The EUR/USD currency pair showed a new round of correction on Friday as part of an upward trend. Recall that last week the European currency for the first time in a long time began to grow against the dollar, which is clearly seen in the chart above. An ascending trendline was formed and is now supporting bull traders. However, despite the fact that the euro did start to rise, we believe that it is now supported only by the need to correct from time to time, as the downward trend is still present on the higher timeframes. Therefore, the euro's growth may not be long-term and is very fragile. Most of the factors are still on the dollar's side. The geopolitical conflict in Ukraine is not resolved and could result in huge problems for the European and world economy. The European Central Bank may raise the key rate 1-2 times this year, while the Federal Reserve is targeting a minimum of 2.5%. The European economy shows strong growth rates in the first quarter, but even they do not look stable and confident. Thus, we will not be surprised at all if the price settles below the trend line this week, and the euro again rushes to its 20-year lows.
The technical picture on the 5-minute timeframe does not look good. On Friday, the volatility was only 66 points, which does not seem to be too low, but at the same time, in recent weeks, we have become accustomed to high volatility, so Friday's value is already considered weak. The nature of the movement also leaves questions, as the pair managed to show growth during the day. As for trading signals, there were only two of them. First, the price rebounded from the level of 1.0564 and went up about 25 points, but at the same time it could not reach the level of 1.0607. Thus, it was possible to make a profit on this transaction only if it was closed manually. Also, for a long position, Stop Loss should have been set to breakeven. Further, the price settled below the level of 1.0564, but in this case it managed to go in the right direction even less, but in this case, novice traders did not lose anything, because by the end of the day the price could neither continue to fall nor go above level 1, 0564. Thus, it turned out to be a completely "empty" day.
The ascending trendline on the 30-minute timeframe has been slightly rebuilt and remains relevant. As long as the pair is above it, the upward trend continues. If the price settles below, then the downward trend will most likely resume, and the euro will go back to falling to the level of 1.0354. On the 5-minute TF on Monday it is recommended to trade at the levels of 1.0354, 1.0389, 1.0464, 1.0564, 1.0607, 1.0636, 1.0697. When passing 15 points in the right direction, you should set Stop Loss to breakeven. Neither the US nor the European Union is scheduled for a single important event or macroeconomic report. Thus, the pair may try to continue to correct downwards, but the trend line is already very close to the bottom. In any case, we do not expect high volatility. It's time for the market to calm down a bit.
1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal.
2) If two or more deals were opened near a certain level based on false signals (which did not trigger Take Profit or the nearest target level), 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 deals are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals must be closed manually.
5) On the 30-minute TF, using signals from the MACD indicator, you can trade 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 an area of support or resistance.
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.
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 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 in order to avoid a sharp price reversal against the previous movement.
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.
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