31.12.202407:50 Forex Analysis & Reviews: How to Trade the EUR/USD Currency Pair on December 31? Simple Tips and Trade Analysis for Beginners

Monday Trade Analysis:1H Chart of EUR/USD Pair:

The EUR/USD currency pair continued trading within a sideways channel on Monday, which is clearly visible. The price has been trading between the levels of 1.0359 and 1.0451 for over a week, forming a channel less than 100 points wide. As expected, the market is simply in a holiday flat. Yes, the euro moved slightly upward over several days, and yesterday it experienced a noticeable drop. However, the overall technical picture remains unchanged. Yesterday's decline in the euro could only have been predicted based on its bounce from the upper boundary of the sideways channel.

5M Chart of EUR/USD Pair:

On the 5-minute timeframe, there was one trading signal for selling on Monday. The price rebounded from the 1.0433–1.0451 level and moved down by about 50 points. Although it did not reach the nearest target level of 1.0359, beginner traders could still have made a profit from this trade by closing it manually before the end of the day.

How to Trade on Tuesday:

On the hourly timeframe, the EUR/USD pair continues to trade in a "holiday flat." We believe that the medium-term decline in the euro has resumed, but currently, most market participants are not ready to open new trades, so the price remains stagnant. We expect the price to return to the 1.0334–1.0359 level almost inevitably, though it might now take until the new year.

On Tuesday, the pair might make another attempt to drop toward the key 1.0334–1.0359 level. However, the continuation of the flat or very low volatility is also possible.

On the 5-minute timeframe, consider levels of 1.0269–1.0277, 1.0334–1.0359, 1.0433–1.0451, 1.0526, 1.0596, 1.0678, 1.0726–1.0733, 1.0797–1.0804, 1.0845–1.0851, and 1.0888–1.0896. No significant events are scheduled in the European Union or the U.S. on Tuesday. Thus, the euro is likely to remain within the sideways channel today, with no clear reasons for a breakout.

Main Trading System Rules:

1. The strength of a signal is determined by the time it takes to form (a rebound or breakthrough of a level). The shorter the time, the stronger the signal.
2. If two or more trades at a level are false signals, all subsequent signals from that level should be ignored.
3. In a flat market, any pair can produce many false signals or none at all. In any case, it's better to stop trading at the first signs of a flat.
4. Trades should be opened during the European session and until the middle of the American session. All trades should be closed manually afterward.
5. On the hourly timeframe, MACD signals should only be traded when there is good volatility and a trend confirmed by a trendline or trend channel.
6. If two levels are very close to each other (5 to 20 points apart), treat them as a support or resistance zone.
7. After a trade moves 15 points in the right direction, set a Stop Loss to break even.

What's on the Charts:

• Support and Resistance Levels: Target levels for opening buy or sell trades. Place Take Profit levels near these areas.
• Red Lines: Channels or trendlines indicating the current trend and preferred trading direction.
• MACD Indicator (14, 22, 3): A histogram and signal line serve as a supplementary source of trading signals.
• Important Reports and Speeches: Found in the economic calendar, these can significantly impact currency pair movements. Trade cautiously or exit the market during these events to avoid sudden price reversals.

Note for Beginners:Not every trade will be profitable. Developing a clear strategy and proper money management is the key to long-term success in trading.