EUR/USD saw robust trading on Tuesday and managed to gain 140 pips. Such a strong movement was provoked by an event not connected with macroeconomics in any way. Another round of talks between Ukraine and Russia has taken place in Turkey and gave hope for some positive changes. Kyiv and Moscow noted that negotiations moved from the dead point and may soon result in a peace agreement. Some issues still need to be discussed, but consensus can also be reached on them. It was also reported that Russian troops were retreating from Kyiv and Chernihiv. Naturally, markets immediately reacted to this information. Earlier, the euro and the pound fell amid the escalation of the military conflict, but on Tuesday, they showed a reversal. Unfortunately, it was very difficult to predict this move since no one knew how the negotiations would end. Besides, chances were slim that any significant progress could be made. We have repeatedly warned you in our previous reviews that the geopolitical factor must be taken very seriously.
On the 5-minute time frame, we saw a lot of trading signals formed. Since the volatility was very high, the pair tested several levels. Let's try to figure out what was the best strategy to use on Tuesday. At first, trading was sluggish. The price has formed three trading signals near the level of 1.0999. The first should have been ignored since the price had already reached the next level of 1.1019 at the time of its formation. The second sell signal could have been followed, but the short position was closed by a Stop Loss at breakeven as the price went down by about 20 pips. The third signal should not have been followed at all since at that time, there were already two false signals near 1.0999. But then everything changed. There was a buy signal near the level of 1.1019 which could be used to open a long position. After that, the pair jumped by 100 pips, breaking through a bunch of levels along the way. Therefore, a buy trade should have been closed only after a rebound from the level of 1.1136. Then, traders could have opened a new short position straight away, which should have been closed manually in the evening near the level of 1.1070. Thus, there were a lot of signals but only 4 trades were opened. The last two allowed traders to earn at least 100 pips in profit.
Trading tips on Wednesday
On the 30-minute time frame, the pair has rapidly started a new uptrend, which can end quite quickly. There is no clear trend on this time frame right now, and all the movements were unstable in nature. This means that the market panicked and reacted to a very important event. Based on this movement, it is impossible to analyze the technical picture, build trends or make forecasts. Now the market needs to calm down after a crazy Tuesday. On the 5-minute chart on Wednesday, it is recommended to trade at the levels 1.1019, 1.1038, 1.1070, 1.1106, 1.1136, and 1.1168. You should set a stop loss order to breakeven as soon as the price passes 15 pips in the right direction. On Wednesday, Christine Lagarde will make a statement, and the US will release the ADP and GDP reports. However, another round of talks in Turkey between Ukraine and Russia will also take place on Wednesday. Therefore, geopolitics may stay the most significant factor for the market.
