Analysis of previous deals:
30M chart of the EUR/USD pair
The EUR/USD pair as a whole continued to move mainly sideways on Tuesday. At this time, the pair still lacks a clear trend. The pair tries to continue moving down from time to time, and even manages to do it every now and then, but in general the movement remains as close as possible to the sideways movement. Thus, it is still not recommended to trade on the 30-minute timeframe at this time. As for the outlook for the euro/dollar, it is possible that the situation might clear up a bit on Thursday, when the European Central Bank sums up the results of its meeting. However, the chances of this are low. Traders will focus on ECB President Christine Lagarde's speech. And here everything will depend on what she says. If the rhetoric changes its tone to a more dovish or, on the contrary, becomes more hawkish, in other words, changes, then one can expect a market reaction that can bring the pair out of the stupor. Otherwise (more likely), the pair may remain in such a movement for a long time, which is most similar to a flat.
5M chart of the EUR/USD pair
The pair formed quite a lot of various trading signals on the 5-minute timeframe. However, most of them should not have been worked out. Let's see how the euro/dollar should have been traded on Tuesday. The first buy signal was formed in the morning through a rebound from the level of 1.1772. This signal was quite strong, but the upward movement was rather weak. The price reached the level of 1.1796 and even crossed it, but was unable to continue its upward movement. Thus, a long position should have been closed after the quotes had re-consolidated below the level of 1.1796. The profit on this trade was about 5 points. Then the pair should be sold on the same signal. And here, novice traders are much more fortunate. The price went down 30 points required for the minimum Take Profit to be triggered and returned to the level of 1.1772, which it had overcome earlier. In case the price settled above this level, novice traders had the right to open new long positions, but this signal was already blatantly false and the price immediately went down. At that time, several signals had already been formed near this level, which did not work out properly, therefore, after this transaction, it was no longer necessary to work out signals from the level of 1.1772. The loss on the long position was 13 points. Thus, the total profit for Tuesday was about 22 points.
Trading tips for Wednesday:
There is still no trend on the 30-minute timeframe, so it is not recommended to trade on this timeframe yet. The horizontal channel is clearly visible, and the pair continues to show rather weak volatility, so it is best to immediately switch to the lower chart, and wait for a trend line or channel at the current one. On the 5-minute timeframe, it is recommended to trade from the levels 1.1738, 1.1756 (new level, Tuesday's low), 1.1772, 1.1802 (new level, Tuesday's high), 1.1822. 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 event in America and the eurozone on Wednesday. Thus, there is a high probability that the pair will see low volatility and multidirectional movements again.
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