Analysis of Tuesday trade:
EUR/USD on 30M chart
On Tuesday, the EUR/USD pair was trading between the levels of 1.1860 and 1.1920 for almost the whole day. The main event of the day was the publication of the US inflation report. Had it not been for this report, EUR/USD would probably have stayed in a sideways channel. Today was a good example for novice traders of a proper reaction to important statistics. For your reference, the latest data on Nonfarm Payrolls in the US did not cause any reaction at all. Actually, it shouldn't be that way, but over the past year, markets tend to downplay the macroeconomic statistics. On Tuesday, however, one report was enough for the pair to leave the sideways channel and resume the upward movement. Three signals were generated on the hourly time frame during the day. They are all circled in the illustration. The first signal refers to a price rebound from the 1.1915 level. The signal was strong and clear. However, the pair did not reach the nearest support level and did not retreat by at least 30 pips after the signal had been formed. It went down by only 20 pips which was enough to set Stop Loss to breakeven. The trade was closed after the order had been triggered. The next buy signal was generated by the MACD indicator that turned to the upside. This signal turned out to be false as the upward movement did not continue. So, we had a loss of 8 pips. The third buy signal should have been ignored as it was formed right during the publication of the inflation data in the US. Although the quotes moved up by about 45 pips following this signal, it was still too risky. It should be noted that inflation has significantly accelerated in the US compared to February. This triggered a rapid sell-off in the US currency.
EUR/USD on 5M chart
Now let's take a look at the 5-minute time frame. Only one signal was generated here during the day. In recent days, the pair has formed too many local support and resistance levels (based on the lows and highs of the previous days) due to the sideways channel. This situation was confusing for novice traders. Nevertheless, the breakout of the 1.1912 level could be considered a buy signal. On the other hand, the signal was formed immediately after the publication of the key report on inflation in the US, so it could be easily ignored. If beginners decided to take a risk and entered the market with long positions, they could have gained 20-25 pips on this upward movement as the pair had reached the latest resistance level of 1.1937.
Trading tips for Wednesday:
On Wednesday, we recommend trading upwards on the 30-minute time frame as the uptrend still continues. The ascending trendline supports the bullish trade. The MACD indicator is currently located well above zero. This means that novice traders need to wait for it to decline to the zero level.After that, it will be possible to track the formation of new buy signals. Also, beginners can trade from the levels of 1.1990 and 1.1915, aiming for a rebound or a breakout in both directions. Take Profit should be set at the distance of 30-40 pips. Stop Loss should be moved to a breakeven point when the price passes 15-20 pips in the right direction. On the 5-minute time frame, the situation is now very difficult. Here, 4 levels at once can be considered the key levels, but they are all located very close to each other. This is due to the sideways channel that the pair has been holding in for the past few days. Therefore, it is now especially important that the signal is clear. If the signal is vague, then it is better not to enter the market. No important macroeconomic news is expected tomorrow. Yet, markets will pay attention to the speeches by ECB President Christine Lagarde and Fed's Chairman Jerome Powell. Naturally, these events will generate interest among traders and may provoke a strong market reaction.
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 trendlines 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 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 exit 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 are the key to success in trading over a long period of time.
