Analyzing Tuesday's trades:
EUR/USD on 30M chart
EUR/USD traded with low volatility on Tuesday but remained stable within an ascending channel. The uptrend persists despite the three-day correction. If the price consolidates below the ascending channel, it may indicate a shift to a downtrend, but you should trade with caution. If the pair leaves the channel while in a flat phase, such a signal cannot be considered reliable. Currently, we are observing movement close to a flat trend.
There were no significant macroeconomic events throughout the day. The only report worth mentioning was the better-than-expected US building permits data, which triggered a 20-point reaction. The overall volatility for the day did not exceed 50 pips. Therefore, it was inconvenient and impractical to trade. There won't be many important events for the euro this week. So far, the 5 or 6 speeches by representatives of the Federal Reserve and the European Central Bank have had no impact on the pair's movement, as we previously warned. The difficulty lies in expecting new information immediately after the meetings.
EUR/USD on 5M chart
On the 5-minute chart, you can also clearly see that EUR/USD has mostly moved sideways with low volume. Therefore, there was no point in entering the market. The price stayed around the 1.0918-1.0933 range for the entire day (the second day in a row). Two trading signals materialized, but the potential profit (considering the current volatility) was lower than the potential loss since the stop-loss for any trade would have to be placed beyond the range where the signal formed. Therefore, it made no sense to enter the market yesterday.
Trading tips on Wednesday:
On the 30M chart, the pair continues to follow an uptrend. In the medium term, we expect the euro to fall again, but it may take quite a long time before the downtrend returns to the market. The ascending channel currently serves as a reference for the trend and could signal its possible break. The key levels on the 5M chart are 1.0607-1.0613, 1.0673, 1.0733, 1.0761, 1.0803, 1.0857-1.0867, 1.0918-1.0933, 1.0980, and 1.1038. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. Several ECB representatives (particularly Isabel Schnabel), and Fed representatives (particularly Jerome Powell) are scheduled to speak today. There is practically no significant macro data to highlight.
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.
