How to trade EUR/USD on May 4. Simple trading tips and analysis for beginners

The EUR/USD pair edged up throughout Wednesday. Several important reports were published during the day, but we cannot confirm that the market reacted to them in a logical manner. And we can't even say that they simply reacted either. In the morning, the European Union published an unemployment report, which unexpectedly decreased by 0.1%. In the second half of the day, strong ADP and ISM reports were released in the US. The unemployment report was ignored, as traders didn't react significantly to this report (the pair steadily crawled up all day), and the US reports should have triggered the dollar's growth, which we, of course, did not see. Therefore, once again, we witnessed the euro rise for no logical reason. The pair consolidated above the descending channel, but I already warned you that this would be quite easy and simple. In the evening, we have the results of the FOMC meeting, which may provoke strong market movements, but by that time, beginners should have already left the market. Or set a Stop Loss for any open trades.

On the 5-minute chart, it is clear that the movement was weak and steady. The price spent most of the day around the 1.1038 level. We can't really consider the breakthrough of this level, which happened during the US trading session, a strong buy signal. And it was the only one anyway. Beginners could have worked it out and opened a long position, and even made a small profit on the trade. But I believe that this should not have been done before the announcement of the results of the FOMC meeting and Fed Chairman Jerome Powell's speech. Open long positions can even be left as they are, setting a Stop Loss at breakeven.

On the 30-minute chart, the pair has once again traded higher after another unsuccessful attempt to correct. I have already reiterated that the upward movement has no basis, and I still hold the same opinion. However, now the pair is neither rising nor falling, the movements are absolutely illogical and random. By Thursday morning, the EUR/USD pair may be significantly away from the current price. On the 5-minute chart, consider levels 1.0792, 1.0857-1.0867, 1.0920-1.0933, 1.0965-1.0980, 1.1038, 1.1070, 1.1132, 1.1184, and 1.122. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. On Thursday, the European Union plans to summarize the results of the ECB meeting, and in the US, there is nothing interesting except for the secondary report on unemployment benefit claims. The market will be forced to work out two meetings at once, so movements during the day may turn out to be strong.

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.