FX.co ★ Trading plan for EUR/USD on February 20. Simple tips for beginners

Analyzing Monday's trades:

EUR/USD on 1H chart

EUR/USD showed absolutely no movements on Monday, not even weak ones. Volatility did not exceed 30 pips. The pair generally moved sideways. There were no reports, not even secondary ones, and U.S. markets were closed for the President's Day holiday. Therefore, the technical picture has not changed.

Formally, the price surpassed the descending trendline, which seems to indicate a shift to an uptrend, but this is not the case. Such breakthroughs are not considered in a flat market. The price repeatedly tried to overcome the level of 1.0785 but ultimately failed to do so. Therefore, the downward movement may be restored. The problem is that throughout the current week, the fundamental and macroeconomic background will be very weak, so we don't expect strong movements.

EUR/USD on 5M chart

The 5-minute timeframe illustrates a better picture. The pair stayed within a 20-pip range for the entire day. Yes, there were a few shallow consolidations above and below the range of 1.0767-1.0781, but we can't even call these consolidations as "signals". We already mentioned that volatility could be very weak. Therefore, novice traders did not have any good reason to enter the market.

Trading tips on Tuesday:

On the hourly chart, the downtrend remains intact. We still expect the euro to show a pronounced decline, as the fundamental and macroeconomic background cannot support it. Unfortunately, the price has surpassed the trendline, and now traders have no clear reference point for maintaining the downtrend, except for the level of 1.0785. A consolidation above it can be used for small purchases of the euro.

The key levels on the 5M chart are 1.0568, 1.0611-1.0618, 1.0668, 1.0725, 1.0767-1.0785, 1.0835, 1.0896-1.0904, 1.0940, 1.0971-1.0981, 1.1011, 1.1043, 1.1091. On Tuesday, there are no events lined up in the European Union or the U.S., not even secondary ones. We can expect another dull day. Volatility may be very weak.

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, after 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 trendline 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.