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Analysis of previous deals:
30M chart of the EUR/USD pair
The EUR/USD pair continued the upward correction that started on Wednesday. The MACD indicator did not generate any sell signals during the day. It only turned down in the evening, while being well below the zero level. However, this signal was formed at night, plus it was weak. The pair's quotes moved up during the rest of the day, therefore, given the continuing downward trend, only short positions should have been considered. Volatility during the day has been quite "average", only around 60 points. The price continues to move towards the downward trend line and so far it looks as if this trend line will be broken. The 1.1746 level failed to provide any resistance to the bulls. Therefore, the downward trend is still preserved, but when the trend line is overcome, it will change to an upward trend. And this could happen tomorrow.
5M chart of the EUR/USD pair
Now let's take a look at the 5-minute timeframe. Several macroeconomic reports were published during the day, the most important of which were marked in the chart. Let's start with the first report that was published at the European trading session – the index of business activity in the manufacturing sector. The value of this indicator exceeded the forecast by only 0.1 and reached 62.5. This, of course, is a very high value, much more than the minimum required 50.0, but the deviation from the forecast was so small that the reaction of traders could not be a priori. The report simply did not surprise them in any way. Meanwhile, the bulls began to attack the pair and it started an upward movement, systematically rising to the 1.1746 level. This level was initially tested almost at the opening of the US trading session and the rebound from this level turned out to be false. Moreover, it was not clear, so it was not necessary to open short positions near it. The price came close to this level in the middle of the European session, but did not work it out, at the end of the session, it rebounded off it, but not clearly. Later, the quote surpassed this level, and the upward movement continued.
The second most important report of the day was published at the beginning of the US session and it is marked with the second tick in the chart. This is the data on applications for unemployment benefits in the United States. Both indicators (primary and secondary applications) slightly exceeded the forecast values, but again only slightly, without causing any emotions among market participants. The latest third report – the most important – the ISM index for the US manufacturing sector was published a little later and was even stronger than its previous value - 64.7 against 60.8. Thus, the forecast and the previous value were seriously exceeded, so a downward movement could be expected. At the same time, the pair more or less accurately reached the 1.1760 level and even rebounded from it. Therefore, at this point one could finally open short positions. The target was very close – the 1.1746 level - and the day's trend was definitely to the upside. Therefore, it was not necessary to count on a strong downward movement. As a result, the pair went down after the signal appeared, only by about 15 points, which was enough to set the Stop Loss to breakeven and worked just an hour later. Furthermore, the 1.1760 level was already overcome, but after passing up 50 points with an average volatility of 60 points, and even at the end of the day, it was clearly not necessary to open long positions.
How to trade on Friday:
We recommend trading on the 30-minute sell timeframe on Friday, as the downward trend continues. The MACD indicator is already very high and may start to run down, especially tonight. Therefore, it is best to wait for the price to rebound from the trend line and sell the pair. Or wait for it to return to the 1.1746 level, rebound from it and buy the pair. Take Profit, as before, is set at a distance of 30-40 points. Stop Loss to break even when the price passes in the right direction 15-20 points. You can highlight the levels 1.1760 and 1.1805 on the 5-minute timeframe, from which rebounds or surmounts can occur. As before, the main thing is that the signal is clear. If the signal is not clear, then it is better not to enter the market. Tomorrow, the US will publish very important reports on the unemployment rate and NonFarm Payrolls. They will come out at the same time, so the market reaction may be strong. You need to be ready for a reversal and increase in movement.
On the chart:
Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator (14,22,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).
Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
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