Analyzing Thursday's trades:
EUR/USD on 1H chart
EUR/USD finally showed notable movements on Thursday. The quotes initially showed a fairly good growth, and then an even stronger decline. We can't say that these movements were completely logical; however, there was a strong macroeconomic background on Thursday. We previously told you that business activity indices are not crucial, but in the absence of data, the market can also react to these reports. And that's exactly what happened. The market was buying the euro early in the morning, but after the release of weak Manufacturing PMI prints in Germany and the EU, it started to sell. However, the Services PMI turned out to be good, so the euro could also rise further.
In any case, the short-term uptrend remains intact, as shown by the trendline. If the quote settles below this mark, this will confirm the end of the bullish correction and signal the start of the downtrend.
EUR/USD on 5M chart
Two trading signals were generated on the 5-minute timeframe. In the morning, beginners could open long positions near the level of 1.0835, but before the release of PMI data, the trades could be closed since they already made very good profit. Traders had to wait for the next signal until the US session. The pair settled below the level of 1.0835 and managed to fall by another couple of dozen pips, which could also be taken as profit.
Trading tips on Friday:
On the hourly chart, EUR/USD may continue to correct higher for some time, although there are still no macroeconomic and fundamental reasons to support the euro's growth. We still expect a decline from the single currency, and in our opinion, it should continue for quite a long time. We can confirm the downtrend once the pair overcomes the trendline.
The key levels on the 5M chart are 1.0568, 1.0611-1.0618, 1.0668, 1.0725, 1.0767-1.0785, 1.0835, 1.0888-1.0896, 1.0940, 1.0971-1.0981, 1.1011, 1.1043, 1.1091. On Friday, there are no important events planned in the European Union and the United States. Germany will release reports on IFO investor expectations, and the final assessment of GDP for the fourth quarter. These reports may trigger a surge of emotions in the morning.
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.
