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16.02.202404:26 Forex Analysis & Reviews: Trading plan for EUR/USD on February 16. Simple tips for beginners

Analyzing Thursday's trades:

EUR/USD on 1H chart

Exchange Rates 16.02.2024 analysis

EUR/USD corrected higher on Thursday, which started the day before. Overall, we observed a standard upward retracement within the downtrend, as indicated by the descending trendline. The price tested the level of 1.0785, from which it may rebound on Friday and resume the downward movement. We expect the euro to fall further.

On Thursday, the dollar fell due to two U.S. reports. On Wednesday, we mentioned that all the U.S. reports are not important and may only provoke a mild market reaction. In total, the dollar fell by 45 pips after these reports. However, it is worth noting that the retail sales report turned out to be much worse than forecasts, and the industrial production report was simply disappointing. Thus, the dollar fell and it was an absolutely logical move.

EUR/USD on 5M chart

Exchange Rates 16.02.2024 analysis

Two trading signals were generated on the 5-minute timeframe. At the beginning of the European trading session, the pair rebounded from the level of 1.0725, and by the middle of the U.S. session, it managed to rise to the 1.0767-1.0781 range. Therefore, beginners could confidently open long positions, which brought them a profit of about 25-30 pips. The price rebounded from the mentioned range, so traders could also open short positions, but as of the moment, the pair has not been able to fall by 10 pips, so it is better to close the short position.

Trading tips on Friday:

On the hourly chart, the downtrend remains intact. We still expect the euro to show a pronounced decline, as the fundamental and macroeconomic background cannot support it at the moment. At the same time, we shouldn't expect the euro to fall everyday. We noticed that the market is actively trading only when there are fundamental reasons behind it.

The key levels on the 5M chart are 1.0568, 1.0611-1.0618, 1.0668, 1.0725, 1.0767-1.0781, 1.0835, 1.0896-1.0904, 1.0940, 1.0971-1.0981, 1.1011, 1.1043, 1.1091. On Friday, no important events are planned in the European Union, while the U.S. will release secondary reports. We can only highlight the University of Michigan Consumer Sentiment Index, as well as the Producer Price Index and the number of building permits. The market's reaction to these reports may be similar to how they reacted to Thursday's reports.

Basic trading rules:

1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.

4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.

5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.

6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.

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 represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.

The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.

Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.

Beginning traders should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Paolo Greco,
Analytical expert of InstaSpot
© 2007-2024
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