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22.02.202403:36 Forex Analysis & Reviews: Trading plan for EUR/USD on February 22. Simple tips for beginners

Analyzing Wednesday's trades:

EUR/USD on 1H chart

Exchange Rates 22.02.2024 analysis

EUR/USD showed volatility equal to 30 pips. In general, there was simply nothing to analyze. The price stayed in one place all day, and this is not the first time this happened in recent weeks. The volatility is low, which greatly complicates the trading process even on the lowest timeframes. This implies quick opening and closure of trades during the European and US sessions. However, with such volatility, it is almost impossible to trade even if it's within the day.

There were no important or secondary macroeconomic and fundamental events in both the United States and the European Union. Several speeches by representatives of the European Central Bank and the Federal Reserve did not evoke any emotions from the market, as clearly seen in the pair's movements during the day. The euro will continue to correct higher.

EUR/USD on 5M chart

Exchange Rates 22.02.2024 analysis

The pair did not form any relevant entry signals on the 5-minute timeframe. This is not surprising at all, given such volatility. Obviously, the pair had no chance to even work out the nearest levels. Therefore, the best decision was not to enter the market.

Trading tips on Thursday:

On the hourly chart, EUR/USD may continue to correct higher for some time, although there are still no macroeconomic and fundamental reasons to support the euro's growth. We still expect a decline from the single currency, which, in our opinion, should take place for quite some time. Unfortunately, the pair has breached the trendline, and now traders do not have a clear reference point to maintain the downward trend.

The key levels on the 5M chart are 1.0568, 1.0611-1.0618, 1.0668, 1.0725, 1.0767-1.0785, 1.0835, 1.0896-1.0904, 1.0940, 1.0971-1.0981, 1.1011, 1.1043, 1.1091. On Thursday, investors will look to the release of the manufacturing and services PMI prints from the eurozone, and the US. Since there are no other reports and events, even these secondary data can provoke a market reaction. And it can have a strong impact, as there is no volatility at the moment. In addition, the US will release another report on initial jobless claims, and the EU will publish the second estimate of inflation for January.

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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