FX.co ★ How to Trade the EUR/USD Currency Pair on May 8? Simple Tips and Trade Analysis for Beginners

Trade Analysis for Thursday:

1H Chart of the EUR/USD Pair

The EUR/USD currency pair attempted to extend its upward move on Thursday, but by the end of the day, buyers again surrendered their positions. Overall, over the past three weeks, we have observed movements that resemble a range-bound market. There is a minimal upward inclination, but it is really quite weak. The European currency still cannot generate an upward impulse due to the lack of positive, fact-based geopolitical news. At the beginning of the week, hostilities resumed in the Middle East, and by Wednesday, Donald Trump announced the imminent signing of a memorandum on a temporary truce and mutual understanding, which would allow the unblocking of the Strait of Hormuz and serve as a platform for a comprehensive deal with Iran. However, Iran has not confirmed Trump's statements. Tehran does not deny the existence of negotiations but continues to assert that any deal must be fair for both parties, not just for Trump. Thus, the market is hesitant to sell the dollar and buy risk currencies.

5M Chart of the EUR/USD Pair

On the 5-minute timeframe, two trading signals were formed on Thursday. During the European trading session, the pair bounced off the area of 1.1745-1.1754, allowing traders to open long positions. Closer to the evening, it consolidated below that area, allowing short positions to be opened. Since volatility was low, neither trade yielded significant profits. However, the short position could be carried over to Friday. Movements today are expected to be more volatile.

How to Trade on Friday:

On the hourly timeframe, the upward trend remains, but the euro has been trading in a range for three weeks. The geopolitical situation is not improving, and it could worsen at any moment. The world does not particularly expect a real truce between Iran and America and is learning to live without oil from the Middle East. Therefore, it is unreasonable to expect a significant strengthening of the dollar. At most, there will be a continuation of the correction we have been observing for a month.

On Friday, beginner traders may stay in short positions targeting 1.1655-1.1666, as the price has consolidated below the 1.1745-1.1754 range. New buy positions can be considered if the price consolidates above the area of 1.1745-1.1754, targeting 1.1830-1.1837.

On the 5-minute timeframe, the following levels should be considered: 1.1354-1.1363, 1.1413, 1.1455-1.1474, 1.1527-1.1531, 1.1584-1.1591, 1.1655-1.1666, 1.1745-1.1754, 1.1830-1.1837, and 1.1899-1.1908. On Friday, a report on industrial production will be published in Germany, while in the US, the Nonfarm Payrolls, unemployment rate, wage report, and Michigan Consumer Sentiment Index will be released.

Main Rules of the Trading System:

1. The strength of the signal is determined by the time it took to form the signal (bounce or breakout of the level). The less time it took, the stronger the signal.
2. If two or more trades were opened near any level based on false signals, all subsequent signals from this level should be ignored.
3. In a flat market, any pair can generate many false signals or none at all. Technical levels may be ignored.
4. On the hourly timeframe, it is preferable to trade signals from the MACD indicator only in the presence of good volatility and a trend that is confirmed by a trend line or trend channel.
5. If two levels are too close together (5-20 pips apart), treat them as a support or resistance zone.
6. After a move of 15 pips in the right direction, a Stop Loss should be set to breakeven.

What is on the Charts:

Price levels (areas) of support and resistance – levels that are targets when opening purchases or sales, or sources of signals.

Red lines – channels or trend lines that display the current trend and indicate which direction is preferable to trade now.

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

Important speeches and reports (contained in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be done as cautiously as possible, or one should exit the market to avoid a sharp price reversal against the preceding movement.

Beginners trading in the Forex market should remember that not every trade can be profitable. Developing a clear strategy and effective money management are key to long-term trading success.