Forex Analysis & Reviews: How to trade EUR/USD on October 4? Simple tips for beginners.
time 03.10.2022 11:26 PM
time Relevance up to, 04.10.2022 07:11 PM

Analysis of Monday's deals:

30M chart of the EUR/USD pair

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The EUR/USD currency pair stayed in a blatant flat on Monday. Maybe it wasn't as eloquent as it used to be, but the price moved without a particular direction during the day. A little earlier, the price also settled below the ascending channel, which has already cast doubt on its ability to continue rising. Recall that we have repeatedly said that "one should not depend upon a favorable outcome to one's plans until it is certain to occur", and two days of growth from the euro does not mean at all that a new long-term trend will now begin. As you can see, for two consecutive days the euro has had serious problems with continuing the upward movement. The index of business activity in the manufacturing sector for September was published in the European Union on Monday morning, which was only 0.1 weaker than forecasts. However, at the same time, it turned out to be 1.2 weaker than the previous value, that is, a downward trend is evident. And the fact that the index is below 50.0 points to the stagnation of the industry. Thus, the euro's decline in the morning is logical. A report on business activity in the US manufacturing sector was released in the afternoon, which also turned out to be weaker than forecasts, and also caused a fall in the national currency. Therefore, we can say that the pair's movements on Monday were quite logical.

5M chart of the EUR/USD pair

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There were no trading signals on the 5-minute timeframe on Monday. The price approached the level of 0.9748 several times, but did not reach it by at least 5 points, which cannot be considered an error when opening positions. Therefore,, novice traders could relax and observe the development of the situation. This week there will be more interesting days with stronger macroeconomic statistics. The pair's volatility was 80 points, which is not so little for an almost empty day, however, there was no trend movement, which is clearly seen in the chart above.

How to trade on Tuesday:

The downward trend has been canceled on the 30-minute timeframe, but the upward trend has already managed to cancel. Thus, this week we are waiting for a new fall in the euro. The really important events are scheduled only for Friday, but we remind you that geopolitical news should also be taken into account, as they also affect the mood of market participants. On the 5-minute TF on Tuesday, it is recommended to trade at the levels of 0.9636, 0.9748-0.9753, 0.9845, 0.9877, 0.9910, 0.9952, 1.0020-1.0034. When passing 15 points in the right direction, you should set Stop Loss to breakeven. European Central Bank President Christine Lagarde will speak in the European Union and there will be nothing else interesting on Tuesday. We believe that Lagarde will not change her previous statements and will continue to stick with the rate hike and the fight against inflation. Theoretically, this can support the euro, but in practice the market has long been familiar with this rhetoric, so it is unlikely that Lagarde will rush to work out a new speech.

Basic rules of the trading system:

1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal.

2) If two or more deals were opened near a certain level based on false signals (which did not trigger Take Profit or the nearest target level), then all subsequent signals from this level should be ignored.

3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading.

4) Trade deals are opened in the time period between the beginning of the European session and until the middle of the US one, when all deals must be closed manually.

5) On the 30-minute TF, using signals from the MACD indicator, you can trade only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel.

6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as an area of support or resistance.

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.

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 speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.

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.

Paolo Greco,
Analytical expert of InstaForex
© 2007-2022
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