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23.10.202406:51 Forex Analysis & Reviews: How to Trade the EUR/USD Pair on October 23? Simple Tips and Analysis for Beginners

Analysis of Tuesday's Trades

1H Chart of the EUR/USD Pair

Exchange Rates 23.10.2024 analysis

The EUR/USD currency pair continued to trade lower on Tuesday. The price remains below the trend line and makes no attempts to break above it to start a correction. Thus, we see the same pattern daily—the euro is falling slowly but steadily. As we mentioned, this development is unsurprising, as the euro had risen too much and for too long against the dollar. The market's focus has shifted from the Federal Reserve to the European Central Bank, as the market has already priced in the Fed's monetary policy easing.

Meanwhile, the ECB is not only continuing to ease its monetary policy but has also accelerated the pace of key rate cuts. Yesterday, Christine Lagarde confirmed that the ECB will continue to follow a policy of rate cuts, and she did not rule out the possibility of a 0.5% rate cut at one of the upcoming meetings. All this information, naturally, works against the euro.

5M Chart of the EUR/USD Pair

Exchange Rates 23.10.2024 analysis

No signals were formed in the 5-minute time frame on Tuesday. There was a decent selling opportunity during the European trading session, but the price fell just short of reaching the 1.0845-1.0851 area, from which it would have been reasonable to open short positions. By the end of the day, the price dropped to the 1.0797-1.0804 area, but no clear buying signal was formed. The pair is currently in a predominantly downward trend, so buying signals should not be a priority.

How to Trade on Wednesday:

The EUR/USD pair is moving towards a new downward trend in the hourly time frame. At this point, this step looks more like a leap. A correction could begin soon, but there are currently no signs of its start. Further declines in the euro can be expected even without a correction, as it remains highly overbought, but a correction would make the movement look more orderly.

On Wednesday, novice traders can trade from the trend line and the 1.0797-1.0804 area. However, short positions are preferable at the moment.

In the 5-minute time frame, the levels to watch are 1.0678, 1.0726-1.0733, 1.0797-1.0804, 1.0845-1.0851, 1.0888-1.0896, 1.0940-1.0951, 1.1011, 1.1048, 1.1091, and 1.1132-1.1140. On Wednesday, Lagarde is scheduled to give another speech in the Eurozone and a couple of completely secondary reports in the United States. In principle, it is unlikely that Lagarde will announce anything new today, so we can assume there will be no important news today.

Basic Rules of the Trading System:

  1. The strength of a signal is determined by the time it takes to form (bounce or break through a level). The less time it takes, the stronger the signal.
  2. If two or more trades were opened with false signals around a certain level, all subsequent signals from that level should be ignored.
  3. In a flat market, any pair can generate many false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.
  4. Trading should be done between the start of the European session and the middle of the American session, after which all trades should be closed manually.
  5. On the hourly time frame, trade signals from the MACD indicator are best used when there is good volatility and a trend confirmed by a trendline or channel.
  6. If two levels are too close to each other (5 to 20 pips apart), consider them as a support or resistance zone.
  7. When the price moves 15 pips in the intended direction, set a Stop Loss to break even.

What's on the Charts:

Support and Resistance Price Levels: These levels serve as targets when opening buy or sell positions. They can also be used as points to set Take Profit levels.

Red Lines: These represent channels or trend lines that display the current trend and indicate the preferred trading direction.

MACD Indicator (14,22,3): The histogram and signal line serve as a supplementary indicator that can also be used as a source of trading signals.

Important Speeches and Reports (always found in the news calendar) can significantly impact the movement of a currency pair. Therefore, trading should be done with maximum caution during their release, or you may choose to exit the market to avoid a sharp price reversal against the preceding movement.

For Beginners Trading on the Forex Market: It's essential to remember that not every trade will be profitable. Developing a clear strategy and practicing money management is key to achieving long-term success in trading.

*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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