EUR/USD on 30M chart
On Wednesday, EUR/USD was trading within the sideways channel of 1.1950 - 1.1975 for most of the day. The movement in the channel started at night. Since we do not recommend trading at night, we continued trading at the beginning of the European session. Actually, there is nothing to analyze today. During the day, the euro/dollar pair did not approach either the nearest support level of 1.1915 or to the nearest resistance level of 1.1990. Thus, there was not a single important pullback or a breakout during the day. The MACD indicator has been holding near the zero level for most of the day and its correlation with the pair is very weak. When the indicator went down, then the price moved sideways. Anyway, later in the day, a buy signal was formed after the MACD indicator reversed to the upside. At the time of the formation of this signal, the indicator dropped sufficiently to the zero level, so it was possible to open a buy deal. For example, a little earlier the MACD indicator had already turned upwards, but then it was still quite far from the zero level. However, there is one "but" here. A buy signal was formed almost in the evening. For the whole day, the pair was unable to show a more or less strong movement. As we do not recommend trading at night, it would be possible to keep this positions open for just 1 to 3 hours. So, we were unlikely to earn anything at all on this deal. Thus, it was not necessary to open it. If any of the beginners have opened a trade, then it could be closed manually with a small profit.
EUR/USD on 5M chart
Now let's take a look at the 5-minute time frame. Here, the flat channel that persisted for most of the day is clearly seen. Indeed, the pair could not leave the sideways channel of 25-pips during the day, and only in the evening it consolidated 10 pips higher. Neither Jerome Powell's nor Christine Lagarde's speeches helped move the pair. On Wednesday, the price did not even approach the nearest levels on the 5-minute time frame where there are more levels found, so no signal was generated here either. Consequently, novice traders did not have a single reason to enter the market. However, this is for the best. In a flat trade, all indicators and patterns usually form false signals that only lead to losses.
How to trade on Thursday:
On Thursday, we recommend trading upwards on the 30-minute time frame, as the uptrend currently continues. The ascending trendline supports the bullish trade. The MACD indicator is currently located well above zero. This means that novice traders need to wait for it to decline to the zero level. After that, it will be possible to track the formation of new buy signals. Also, beginners can trade from the levels of 1.1990 and 1.1915, aiming for a rebound or a breakout in both directions. Take Profit should be set at the distance of 30-40 pips. Stop Loss should be moved to a breakeven point when the price passes 15-20 pips in the right direction. On the 5-minute time frame, the situation is now very difficult. Here, a dozen of levels can be considered the key levels, but they are all located very close to each other. This is due to the sideways channel that the pair has been holding in for the past week. Therefore, it is now especially important that the signal is clear. If the signal is vague, then it is better not to enter the market. Most of the levels will be removed soon. Tomorrow, markets will focus on reports on retail sales, industrial production, and initial jobless claims in the US. These are not the most significant publications, but still we should keep them in mind.
On the chart
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are channels or trendlines that display the current trend and show in which direction it is better to trade now.
The MACD indicator (14, 22, and 3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend patterns (channels and trendlines).
Important announcements and economic reports that you can always find on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exit the market in order to avoid sharp price fluctuations.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
The material has been provided by InstaForex Company - www.instaforex.com