Analyzing Monday's trades:
EUR/USD on 30M chart
EUR/USD didn't show any strong move and remained mostly flat throughout Monday, hovering just below the 1.0781 level. The fact that the price managed to break below this level is a good thing for the prospects of a downward movement. It was simply a "quiet Monday" without significant macroeconomic or fundamental background. We already warned you that we don't expect strong movements on this day. Therefore, we could not draw any new conclusions. The price remained where it was at the market open, the downtrend did not change, and there was no significant news. The interesting developments are expected later in the week. There is no doubt that we will witness high volatility and trend movements in the next couple of days, as the U.S. will release the inflation report for November...
EUR/USD on 5M chart
It was difficult to find trading signals on the 5-minute chart. Throughout the Asian and European trading sessions, the price stayed within the 1.0767-1.0781 range and only broke away from it at the beginning of the US session. Formally, this was a sell signal that could have been executed. After this signal was formed, the pair reluctantly fell by 15 points, making it possible for beginners to set a stop loss to breakeven. By the evening, the price returned to the aforementioned range, and the trade closed with a stop loss. The overall volatility for the day was 38 pips...
Trading tips on Tuesday:
On the hourly chart, EUR/USD continues to form a new downtrend. The US reports did not spoil the picture for the dollar, but several events and reports are scheduled for this week. These can either boost or exert pressure on the US currency. However, overall, we expect the pair to fall to the 1.0200 level.
We suggest that you closely monitor the 1.0767-1.0781 range. Volatility may gradually increase on Tuesday, so trading signals may trigger a good movement.
The key levels on the 5M chart are 1.0568, 1.0611-1.0618, 1.0668, 1.0733, 1.0767-1.0781, 1.0835, 1.0896-1.0904, 1.0940, 1.0971-1.0981, 1.1011, 1.1043, 1.1091. On Tuesday, the eurozone will release secondary economic expectation data from the ZEW Institute. Traders will keep an eye on the US inflation report. Last month's value slightly deviated from the forecast and triggered a strong market reaction.
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.
