Analysis of previous deals:
30M chart of the EUR/USD pair
The EUR/USD pair continued to move down on Friday, however, volatility has already decreased compared to Wednesday and Thursday. Nevertheless, it was still high (for the EUR/USD pair), as it reached 79 points. Quotes bounced from the level of 1.1924 twice during the day, which is the corrected level of 1.1915. Simply put, on Friday, the level was 1.1915, not 1.1924. However, in any case, we only consider signals from the MACD indicator on the 30-minute timeframe, which are formed in a clear trend movement. There is a trend now, but it is so strange and unstable that we still do not recommend trading using the MACD indicator. At this time, despite the strong movement, it is impossible to form either a trend line or a channel, and the movement is practically recoilless, so the MACD indicator will not generate strong signals anyway. In addition, the reasons for such a strong growth of the US dollar raise questions. Recall that the downward movement began after the Federal Reserve meeting on Wednesday, although the US central bank did not take any serious decisions and did not make such serious statements that the dollar rose by 250 points in 2.5 days.
5M chart of the EUR/USD pair
Last Friday's technical picture on the 5-minute timeframe looks far from ideal. Several different signals were formed during the day, but not all of them were accurate and correct. It all started with a sell signal forming near the level of 1.1915, which occurred right when the European session opened. This signal turned out to be false, as prices failed to reach the target level of 1.1878 and returned to their original positions during the day. But at the same time, there was no clear consolidation above the level of 1.1915. However, this is not important, since a short position was closed by Stop Loss at breakeven (the price went down 15 points after the position was opened). Further, the price spent several hours near the 1.1915 level and finally settled below it. It was a sell signal, but it was extremely fuzzy and could not be worked out, even though this time the level of 1.1878 was reached. However, novice traders still had the right to open short positions. In this case, they could have earned around 27 points. Further, a rebound followed from the level of 1.1878, which could be regarded as a buy signal, and it also turned out to be false: the quotes crossed the level of 1.1878 within an hour. Therefore, there was a loss of 14 points. After a breakthrough of the 1.1878 level from top to bottom, it was also possible to open a short position, but it was also closed by Stop Loss at breakeven, and the price did not reach the next target level. Thus, in the best case, novice traders could earn about 10-15 points on Friday, in the worst case, they could get a loss of 14 points.
Trading tips for Monday:
A strong downward movement continues on the 30-minute timeframe, without a trend line or channel. Thus, on this timeframe, we continue to expect the formation of a clear trend and do not recommend using the MACD indicator to search for signals. In the 5-minute timeframe, it is recommended to trade from the levels 1.1786, 1.1836, 1.1878, 1.1924 and 1.1943. Take Profit, as before, is set at a distance of 30-40 points. Stop Loss - to breakeven when the price passes in the right direction by 15-20 points. At the 5M TF, the target can be the nearest level if it is not too close or too far away. If located - then you should act according to the situation. No important macroeconomic events scheduled either in the European Union or in the United States on this day. Nevertheless,European Central Bank President Christine Lagarde will deliver a speech in Europe, which may have a certain impact on the foreign exchange market.
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 the channels or trend lines that display the current trend and show in which direction it is better to trade now.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator (14,22,3) 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 lines (channels and trend lines).
Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.
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