Analysis of Tuesday's Trades:
1H Chart for EUR/USD
The EUR/USD currency pair traded with an overall volatility of 32 pips on Tuesday. Even relatively important reports on unemployment and inflation in the Eurozone did not provide any help. Both reports showed unexpected figures that did not match forecasts, but the market simply refused to trade. However, the upward trend remained intact by the end of the day, and yet another irrational and illogical rise of the American currency was avoided. Thus, both in the short-term and long-term, we still expect only growth of the euro. This week, it can be stated that traders continue to ignore the macroeconomic backdrop. On Monday, the ISM Manufacturing Index sparked a very strange market reaction, and on Tuesday, the market completely overlooked the unemployment and inflation reports. The daily timeframe continues to show a flat trend, with the price seemingly turning around near its lower boundary—the 1.1400 level. Therefore, we expect growth towards the upper boundary—the 1.1800 level.
5M Chart for EUR/USD
On the 5-minute timeframe, no trading signals were generated during Tuesday, which is not surprising given the volatility of only 32 pips. Thus, there were no grounds for beginners to enter the market.
How to Trade on Wednesday:
On the hourly timeframe, the EUR/USD pair has begun another attempt at ascending. The overall fundamental and macroeconomic background remains very weak for the U.S. dollar, thus the pair can continue to show declines only on technical grounds—the flat trend on the daily timeframe remains relevant. However, we anticipate its conclusion and the resumption of the upward trend in 2025. Market volatility remains low.
On Wednesday, beginner traders can again trade from the area of 1.1655-1.1666. A price bounce from this area will allow for opening short positions targeting 1.1584-1.1571. A consolidation above this area will warrant long positions targeting 1.1745-1.1754.
On the 5-minute timeframe, levels to consider are 1.1354-1.1363, 1.1413, 1.1455-1.1474, 1.1527-1.1531, 1.1571-1.1584, 1.1655-1.1666, 1.1745-1.1754, 1.1808, 1.1851, 1.1908, and 1.1970-1.1988. No significant events or reports are scheduled in the Eurozone for Wednesday, while the U.S. will release reports on industrial production, the ADP labor market, and the ISM services activity index. Again, while these are quite important reports, it is impossible to predict what reaction they might provoke today, if any.
Key Rules of the Trading System:
- The strength of a signal is determined by the time it takes to form the signal (bounce or breakout). The less time required, the stronger the signal.
- If two or more trades were opened near any level based on false signals, all subsequent signals from that level should be ignored.
- In a flat, any pair may form numerous false signals or none at all. At the first signs of a flat, it is better to stop trading.
- Trades are opened during the period between the beginning of the European session and the middle of the American session, after which all trades should be closed manually.
- On the hourly timeframe, it is preferred to trade only when there is good volatility and a trend confirmed by the trend line or channel, using signals from the MACD indicator.
- If two levels are too close to each other (5 to 20 pips), they should be viewed as a support or resistance area.
- Upon moving 15 pips in the right direction, set the Stop Loss to breakeven.
Chart Explanations:
- Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed near them.
- Red Lines: Channels or trend lines that reflect the current trend and indicate the preferred direction for trading.
- MACD Indicator (14, 22, 3): A histogram and signal line; a supplementary indicator that can also be used as a source of signals.
Important Note: Significant speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their release, it is advisable to trade cautiously or exit the market to avoid sharp reversals against the preceding movement.
Remember: For beginners trading in the Forex market, it is important to understand that not every trade can be profitable. Developing a clear strategy and practicing money management are keys to long-term trading success.
