Analysis of previous deals:
30M chart of the EUR/USD pair
The EUR/USD pair moved very actively on Friday. This was due to the US reports. Yes, for the second day in a row the EUR / USD pair moved solely on the basis of US macroeconomic reports. This is clearly seen on the 5-minute timeframe, where in the first half of the day (when reports were also published in the EU) the market simply stood in one place. However, that all changed in the afternoon when data on the US labor market and unemployment rate were released. I would like to note right away that the unemployment rate, although it dropped from 6.1% to 5.8%, which is very good for the economy, did not provide any support to the dollar. Traders paid attention to the NonFarm Payrolls report, which was not even a failure. Its value was only slightly below the predicted value, but it was enough for the markets to rush back to sell the dollar, which they had been actively buying days earlier. Thus, at the end of Thursday and Friday, everything remained in place. As for trading on the 30-minute timeframe, it was necessary to trade down, according to the new descending channel. However, the MACD indicator did not form a single standing sell signal during Friday.
5M chart of the EUR/USD pair
It is very expressive on the 5-minute timeframe. It is perfectly clear that the euro/dollar pair stood in one place throughout the European trading session, although, for example, the retail sales report for April was published (the first tick). However, the movement began in the US trading session, when the NonFarm Payrolls report was published (the third tick). It was this report that provoked a strong upward movement, which was not possible for novice traders to work out. No signals were generated during the European session. On the US side – three, but they were all formed after the reports were published, that is, to predict where the pair will move and with what force was not possible. We do not advise you to trade during such important publications, so all three signals should be ignored. And in any case, it was very difficult to manage to enter the market on one of these signals. Therefore, trades on Friday, despite the strong movement, should not have been opened.
Trading tips for Monday:
A new downward trend persists on the 30-minute timeframe, so it is recommended to track the sell signals from the MACD indicator. At the moment, this indicator is very high, so you should wait for it to discharge to zero before looking for new signals. Also, the price is located near the upper line of the descending channel, so theoretically you could try to sell the pair on a rebound from this line. But we think it’s too risky in the current circumstances. On the 5-minute timeframe, it is recommended to trade from the levels of 1.2092, 1.2104, 1.2133, 1.2159, 1.2181 and 1.2215. Take Profit, as before, is set at a distance of 30-40 points. Stop Loss – to break even when the price passes in the right direction 15-20 points. The target at the 5M TF can be the nearest level, as long as it is not too close or too far away. If it is located – then you should act on the situation. No major publications or major events scheduled in America and the European Union for Monday. Therefore, the pair’s movement may be sluggish, and volatility may be weak.
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 the channels or trend lines that display the current trend and show in which direction it is better to trade now.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator (14,22,3) 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 lines (channels and trend lines).
Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.
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.
The material has been provided by InstaForex Company – www.instaforex.com