Analyzing Monday's trades:
EUR/USD on 30M chart
The EUR/USD pair showed volatility equal to 40 points on Monday. In essence, this could be the end of the article, because with such movement, one should not have even entered the market. Surely, beginners couldn't have known in advance that there would be no volatility, but there was a very high probability of a low-volatility flat, as there were no important publications or events planned for Monday. Volatility has been steadily declining in recent weeks, and even last week, when two central bank meetings took place and many important reports were published, it was still relatively low.
Overall, the pair continues to move mostly sideways and has been doing the same thing for three weeks now. There is currently no trend line or channel. Movements are still abrupt, illogical, and very difficult to work with.
EUR/USD on 5M chart
On the 5-minute chart, it is clear that the quotes moved sideways for most of Monday's trading session. All trading signals were formed around the 1.1038 level, which is also characteristic of a flat. Beginners could have only used the first two signals, but most likely they would have incurred losses, as even setting a stop loss to breakeven was not possible because the pair couldn't even move in the right direction by 15 points. Therefore, it was a futile attempt that would have ended in failure, but not because the levels were incorrect or the movements were volatile. Rather, there were no movements at all, and it was simply unlucky that the 1.1038 level happened to be in the way of the price.
Trading tips on Tuesday:
On the 30-minute chart, the pair started a new downward move within the general flat. The "swings" persist, and the fundamental and macroeconomic backgrounds do not lead to a logical reaction, and there will be very few important reports and events this week. The euro currency remains at high, unjustified values and is heavily overbought. 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, and 1.1228. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. On Tuesday, no important events or reports are planned again in either the European Union or the United States. Most likely, the flat will persist, and so will the weak volatility.
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.
