Analyzing trades on Tuesday:
EUR/USD on 30M chart
On Tuesday, EUR/USD was trading with low volatility for the most part of the day but accelerated its movement in the North American session. As a result, the European currency gained a few dozen more pips. In the course of the day, only one important report was published in the EU. The report on retail sales for September came in line with analysts' expectations. Therefore, this data could not have caused such a rise in the euro in the second half of the day. Still, the euro was going up which was rather surprising. The pair began to advance last Friday when the US revealed rather strong unemployment data. There were no important events on Monday and Tuesday. So what was driving the pair up? There is no answer to this question. What is more, everything that could have influenced the pair's trajectory this month has already happened. I doubt that the market is acting based on possible future events. So, the situation is very ambiguous.
EUR/USD on M5 chart
As we can clearly see on the 5-minute time frame, a strong movement began only at the start of the North American session. In the European session, the pair was trading flat. The first signal was formed in the afternoon. This was actually good for us as the pair could have formed numerous false signals while trading in the sideways channel in the first half of the day. Traders should have opened a long position after receiving a buy signal in the area of 1.0020-1.0034. Yet, this trade needed to be closed very soon as the signal was formed late in the evening. Still, beginners could have earned around 30 pips by closing this position manually.
Trading tips on Wednesday:
The pair continues to advance on the 30-minute chart although this rise may come to an end very soon. Currently, there is no clear trend, and the pair looks like it is going to trade in a sideways or a swing mode on higher time frames. There are still no strong drivers that can support the euro's uptrend in the medium term. Neither technical nor fundamental and geopolitical factors can ensure the euro's confident rise. On the 5-minute chart on Wednesday, it is recommended to trade at the levels of 0.9895, 0.9967, 1.0020-1.0034, 1.0093, 1.0123, 1.0156, and 1.0221. As soon as the price moves by 15 pips in the right direction, you should set a Stop Loss to breakeven. On Wednesday, there will be no significant reports or important economic events. However, judging by the first two weeks of the month, the market seems eager to trade and buy the pair even without any obvious reasons.
Basic rules of the trading system1) 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.