Analyzing Thursday's trades:
EUR/USD on 30M chart
EUR/USD finally showed some bullish bias on Thursday. Although the euro doesn't actually deserve to rise, we have to point out the fact that the single currency has been falling for more than two consecutive weeks (without any corrections), so technically, the pair has room to correct higher. Now it's crucial to understand whether this will be a one-day correction or if it marks a correction against the two-month decline. Either way, the short-term downtrend may turn into an uptrend. Even if the growth doesn't turn out to be particularly strong, some days the pair may still trade higher.
Thursday's macroeconomic backdrop was stronger than in the first half of the week. The German Consumer Price Index fell below relatively optimistic forecasts. This appears to be bad news for the euro because it leaves the European Central Bank with fewer reasons to tighten its monetary policy. Nevertheless, the euro started to rise on Thursday morning. Then the US GDP report was released, which matched the consensus estimate, but it didn't provoke a significant market reaction. Therefore, it appears that the euro rose without any substantial reasons.
EUR/USD on 5M chart
Only one trading signal was formed on the 5-minute chart, but it took a long time to form—about 5 hours. During this period, the pair initially surpassed the 1.0517-1.0533 range, tried to develop an upward movement, and then it bounced off this mark from above. Beginners could open a long position based on this signal, and as a result, the pair was up by about 30-35 pips. Thursday's movements were quite erratic and didn't correspond to the macroeconomic background, so a profit of around 20 pips was a good result.
Trading tips on Friday:
On the 30-minute chart, EURUSD can finally begin to correct higher. In the medium term, we anticipate the euro's further decline, but in the next few days or even a week, the pair may start an upward movement. Just like it did on Thursday, without any specific reasons behind it. The key levels on the 5M chart are 1.0391, 1.0433, 1.0465, 1.0517-1.0533, 1.0607-1.0613-1.0618, 1.0673, 1,0733, 1,0767-1,0781, 1,0835. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Friday, Germany will publish a number of reports. The eurozone CPI report will be in the spotlight, and market participants may also look to the release of several less significant reports from the US. Overall, there are plenty of economic reports, so we expect good volatility and trend movements on Friday. We believe that the euro may continue its bullish correction.
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.
