Analysis of previous deals:
30M chart of the EUR/USD pair
The EUR/USD pair, quite unexpectedly for many, started an upward movement on Thursday, which was practically recoilless. And by the end of the trading day, the price reached the downward trend line that we talked about yesterday and rebounded from it. Thus, novice traders received a powerful sell signal, which is generated infrequently. We believe that in this situation it was possible to take a risk and open short positions. At the moment, you should set Stop Loss to breakeven. Usually, when price bounces off the trendline and the rebound is not false, it starts a strong move in the direction of the trendline. This was the case, for example, on the last rebound a couple of days ago. There is still a downward trend and is now supported by the trend line. If the pair settles above it, then it will be possible to conclude that the downward movement has ended and a period of growth for the European currency begins. As for the macroeconomic background, there weren't any important reports today. In America, a report was released on applications for unemployment benefits, which was not of interest to anyone. In the European Union, the European Central Bank presented a report on the change in the inflation targeting parameter within the framework of monetary policy. Now the ECB will allow inflation to stay slightly above 2%, which, however, does not significantly change the general state of affairs.
5M chart of the EUR/USD pair
Several signals were formed on the 5-minute timeframe, but not all of them were profitable and correct. Let's take a look at how you should have traded today and what came of it. The first signal of the day was very inaccurate. The price initially rose to the level of 1.1807, bounced off it, settled below the level of 1.1800, returned to 1.1807 and eventually surpassed it. It was difficult for novice traders, as it required a certain endurance and patience. However, as a result, the price still settled above both levels 1.1800 and 1.1807 (the first is no longer relevant and has been removed from the chart), which served as a signal to open long positions. Unfortunately, even this signal was very inaccurate. Nevertheless, the pair subsequently went up about 15 points, so it was necessary to place a Stop Loss order at breakeven and wait for Take Profit. The position should not have been closed near the nearest level of 1.1835, since at that time the trade was in profit by only around 10 points. Subsequently, the pair surpassed this level, as well as the level of 1.1851. In total, the pair went up by 30 and 40 points, so the deal had to be closed by Take Profit. There was no 1.1868 level today - this is the high for today. You should not have rejected closing prices below 1.1851, since by that time it was already evening.
Trading tips for Friday:
The downward trend persists and a downtrend line has finally formed on the 30-minute timeframe. However, the very nature of the movement due to this line did not change at all. It is still as uncertain and chaotic as possible. So now you can consider the signals of the MACD indicator, but first you need to let it discharge to the zero level. We also remind you of an open short position on the rebound from the trend line. The 30-minute chart shows that the pair continues to be in a 120-point horizontal channel. On the 5-minute timeframe, it is recommended to trade from the levels 1.1784, 1.1807, 1.1835, 1.1851, 1.1868. 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 Friday, European Central Bank President Christine Lagarde will deliver a speech in the European Union. Perhaps she will give the markets some important information, so at this time you need to be on the lookout.
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