FX.co ★ Trading plan for EUR/USD on August 7. Simple tips for beginners

Analyzing Friday's trades:

EUR/USD on 30M chart

On Friday, the EUR/USD pair corrected higher and reached the level of 1.1038, which it has been favoring in recent weeks. Naturally, such a sudden and powerful movement could not happen out of nowhere (although it sometimes does). The "culprit" behind the rally was the NonFarm Payrolls report, which we have mentioned all week. It was slightly below the forecast, causing a substantial decline in the US dollar, which, however, was expected after its recent growth. In my opinion, nothing terrible has happened; the main thing is to avoid the resumption of the year-long uptrend, which would be entirely illogical.

Traders did not consider the unemployment rate and wage levels, but they should have. Unemployment actually fell from 3.6% to 3.5%, which was unexpected. And the Nonfarm Payrolls data did not turn out to be as disappointing as expected. Nevertheless, the dollar corrected, and that is what matters. There is not much more to add. We still expect the pair to fall and the US dollar to rise.

EUR/USD on 5M chart

Only two entry points on the 5-minute chart. The first one, a buy signal, formed when the US data was released, but since it allowed for both a rise and a fall in the US dollar, traders could enter a long position. Subsequently, the pair rose to the level of 1.1038 and rebounded from it. Here, beginners could close their longs, with a profit of about 40-50 pips. There was no need to open short positions since the sell signal was formed a couple of hours before the market closed for the weekend.

Trading tips on Monday:

On the 30M chart, the pair started to correct, but we still expect it to fall since it is significantly overbought in the long term and lacks significant fundamental reasons to start a new, strong growth. The key levels on the 5M chart are 1.0835, 1.0871, 1.0901-1.0904, 1.0971-1.0977, 1.1038, 1.1091, 1.1132-1.1145, 1.1184, 1.1241, 1.1279-1.1292. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Monday, there are no important events lined up in the EU and the US. Most likely, the pair will go through low volatility and volume, with a high probability of a flat.

Basic trading rules:

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.