Analysis of Friday's Trades
1H Chart of EUR/USD
On Friday, the EUR/USD currency pair traded completely flat. No macroeconomic reports were scheduled for that day, so traders had nothing to react to during the session. Of course, a steady stream of information continues to flow from the White House, which market participants cannot ignore. This week, Donald Trump introduced a large number of new tariffs, announced plans for further tariff increases, and arranged meetings with Vladimir Putin and Volodymyr Zelensky to discuss a potential ceasefire in Ukraine. All these factors, in one way or another, do not support the dollar. The resolution of the conflict in Ukraine would boost risk assets. New tariffs represent a fresh escalation of the global trade war. In addition to these reasons, there remains a list of other global factors weighing on the dollar, such as Trump's pressure on the Federal Reserve and a sharp decline in market participants' trust in official U.S. statistics. We believe the U.S. currency will continue to decline.
5M Chart of EUR/USD
On the 5-minute timeframe on Friday, three sell signals formed. The price bounced three times from the 1.1655–1.1666 area, but the pair's total volatility for the day was only 50 pips. Thus, the problem was not with the signals or levels but with the market's unwillingness to trade that day. However, none of the signals resulted in a loss, as the price could not rise above the 1.1655–1.1666 area.
Trading Strategy for Monday:
On the hourly timeframe, the EUR/USD pair has every chance to resume the upward trend that has been forming since the start of this year. The U.S. dollar's "house of cards" collapsed last Friday. Since then, we have seen a series of news events that have created further problems for the dollar. We have previously warned that the U.S. currency has no long-term growth drivers, and we have also questioned the "optimism" linked to Trump's policies and their economic outcomes. The latest data and developments have confirmed that these problems are real.
On Monday, the EUR/USD pair could move in either direction, as there will be very little news that day — unless Trump makes new high-profile decisions that once again shake the market. Today, novice traders can trade from the 1.1655–1.1666 area.
On the 5-minute timeframe, the following levels should be considered: 1.1198–1.1218, 1.1267–1.1292, 1.1354–1.1363, 1.1413, 1.1455–1.1474, 1.1527, 1.1552–1.1563–1.1571, 1.1655–1.1666, 1.1740–1.1745, 1.1808, 1.1851, 1.1908. No important reports or events are scheduled in the Eurozone or the U.S. for Monday. Therefore, the only potential catalyst remains Trump.
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.
