Analysis of Monday's Trades

1H Chart of EUR/USD

On Monday, the EUR/USD pair, somewhat unexpectedly, traded lower. At first, the decline in the euro was very weak, so we interpreted it as a technical correction following Friday's rally. For now, this movement still looks like a correction. However, the dollar's strengthening during overnight trading is somewhat concerning.

We have noted several times in recent articles that Jerome Powell's Friday speech was not dovish, and the Federal Reserve Chair actually created more uncertainty regarding the September rate decision than before his speech. This may partly explain the dollar's rebound after Friday's plunge. In any case, the technical picture still looks bullish: the trendline has been broken, and corrections vary in strength. If the price falls into the 1.1563 area, the technical outlook will turn ambiguous, and time will be needed to identify a new trend and adjust trading accordingly. For now, though, we maintain our view that a new local uptrend is forming.

5M Chart of EUR/USD

On the 5-minute timeframe, only one trading signal appeared on Monday. Toward the evening, the price broke through the 1.1655–1.1666 area, which allowed novice traders to open short positions. The price then moved down about 20 pips and could theoretically extend the decline today. However, the beginning of this move actually started on Friday, when the price bounced almost perfectly from the 1.1740–1.1755 area.

Trading Strategy for Tuesday:

On the hourly chart, EUR/USD still has every chance of resuming the uptrend that has been forming since the start of this year. The flat phase is over, a new upward trend is developing, and the fundamental and macroeconomic background remains negative for the U.S. dollar. As before, the dollar can only count on technical corrections.

On Tuesday, EUR/USD may trade with low volatility, since again there are few significant events on the calendar. After breaking through and then bouncing down from the 1.1655–1.1666 area, a local continuation of the decline toward 1.1571 may follow.

On the 5-minute chart, levels to watch 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, the U.S. is scheduled to publish the durable goods orders report, the only important release that traders should pay attention to.

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.