Analyzing Monday's trades:
EUR/USD on 30M chart
The EUR/USD pair opened the first trading day of the week almost flat. The market saw activity spike when PMIs were published in the eurozone. It's worth noting that we are considering the overall European indicators as well as the indicators of the largest economy in the eurozone - Germany. All six indices, including composite ones, turned out to be weaker than the previous month's values and forecasts. Some were significantly weaker. In case of resonant report values, the market's reaction could lead to a movement of up to 50 pips. And that's exactly what happened. Within just 5 minutes, the euro fell by 42 pips. As expected, the market was not interested in the US PMIs.
Thus, the downtrend persists, and the pair may continue to fall as logic and common sense dictate. The market has started paying attention to the disappointing data from the EU, which is already a good sign.
EUR/USD on 5M chart
There were plenty of trading signals on the 5-minute chart, but unfortunately, most of them were formed when the pair was moving sideways. Even the two morning signals were quite challenging to execute. First, a buy signal was formed around the 1.1132 level, but it appeared just half an hour before the release of the PMIs. It was risky to trade without a Stop Loss at break-even. Then a sell signal followed, but it was quite problematic to react to it in time as the price fell in just 5 minutes. All the other signals were false, and none of them moved in the right direction by even 15 pips. Therefore, it wasn't exactly a good day to trade.
Trading tips on Tuesday:
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. The new descending trend line is currently supporting sellers, so we don't expect the euro to start a new wave of growth 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 Tuesday, no reports lined up in the EU or the US. Thus, we can assume low levels of EUR/USD volatility, and probably no trend.
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.
