Analyzing Thursday's trades:
EUR/USD on 30M chart
EUR/USD continued to trade in a very sluggish manner on Thursday. Quotes slightly rose and by the end of the day the pair even managed to settle above 1.0657. However, we can't be too confident on this. The pair formally left the horizontal channel but it is still flat. Therefore, we wouldn't make any conclusions regarding the end of the sideways movement. There is still no fundamental and macroeconomic background, the reports will start coming out next week and it is not a fact that they will be able to bring the market out of the coma. We can only expect serious moves next Friday, which is when the EU inflation report and the Unemployment Nonfarm payrolls in the US will be released. Until then, we may continue to see movement, which will be very much like a flat. I still expect the euro to fall.
EUR/USD on M5 chart
Recently, novice traders have been lucky with the euro/dollar pai, but there is a limit to everything. There were three signals on Thursday, but due to the fact that the pair suddenly decided to leave the horizontal channel, all the signals were false. At least the first rebound from 1.0657 let beginners close the short position without loss since the price crawled down 15 pips. However, the second sell signal turned out to be absolutely false and the deal closed with a loss. The loss is not considerable since volatility is still low. Moreover, the position should have been closed manually closer to the evening and the loss should have been minimized that way. In general, there were no big losses, but now the pair is no longer in the horizontal channel, which means that there might be a lot of false signals today.
Trading tips on Friday:
EUR/USD left the 1.0587-1.0657 horizontal channel on the 30-minute chart. However, this doesn't mean that the flat is over. It just means that the euro can cross the upper limit in any direction. Therefore, there could be a lot of false signals today. On the 5-minute timeframe, we recommend trading at the levels 1.0465-1.0483, 1.0536, 1.0587-1.0607, 1.0657-1.0668, 1.0697, 1.0736, 1.0787, 1.0806. As soon as the price passes 15 pips in the right direction, you should set a Stop Loss to breakeven. Today, there are no important reports or events scheduled in the EU or the US, so I don't expect the flat to end.
Basic rules of the trading system:
1) The strength of the signal is determined by the time it took the signal to form (a rebound 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 a false signal (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 amid strong volatility and a clear trend that should be confirmed by a trendline 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 trendlines).
Important announcements and economic reports that can be found 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.