Analyzing Friday's trades:
EUR/USD on 30M chart
EUR/USD only moved by 36 pips on Friday. In general, we could end the analysis here since there was nothing substantial to analyze. The pair spent the entire day in a movement that can only be described as a flat, given the 36-pip volatility. Although European Central Bank President Christine Lagarde was expected to speak during the day, the pair's movements suggest that she did not provide any significant information to the market. Later in the day, the University of Michigan's Consumer Sentiment Index was published, which was 3.4 points below expectations, but the market did not react to this report either.
So basically, the pair started moving downward last week, but it remains unclear whether this marks the beginning of a new prolonged downtrend or a pullback before a new upward movement. The pair failed to overcome the level of 1.0668 four times, and it stopped falling further. While a formal uptrend persists, we also expect the downtrend to resume.
EUR/USD on 5M chart
On the 5-minute chart, there were no trading signals. The pair traded along the 1.0668 level for the entire day. There was a slight deviation from this level at one point, which beginners might have interpreted as a buy signal. Even if they opened a long position, it did not yield profits, as the price could not even rise by 15 pips. Traders could have closed this trade at any time since the price could not fall below the 1.0668 level.
Trading tips on Monday:
On the 30-minute chart, the corrective phase remains intact, which may have already ended or is about to end soon. Take note that the pair remained stagnant for several weeks until the employment and unemployment data were released in the United States. The previous week worked in the dollar's favor, but the greenback's growth has been relatively weak. We expect a more significant decline in the pair. The key levels on the 5M chart are 1.0451, 1.0483, 1.0526, 1.0568, 1.0611-1.0618, 1.0668, 1.0733, 1.0767-1.0781, 1.0835, 1.0871. 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 significant events or reports scheduled in the U.S. or the EU. Therefore, the pair will likely go through low volatility and we will witness the persistence of the flat market.
Basic trading rules:
1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.
2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.
3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.
4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, post which all open trades should be manually closed.
5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trend line or trend channel.
6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.
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 represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.
The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.
Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.
Beginning traders should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.
