Analyzing Friday's trades:
EUR/USD on 30M chart
On Friday, the EUR/USD went lower again. The euro has been gradually falling for several weeks now. This is precisely the movement we have been forecasting recently. The single currency is slowly depreciating, but almost daily. On Friday, it lost another 20 pips.
Friday's economic reports had no effect on the pair's movement. This is because there were only two reports worth mentioning, but they were initially very weak. Germany's GDP for the second quarter in its final assessment fully met forecasts, and the University of Michigan's Consumer Sentiment Index was slightly below expectations. However, traders were focused on the speeches of Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde. As Lagarde spoke late in the evening, the main focus was on Powell's speech. His hawkish remarks, given the current circumstances, fueled the dollar's growth.
EUR/USD on 5M chart
On Friday's 5-minute chart, we saw a wealth of trading signals, but unfortunately, most of them turned out to be false. During the European session, before rising, the pair broke the 1.0781 level four times. Beginners could only execute the first two signals, both resulting in a small loss. During the US session, after Powell's speech, a strong sell signal was formed around the 1.0835 level, but newcomers still had to catch it in time, as the price changed very quickly. We believe that this signal was risky as the market could have moved in either direction. The last signals, again around the 1.0781 level, should have been ignored.
Trading tips on Monday:
On the 30M chart, the pair extends its downward movement. From our perspective, the decline of the euro remains the most justified and logical course of action, irrespective of the macroeconomic backdrop. The key levels on the 5M chart are 1.0673, 1.0733, 1.0767-1.0781, 1.0835, 1.0871, 1.0901-1.0904, 1.0936, 1.0971-1.0981. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Monday, Bundesbank head Joachim Nagel is scheduled to speak. It is unlikely for him to disclose anything important, so any market reaction seems implausible. However, it's the only event of the day, so what else can we focus on?
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.
