FX.co ★ Trading plan for EUR/USD on August 31. Simple tips for beginners

Analyzing Wednesday's trades:

EUR/USD on 30M chart

EUR/USD raced higher on Wednesday. For two days in a row, the euro's mini-rally is linked to economic reports. At least three reports were released on Wednesday, which could influence the pair's movement. Since all of them were released within half an hour, it was quite challenging to determine whether only one of them affected the dollar's decline or all of them collectively. However, since each individual report supported the euro, it isn't particularly crucial.

German inflation dipped slightly in August. The US GDP in the second quarter was revised downward compared to the initial estimate. The number of new jobs from ADP was several tens of thousands below forecasts. As we can see, none of the day's influential reports was on the dollar's side. Slightly lower-than-expected easing of inflation in Germany only increases the chances of prolonged monetary tightening in the European Union, for those who may not understand. Hence, the pair's growth and the US dollar's decline on Wednesday were entirely logical and justified. However, we already mentioned that an upward correction is possible this week due to the strong macroeconomic background.

EUR/USD on 5M chart

Several trading signals were formed on the 5-minute chart. The first sell signal turned out to be false. The price bounced off the 1.0871 level but the pair couldn't even fall by 15 pips. Thus, the trade closed at a slight loss when the price settled above the 1.0871 level. Then the pair continued to rise for a long time, with the macroeconomic background fully supporting it. Hence, beginners could simply maintain long positions. The euro stopped rising around the 1.0936 level, where a sell signal was formed. Profits from the long positions amounted to about 45 pips, which offset the loss from the first trade and allowed for a profit. The last sell signal yielded another 15-20 pips.

Trading tips on Thursday:

On the 30M chart, the pair started an upward correction. From our perspective, the decline of the euro remains the most justified and logical course of action in the medium-term perspective, irrespective of the macroeconomic backdrop. Therefore, once the correction ends, we expect the euro to start another downward movement. The key levels on the 5M chart are 1.0673, 1.0733, 1.0767-1.0781, 1.0835, 1.0871, 1.0901-1.0904, 1.0936, 1.0971-1.0981, 1.1011, 1.1043. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Thursday, Germany will release reports on retail sales and unemployment, while the EU will publish inflation data, which is the most influential report this week in the eurozone. Meanwhile, several secondary reports will be published in the US. Among them are personal income and consumer spending.

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.