Analyzing Tuesday's trades:
EUR/USD on 30M chart
The EUR/USD pair extended its upward trajectory on Tuesday, but the overall volatility of the day was not very high. The pair covered a range of nearly 80 pips from the low to the high, but considering the macroeconomic background, a more significant movement could have been expected. In the first half of the day, the pair continued to rise and even broke out of the sideways channel, surpassing the level of 1.0792. Therefore, a new uptrend has technically formed. However, the movement has been weak, clearly corrective in nature. In the medium term, we expect a resumption of the euro's decline.
Only secondary indicators were released in the European Union, which did not elicit a significant reaction. However, in the United States, a crucial inflation report for May was published, which turned out to be better than forecasted, showing a slowdown to 4%. The core inflation also decreased to 5.3%. As a result, the dollar was under pressure at the beginning of the US trading session (which is entirely logical), but that pressure didn't last long. The movements in the second half of the day were confusing so beginners had a difficult time making profits.
EUR/USD on 5M chart
All the trading signals formed around the 1.0792 level on the 5-minute chart. A decent buy signal formed at the beginning of the European trading session, but the pair only managed to move up by 10 pips. This long position should have been closed before the release of the inflation report. Another strong buying signal was formed when the report was released, but it couldn't be executed in time as the price immediately surged. Subsequently, a sell signal formed near the same level, but it shouldn't have been executed, at least because it was the third consecutive false signal. Moreover, the nature of the US inflation report implied growth rather than a decline.
Trading tips on Wednesday:
On the 30-minute timeframe, the pair shows that an uptrend is brewing. In the medium term, we anticipate a resumption of the downtrend, but it may take some time to bring back this trend. The pair has technically surpassed the 1.0792 level, but the actual significance of this remains unclear. The key levels on the 5M chart are 1.0517-1.0533, 1.0607-1.0613, 1.0673, 1.0733, 1.0761, 1.0792, 1.0857-1.0867, 1.0918-1.0933. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Wednesday, the European Union will publish its industrial production report, which isn't that important. In the United States, the producer price index and the results of the Federal Reserve meeting will be announced in the late evening. The producer price index is also not the most significant report but there's a chance it may provoke a reaction. The key event of the day will be the Fed meeting.
Basic trading rules:
1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
How to read charts:
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines are channels or trend lines that display the current trend and show which direction is better to trade.
MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
