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How to Trade the EUR/USD Pair on August 28? Simple Tips and Trade Analysis for Beginners

Analyzing Tuesday's Trades:

EUR/USD on 1H Chart

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The EUR/USD pair stood in the same place all day on Tuesday. The macroeconomic backdrop was relatively weak, and there were no fundamental developments. Among the macroeconomic data, we can only highlight the German consumer confidence index, which plunged to -22 points, and the GDP report for the second quarter, which predictably came in at -0.1% quarter-on-quarter. Thus, these data could not support the euro, nor did they exert any pressure on it. Once again, weak reports for the euro did not provoke any reaction from the market.

Regarding fundamental events, several Federal Reserve representatives spoke, each indicating that the key interest rate might be lowered in September. They completely reiterated Fed Chair Jerome Powell's rhetoric. Oddly, the dollar did not fall even further in response to these statements.

EUR/USD on 5M Chart

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In the 5-minute time frame, trading on Tuesday was marked by low volatility and was exclusively sideways. As a result, no trading signals were generated throughout the day.

How to Trade on Wednesday:

EUR/USD continues to form an upward trend supported by a trend line in the hourly time frame. We believe the euro has already factored in all the bullish factors, so we do not expect further upward movement. However, the market again shows it is ready to react to almost any event by panic selling the dollar. And even if there are no events, it is still prepared to sell the dollar. We can expect a drop in the pair after a breakout below the trend line.

On Wednesday, novice traders might anticipate a decline since the price cannot rise forever. However, it is important to understand that there is a strong uptrend. If the price remains below 1.1184, a slight decline towards 1.1132 can be expected.

The key levels to consider on the 5M time frame are 1.0726-1.0733, 1.0797-1.0804, 1.0838-1.0856, 1.0888-1.0896, 1.0940, 1.0971, 1.1011, 1.1048, 1.1091, 1.1132, 1.1184, 1.1275-1.1292. On Wednesday, no significant or even secondary events are scheduled in the European Union or the United States. Therefore, a flat or slight decline in the European currency may continue.

Basic Rules of the Trading System:

1) The strength of a signal is determined by the time it takes for the signal to form (bounce or level breakthrough). The less time it took, the stronger the signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be ignored.

3) In a flat market, any currency pair can form multiple false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.

4) Trades should be opened between the start of the European session and midway through the U.S. session. After this period, all trades must be closed manually.

5) In the hourly time frame, trades based on MACD signals are only advisable amidst substantial volatility and an established trend confirmed by a trendline or trend channel.

6) If two levels are too close to each other (5 to 20 pips), they should be considered support or resistance.

7) After moving 15 pips in the intended direction, the Stop Loss should be set to break even.

What's on the Charts:

Support and Resistance price levels: targets for opening long or short positions. You can place Take Profit levels near them.

Red lines: channels or trend lines that depict the current trend and indicate the preferred 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 source of signals.

Important speeches and reports (always noted in the news calendar) can profoundly influence the movement of a currency pair. 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.

Beginners should always remember that not every trade will yield profit. Developing a clear strategy and effective money management is key to success in trading over a long period.

The material has been provided by InstaForex Company - www.instaforex.com

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