How to Trade the EUR/USD Pair on September 26? Simple Tips and Trade Analysis for Beginners

[Ben Graham]

Thursday Trade Review:

1H Chart of EUR/USD

The EUR/USD currency pair resumed its downward movement on Thursday after consolidating below the ascending trend line. Thus, from a technical analysis perspective, this was an entirely logical move. The trend has shifted to bearish, so a decline is expected. However, Thursday's drop did not result solely from technical factors. During the US trading session, reports were published that we had previously advised paying attention to: durable goods orders and the third estimate of Q2 GDP. Both reports delivered much stronger results than traders and experts had expected, which triggered a sharp strengthening of the dollar. Thus, on the local scale, the dollar had grounds to strengthen; however, on a global, long-term scale, the fundamental backdrop continues to weigh on it. Recall that many macroeconomic indicators can only envy the GDP growth rates, while the Fed has resumed quantitative easing, which is a strong bearish factor for the dollar.

5M Chart of EUR/USD

On the 5-minute timeframe, Thursday produced a very "long" sell signal. It formed throughout the European session, but eventually the pair consolidated below the 1.1737–1.1745 area. In just about an hour, the price reached the 1.1655–1.1666 zone. The drop started abruptly, so it was crucial to enter short positions quickly. Those who managed to enter earned about 30–40 pips.

How to Trade on Friday:

On the hourly timeframe, the EUR/USD pair has, on a global scale, begun a new round of correction, aided by the US Q2 GDP report. However, the overall fundamental and macroeconomic backdrop remains unfavorable for the US dollar, so we still do not expect strong dollar strength. In our view, as before, the US currency can only count on technical corrections—one of which we are observing now.

On Friday, the EUR/USD pair may continue to fall; however, it is essential to note that on Thursday, there were strong reasons for this, whereas today may not be the case. Therefore, Friday's movement could go either way, and the macroeconomic background may once again impact traders' sentiment.

On the 5-minute timeframe, consider the levels 1.1354–1.1363, 1.1413, 1.1455–1.1474, 1.1527, 1.1571–1.1584, 1.1655–1.1666, 1.1737–1.1745, 1.1808, 1.1851, 1.1908, 1.1970–1.1988. On Friday, pay attention to Christine Lagarde's speech, as well as the University of Michigan consumer sentiment indexes and the US PCE data. We do not expect anything from Lagarde's speech, but the US indices could impact the dollar's exchange rate.

Core Trading System Rules:

1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
7. Stop Loss: Set a Stop Loss to breakeven after the price moves 15 pips in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.

Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.

The material has been provided by InstaForex Company - www.instaforex.com