Analyzing Thursday trades
EUR/USD on M30 chart
The EUR/USD currency pair was going through a correction for most of the day on Thursday. Later in the day, the correction turned into a fully developed uptrend as the pair had crossed the trend line. Although there is no guarantee that the upward movement will continue, the chances for a steady uptrend for the euro have greatly increased. For this, the price needs to overcome the level of 1.1371 which has been hit recently. However, the interesting part for today ends here. On Thursday, neither the EU nor the US has published any important macroeconomic data. The report on jobless claims in the United States has not been considered so important lately. Anyway, the actual reading met the forecasts. Therefore, this report could not have caused any strong reaction from the market even in theory. In the coming days, the euro will try to affirm its confidence and move as high as possible. By the way, breaking through the trendline could be regarded as a buy signal. After the formation of this signal, the pair went up by 30 pips, which was enough for the Take Profit to trigger.
EUR/USD on M5 chart
On a 5-minute time frame, the technical picture looks rather boring. Not a single trading signal was generated during the day. The level of 1.1316, which was tested at the beginning of the European session, was the daily low and it was formed later. At the same time, the signal to overcome the level of 1.1356 was formed too late to be followed. Just above this level, the mark of 1.1371 is located, so both of these levels should be considered as an area of resistance. The pair broke through this area even later, so you shouldn't have opened long positons on this signal. Interestingly, the pair eventually showed some upward movement today, but we couldn't make use of it. In general, the whole weekly session turns out to be rather sluggish. The number of trading signals and open trades is minimal.
Trading tips on Friday
On the 30-minute time frame, the downtrend has reversed. So, buying the euro is more preferable now, especially if the price overcomes the level of 1.1371. However, we would like to remind novice traders that the fundamental background is quite mixed at the moment, while the macroeconomic background is absent. On the 5-minute time frame, the key levels for November 19 are found at 1.1259 - 1.1264, 1.1356, 1.1371, and 1.1422. The Take Profit should be set at a distance of 30-40 points. The Stop Loss should be placed to a breakeven point as soon as the price passes 15 pips in the right direction. On the M5 chart, the nearest level could serve as a target unless it is located too close or too far away. If it is, then you should act according to the situation or trade with a Take Profit. On Friday, there will be nothing to pay attention to. In the EU, markets will focus on the speech by ECB President Christine Lagarde. However, this week, she has already made four statements, according to the calendar. And every time, there was nothing new in her rhetoric. Accordingly, it may remain the same tomorrow: the rates will not be raised next year, and the European economy is still too weak.
Basic rules of trading
1) The signal strength is determined by the time the signal took to form (a bounce or a breakout of the level). The quicker it is formed, the stronger the signal is.
2) If two or more positions were opened near a certain level based on false signals (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.
3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.
4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours when all positions must be closed manually.
5) You can trade using signals from the MACD indicator on the 30-minute time frame only given that volatility is strong and there is a clear trend that should be confirmed by a trend line or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.
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 trend lines 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 trend lines).
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 exiting 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 is the key to success in trading over a long period of time.
The material has been provided by InstaForex Company - www.instaforex.com