Analysis of Thursday's Trades
1H Chart of EUR/USD
On Thursday, the EUR/USD currency pair corrected to the nearest support level on the hourly timeframe, which was at 1.1267. Multiple factors caused the euro's decline. Yesterday, we mentioned that the macroeconomic backdrop has a very limited influence on overall market sentiment. While short-term reactions are possible, they do not change the broader trader outlook.
All of the business activity indices in the Eurozone and Germany—both in the services and manufacturing sectors—fell short of forecasts, placing the market in an uncomfortable position. On one hand, traders were reluctant to sell the euro and buy the dollar, but on the other, they had little choice. In the second half of the day, another negative surprise hit the markets when U.S. PMI figures came out better than expected. This once again prompted dollar buying. On the back of six positive reports, the U.S. dollar appreciated by about 50 pips. Yet, the dollar dropped by 40 pips just tonight without any reports or specific reasons.
5M Chart of EUR/USD
On Thursday, there was only one trading signal worth noting in the 5-minute timeframe, which turned out to be a false signal. The downward movement lasted all day, but no valid sell signal was formed initially. At one point, the price tested and bounced off the 1.1292 level. But during the U.S. session, traders were again forced to sell under pressure from strong U.S. data. Nevertheless, the price failed to break firmly below the 1.1267–1.1292 zone, which increases the likelihood of an upward trend resuming on the hourly timeframe.
Trading Strategy for Friday:
In the hourly timeframe, EUR/USD broke above the descending channel and rose without any apparent reason or catalyst. It seems that the uptrend, which began the moment Trump became President, will continue. This time, the market didn't need new tariffs, sanctions, or high-profile decisions from Trump — his presidency alone is enough to prompt selling of the U.S. dollar under current conditions.
On Friday, the EUR/USD pair is expected to continue trading based on technical factors, as the macroeconomic background remains irrelevant to current market sentiment. The market once again demonstrates its readiness to sell the dollar for any reason—or no reason at all.
On the 5-minute TF, the following levels should be considered: 1.0940-1.0952, 1.1011, 1.1088, 1.1132-1.1140, 1.1198, 1.1267-1.1292, 1.1354-1.1363, 1.1413-1.1424, 1.1474-1.1481, 1.1513, 1.1548, 1.1571, 1.1607-1.1622. No significant economic events are scheduled for Friday in the Eurozone or the U.S.. As a result, the market could enter a flat phase or trigger a new decline in the dollar. A rebound from the 1.1267 level has already formed, so we expect the pair to continue rising.
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.
