Analyzing Wednesday's trades:
EUR/USD on 30M chart
EUR/USD has dropped for the seventh consecutive day. In general, we have repeatedly started our articles with the words "today, the pair fell again". Despite the weak fundamental and macroeconomic backdrop, the market still manages to find a reason to sell the euro every day. And we would like to remind you once again that this scenario was already forecasted several months ago. Currently, the pair has descended to the 5th level, which we referred to as the target. And there is still no sign of the end of this trend.
On Wednesday, European Central Bank representative Frank Elderson spoke and his stance was no different from his colleagues. He indicated that interest rates could still go higher, if needed, but his remarks did not help the single currency. In the United States, the report on orders for durable goods was published, which turned out to be slightly better than expected, but it is unlikely for us to say that the dollar rose by 80 pips solely due to this report.
EUR/USD on 5M chart
Not the best trading signals on the 5-minute chart. The current problem is that although the movement has been excellent and we are witnessing a trend, the market is also in need of a corrective cycle, which is nowhere in sight. Since trading at night isn't recommended, many short positions are closed much earlier. And it would be quite problematic to enter the market because new sell signals are not formed on bullish corrections but on the same downward movement. On Wednesday, the pair initially rebounded from the level of 1.0533 (a false signal), and then it overcame the range of 1.0517-1.0533. Beginners incurred a small loss in the first case, and a small profit in the second.
Trading tips on Thursday:
On the 30-minute chart, EURUSD continues to trade lower. In the medium term, we anticipate the euro's further decline, but now we advocate for a bullish correction since the downtrend has been going on for too long. In general, we are currently observing clear negative trading from the pair. The key levels on the 5M chart are 1.0391, 1.0433, 1.0465, 1.0517-1.0533, 1.0607-1.0613-1.0618, 1.0673, 1.0733, 1.0767-1.0781, 1.0835. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Thursday, different ECB officials are scheduled to speak. In addition, the German inflation report for September will be released, which is quite important. Market participants may keep an eye on the third revision of the U.S. GDP report for the second quarter and a speech by Federal Reserve Chair Jerome Powell. Finally, an interesting day is ahead in terms of macroeconomics. But will it be able to influence the bearish sentiment in the market?
Basic trading rules:
1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
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 are channels or trend lines that display the current trend and show which direction is better to trade.
MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, 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 should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
