Analyzing Tuesday's trades:
EUR/USD on 1H chart
EUR/USD carried out another test of the 1.0888 level. This marks the second rebound from this mark in the past few weeks, but it doesn't necessarily imply that the pair will start forming a new downward trend. After rebounding from the 1.0888 level two weeks ago, the pair struggled to fall by about 80 pips. Therefore, it would be much more accurate to say that the euro is currently in a flat phase between the levels of 1.0811 and 1.0888.
We still believe that the euro is exhibiting an illogical rise. We see no reasons for the pair to rise further, especially considering that in just a week and a half, the European Central Bank may lower the key interest rate. However, as the past few weeks have shown, the market is ready to buy the euro under any circumstances. Yesterday, there were no significant reports or events in either the US or the European Union. Volatility was quite low. The decline was only ensured by the rebound from the level 1.0888.
EUR/USD on 5M chart
A very good sell signal was formed on the 5-minute timeframe. Nearly at the beginning of the US session, the price bounced off the range of 1.0888-1.0896, after which it fell to the level of 1.0856. Therefore, novice traders could have earned about 20 pips from this trade. At the moment, trades can be closed without waiting for a rebound from the target level, as volatility is very weak, and there's an extremely low likelihood of quickly surpassing this level.
Trading tips on Wednesday:
On the hourly chart, the bullish correction remains intact, which is smoothly transitioning into a flat. We believe that the euro should fall in the medium term, and the global trend is downward. Nevertheless, the market still refuses to buy the dollar for unknown reasons and volatility also remains low. Traders should consider these factors before they decide to open any trades.
On Wednesday, novice traders may look for signals around the area of 1.0838-1.0856. Sell signals should be considered, but the euro could also rise at any moment. In any case, one should take note of the low volatility.
The key levels on the 5M chart are 1.0483, 1.0526, 1.0568, 1.0611, 1.0678, 1.0725-1.0733, 1.0785-1.0797, 1.0838-1.0856, 1.0888-1.0896, 1.0940, 1.0971-1.0981. Wednesday brings the first interesting event of the week. The German inflation report will be published, and the indicator may accelerate to 2.4%. While not critical, the market could use this as a reason to buy the euro again.
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.
