Monday's Trade Analysis:
1H Chart of EUR/USD
On Friday, the EUR/USD currency pair traded in a very sluggish manner. No significant news was available for traders throughout the day. Over the weekend, it was reported that Donald Trump had decided to impose new tariffs on steel and aluminum imports for "all participants," though the implementation timeline remains unclear. The market reacted more calmly this time. The U.S. dollar strengthened again at the market open with a gap up, but overall daily volatility was low, and the gap was quickly closed.
Additionally, ECB President Christine Lagarde was scheduled to speak on Monday, but according to news reports, she did not deliver any important updates, as expected. As a result, the EUR/USD pair is essentially stagnating, waiting for new catalysts. The euro continues to decline, but it still has some potential to continue its upward correction on the daily timeframe.
5M Chart of EUR/USD
On the 5-minute timeframe, only one trading signal was formed on Monday. During the European session, the price bounced off the 1.0334 level, then moved downward by about 20 points. The decline may continue today, so it is advisable to hold this trade and move the Stop Loss to breakeven.
How to Trade on Tuesday
On the hourly timeframe, the EUR/USD pair remains in a medium-term downtrend, with a local upward trend that was canceled but has already resumed. As before, a further decline in the euro is expected, as the fundamental and macroeconomic background continues to favor the U.S. dollar. However, the upward correction on the daily timeframe could still last for several weeks.
On Tuesday, the pair's movements may be relatively weak, and the euro may move in either direction.
On the 5-minute timeframe, the following key levels should be considered:1.0156, 1.0221, 1.0269-1.0277, 1.0334-1.0359, 1.0433-1.0451, 1.0526, 1.0596, 1.0678, 1.0726-1.0733, 1.0797-1.0804, 1.0845-1.0851.
The only major event of the day is Jerome Powell's testimony before Congress. This event is potentially significant since it remains unclear what questions senators might ask the Fed Chair. Some of these questions could be quite challenging. As a result, a strong market reaction is possible.
Main Rules of the Trading System:
- The strength of a signal is determined by the time it takes to form (whether it is a bounce or a breakout of a level). The less time required, the stronger the signal.
- If two or more trades have been executed at the same level based on false signals, then all subsequent signals from that level should be ignored.
- During flat (sideways movement), any currency pair can generate multiple false signals or none at all. In such cases, it is best to stop trading at the first signs of a flat market.
- Trades should be opened during the European session and closed manually by the middle of the U.S. session to avoid overnight risks.
- On the hourly timeframe, MACD signals should only be traded if there is sufficient volatility and a confirmed trend, verified by a trendline or trend channel.
- If two levels are too close to each other (within 5-20 points), they should be treated as a support or resistance zone rather than separate levels.
- After gaining 15 points in the right direction, move Stop Loss to breakeven to minimize risk.
Key Chart Elements:
- Support & Resistance Levels – These are the targets when opening buy or sell trades. Take Profit levels can be placed near these zones.
- Red Lines – Trend channels or trendlines, indicating the current market trend and the preferred direction for trading.
- MACD Indicator (14, 22, 3) – Histogram & signal line, a secondary indicator that can also serve as a signal source.
- Major Economic Reports & Speeches (always found in the economic calendar) can significantly impact the currency pair's movement. During these events, traders should be extra cautious or exit the market to avoid sudden price reversals.
Important Note for Beginner Traders:
Not every trade will be profitable. Developing a disciplined approach and adhering to risk management strategies is essential for long-term success in Forex trading.
