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Analysis of previous deals:
30M chart of the EUR/USD pair
The EUR/USD pair was trading with a rather noticeable decline on Tuesday, although it is quite difficult to find its reasons. On the one hand, the pair cannot always stand in one place in the literal sense of the word. It needs to move somewhere anyway. Sometimes this movement takes place with very weak volatility, sometimes, like today, it is strong. Thus, today's decline in the quotes of the euro/dollar pair by almost 90 points in total is nothing more than a coincidence or a successful combination of circumstances for the US dollar. Let's immediately pay attention to the macroeconomic reports of the day. Today, the following were published: the index of business sentiment from the ZEW Institute for the European Union, retail sales for the European Union, as well as the Markit and ISM business activity indices in the United States. Even without going into details and not paying attention to the actual values of these reports, we can say with confidence that none of them affected the course of trading in any way. Simply because after these reports were published, the price always moved in the opposite direction to the nature of the report, or even stood still. There is still no trend line or channel on the 30-minute timeframe. Thus, this schedule still practically does not carry any practical sense. All trading should be conducted on the lower timeframe.
5M chart of the EUR/USD pair
A lot of interesting signals have been formed on the 5-minute timeframe today. Actually, this is not surprising, since the price went from a low to a high of about 88 points, that is, a priori it crossed quite a lot of levels. It all started early in the morning, when the price settled above the level of 1.1884, and this was the first signal of the day. Unfortunately, it is false. The price almost immediately turned down and settled below the level of 1.1884, which was already a sell signal. Short positions turned out to be much more profitable, as the price went down about 40 points in total, going beyond 1.1851 without any problems. Thus, it was necessary to close the short position around the level of 1.1837. The profit on it is equal to 40 points, and the loss on the first transaction is 12 points. Further, a rebound followed from the level of 1.1837(which has already lost its relevance after today), which could be regarded as a buy signal. This signal also turned out to be false and brought a loss of 15 points, as the price eventually settled below the level of 1.1837. But at the moment when it settled below 1.1837, it was also necessary to open a short position, which eventually had to be closed around this time, since the price did not reach the level of 1.1800(and 1.1806), so it brought around 10 points of profit. As a result, novice traders could earn about 23 points today.
Trading tips for Wednesday:
The downward trend is still present on the 30-minute timeframe, but only formally. The downward movement is as weak and uncertain as possible. At this time, there is still no trend line or channel, so it is not recommended to use the MACD indicator to track signals before they are formed. On the 5-minute timeframe, it is recommended to trade from the levels of 1.1786, 1.1807, 1.1800, 1.1851 and 1.1884. Take Profit, as before, we set at a distance of 30-40 points. Stop Loss - to breakeven when the price passes in the right direction by 15-20 points. At the 5M TF, the target can be the nearest level, if it is not located too close or too far away. Once located – then you should act according to the situation. The European Union is set to publish only the forecast of the European Commission on the economy, and in the United States – the minutes from the last Federal Reserve meeting. We believe that they will not affect the course of trading of the euro/dollar pair in any way.
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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