Analyzing Wednesday's trades:
EUR/USD on 30M chart
EUR/USD gradually edged up for most of the day. About six or seven European Central Bank officials spoke at different times of the day, but the previous six or seven speeches allowed for a fairly clear consensus within the institution. Therefore, the speeches were not influential, and the pair continued to move very slowly. There were also no significant reports in the European Union or the United States. Therefore, the market continued to rest until the results of the FOMC meeting were announced in the evening.
If we analyze the results of the Federal Reserve meeting, the only thing we can conclude for now is that the dollar strengthened, indicating that the results were more hawkish than expected. Final conclusions will be made on Friday. The key interest rate, as expected by most experts, remained unchanged at 5.5%.
EUR/USD on 5M chart
On the 5-minute chart, the pair moved from the level of 1.0673 to 1.0733 for most of the day, and then it fell in just 15 minutes. Nevertheless, almost all of the upward movement could have been traded. At the very beginning of the European session, the price bounced off the level of 1.0673, so beginners could open a long position. In any case, it was advisable to close the position half an hour to an hour before the announcement of the results of the FOMC meeting, but it was during this time that the level of 1.0733 was worked out. Therefore, the position should have been closed around this level, resulting in a profit of about 50 pips.
Trading tips on Thursday:
On the 30-minute chart, EURUSD started a weak correction. The euro still lacks robust bullish indicators. In the medium term, we anticipate the euro's further decline, but the pair could still correct higher since that is also necessary. The key levels on the 5M chart are 1.0517-1.0533, 1.0607-1.0613, 1.0673, 1.0733, 1.0767-1.0781, 1.0835, 1.0871, 1.0901-1.0904. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Thursday, ECB President Christine Lagarde and Isabel Schnabel will speak. Several secondary reports will be released in the US, such as unemployment benefit claims and changes in existing home sales. The Bank of England will also hold its meeting on Friday, which could also impact the euro.
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.
