Analyzing Wednesday's trades:
EUR/USD on 30M chart
The EUR/USD pair traded actively and dropped on Wednesday. The single currency started falling closer to the US session. The speeches of European Central Bank President Christine Lagarde and Federal Reserve Chairman Jerome Powell at the economic forum in Sintra were scheduled to start at the beginning of the US session. Although they were scheduled at the same time, they couldn't speak simultaneously. Therefore, heightened volatility was expected for several hours.
Overall, Powell's speech turned out to be the only interesting one. He directly stated that the key interest rate is likely to increase two more times, as most participants in the Fed's monetary committee supported this scenario at the previous meeting. Lagarde limited herself to general phrases that she repeats in every speech. As a result, the dollar received support in the context of a day, but overall (in the long term), the uptrend persists. Meanwhile, the euro is significantly overbought and is due for a decline. The price has left the ascending channel, so it may continue to fall for some time.
EUR/USD on 5M chart
Two trading signals materialized on the 5-minute chart. The pair traded sideways during the Asian and European sessions, and it was a good thing that there were no trading signals during that time. However, the two signals that formed at the beginning of the US session were inconvenient to execute since they occurred during the top officials' speeches. We believe that beginners should not have taken risks and entered the market with such a strong fundamental background.
Trading tips on Thursday:
On the 30M chart, the pair has secured a position below the ascending channel, so the trend has formally switched to a downward one. However, we are once again observing an increase in the euro. Recently, the tone of the ECB has turned more hawkish, and the market has started to believe that the rate will continue to rise for an extended period, which could support the euro. The key levels on the 5M chart are 1.0733, 1.0761, 1.0803, 1.0857-1.0867, 1.0918-1.0918, 1.0977-1.0980, 1.1038, 1.1091, 1.1132. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. Thursday will have a sufficient number of important events. Germany will release the first inflation report for June, and the US will have the GDP report and Powell's speech. And these are just the most important events that cannot be ignored!
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.
