FX.co ★ Trading plan for EUR/USD on November 15. Simple tips for beginners

Analyzing Tuesday's trades:

EUR/USD on 30M chart

EUR/USD showed new positive trades on Tuesday. It is quite challenging to describe it in words but it is clear that the euro rose and the dollar fell due to the US inflation data. Reports on the EU GDP or ZEW indices had no impact on the pair's movement. But what was in the inflation report that caused the dollar to plummet by 150 pips in just a few hours?

As prosaic as it may sound, there was nothing extraordinary in the inflation report. The Consumer Price Index decreased from 3.7% to 3.2% in October. This is certainly bad for the US dollar, but not so bad that it had to lose 150 pips in a few hours. We consider the market's reaction to this report absurd and illogical. No one could have predicted such a drastic movement, even if inflation had fallen to 3%.

EUR/USD on 5M chart

On the 5-minute chart, several trading signals were generated. However, none of them should have been executed by beginners. The first buy signal formed precisely at the time when the US inflation data was released, so there was no opportunity to execute it. When the price surpassed the 1.0767-1.0781 range, it was already too late to enter the market with long positions because no one would know that the pair's growth would be so strong. We could have seen a reversal, so it was not advisable to enter longs. The same applies to all subsequent buy signals.

Trading tips on Wednesday:

On the 30-minute chart, the corrective phase remains intact, and it extends the same movement due to the US inflation data. Despite the sharp increase, a correction is still a correction. Therefore, we expect it to end and resume the downtrend. Unfortunately, this month, US reports have been quite weak, preventing the pair from resuming its downward movement. The key levels on the 5M chart are 1.0526, 1.0568, 1.0611-1.0618, 1.0668, 1.0733, 1.0767-1.0781, 1.0835, 1.0871, 1.0901-1.0904, 1.0936, 1.0971-1.0981, 1.1011. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Wednesday, the EU will publish the industrial production report, and in the US, traders may look to the retail sales and the producer price index. All reports are secondary of importance. On Wednesday, the market will show us whether the upward movement was accidental.

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.