Analyzing Monday's trades:
EUR/USD on 30M chart
The EUR/USD pair resumed its downward movement on Monday, largely due to the ISM report in the US. Thus, the euro continues to fall for three consecutive days, which looks absolutely unusual. Nevertheless, the US S&P and ISM business activity reports in the manufacturing sector turned out better than expected, causing the US currency to strengthen. Finally, the market reacted logically to the data. We can only hope that this trend will continue. After all, this week, the European Central Bank and the Federal Reserve will hold meetings, and on Friday, crucial data on Nonfarm Payrolls and unemployment in the US will be published. It hasn't been confirmed that they will be in favor of the dollar, but it is still desirable for the dollar to strengthen if the reports turn out to be strong, and not the other way around. Take note that the descending channel is rather weak and narrow, and so far, the entire downtrend is 130 points.
EUR/USD on 5M chart
There were quite a few trading signals on the 5-minute chart, but in the second half of the day, there was a decent downward movement. Beginners were lucky with the sell signal around the 1.1038 level. The price fell short of reaching it by 2 points, which could be considered a "mistake" and you could open short positions. Subsequently, the pair dropped to the area of 1.0965-1.0980, where the movement ended. The short position should have been closed, and the profit on it was about 50 points. In the first half of the day, the pair did not even come close to significant levels.
Trading tips on Tuesday:
On the 30-minute chart, the pair left one flat to enter another, and overall, the uptrend remains (if we take the higher chart). I have already reiterated that the upward movement had no basis, and I still hold the same opinion. But now the pair is neither growing or falling, the movements are absolutely illogical, random. The pair can stand still for a week, and then show "swings" with an empty fundamental and macroeconomic background. On the 5-minute chart, consider levels 1.0792, 1.0857-1.0867, 1.0920-1.0933, 1.0965-1.0980, 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. On Tuesday, the eurozone plans to publish its inflation report for April (a very important indicator), and in the US – the JOLTs job openings report (also an important report). Thus, it is possible for the market to logically work out the macroeconomic information for two straight days.
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.
