Analyzing Friday's trades:
EUR/USD on 1H chart
Despite strong macro data and a speech by European Central Bank President Christine Lagarde, EUR/USD only managed to go through 43 pips of volatility. And this amount of volatility was demonstrated within five minutes when the NonFarm Payrolls and unemployment reports were published in the US. Both reports turned out to be weaker than forecasts, which could have triggered a new decline in the greenback. Overall, the dollar did decline, but the overall intraday volatility, as before, left much to be desired. We constantly bring up the fact that the pair shows very weak movements, as this is the main point at the moment. Therefore, we can draw two conclusions. First, even trades on the 5-minute timeframe can be kept open for 2-3 days. Second, it is extremely difficult to count on high profits right now, and the pair may not even form signals every day, although we are talking about the smallest timeframe.
EUR/USD on 5M chart
Two trading signals were formed on the 5-minute timeframe, and it made no sense to execute either of them. The pair formed both signals during the release of key US data, so it was very difficult to open at least one trade. Not to mention that the signals formed within 5 minutes and were pointing in different directions. In any case, it was simply dangerous to enter the market before the release of the NonFarms and unemployment data. The only option was to remain in long positions from Thursday when the price overcame the area of 1.0797-1.0804.
Trading tips on Monday:
On the hourly chart, EUR/USD was unable to break through the 1.0678 level, and the latest economic reports have mostly supported the euro rather than the dollar. Therefore, we saw a fairly consistent rise in the euro. The general (downward) trend has not changed, but the euro has been frequently trading with strong corrections over the past 7-8 months. Formally, the euro is in a downtrend, as seen on the higher timeframes, but the process of the pair's decline in the medium-term has been extremely slow.
On Monday, beginners can trade from the 1.0838-1.0856 area. However, please note that the pair may experience very low volatility.
The key levels on the 5M chart are 1.0483, 1.0526, 1.0568, 1.0611, 1.0678, 1.0726-1.0733, 1.0797-1.0804, 1.0838-1.0856, 1.0888-1.0896, 1.0940, 1.0971-1.0981. For Monday, no important events are scheduled in either the Eurozone or the US. Therefore, it is almost guaranteed that volatility will be extremely low.
Basic trading rules:
1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.
2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.
3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.
4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.
5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.
6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.
How to read charts:
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.
The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.
Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.
Beginners should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.
The material has been provided by InstaForex Company - www.instaforex.com #
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