Analyzing Thursday's trades:
EUR/USD on 1H chart
EUR/USD stayed within a narrow range between 1.0835 and 1.0906 throughout Thursday. The results of the European Central Bank meeting were announced, and ECB President Christine Lagarde delivered a speech, while the United States released two important reports. Despite the events on Thursday's calendar, the pair only moved in one direction, and it still stayed within a relatively narrow sideways channel.
The volatility was not very high, as one might expect when looking at the day's event calendar. The results of the ECB meeting did not surprise, disappoint, or impress investors. Key interest rates remained unchanged, and during the press conference, Lagarde mentioned that the central bank is ready to continue holding rates at their highest level to return inflation to the 2% target. She also stood by her comments on a likely rate cut in the summer, but there must be significant reasons like further progress on disinflation. Therefore, the results of the meeting turned out to be quite uneventful, and the decline could simply be part of the flat phase.
EUR/USD on 5M chart
Only two trading signals were generated on the 5-minute timeframe. The first one, a rebound from the 1.0896-1.0906 area, was extremely accurate but took about 5 hours to form. However, beginners could open short positions based on this signal. Subsequently, the pair fell to the 1.0835 level, where you should have taken profits from the short position. It amounted to about 35-40 pips. It was probably not worth executing the signal when the price rebounded from the 1.0835 level, since this signal was formed quite late. Nevertheless, this signal could push the pair up during the night and on Friday, as the ECB meeting results were not so bad for the euro that the market would only think about selling now.
Trading tips on Friday:
On the hourly chart, EUR/USD still has a chance to form a new downtrend since it previously settled below the ascending channel. However, at the moment, the pair remains within the sideways channel of 1.0835-1.0906. Therefore, we expect the pair to fall further, but first, the price must leave this range.
On Friday, the price could rise to the upper boundary of the sideways channel, more precisely to the level of 1.0896. For this to happen, the price should bounce from the 1.0835 level. If the price consolidates below the 1.0835 level, you may consider selling again, and we can expect a downtrend to resume, which is still the most logical scenario from our perspective.
The key levels on the 5M chart are 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, 1.1184. There are no major events scheduled for Friday. From the US docket, reports on the Producer Price Index and personal income and spending will be released. These are secondary reports that are unlikely to help the pair break out of the range. However, it is important to pay attention to the 1.0835 level.
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, after 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 trendline 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.
