FX.co ★ How to trade EUR/USD on May 24. Simple trading tips and analysis for beginners

Analyzing Tuesday's trades:

EUR/USD on 30M chart

On Tuesday, the EUR/USD pair edged down but only managed to hit its latest low. Volatility was low, which makes trading quite challenging. As a reminder to novice traders, it is extremely difficult to rely on good signals and profits when the pair moves only 50-60 pips in a day. Thus, the downtrend persists, and the euro continues to fall, but the nature of the movement is far from ideal.

Throughout the day, a significant amount of macroeconomic information was published. In particular, these are the PMIs in the services and manufacturing sectors of the European Union and the United States. Like clockwork, the manufacturing sector fell in May and dropped below the 50.0 level, which is considered negative, while the services sector remained above 50 or even went higher. The market only paid attention to the industrial sector, so the euro fell in the first half of the day and the dollar dropped in the second half. However, in general, these PMIs should not have a drastic impact on trader sentiment.

EUR/USD on 5M chart

On the 5-minute chart, trading was not favorable. The first buy signal turned out to be false and resulted in a loss of around 20 pips. This was followed by a sell signal at around the same level of 1.0792. On the bright side, this signal made it possible for novice traders to recover the loss from the first trade. The price then dropped to the nearest target of 1.0761, and the trade should have been closed as near as the target level as possible since it was approaching the evening and it was time to leave the market. In the end, you could gain around 20 pips from this trade.

Trading tips on Wednesday:

On the 30-minute chart, the EUR/USD pair continued moving downward, taking a small pause during the day. The downward trend has been ongoing for over a week, which aligns with our expectations. It's worth noting that the pair had been rising for no good reason for two months, and now it's time for a correction. In the near future, an upward correction may occur, but the clear downward channel indicates the continuation of the trend. On the 5M chart, Wednesday's key levels are 1.0607-1.0613, 1.0715, 1.0761, 1.0792, 1.0857-1.0867, 1.0918-1.0933. If the price moves 15 pips in the right direction, a stop-loss order can be placed at breakeven. In the European Union, European Central Bank President Christine Lagarde is scheduled to speak, and in the United States, the minutes of the latest Federal Reserve meeting will be released. The minutes will be released late in the evening, and they rarely contain important information. They can be reviewed on Thursday as well. Lagarde's speech is also scheduled for the evening, so there won't be anything interesting throughout the day that would affect the pair's movement.

Basic rules of the trading system:

1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.

2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.

3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.

4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.

5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.

6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.

How to read charts:

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

Red lines are channels or trend lines that display the current trend and show which direction is better to trade.

MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.

Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.

Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.