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The EUR/USD currency pair began to correct both against the upward movement on Tuesday and against the new upward trend on Wednesday. Now there is an ascending trendline on the chart, so novice traders have a clear guideline for maintaining an upward trend. In the near future, the price may work it out. If there is a rebound, then the upward trend will continue. If it is overcome, then the fall to the level of 1.0354 will resume, from where the last growth of the pair began. The positions of the European currency remain very shaky. Yes, in the last two trading days, the pair showed growth, but this growth was very doubtful, not supported by clear fundamental or macroeconomic events. It turns out to be quite a paradoxical situation. On the one hand, the euro should have corrected strongly to the upside for a long time, since the downtrend is already very long and strong. On the other hand, there is practically no reason for this. In such a situation, it is better to really rely on technical analysis. The European Union just released its final estimate of inflation for April, which turned out to be 0.1% lower than the first one. The final value is 7.5%. The market did not react to this event in any way. There were also speeches by European Central Bank President Christine Lagarde and Federal Reserve Chairman Jerome Powell last night, but they did not provoke any reaction from traders either.
The technical picture is still very simple on the 5-minute timeframe. There are very few levels and, as a result, there are few trading signals. Recall that the pair is now close to its 20-year lows, so there cannot be many levels a priori. Volatility remains quite high (on average), but again it doesn't really matter now. As a result, only one buy signal was formed on Wednesday, when the price rebounded from the 1.0490 level in the middle of the US trading session. This signal was formed rather late, so it could not be worked out. And then the pair came close to the level of 1.0490 only once during the European trading session, but did not reach it by 4 points, which is too much to consider an error. Thus, no trading deals should have been opened today. It should also be noted that today's movement was not the best.
An ascending trend line has formed on the 30-minute timeframe, so for the time being you can count on the strengthening of the European currency (until the pair consolidates lower). Unfortunately, there are still few reasons for the euro to rise, which means that the resumption of its fall is a very real option, even if it is already very low. On the 5-minute TF it is recommended to trade at the levels of 1.0354, 1.0389, 1.0471-1.0490, 1.0564-1.0576, 1.0636. When passing 15 points in the right direction, you should set Stop Loss to breakeven. The European Union will publish a report on monetary policy, but usually it does not interest the market. This is a rather formal document that does not usually contain important information. On the other hand, we only have secondary reports in the US - applications for unemployment benefits, sales in the secondary housing market. Thus, one should not wait for the market to react to the statistics. However, volatility may remain high.
1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal.
2) If two or more deals were opened near a certain level based on false signals (which did not trigger Take Profit or the nearest target level), then all subsequent signals from this level should be ignored.
3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading.
4) Trade deals are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals must be closed manually.
5) On the 30-minute TF, using signals from the MACD indicator, you can trade only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as an area of support or resistance.
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.
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 speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
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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