Analysis of previous deals:
30M chart of the EUR/USD pair
The EUR/USD pair was not very active on Friday, if we take the macroeconomic background into account. You should understand the difference that 70 points a day, when there are no reports, and 70 points, when the due several reports are considered very important, are different. Just the second case turned out on Friday. The most important data on the US labor market and unemployment were published in the US, which, in principle, provoked an increase in volatility, but not enough to consider that there was a strong reaction to the reports. Moreover, the US dollar fell at the end of the day, although in the first half of the day it was growing ahead of the NonFarm Payrolls report. Moreover, the report turned out to be strong, so it's hard to say why the US dollar fell in the afternoon. This is an excellent example for novice traders as they could see that even an unambiguous report does not always cause the movement that is logical and expected. Of course, we can assume that the unemployment report, which turned out to be weaker than forecasted, overlapped the data on nonfarm, but we do not believe in it.
5M chart of the EUR/USD pair
A large number of trading signals were generated on the 5-minute timeframe during the last trading day, but most of them should be ignored, since they were formed during or immediately after the most important reports were released in America. Actually, it was only possible to work out the first and last signals, since all the others were formed at the beginning of the US trading session. Moreover, the last signal was formed quite late in time, so it could be passed. Hence, only the first signal. It was formed at the beginning of the European session - the price went beyond the level of 1.1837 and then went down by about 25 points. However, novice traders should not have waited for the US reports to be released, they should have manually closed a short position before that, since the reaction of the markets was not predictable. As a result, around 10 points could be earned on this trade. In an extreme case, if traders did not manage to close it manually, it closed by Stop Loss at breakeven, since the pair went down in total after the signal was generated by more than 15 points. Well, at the beginning of the US session, movements began in different directions. The price crossed the levels 1.1837 and 1.1851 several times, forming signals in batches. But, as we have already said, it is not recommended to enter the market at such a time.
Trading tips for Monday:
The downward trend remains on the 30-minute timeframe, but rather weak and uncertain. At this time, there is still no trend line or channel, therefore, it is not recommended to use the MACD indicator to track signals until such signals are formed. On the 5-minute timeframe, it is recommended to trade from the levels 1.1806, 1.1837, 1.1851 and 1.1882. 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. On Monday, only secondary data will be published in the European Union and the United States. More precisely, in the United States, no events are scheduled for July 5 at all. The European Union will release an index of business activity in the services sector, which is almost guaranteed to cause no reaction.
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