Analysis of trades on April 13:
EUR/USD 30M Chart
The EUR/USD currency pair was rising again throughout Thursday. There were formal reasons for the bullish market. Lately, we've been regularly talking about the unjustified rise of the European currency. On Thursday, macroeconomic data supported the growth of the European currency. In the European Union, a report on industrial production was published, significantly exceeding forecasts. In the United States, the producer price index came in much lower than expected. Therefore, the decline of the US dollar raises no questions, but the drop began several hours before the publication of these reports. We believe the reports merely served as a backdrop for traders. Even without them, the European currency would have continued to rise. Thus, the pair has been growing daily since breaking through the downward channel. The bullish trend may continue for some time, but it may get exhausted soon.
EUR/USD 5M Chart
On the 5-minute timeframe, it can be seen that the pair formed several trading signals throughout the day. Not the best or most unambiguous ones, but still. First, the pair bounced off the 1.0989 level, and novice traders might initially interpret this signal as a sell signal. However, below the 1.0989 level was 1.0966, just 23 pips away. Thus, these two levels should be considered as a support zone. It was from this support zone that the pair eventually bounced. By mid-American session, it reached the 1.1070 level and, with minimal deviation, worked and bounced off it. At this point, novice traders could have locked in profits of at least 55 pips. Whether to act on a sell signal around 1.1070 was at the traders' discretion. After a decent first trade, we would not have taken the risk on a strong bullish trend.
Trading plan on April 14:
On the 30-minute timeframe, the pair quickly completed a downward correction, which once again turned out to be quite weak. The upward movement now logically (from a technical perspective) continues. The baseless growth doesn't raise any doubts. On the 5-minute timeframe tomorrow, consider levels 1.0857-1.0867, 1.0920-1.0933, 1.0966, 1.0989, 1.1038, 1.1070, 1.1132, 1.1184, and 1.1228. When passing 15 pips in the right direction, set a break-even Stop Loss. On Thursday, several secondary reports will be published in the US, such as industrial production, retail sales, and the University of Michigan's consumer sentiment index. In the European Union, there will be no important reports. Keeping in mind that today's market responded to similar secondary reports, pay attention: in case of significant deviations from the forecasted values, a reaction may follow.
The basic principles of the trading system:
1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
How to read charts:
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines are channels or trend lines that display the current trend and show which direction is better to trade.
MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginning traders should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
