Analyzing Friday's trades:
EUR/USD on 30M chart
EUR/USD was in recovery mode on Friday, marking a new phase that started earlier in the week. The pair tried to start a corrective phase the week before last, which didn't go well. As a result, we expected the pair to start a new leg of the correction. Take note that it was challenging for the euro to correct higher due to the economic reports that week, which mostly favored the greenback, implying dollar strength and a decline in the EUR/USD pair. However, the market had been gearing up for a correction for two weeks, so it ended up ignoring some positive reports from the US to maintain the prevailing sentiment.
In the end, traders ignored the strong Nonfarm Payrolls report on Friday. The market's initial reaction was logical, with the dollar surging due to the fact that the number of new nonfarm jobs exceeded expectations by two-fold. However, the dollar eventually lost more than it gained. As a result, the strong US data didn't leave much impact on the pair.
EUR/USD on 5M chart
There were several signals on the 5-minute chart. Early in the European session, the price rebounded from the 1.0533 level, and before the start of the US session, it rose by 23 pips, which made it possible for traders to set stop-loss on breakeven. Then, a sell signal was generated near 1.0533 when the NonFarm Payrolls and unemployment reports were released in the US. But it was impossible to react to this signal. The next buy signal near 1.0491 could have been executed. It was difficult to expect a strong rally, but that's precisely what happened. The trade should have been manually closed in the evening, resulting in a profit of 80 pips.
Trading tips on Monday:
On the 30-minute chart, the pair continues to carve out a new wave of upward correction. In the medium-term perspective, we anticipate a dip in the euro almost inevitably, yet the pair may continue its ascent for technical reasons. The key levels on the 5M chart are 1.0391, 1.0433, 1.0451, 1.0491, 1.0533, 1.0611-1.0618, 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 Monday, there are no important events scheduled in the European Union or the United States. EUR/USD will likely go through little volatility, and the price might edge down because its growth on Friday was illogical.
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.
