FX.co ★ Trading plan for EUR/USD on December 5. Simple tips for beginners

Analyzing Monday's trades:

EUR/USD on 30M chart

On Monday, EUR/USD continued to decline after consolidating below the ascending trendline. It is logical for the pair to do so at the moment, and it also aligns with our expectations. Unfortunately, the bullish correction against the global trend was initially too weak and unconvincing, then it became excessively strong. However, almost all of the U.S. economic reports for the month of November turned out to be weaker than expected, which fueled the dollar's fall. Without such data, there were no reasons for the dollar to fall.

Yesterday, there were no significant macroeconomic or fundamental events. European Central Bank President Christine Lagarde delivered another speech, recounting the story of how her son lost all his investments in cryptocurrency. The market was not interested in this story, and the euro was sold because it remains overbought and illogically expensive.

EUR/USD on 5M chart

On the 5-minute chart, two trading signals were generated. The first signal was formed overnight, but by the opening of the European session, traders could open short positions since the price had not moved far from the signal formation point. During the U.S. session, the price consolidated below the 1.0835 level, forming the second sell signal. The short position could be manually closed in the evening as no closing signals were formed. Approximately 55 pips could be earned on the short position.

Trading tips on Tuesday:

On the hourly chart, EUR/USD finally started to trade lower and now it has a real chance to form a downtrend. EUR/USD has breached the trendline, the pair is overbought, and the eurozone inflation data puts pressure on monetary policymakers to halt their string of interest rate hikes. Therefore, we advise you to consider selling. The euro has the potential to fall by a few hundred pips more.

The key levels on the 5M chart are 1.0568, 1.0611-1.0618, 1.0668, 1.0733, 1.0767-1.0781, 1.0835, 1.0896-1.0904, 1.0940, 1.0971-1.0981, 1.1011, 1.1043, 1.1091. Today, we can look forward to several interesting events worldwide. Services PMI data will be released in the EU and Germany. From the U.S., traders will keep an eye on the crucial ISM Non-Manufacturing PMI, as well as the ADP Nonfarm Employment Change report. The ISM report is crucial, and others may trigger a market reaction of 20-30 pips.

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.