Analyzing Friday's trades:
EUR/USD on 30M chart
EUR/USD continued to show unclear movements and low volatility on Friday, which has been the case for the last two weeks. Thus, the pair returned to the level of 1.0673, but there are no new findings from the technical picture. The pair only fell by about 100 pips on Thursday, and it traded sideways for the rest of the week. The downtrend persists in the medium term, which aligns with our expectations. In the short term, the market has been exhibiting more of a flat than a trend.
It wouldn't make any sense to analyze Friday's macro data, as the reports were secondary of importance. Industrial production in the United States increased slightly more than expected in August, and the University of Michigan's Consumer Sentiment Index was only slightly weaker than forecasts. Collectively, these two reports had no impact on the pair's movements. The dollar slightly weakened during the day, which had no significant effect on the current situation.
EUR/USD on 5M chart
It's difficult to determine how many signals were formed on the 5-minute chart. The pair traded higher throughout the day and reached the level of 1.0673 by the middle of the US session. It's difficult to say whether it broke through this level or not. It didn't move below it either. Instead, the price mostly moved along this level until the end of the day and the trading week. Therefore, it was not advisable to open any positions based on such a signal, especially for beginners. By the time the level of 1.0673 was tested, it was evident that there was no volatility, no significant movement, and no clear trend. It was not advisable to take risks.
Trading tips on Monday:
On the 30-minute chart, the correction came to an end, and the downward movement resumed. The euro still lacks robust bullish indicators. In the medium term, we anticipate the euro's further decline against any macroeconomic and fundamental backdrop. The key levels on the 5M chart are 1.0517-1.0533, 1.0607-1.0613, 1.0673, 1.0733, 1.0767-1.0781, 1.0835, 1.0871, 1.0901-1.0904. 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 most important event of the day will be the speech of European Central Bank Vice President Luis de Guindos. However, he already mentioned that it's unlikely that rates will continue to rise after the September meeting. This is a factor that exerted downward pressure on the euro.
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.
