Analyzing Thursday's trades:
EUR/USD on 30M chart
The EUR/USD pair continued its downtrend throughout Thursday. Only a few minor reports were published in the US, which had no impact on the pair's movement. Nevertheless, both reports (on jobless claims and the Philadelphia Index) turned out stronger than forecasts, so they could have supported the US currency. Thus, as expected, the downtrend for the pair continues after a prolonged unjustified growth. The price has already fallen below the descending channel, which points to the bearish momentum. We still anticipate a drop in the European currency and see no reasons for its rise.
Also, Christine Lagarde and Luis de Guindos delivered speeches, but neither of them made important statements. Therefore, it is not possible to link the euro's fall to the fundamental background. We are not trying to do that. The pair is falling because it had been growing for a long time without reason and was overbought.
EUR/USD on 5M chart
There was only one trading signal on the 5-minute chart. At the beginning of the US trading session, the price broke through the 1.0792 level, and managed to slid another 10-15 points. This is exactly how much beginners could have earned from a short position. Unfortunately, it was not possible to catch the start of the downward movement, and volatility still remains low. Therefore, despite a fairly strong trend, the current signals aren't that great and neither are they profitable.
Trading tips on Friday:
On the 30-minute chart, the pair continues to generally move downwards. For the first time in a long time, the pair may show prolonged downward movement, which would be absolutely logical from all perspectives. Remember, the pair has been growing for no reason for 2 months. A bullish correction may begin soon, but the descending channel clearly indicates the preservation of the trend for now. On the 5-minute chart, consider levels 1.0587-1.0607, 1.0692, 1.0737, 1.0792, 1.0857-1.0867, 1.0920-1.0933, 1.0965-1.0980. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. On Friday, another speech by Lagarde is scheduled in the European Union, which may be as successful as the previous ones. In any case, it will take place late at night. In America - a speech by Jerome Powell, who is usually slightly more eloquent and frank than his European colleagues. Therefore, in the second half of the day, movements can be sharper and more volatile.
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.