Analysis of Wednesday's Trades

1H Chart of EUR/USD

On Wednesday, the EUR/USD currency pair failed to establish new grounds for its upward movement. This is not surprising, as the market has primarily been reacting to news related to Donald Trump—specifically, announcements about new tariffs. However, the market tends to ignore news regarding the delays or cancellations of these tariffs.

In practical terms, this dynamic plays out as follows: when Trump announces new import tariffs, the dollar tends to decline; conversely, when he postpones or cancels those tariffs, the dollar does not tend to recover. Therefore, we believe the current decline of the dollar is not entirely justified. The market seems to be overlooking essential fundamental and macroeconomic factors and is behaving as if the Federal Reserve has cut interest rates to zero and the U.S. economy is already in a recession.

5M Chart of EUR/USD

On the 5-minute timeframe on Wednesday, two trading signals emerged. First, the price bounced off the 1.0888-1.0896 range, moving up by only 20 pips, which was enough to adjust to a breakeven Stop Loss, leading to a trade closure. Then, there was another slight rebound from the same range, and once again, the price increased by 20 pips in the expected direction.

Trading Strategy for Thursday:

On the hourly timeframe, the EUR/USD pair remains in a medium-term downtrend, but the chances of its continuation are decreasing. Given that fundamental and macroeconomic factors continue to support the U.S. dollar more than the euro, we still expect a decline. However, Trump's regular decisions and statements keep pushing the dollar lower. Right now, political and geopolitical factors overshadow fundamental and macroeconomic data.

On Thursday, the euro may trade in either direction, as macroeconomic and fundamental factors currently have no consistent impact on price movement. The market essentially ignored yesterday's U.S. inflation report.

For the EUR/USD pair, relevant levels on the 5-minute timeframe are 1.0433-1.0451, 1.0526, 1.0596, 1.0678, 1.0726-1.0733, 1.0797-1.0804, 1.0845-1.0851, 1.0888-1.0896, 1.0940-1.0952, 1.1011, and 1.1048. On Thursday, the macroeconomic background will have no impact. The market is ignoring much more important reports than industrial production in the Eurozone or the U.S. producer price index, which are secondary indicators.

Core Trading System Rules:

1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
3. 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.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
5. 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.
6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
7. 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.