FX.co ★ How to trade EUR/USD on October 21, 2022. Simple trading tips and analysis for beginners

Analyzing trades on Thursday:

EUR/USD on 30M chart

EUR/USD started a new upward cycle on Thursday. It seems that there was no logic behind its movements even on the 30-minute chart. The day before, the quote settled below the ascending trendline and the next day, it started a new round of growth. This upside movement looks absolutely unfounded as there were no important macroeconomic reports both in the US and the UK. If we take a closer look at the North American session, we can see that the US dollar dropped twice intraday after the publication of the US data. The first report on initial jobless claims turned out to be neutral which means it couldn't affect the trajectory of the pair. Then, the data on existing home sales went out and came fully in line with the forecast. Therefore, it could have hardly caused the fall of the greenback by 50 pips. So, the situation is puzzling as the market reacted to something but we don't know what it was. It seems that the euro has been trading without any logic behind its trajectory for the past two weeks.

EUR/USD on 5M chart

As we can clearly see on the 5-minute chart, the trade was absolutely erratic. The price was stuck in the sideways channel for most of the European session but then a roller coaster started later in the US trade. Of course, it was very hard to gain profit amid such wild movements. The first buy signal was formed when the price broke through the level of 0.9807. After that, it moved up by more than 15 pips. A Stop Loss should have been placed to breakeven so that the trade was closed there when the price moved below 0.9807. This sell signal could have been followed as well. However, this time, the pair failed to pass 15 pips in the right direction. So, the trade closed with a loss. All other signals emerging near the 0.9807 level should have been ignored.

Trading tips on Friday

On the 30-minute time frame, the pair displayed erratic and unpredictable movements. We hope that this won't last for long but it seems that this trading mode may persist for some time. The European currency is very likely to decline. Yet, neither bears nor bulls are ready to act now. On the 5-minute chart on Friday, it is recommended to trade at 0.9636, 0.9709, 0.9807, 0.9845, 0.9877, 0.9952, and 1.0020. As soon as the price moves by 15 pips in the right direction, set the Stop Loss at breakeven. There will be no important events on Friday either in the US or the EU. So, traders will have no drivers to follow. The euro/dollar pair may continue to trade unpredictably, switching from the flat mode to sharp fluctuations.

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.