Analyzing Tuesday's trades:
EUR/USD on 1H chart
EUR/USD continued its corrective movement throughout Tuesday, which started a week ago. Despite breaching the descending trendline, we consider the current upward movement as a "correction." The euro has fallen quite well in the past few weeks, which aligns with our expectations, but it is a bit premature to consider that the downtrend has ended. The corrective phase may continue for a few more days or even a couple of weeks, but then we still expect the downtrend to resume. In general, the targets for the euro are around 1.00-1.02.
On Tuesday, neither the European Union nor the United States published any reports, and there were no significant events. Nevertheless, the market was much more active during the day than on Monday. The price moved approximately 78 pips from the low to the high. Since there were no events, we can confidently say that there were purely technical reasons for such a movement.
EUR/USD on 5M chart
Two signals were generated on the 5-minute timeframe. Both turned out to be quite strong, given the volatile movements. Initially, the pair settled above the 1.0767-1.0785 range, which acted as a buy signal. During the U.S. trading session, the pair reached the nearest target level at 1.0835, from which the price rebounded. This formed a sell signal, which also proved to be accurate and made it possible for beginners to earn. The first trade yielded approximately 25 pips of profit, and the second one around 20. The short position should have been manually closed.
Trading tips on Wednesday:
On the hourly chart, EUR/USD may undergo some bullish correction for a while, even though, for instance, on Tuesday, there were no macroeconomic and fundamental reasons for the euro's growth. We still anticipate a much stronger decline for the euro. Unfortunately, the pair has breached the trendline, and now traders do not have a clear reference point to maintain the downward trend.
The key levels on the 5M chart are 1.0568, 1.0611-1.0618, 1.0668, 1.0725, 1.0767-1.0785, 1.0835, 1.0896-1.0904, 1.0940, 1.0971-1.0981, 1.1011, 1.1043, 1.1091. On Wednesday, there are no significant events lined up in the European Union and the United States. Several speeches by representatives of the Federal Reserve and the European Central Bank are unlikely to trigger a strong market movement. We don't expect the minutes from the latest FOMC meeting to cause significant volatility.
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.
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