Analysis of Monday's deals:
30M chart of the EUR/USD pair.
The EUR/USD currency pair was trading exactly as we expected on Monday. A flat was observed during the day, but at the same time, a minimal downward slope also took place. The price went slightly below the lows of the previous week, but this had almost no effect on the current technical picture. Unless the side channel 1.0966-1.1038 can no longer be considered relevant since the price has twice overcome its lower limit today. Since there was not a single scheduled important event or report on Monday, the market had nothing to react to during the day. And the fact that the European currency continues to slide down anyway speaks of a complex geopolitical and fundamental background for this currency. We remind novice traders that the difference in monetary policy approaches between the ECB and the Fed is now huge and not in favor of the euro. And the complex geopolitical background exerts pressure primarily on risky currencies, which include the euro and not the dollar. Thus, it may not be as fast as before, but the European currency may continue to fall against the dollar.
5M chart of the EUR/USD pair.
On a 5-minute timeframe, the technical picture looks exactly as it should look, given the flat on a 30-minute TF. All trading signals of the day were formed around the same level - 1.0966. The 1.09999 level is a new level, this is Monday's maximum. Let's try to figure out how the pair should have been traded today. The first sell signal was formed when the price rebounded from the 1.0966 level. After this signal, the price could not go down even 15 points, so it was not possible to set a Stop Loss and a small loss was received on the transaction. The next buy signal should have been ignored since, at the time of its formation, the pair had already grown to the level of 1.0999. That is, the point of overcoming the level of 1.0966 was too far from the point of signal formation. However, this signal also turned out to be false and by the beginning of the American trading session, when the next sell signal was formed, it became clear that the pair was trading flat, and the two previous signals near the 1.0966 level turned out to be false. Therefore, all subsequent signals around 1.0966 should have been ignored. And no other signals were generated during the day.
How to trade on Tuesday:
On the 30-minute timeframe, the pair has consolidated below the ascending channel, so we still expect to see a continuation of the fall of the European currency. However, so far everything is going to the fact that the pair will spend some time, if not in a side channel, then in a very flat-like movement. A minimal downward bias may be present, but frequent pullbacks and corrections will interfere with the formation of a clear and convenient trend. On the 5-minute TF tomorrow, it is recommended to trade by levels 1.0902, 1.0932, 1.0966, 1.0999, 1.1019, 1.1038, 1.1070. When passing 15 points in the right direction, you should set the Stop Loss to breakeven. On Tuesday, neither America nor the European Union is scheduled for any important event or publication. The consumer confidence indicator can hardly be considered important now. Therefore, we still recommend that you closely monitor geopolitics (there is very little news right now, however) and be prepared for a flat or a movement as similar to it as possible.
Basic rules of the trading system:
1) The signal strength is calculated by the time it took to generate the signal (rebound or overcoming the level). The less time it took, the stronger the signal.
2) If two or more trades were opened near a certain level on false signals, 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 transactions are opened in the period between the beginning of the European session and the middle of the American session when all transactions must be closed manually.
5) On a 30-minute TF, signals from the MACD indicator can be traded 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 a support or resistance area.
What's on the charts:
Price support and resistance levels - target levels when opening purchases or sales. Take Profit levels can be placed near them.
Red lines - channels or trend lines that display the current trend and show in which direction it is preferable to trade now.
MACD indicator (14,22,3) - a histogram and a signal line - an auxiliary indicator that can also be used as a signal source.
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 to avoid a sharp price reversal against the previous movement.
Forex beginners should remember that every trade cannot be profitable. The development of a clear strategy and money management are the keys to success in trading over a long period.
