Analyzing Friday's trades:
EUR/USD on 30M chart
On Friday, the EUR/USD pair traded sideways with low volatility. There were no significant movements throughout the day in the absence of influential economic releases. The downtrend persists, as indicated by the descending trendline, and there is nothing more to add.
We still expect the euro to fall further, as it remains overbought. The Federal Reserve and the European Central Bank will hold their meetings this week and the market's reaction to these meetings can be unpredictable. Therefore, there's a possibility that we will see an uptrend again, given the bullish sentiment in the market in recent weeks and months.
EUR/USD on 5M chart
Four entry signals materialized on the 5-minute chart, all around the same level of 1.1132. Due to low volatility, all these trading signals turned out to be false. Nevertheless, beginners could have tried to execute the first two signals. The long position from the first signal resulted in a small loss, as the pair couldn't even rise by 15 pips. The last three signals were duplicates of each other, so only one short position should have been opened based on them. Eventually, the pair fell by 15-20 pips, and traders could have gained profits if they manually closed their positions. The outcome was a break-even result.
Trading tips on Monday:
On the 30M chart, the pair finally started declining. The expectation is that this downtrend will continue, regardless of any fundamental background or central bank decisions next week. The new descending trend line is currently supporting sellers, so there is no reason to expect a new rise in the euro at the moment. The key levels on the 5M chart are 1.0901, 1.0932, 1.0971-1.0977, 1.1038, 1.1091, 1.1132, 1.1184, 1.1241, 1.1279-1.1292, 1.1330, 1.1367. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Monday, the eurozone, Germany, and the US will publish their manufacturing and services PMIs. While these reports are not considered super important, significant values may cause a minor market reaction of up to 50 pips. However, they are not likely to significantly impact market sentiment.
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.
