Analyzing Wednesday's trades:
EUR/USD on 30M chart
EUR/USD did not show any notable movements on Wednesday. The volatility of the day is currently 36 pips. It is clear that it wouldn't have made sense to enter the market with such low volatility. The market has signaled from the start of the day that it does not intend to make any trading decisions ahead of the results of the Federal Reserve meeting. Although the market does not expect much from the Fed at this time, there is always a chance of surprises. Therefore, the market must have been waiting to ensure there are no surprises before they make any trading decisions.
As a result, we could not draw any new conclusions from the day. The pair could be at a distance of 100 pips from the current price in just a couple of hours. Therefore, it would be more appropriate to draw conclusions on Thursday morning or during the day. The European Central Bank (ECB) meeting will announce the results of its meeting by then.
EUR/USD on 5M chart
On the 5-minute chart, it was clear that the pair remained stagnant throughout the entire day. The price repeatedly bounced from the 1.0767-1.0781 range, and in the most positive scenario, it moved up by 20 pips. Therefore, a stop-loss should have been set at breakeven for a long position. Consequently, beginners could not incur losses. If anyone was still in the market, it might be better to exit or set a stop-loss in case the price sharply declines after the announcement of the FOMC meeting results.
Trading tips on Thursday:
On the hourly chart, EUR/USD continues to form a downtrend. Despite having a good chance of correcting higher, we believe that the downtrend is not over. This week, the pair may rise since there will be many significant fundamental events. However, overall, we believe that the pair should fall as the euro has no good reason to justify a stronger upward movement than a correction.
For beginners, we suggest keeping a close eye on the 1.0767-1.0781 range. However, by morning, the price may be far from this range, so it is also important to monitor the nearest levels listed below.
The key levels on the 5M chart are 1.0568, 1.0611-1.0618, 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. On Thursday, the European Central Bank policy decision, the Bank of England meeting, ECB President Christine Lagarde's speech, and several less important reports in the United States will garner investor interest. The day potentially holds excitement for us.
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, post 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 trend line 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.
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