Analyzing Monday's trades:
EUR/USD on 30M chart
EUR/USD started to trade higher on Monday. Take note that volatility was 46 pips, and this was in the absence of influential economic releases. Basically, it was quite a dull day, and the movements were absolutely lackluster. It was better not to draw significant conclusions based on a 46-pip movement. At the same time, we have already mentioned that we believe that the pair should correct higher, despite the fact that it has breached the ascending trend line on Friday. We believe that the decline at the end of last week was illogical and did not correspond to the macroeconomic backdrop. Therefore, this week, we are not merely considering but actually expecting a new phase of the bullish correction. The euro remains weak and lacks support, but that doesn't mean it should steeply fall without going through any corrective movements.
EUR/USD on 5M chart
The 5-minute chart showed the nature of the pair's movement. The price remained in a 20-pip range throughout the European trading session. The 1.0533 level was in the middle of this range, which we removed from the charts by the end of the day. However, during the day, the price crossed this mark about 10 times, so there were no strong trading signals. It's even hard for us to say whether beginners could find a reason to open positions because the movement was so sluggish and overtly sideways. The pair only managed to budge during the US session, but volatility was very weak. It was quite inconvenient to trade and there were no clear signals either.
Trading tips on Tuesday:
On the 30-minute chart, the pair has started to fall significantly and it could evolve into a new, full-fledged downtrend. We've repeatedly mentioned that we anticipate a dip in the euro in the medium-term perspective but we were also expecting a stronger bullish correction. The pair could start a new corrective phase this week. The key levels on the 5M chart are 1.0391, 1.0433, 1.0451, 1.0483, 1.0559, 1.0611-1.0618, 1.0673, 1.0733, 1.0767-1.0781, and 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 Tuesday, investors will monitor the ZEW Economic Sentiment Survey for October, and the US Retail Sales and Industrial Production for fresh impetus. These reports may trigger a market reaction of 20-30 pips at most. In addition, several European Central Bank and Federal Reserve officials are scheduled to speak for the day.
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.
