Analysis of Wednesday's Trades
1H Chart of EUR/USD
On Wednesday, the EUR/USD currency pair continued its sluggish decline. The euro's depreciation is quite logical, although traders continue to ignore the majority of macroeconomic events. The market is currently trading according to its own rules. Sometimes, the direction of movement aligns with the nature of the macroeconomic data—sometimes, it doesn't. Yesterday, for example, it did. The U.S. Durable Goods Orders report turned out to be much stronger than expected, and the U.S. dollar rose as a result.
We would also like to point out that the hysteria surrounding Donald Trump's tariffs is gradually subsiding. Trump hasn't officially introduced the tariffs yet, let alone impacted the economy or influenced the Federal Reserve's monetary policy—and the dollar has already plunged. That seems illogical and unfair. Therefore, we expect the dollar to strengthen heading into April 2.
5M Chart of EUR/USD
Several ideal trade signals were formed in the 5-minute timeframe on Wednesday. During the European and U.S. sessions, the price rebounded from the 1.0797–1.0804 area, and then during the night into Thursday, it tested the 1.0726–1.0733 area. As a result, a single trade could have yielded around 40–45 pips. The overnight buy signal was unlikely to be acted on by most traders, but it ultimately became profitable as the euro experienced a significant rise overnight.
Trading Strategy for Thursday:
On the hourly timeframe, the EUR/USD pair continues to follow a medium-term downtrend, although the chances of its continuation are diminishing. Since the fundamental and macroeconomic backdrop still supports the U.S. dollar far more than the euro, we continue to anticipate a decline. However, Donald Trump continues to push the dollar lower with his recurring tariff decisions and statements about how the world should be organized according to the U.S. agenda. As a result, fundamentals and macroeconomics are still being overshadowed by politics and geopolitics, and we do not expect a strong dollar rally just yet.
On Thursday, the euro may continue to decline, as the market has finally stopped selling off the dollar due to Trump. Technically, the pair has broken below the ascending channel. The dollar has been oversold and undervalued for too long and without justification. A continued correction looks likely.
Key levels to monitor on the 5-minute chart: 1.0433–1.0451, 1.0526, 1.0596, 1.0678, 1.0726–1.0733, 1.0797–1.0804, 1.0859–1.0861, 1.0888–1.0896, 1.0940–1.0952, 1.1011, 1.1048. There are no significant events scheduled in the Eurozone on Thursday. In the U.S., a somewhat important report on the final Q4 GDP estimate will be published. Since this is the final reading, it may still catch the market off guard.
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.
