Analyzing Wednesday's trades:
EUR/USD on 30M chart
The EUR/USD pair continued trading within Tuesday's range throughout Wednesday, which is clearly visible in the chart above. During the day, the pair managed to rise and fall, but volatility was very low. There were few important macroeconomic and fundamental events, or rather none at all. I already mentioned that the eurozone March inflation report isn't that important, since traders are already aware of its values. The second, final assessment of this report was released, which was no different from the first. Therefore, around 65 points of volatility is quite logical. The euro still isn't able to fall further, but to be fair, there were few drivers for such a move. Bears are still in doubt, but I believe that the euro has no reason for new growth.
EUR/USD on 5M chart
The technical picture was not the best on the 5-minute chart. Traders ignored the 1.0966 level throughout the day and it was removed from the charts. Instead, the 1.0980 level was added. Signals were complex and ambiguous. During the European trading session, the pair bounced off the 1.0966 level twice, albeit not very accurately. Beginners could only open one short position, as the signals duplicated each other. The pair managed to reach the nearest target area of 1.0920-1.0933, resulting in a profit of about 15 points. Due to low volatility, even decent signals did not bring the expected profit. The bounce from the 1.0920-1.0933 area could also be traded, and the pair quickly returned to its original positions. Therefore, another 15 points of profit were gained. The trade should be closed after the price consolidates below 1.0966.
Trading tips on Thursday:
On the 30-minute chart, the pair started to trade lower, which could be (as in previous instances) a pullback before the euro starts to rise again. Unfortunately, the current situation does not allow us to confirm in which direction the movement will be in the coming week. The euro is overbought and should trade lower, but the market can still start forming a new wave of baseless growth. On the 5-minute chart, it is recommended to trade at the levels 1.0792, 1.0857-1.0867, 1.0920-1.0933, 1.0980, 1.1000, 1.1038, 1.1070, 1.1132, 1.1184, 1.1228. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. The EU and the US do not have any important fundamental or macroeconomic events planned on Thursday. So once again we may face low-volatility sideways movements or predominantly sideways movements.
Basic rules of the trading system:
1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.
2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.
3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.
4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours when all positions must be closed manually.
5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.
On the chart:
Support and Resistance levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are channels or trend lines that display the current trend and show in which direction it is better to trade now.
The MACD indicator (14, 22, and 3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend patterns (channels and trendlines).
Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.
