Monday Trade Analysis:

1H Chart of the EUR/USD Pair

The EUR/USD currency pair completed its range after three weeks, trading in the 1.1584-1.1666 area. On Friday, the price plunged by about 120 pips, which triggered the end of the range. However, on Monday, the U.S. dollar was unable to continue its rise, as substantial reasons are still required. On higher timeframes (daily, weekly), it is clear that the dollar has shown quite modest growth in recent weeks and months compared to the preceding decline. Thus, we still do not expect a strong strengthening of the American currency in the long term. Individual events (geopolitical developments or strong U.S. reports) periodically provoke market reactions and dollar strengthening. However, each such event only underscores the obvious fact — the dollar cannot rely on a full-fledged trend. A new downward trend has formed on the hourly timeframe. The trend line indicates bearish market sentiment, but as we mentioned, further growth of the dollar requires sustained support from macroeconomic fundamentals and geopolitics. Much of this data has been ignored by the market in recent weeks.

5M Chart of the EUR/USD Pair

On the 5-minute timeframe, two trading signals were formed on Monday. The price first broke the 1.1527-1.1531 area from above to below, then from below to above. In both cases, traders did not experience significant movement, but the price moved at least 15 pips in the right direction, preventing losses on open trades.

How to Trade on Tuesday:

On the hourly timeframe, the range has ended, and the downward trend has resumed after three weeks of stagnation, but further growth of the American currency will depend entirely on developments in geopolitical events. Donald Trump continues to promise that a deal with Iran will be finalized soon. If this happens, the dollar will begin to lose positions.

On Tuesday, novice traders can open short positions targeting 1.1455-1.1474 if the price breaks below the 1.1527-1.1531 area. Buy trades can be considered on a bounce from the 1.1527-1.1531 area, with a target of 1.1584-1.1594.

On the 5-minute timeframe, levels to consider are 1.1354-1.1363, 1.1413, 1.1455-1.1474, 1.1527-1.1531, 1.1584-1.1594, 1.1655-1.1666, 1.1745-1.1754, 1.1830-1.1837, 1.1899-1.1908. On Tuesday, no significant events or reports are scheduled in either the Eurozone or the U.S. Today, reports on industrial production and trade balance in Germany, as well as ADP employment and home sales in the U.S., will be published. None of these is significant under the current circumstances.

Basic Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form (a bounce or a breakout). The less time it took, the stronger the signal.
2. If two or more trades were opened at a particular level on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can form many false signals or none at all. Technical levels may be ignored.
4. On the hourly timeframe, trading signals from the MACD indicator should be executed only when volatility is good, and a trend is confirmed by a trend line or channel.
5. If two levels are too close together (5 to 20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the correct direction, a Stop Loss should be placed at breakeven.

What's on the Charts:

Price levels (areas) of support and resistance are targets when opening long or short positions or sources of signals.

Red lines indicate channels or trend lines that display the current trend and indicate the preferred direction for trading.

The MACD indicator (14,22,3) – histogram and signal line – is a supplementary indicator that can also be used as a source of signals.

Important speeches and reports (contained in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or one should exit the market to avoid sharp reversals against preceding movements.

Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are keys to success in trading over the long term.