Trading plan for EUR/USD on January 31. Simple tips for beginners

EUR/USD showed very weak volatility on Tuesday and, in general, a lack of desire to move. The range from the day's low to the peak was only 45 pips. We don't need to explain why this is small. With such low volatility, intraday trading essentially makes no sense. What profit can one expect when the pair has moved only 45 pips in a day?

Surprisingly, the eurozone released two reports that could have influenced traders to become more active. In the fourth quarter of 2023, seasonally adjusted GDP remained stable in both the euro area and the EU, but the market expected a decrease of 0.1%. Therefore, we came to the conclusion that the report turned out to be more positive than anticipated. This report could have triggered the euro's rise. However, a similar report for Germany coincided with the forecasted values and showed a decline of 0.3%. And this report probably prevented the market from buying the euro.

Overall, the downtrend is still intact. The new descending trendline clearly suggests this. The next few days will be hectic in terms of macroeconomic and fundamental background, so one can expect stronger movements. However, at the same time, there might be more confusion.

On the 5-minute timeframe, three buy signals were formed around the same level of 1.0835. Initially, the price moved above it, and then bounced off it twice from above. Take note that the price did not even rise by 10 pips each time. Therefore, traders could only open one long position, and it could be closed anywhere, as it did not matter. The profit level for the trade was either zero or something low.

On the hourly chart, EUR/USD seems ready to resume the downward trend, and it finally left the sideways channel after a two-week break. Therefore, we expect the euro to fall further, as before.

On Wednesday, we expect the pair to show a sluggish downward movement. There are hardly any important events during the day, so volatility may remain low. However, we have the FOMC meeting in the evening, so volatility may sharply increase. You may consider short positions with targets at 1.0781 and 1.0733 when corresponding signals are formed.

The key levels on the 5M chart are 1.0611-1.0618, 1.0668, 1.0733, 1.0767-1.0781, 1.0835, 1.0896-1.0904, 1.0940, 1.0971-1.0981, 1.1011, 1.1043, 1.1091, 1.1132-1.1145, 1.1184. On Wednesday, inflation, unemployment, and retail sales reports will be published in Germany. From the US docket, we can look forward to the ADP report and the FOMC meeting. We expect strong movements during the US trading session, which are difficult to predict. If you are in the market by the time of the FOMC meeting, it is best to set stop loss to breakeven.

1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.

4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.

5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.

6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.

Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.

Red lines represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.

The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.

Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.

Beginning traders should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.