Analysis of Monday's Trades

1H Chart of EUR/USD

The EUR/USD currency pair continued its weak downward movement on Monday. The dollar failed to show any significant gains by the end of the day, and the macroeconomic backdrop didn't help much either. Six business activity indices in the services and manufacturing sectors were published throughout the day, and all six contradicted each other. In each country, if one index rose, the other declined. If one beat expectations, the other fell short. As a result, neither the dollar nor the euro could count on firm growth. However, the U.S. currency still has a few advantages, allowing it to at least show a corrective rebound. First, the dollar had fallen too long and sharply – a correction is needed. Second, the long-term trends remain bearish. Third, Trump hasn't introduced new tariffs yet, and rumors suggest he may significantly soften his stance. Fourth, the price has settled below the ascending channel on the hourly timeframe. Therefore, for now, we continue to favor movement to the downside.

5M Chart of EUR/USD

On the 5-minute timeframe on Monday, two trading signals were formed. First, the pair rebounded from the 1.0859–1.0861 area and then declined to the 1.0797–1.0804 area. Around the second area, short positions could be closed since the price initially bounced from it. And in general, that was the extent of Monday's movement. The trade was profitable, yielding about 30–40 pips.

Trading Strategy for Tuesday:

On the hourly timeframe, the EUR/USD pair remains in a medium-term downtrend, but the chances of that trend continuing are decreasing. Since the fundamental and macroeconomic background supports the U.S. dollar much more than the euro, we still expect further decline. However, Donald Trump continues to push the dollar into the abyss with his ongoing tariff decisions and statements about reshaping the global order for America. Fundamentals and macroeconomic data remain overshadowed by politics and geopolitics, so we do not yet anticipate strong growth in the dollar.

On Tuesday, the euro may continue to decline, as for the first time in a while, the market has responded to fundamentals as expected (Federal Reserve meeting), and technically, the price has broken out of the ascending channel. The dollar has been oversold and undervalued without justification recently. It is reasonable to expect a correction.

On the 5-minute timeframe, the following levels should be considered: 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. On Tuesday, Germany will release the business climate index, and the U.S. will publish new home sales data. Both are considered secondary reports. We believe that nothing will interfere with the current correction.

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.