Analyzing Tuesday's trades:
EUR/USD on 30M chart
EUR/USD displayed a lot of confusion and a flat trend throughout Tuesday, with absolutely no clear direction. On Monday, we expected the pair to extend its bullish correction. Despite our medium-term expectation of a further decline in the euro and a rise in the dollar, corrections must occur from time to time, and it seemed like a good time to resume the upward movement on Monday. However, the market decided differently, pushing the pair lower by about 100 points in the absence of economic releases, and it simply seemed lost on Tuesday.
What's interesting is that there was a good reason to buy the dollar on Tuesday. The only report of the day, JOLTs Job Openings in the United States, turned out to be significantly stronger than expected and should have triggered a dollar rally. However, the currency did not run to the upside, and volatility was only 45 points. Needless to say, it didn't make much sense to trade on Tuesday.
EUR/USD on 5M chart
On the 5-minute chart, the pair spent most of the day between the levels of 1.0465 and 1.0491. It wasn't until later in the evening when the JOLTs report was published that the pair tried to break out of the sideways range, but it resulted in confusion and chaos. During the European session, traders could still try to work with the signals, but by the US session, it was pretty clear that we were facing a flat. Therefore, beginners could have opened a long position near the level of 1.0465 and a short near 1.0491. These two trades brought in a total profit of about 20 points. It was a decent amount of profit considering the fact that volatility was just 45 points.
Trading tips on Wednesday:
On the 30-minute chart, the pair has not definitively ended its corrective rise. In the medium term, we anticipate the euro's further decline, but in the next few days, the pair may start an upward movement (the corrective move on Thursday and Friday was too weak). The key levels on the 5M chart are 1.0391, 1.0433, 1.0465, 1.0491, 1.0517-1.0533, 1.0611-1.0618, 1.0673, 1.0733, 1.0767-1.0781, 1.0835. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Wednesday, there are quite a number of different events and reports in the European Union. These events include the Services PMI, Producer Price Index, Retail Sales, speeches by European Central Bank President Christine Lagarde and ECB Vice President Luis de Guindos. However, all of these events have a low level of significance. Market participants will keep an eye on the US ISM Services PMI.
Basic trading rules:
1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
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 are channels or trend lines that display the current trend and show which direction is better to trade.
MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
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