FX.co ★ Trading plan for EUR/USD on October 23. Simple tips for beginners

Analyzing Friday's trades:

EUR/USD on 30M chart

EUR/USD gradually corrected higher on Friday. The main thing is that the corrective phase remains intact. We have repeatedly mentioned that we don't expect a pronounced correction but we anticipate a second corrective phase, which is what we are seeing at the moment. Trading with the current upward movement is challenging on any timeframe due to its relatively weak nature. For example, on Friday, the pair's volatility was only 38 pips. This makes it increasingly difficult to trade even on the shortest time frames. This is certainly a correction.

There were no significant reports or important fundamental events on Friday. The events and reports that occurred throughout the week had no impact on the market's corrective sentiment. Therefore, the correction is purely technical, and once it ends, we expect the downtrend to resume. The ascending trend line is weak, but it could signal the end of the correction.

EUR/USD on 5M chart

The pair did not form any trading signals on the 5-minute chart. The movements were so weak that the price failed to reach any of the levels. Therefore, it was better not to trade.

Trading tips on Monday:

On the 30-minute chart, the pair resumed its upward movement, which could be sharp and unstable – this is the correction. We've consistently articulated our anticipation of a decline in the euro over the medium term. However, we were also factoring in a more pronounced correction. The key levels on the 5M chart are 1.0391, 1.0433, 1.0451, 1.0483, 1.0533, 1.0559, 1.0611-1.0618, 1.0673, 1.0733, 1.0767-1.0781, 1.0835. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Monday, the economic calendar is basically empty. Therefore, the EUR/USD pair will likely go through low volatility and the sideways movement will persist.

Basic trading rules:

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, post 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 trend line 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.

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 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.