Analysis of Monday's Trades
1H Chart of EUR/USD
On Monday, the EUR/USD currency pair began a new wave of decline, which had nothing to do with fundamentals or macroeconomics. During the first trading day of the week, there were simply no significant reports or events. In the evening in Washington, Donald Trump held a meeting with EU and Ukrainian leaders on resolving the military conflict between Ukraine and Russia. Progress was made, all sides called the meeting productive, and there are plans for a meeting between Vladimir Putin, Volodymyr Zelensky, and Trump, which could put an end to the nearly 4-year war. This is excellent news, but not for the U.S. dollar. We consider yesterday's strengthening to be a coincidence. The trendline has been broken, but in our opinion, this does not open up any growth prospects for the dollar. The U.S. currency can still count only on corrections.
5M Chart of EUR/USD
On the 5-minute timeframe, no trading signals were formed on Monday, and volatility was again weak. The price rebounded once from the 1.1666 level but failed to rise by even 15 pips, and by the end of the day it traded in a flat range between 1.1655 and 1.1666. Thus, novice traders could have opened a buy trade, but it would have brought neither profit nor loss.
Trading Strategy for Tuesday:
On the hourly timeframe, the EUR/USD pair has every chance to continue the uptrend that has been forming since the beginning of this year. The situation for the dollar continues to worsen day by day. The Federal Reserve may soon resume its cycle of monetary policy easing, while the de-escalation of the military conflict between Ukraine and Russia could increase demand for risk currencies rather than the dollar. Trump continues to impose tariffs against all countries, so we see no grounds for strengthening the U.S. currency.
On Tuesday, the EUR/USD pair may resume upward movement despite breaking through the trendline. Thus, long positions will remain relevant today with targets at 1.1740–1.1750 if the 1.1655–1.1666 area is broken. Shorts can be considered on a confirmed rebound from the 1.1655–1.1666 area with a target at 1.1563. However, traders should probably not expect high volatility again today.
On the 5-minute timeframe, the levels to consider are: 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. For Tuesday, no significant events or reports are scheduled in the Eurozone or the U.S. Several secondary reports will be released in the U.S., but they are unlikely to affect traders' sentiment significantly.
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.
