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19.02.202404:15 Forex Analysis & Reviews: Trading plan for EUR/USD on February 19. Simple tips for beginners

Analyzing Friday's trades:

EUR/USD on 1H chart

Exchange Rates 19.02.2024 analysis

EUR/USD continued to fluctuate on Friday. The price tried to move away from the level of 1.0785, but in the second half of the day, it returned to this mark, and also tested the trendline. Therefore, the current downtrend is on the verge of being canceled. If the pair consolidates above the trendline on Monday or Tuesday, then the euro may strengthen. However, we don't expect the pair to show firm growth, as there are no fundamental and macroeconomic reasons for it.

On Friday, there were no interesting events in the European Union. The U.S. released two reports that traders reacted to. First, the Producer Price Index, unexpectedly exceeding forecasts, which triggered a dollar rally. However, an hour later, the University of Michigan Consumer Sentiment Index was released, which was below expectations and put pressure on the dollar. These two reports explain the pair's movements on Friday.

EUR/USD on 5M chart

Exchange Rates 19.02.2024 analysis

Only one trading signal was generated on the 5-minute timeframe. At the beginning of the US session, the price bounced off the range of 1.0767-1.0781, after which it managed to fall by about 25 pips. However, the first U.S. report triggered this decline, not the signal. The reaction to each of the two reports was about 25 pips, indicating very weak movements, as we warned on Thursday. The pair did not reach the target level of 1.0725, so the trade closed at breakeven.

Trading tips on Monday:

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 for 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 Monday, there are no events lined up in the European Union or the U.S., not even secondary ones. We can expect a rather dull day (if there are no surprises). Volatility may be very weak.

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
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