Analysis of Tuesday's deals:
30M chart of the EUR/USD pair.
The EUR/USD currency pair continued its weak upward movement on Tuesday after rebounding from the level of 1.1704. Since novice traders also had a descending trend line at their disposal, their rebound could be used as a sell signal, which we discussed yesterday. Moreover, the MACD indicator has not formed a single strong signal today, but a similar sell signal was formed on the 5-minute timeframe. Thus, we will consider it exactly. It would be best if you did not duplicate the same signals in the same direction. Therefore, in general, we can say that a day before the announcement of the results of the Fed meeting, the US currency tried to resume growth. Now the price is moving again to the level of 1.1704, which is quite important and strong. On Tuesday, there were no important macroeconomic events in the US or the European Union, so very weak volatility (less than 40 points) is not surprising.
5M chart of the EUR/USD pair.
On the 5-minute timeframe, the technical picture on Tuesday was much more confusing and complex. Several trading signals were formed at once, and novice traders could understand without prompting which of them were strong and weak. However, we will analyze all the signals and understand how we should have traded on September 21. The first sell signal was formed at the beginning of the European trading session in a rebound from the level of 1.1735. After its formation, the price went down only 10 points, which was not enough to set the Stop Loss to breakeven. Therefore, as a result, the sale transaction closed at a loss of about 10 points. When the price was fixed above the level of 1.1735, the next buy signal was also false and even weaker (since it was formed for a very long time). After its formation, the price went up 8 points. However, at the same time, it worked out the level of 1.1750 (we do not take into account the error of 1 point). Thus, since there was a rebound from the level of 1.1750, the buy transaction should have been closed manually (zero profit) and immediately opened a new sell transaction because the signal near the level of 1.1750 was strong. As a result, the price went down when writing about 20 points, and novice traders may well close this deal now. In this case, another weak day may end with a profit of about 10 points.
How to trade on Wednesday:
On the 30-minute timeframe, the euro/dollar pair continues to adhere to the downward trend. Therefore, it is still possible to consider sell signals in the form of price bounces from the trend line or reversals of the MACD indicator down. However, we remind you that the results of the Fed meeting will be summed up tomorrow. Thus, the volatility may increase sharply, and the pair itself may show versatile movements. On a 5-minute timeframe, it is recommended to trade from the levels of 1.1666, 1.1704, 1.1735, 1.1750, 1.1775. Take Profit - we set at a distance of 30-40 points. Stop Loss - to break even when the price passes in the right direction by 15 points. At 5M TF, the target can be the nearest level if it is not close or too far away. If you are located, then you should act according to the situation. On Wednesday, no important events or publications are planned in the European Union. However, the results of the Fed meeting will be published in the US in the evening, and a press conference with Jerome Powell will also be held. Thus, in the evening, we expect strong movements, which are extremely difficult to predict now. But also strong movements can be observed throughout the day (less likely).
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 which direction it is preferable to trade now.
MACD indicator (14,22,3) - a histogram and a signal line, the intersection of which are signals to enter the market. It is recommended to use it in combination with trend constructions (channels, trend lines).
Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, it is recommended to trade as carefully as possible or exit the market to avoid a sharp price reversal against the previous movement during their exit.
Beginners in the Forex market should remember that every trade cannot be profitable. Developing a clear strategy and money management is the key to success in trading over a long period.
The material has been provided by InstaForex Company - www.instaforex.com