Analyzing Tuesday's trades:
EUR/USD on 30M chart
On Tuesday, the EUR/USD pair was trading flat with low volatility. The pair only passed 50 points from the low to the high of the day. Naturally, it was extremely difficult to count on profit and good signals with such movement. And this is despite several interesting macro data. But I already told you that all of Tuesday's reports are of secondary importance or very rarely provoke a market reaction. And so it happened in practice. The report on the EU GDP for the first quarter in the second estimate did not differ from the first estimate. US reports on industrial production and retail sales did not interest traders at all, unless you consider a reaction of 10-20 points as something noteworthy. In any case, we are interested in a reaction where the pair moves 50-60 points or more. And there is no way to work out a movement of 10-20 points. And there is no sense to do so either. The downtrend persists, we continue to expect the euro to fall.
EUR/USD on 5M chart
On the 5-minute chart, the movement looks impressive, but this is a mistaken opinion. Only two trading signals were formed during the day. Both are false, and the second one did not even have time to form at the time of writing the article. Thus, novice traders could only try to work out the first buy signal in the form of a rebound from the level of 1.0867. After this signal, the price went up about 30 points, but could not reach the nearest target level. Therefore, most likely, beginners placed a Stop Loss at break-even, at which the transaction was closed.
Trading tips on Wednesday:
On the 30-minute chart, the pair was generally trending downward. For the first time in a while, the pair may exhibit a significant downtrend, which aligns with the technical analysis. We have been anticipating the dollar's strength for a while, and it seems to be materializing. On the 5-minute chart, consider levels 1.0692, 1.0737, 1.0792, 1.0857-1.0867, 1.0920-1.0933, 1.0965-1.0980, 1.1038, 1.1070. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. On Wednesday, the EU is planning to publish a report on inflation for April in the final value. This report is unlikely to provoke a reaction, as this is the second value and the market is already ready for the 7% value. Nevertheless, a deviation from the forecast is possible. In the evening - a speech by Luis de Guindos. In the US - a minor report on the number of building permits.
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.
