FX.co ★ How to Trade the EUR/USD Currency Pair on August 12? Simple Tips and Trade Analysis for Beginners

Trade Analysis for Tuesday:

1H Chart of the EUR/USD Pair

The EUR/USD currency pair showed absolutely no movement during Tuesday trading. Not a single important event occurred during the day, and there were not even new updates on the Middle East conflict. Donald Trump continues to insist that the Strait of Hormuz is free for passage; Iran holds a different view and demands that the US meet several conditions to lift the blockade. The US does not accept the proposed terms and instead puts forward counter-demands that Iran is unwilling to satisfy. In practice, the Strait of Hormuz remains blocked, with minimal vessel traffic. Oil prices are rising again, which invites a banal assumption — by the end of August, inflation may rise again in both the EU and the US. However, while the European Central Bank could implement a second monetary tightening in September, the Federal Reserve is unlikely to do so because the US labor market is contracting again, as shown by the latest Nonfarm Payrolls report.

5M Chart of the EUR/USD Pair

On the 5-minute timeframe on Tuesday, a single buy signal was formally formed, despite the absolutely sideways movement throughout the day. Nevertheless, it can be said that during the European session the price bounced with minimal deviation from the 1.1527–1.1531 area. We may see upward movement today. But today everything will depend on the US inflation report...

How to Trade on Wednesday:

On the hourly timeframe, the price has left the sideways channel it spent a month in and is now forming a new upward trend. Taking into account all events in recent months, we believe the euro should continue to rise confidently. In recent months, the market has consistently ignored many factors in favor of the euro, so we continue to expect upward movement in the euro, as it is undervalued.

On Wednesday, novice traders can open short positions with a target of 1.1461–1.1474 if the price consolidates below the 1.1527–1.1531 area. Long positions can be supported after yesterday's rebound from the 1.1527–1.1531 area with a target of 1.1584–1.1594.

On the 5-minute timeframe, consider levels 1.1267–1.1275, 1.1366–1.1377, 1.1461–1.1474, 1.1527–1.1531, 1.1584–1.1594, 1.1655–1.1666, 1.1745–1.1754. No important events are scheduled in the European Union for Wednesday, while in the US today the "report of the week" — the July inflation report — will be released. Most likely, inflation will slow slightly, but that does not mean it will not rise again in August.

Main Rules of the Trading System:

1. The strength of the signal is determined by the time it takes to form the signal (bounce or level breakthrough). The less time required, the stronger the signal.
2. If two or more trades are opened around a level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can generate a multitude of false signals or none at all. Technical levels may be disregarded.
4. When trading based on MACD signals on the hourly timeframe, it is advisable to do so only when volatility is high and a trend line or channel supports the trend.
5. If two levels are too close to each other (from 5 to 20 pips), they should be regarded as a support or resistance area.
6. After a 15-pip move in the correct direction, a Stop Loss should be set to break even.

What the Charts Show:

Support and resistance price levels (areas) are the targets when opening buy or sell orders or sources of signals.

Red lines denote channels or trend lines that reflect the current trend and indicate in which direction trading is currently favored.

The MACD indicator (14,22,3) – histogram and signal line – is a supporting indicator that can also be used as a source of signals.

Important speeches and reports (as listed in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be approached with utmost caution, or one should exit the market to avoid sharp price reversals against the preceding movement.

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