Analysis of previous deals:
30M chart of the EUR/USD pair
The EUR/USD pair continued its powerful downward movement on Thursday, which began yesterday evening, when the results of the Federal Reserve meeting became known. In short, the Fed raised its forecasts for economic growth for the coming year, and also lowered its forecasts for unemployment. In addition, several hints were sounded about the possible curtailment of the quantitative stimulus program for the economy as early as 2021. In addition, the chances of a key rate hike in 2022 have increased. All this provoked the strongest demand for the US dollar, which we have been observing for the entire day. In general, the pair left the downward trend channel, but the movement is so powerful that it is impossible to build a new channel or trend line. So far, the price just continues to fall down, which can be successfully worked out on a lower timeframe.
5M chart of the EUR/USD pair
Today's technical picture on the 5-minute timeframe is one of the simplest it has ever been in recent times. Despite the fact that a fairly large number of signals were generated, they were all almost perfect in terms of accuracy and often duplicated each other. All levels were reached almost perfectly, and the movement itself was practically uncorrected. Let's take a look at all the trading signals. The first sell signals were formed at the beginning of the European session. First, the price surpassed the level of 1.1990, and then bounced from it twice from below. Thus, these signals should have been used to open short positions. Then the level of 1.1943 was worked out three times, around which it was possible to take profit. It was also possible to close the deal by Take Profit, since the price moved down about 40 points in total. But signals to buy on such a strong downward movement and a strong fundamental background in favor of the US dollar should not have been opened. However, this did not become a hindrance for novice traders, since after a while four more sell signals were formed through a breakthrough of the 1.1943 level and rebounds from it from below. Here it was possible to open short positions and the total price went down 40 points again, which was enough to trigger Take Profit. And so novice traders could earn up to 80 points of profit depending on where they closed their short positions.
Trading tips for Friday:
The pair was practically flat on the 30-minute timeframe for about a month, which did not allow us to use signals from the MACD indicator. Now a strong downward movement has begun, which also does not allow us to use the signals of the MACD indicator. Thus, on this timeframe, we continue to expect the formation of a clear trend. It is recommended to trade from the levels 1.1836, 1.1878, 1.1912 and 1.1943 on the 5-minute timeframe. 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 events and macroeconomic publications scheduled for Friday in the European Union. Therefore, novice traders will have to trade exclusively on technical signals. Tomorrow there will be a high probability of the beginning of a correction, so you can consider buy signals.
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 market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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