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The EUR/USD currency pair continued to fall on Wednesday without any correction after the collapse on Tuesday. We warned you in yesterday's articles that when the market turns to emotional trading, "accelerates", it can move in the same direction for several days in a row without even correcting. Given the fact that the euro's collapse from yesterday was not associated with macroeconomic statistics or "fundamentals", today one could well expect a continuation of the fall in quotes. Today a couple of reports still came at the disposal of traders. The European Union published an index of business activity in the construction sector in the morning, which turned out to be weaker than forecasts, and a little later - a report on retail sales, which also turned out to be lower than forecasts. Thus, traders had a formal basis for new short positions. Just like yesterday, these grounds can hardly be considered real and valid. Remember the last time two business activity indexes led to a collapse? Moreover, both simply declined without going below the "waterline" in the form of a level of 50.0, below which it is believed that a recession is beginning in the sphere! That is, we saw an ordinary decline in business activity, and the euro has updated 20-year lows!
There were very few trading signals on the 5-minute timeframe today. This is because the pair has not been at current price levels for 20 years, so there are no levels here. Yesterday it was possible to form the level of 1.0235, which is Tuesday's low, and today the levels of 1.0277 and 1.0162 have been added to it. However, it is obvious that only the level of 1.0235 could be used in trading, around which the only signal of the day was formed. Sell signal. Naturally, it should have been worked out with a short position, but since there was no target level from below, it was necessary to aim at manually closing the deal from the very beginning. This could be done, as usual, in the late afternoon. On average, about 45 points of profit could be made per trade, which is a very good result.
The new downward trend continues on the 30-minute time frame, but there is still no trend line or channel. Like the levels below. Thus, the euro may well continue to fall both on Thursday and Friday, but there are no benchmarks on the 30-minute timeframe right now. Thus, you should use the levels from the lower TF. On the 5-minute TF on Thursday, it is recommended to trade at the levels of 1.0162, 1.0235, 1.0277, 1.0354, 1.0383. When passing 15 points in the right direction, you should set Stop Loss to breakeven. No important events and reports are scheduled in the EU on Thursday. But the US will publish quite an important ADP report on changes in the number of employees in the private sector (similar to NonFarm Payrolls), as well as a report on applications for unemployment benefits. We believe that the first report still has a theoretical chance of being developed, while the second one does not.
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 US 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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