Analyzing Friday's trades:
EUR/USD on 30M chart
EUR/USD traded significantly lower on Friday. This was not surprising, as the euro had been rising rapidly for two days prior to that. As we discussed in previous articles, all decisions made by central banks and statements from their heads supported the euro and did not boost the dollar. Therefore, the rise was completely expected, and on Friday, the pair started an equally predictable bearish correction.
At this point, it would be pointless to try to identify the market trend. The price rose too quickly and sharply to consider this movement as a trend. It would not be surprising if the price falls back to the previous week's lows. Therefore, there is currently no trendline or channel. On Friday, several PMI data in the EU and the US were also published, but they clearly were not enough to exert 100 pips worth of pressure on the euro.
EUR/USD on 5M chart
On the 5-minute chart, the price moved quite well, as it only headed in one direction for almost the entire day. Sharp spikes in emotions are clearly visible in the chart above, corresponding to the time when the EU and the US reports were published. The first buy signal around the 1.0981 level turned out to be a false signal. However, the next sell signal allowed the pair to drop to the 1.0904 level. Beginners should have executed it, as it would have brought a profit of about 40-50 pips. The first trade closed with a small loss. The overall profit was small, but its still a profit.
Trading tips on Monday:
On the hourly chart, EUR/USD started a sharp uptrend, but it can also end it at any moment. We believe that the euro does not have enough reasons to rise further. The growth was supported by the fundamental background, but it will no longer receive the same support in the upcoming week.
On Monday, we suggest that you closely monitor the area of 1.0896-1.0904. A rollback upward is possible, after which the decline will resume, or it will continue immediately but at a much slower pace. Sell signals are more preferable.
The key levels on the 5M chart are 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, 1.1132-1.1145. On Monday, there are no important reports lined up in either the European Union or the US, so there is simply nothing to influence sentiment. Volatility may sharply decrease, and the pair is in a state close to a flat but is still able to maintain a corrective trend.
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.
