Analyzing trades on Tuesday:
EUR/USD on 30M chart
On Tuesday, EUR/USD was trading as usual. While in the European session it was almost idle, in the North American session the pair showed strong movements. Notably, there were no important reports or events throughout the day either in the US or the EU. So, the rise of the European currency in the first half of the day could not be attributed to any news or events. This was quite surprising. However, I always say that an unexplained trend movement is always better than a flat or a swing movement which we could see on Monday. Therefore, you should keep in mind that the foreign exchange market can be active even if the economic calendar is empty. So, the euro is slowly rising although this growth cannot be called strong, judging by higher time frames. Yet, even such a moderate rise is better than a flat market.
EUR/USD on 5M chart
On the 5-minute chart, the first sell signal was formed at the very start of the European session near the level of 0.9877. Later on, the price approached this level several times. It managed to pass 15 pips that are necessary to set a Stop Loss to breakeven only closer to the New York session. So, this short trade was closed with zero profit. After that, a buy signal was formed. As a result, the price advanced to the level of 0.9952 and broke above it. However, it couldn't move higher and settled below 0.9952 right away. This was a sell signal meaning that long positions should have been closed. This trade generated a profit of 45 pips. The sell signal should not have been followed as it was formed quite late. Given the daily volatility rate of 130 pips and not-so-accurate signals, beginners could have gained a nice profit that day.
Trading tips on Wednesday:
On the 30-minute time frame, the pair continues to display erratic and unpredictable movements. It was fluctuating wildly on Monday and was trading flat in the first half of the day on Tuesday. Then, it stayed within the trend for the remaining session. So, anything could happen on Wednesday. We hope that the trend movement will stay in place as it is better than the flat. Yet, there is no guarantee that there will be a trend on Wednesday. On the 5-minute chart on Wednesday, it is recommended to trade at the levels of 0.9636, 0.9709, 0.9756, 0.9807, 0.9877, 0.9952, and 1.0020-1.0034. As soon as the price passes 15 pips in the right direction, set a Stop Loss to breakeven. No important events are expected either in the US or the EU on Wednesday. So, it is very likely that the pair will be trading flat or in a swing mode. The home sales report in the US may not influence the market at all.
Basic rules of the trading system:
1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.
2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.
3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.
4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours when all positions must be closed manually.
5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.
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 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, and 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 patterns (channels and trendlines).
Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.