Analysis of Friday's Trades
1H Chart of EUR/USD
On Friday, the EUR/USD currency pair traded with minimal decline. By the end of the day, the euro had settled below the ascending trend line, but we do not believe that the current upward trend has ended. A closer look at the hourly chart shows that the price has been gradually rising throughout the week without forming clear extremes. A second lower extreme may be currently forming, which could serve as the basis for drawing a new ascending trend line.
Let us recall that last week, there was once again very little positive news for the dollar. Only one important macroeconomic report was published on Friday, concerning durable goods orders. Despite its negative reading, the report had little impact on the pair's movement. Jerome Powell's speech contained nothing of interest, while Donald Trump signed one trade deal and announced increases on a few dozen or even hundreds of new tariffs. Thus, the dollar can still still at most expect a correction.
5M Chart of EUR/USD
In the 5-minute timeframe, two trading signals were generated on Friday. Both turned out to be false, as there was virtually no movement during the day and volatility was once again low. We remind novice traders that in flat markets or near-flat conditions, trading signals are unlikely to yield high profits. On Friday, the price initially broke above the 1.1740–1.1745 area, then dropped back below it. In the second case, the price did move about 15 pips in the desired direction, so the second trade would not have resulted in a loss.
Trading Strategy for Monday:
On the hourly timeframe, the EUR/USD pair has presumably completed a three-week correction. Since Trump's policies have not changed at all recently — and the issues involving his conflict with Powell and the trade war have only intensified — we still see no reason for the dollar to strengthen in the medium term. At this point, we do not consider the upward trend to be over.
On Monday, the EUR/USD pair may continue its local downward pullback. We recommend that novice traders closely monitor the 1.1740–1.1745 area. Another flat day is possible on Monday, as there will again be few important events, and market volatility has been disappointing recently. Nevertheless, buy and sell signals could form near the 1.1740–1.1745 area.
On the 5-minute time frame, the following levels should be monitored: 1.1198–1.1218, 1.1267–1.1292, 1.1354–1.1363, 1.1413, 1.1455–1.1474, 1.1527, 1.1563–1.1571, 1.1655–1.1666, 1.1740–1.1745, 1.1808, 1.1851, 1.1908.
No significant reports or events are scheduled for Monday in either the Eurozone or the United States.
Core Trading System Rules:
- Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
- False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
- Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
- Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
- MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
- Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
- Stop Loss: Set a Stop Loss to breakeven after the price moves 15 pips in the desired direction.
Key Chart Elements:
Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.
Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.
MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.
Important Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.
Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.
