Analyzing Thursday's trades:
EUR/USD on 30M chart
EUR/USD lost ground on Thursday. We were previously wondering what caused the single currency to rise by 100 pips. However, at least that corresponded to the uptrend. On Thursday, the pair suddenly dropped by almost the same 100 pips. At this time, the price is approaching the ascending trend line, and breaking through it would finally suggest a more pronounced decline in the euro.
The pair's movements on Tuesday, Wednesday, and Thursday can be described as "Trading on Holidays." There were no fundamental or macroeconomic events this week, but the pair showed ultra-low volatility on Tuesday, a strong rise on Wednesday, and a sharp fall on Thursday. It's very difficult to say what caused these movements. It was impossible to predict them. The only option was to trade based on the situation, specifically using trading signals on the 5-minute timeframe. Some might notice that the U.S. unemployment claims report was released on Thursday. Its value exceeded expectations, which should have triggered the dollar's fall. The greenback did edge down at the beginning of the U.S. session, but it quickly ended and had no impact on the intraday trend.
EUR/USD on 5M chart
On the 5-minute chart, several trading signals were generated. Initially, the price rebounded from the 1.1132-1.1145 area, so traders could open short positions. The dollar continued to strengthen when the unemployment claims report was released (it fell a little later and this was no longer related to the report). Ultimately, a buy signal was generated around the 1.1091 level, forcing traders to leave short positions and open long ones. This turned out to be a false signal, resulting in a small loss. However, the next sell signal proved to be accurate and, like the first one, made it possible to earn profit. In total, three trades were opened, with two of them being profitable.
Trading tips on Friday:
On the hourly chart, EUR/USD maintains an uptrend, supported by the ascending trendline. As we face the holiday mode, the price keeps moving with considerable volatility. We remain skeptical about the euro's growth, but the market holds a different view even during holidays.
On Friday, you should be cautious when trading. We saw how the market was unwilling to trade on Tuesday, while the pair showed a strong trend on Wednesday, and a significant correction on Thursday. Long positions with targets at 1.1132 and 1.1145 remain relevant until the price firmly moves below the trendline.
The key levels on the 5M chart are 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, 1.1184, 1.1241, 1.1279-1.1292. On Friday, there are no scheduled events in either the European Union or the United States, not even minor ones. Therefore, there won't be much to react to during the day.
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.
