How to trade EUR/USD on January 6. Simple trading tips and analysis for beginners

EUR/USD fell on Thursday, as I expected. I previously mentioned that the pair returned to the horizontal channel on Wednesday but it would be unlikely for the flat to resume. And this hypothesis was confirmed today. The macroeconomic background was not very strong on Thursday, but we received quite a hawkish report from the Federal Reserve, which could provoke the dollar's growth in the US trading session. On top of that, the US ADP report came out stronger than expected, and so did the US services PMI. I don't think that any of these events as an individual report could have sent the dollar up on Thursday, but taken together, they might have pushed the USD higher. Plus, don't forget that I have been waiting for a strong bearish correction for almost three weeks, which is justified by the current technical picture.

The pair was standing in one place during the Asian and European trading sessions. The greenback only started to strengthen during the US session. There were two buy signals in the morning, both were rebounds from the 1.0587-1.0607 area. In both cases, the price failed to go up 15 points. Therefore, there was only one long position and it closed with a rather large loss, when the price fell below the area of 1.0587-1.0607. However, the sell signal that was formed right away made it possible for beginners to win back a bit. The pair quickly found itself near the target level of 1.0535, from which it bounced. Unfortunately, the rebound was very strong, so the short position closed with profit at around 20 pips. And it was not advisable to open a long position with the same signal, because at the time of formation the price had already passed half of the way to the nearest level. The last sell signal near 1.0535 was formed too late in time and it shouldn't have been used.

The pair resumed the downward movement on the 30-minute chart, leaving the horizontal channel for the second time. I expect the euro to fall further. On Friday, the market sentiment will depend on the macroeconomic background, so there could be a strong uptrend. On the 5-minute chart on Friday, it is recommended to trade at the levels 1.0354, 1.0391, 1.0433, 1.0465-1.0483, 1.0536, 1.0587-1.0607, 1.0657-1.0668. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. We will receive the EU inflation report for December and in the US, we have the Nonfarm, unemployment, wages and ISM index. The day will be quite volatile and could prove to be interesting. The pair might change its direction several times during the day.

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.

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.