Analysis of Friday's Trades
1H Chart of EUR/USD
The EUR/USD currency pair experienced a brief surge on Friday; however, this rise was short-lived and not particularly strong. The increase in the value of the euro occurred during the European trading session when no significant reports or announcements were released. The only data point was the second German inflation estimate for February, which matched the first estimate. Thus, it can be concluded that the euro gained value without any clear reason. As we have noted previously, the current movements in the market are largely influenced by Donald Trump's decisions and statements. It is challenging to predict when Trump will announce his next decisions regarding tariffs and what those decisions will entail. This uncertainty often leads to price movements that lack any obvious connection to economic fundamentals. The euro continues to hover near local highs, while the market seems to overlook reports and events that would normally support the U.S. dollar. It's worth noting that the U.S. economy is not currently in a recession, and the Federal Reserve has not altered its stance on interest rates for 2025.
5M Chart of EUR/USD
In the 5-minute time frame on Friday, several trading signals emerged but ultimately did not deliver significant results. The initial signal around the 1.0845-1.0851 range proved false, with the price failing to move even 15 pips in the desired direction. The subsequent buy signal was better but still insufficient for considerable gains. A later sell signal yielded a maximum profit of 10 pips.
Trading Strategy for Monday:
In the hourly time frame, the EUR/USD pair remains in a medium-term downtrend, although the likelihood of its continuation appears to be decreasing. Given that the current fundamental and macroeconomic environment favors the U.S. dollar more than the euro, we still anticipate a decline. However, Donald Trump continues to create volatility for the dollar with his frequent tariff announcements and comments regarding the desired global order for the U.S. As a result, fundamental and macroeconomic factors are currently overshadowed by political and geopolitical dynamics.
On Monday, the euro could trade in either direction as the macroeconomic and fundamental backdrop lacks a natural influence on the pair's movement. We cannot predict the news that may come from Trump over the weekend.
On the 5-minute time frame, we should watch levels at 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 Monday, European Central Bank President Christine Lagarde will speak in the European Union, and the U.S. will release its retail sales report. Both events are noteworthy, but we remind you that the market is primarily reacting to Trump's statements at present.
Core Trading System Rules:
- Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
- False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
- 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.
- Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
- 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.
- Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
- 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.
