Friday's Trade Analysis:
1H Chart of the EUR/USD Pair
The EUR/USD currency pair failed to develop the upward impulse from Thursday. Recall that on Thursday, Donald Trump sharply changed his tone towards Iran, again spoke about a "deal over the weekend," and canceled his order to launch new strikes against Iran in retaliation for delaying negotiations. Therefore, on Thursday evening, the dollar lost ground, but as we can see, this movement was not continued on Friday. On Monday night, Donald Trump again stated that the deal with Iran has been agreed upon and will be signed very soon, and that the Strait of Hormuz will be opened today. We still do not believe this, as the deal should be signed first, and then its conditions are implemented. Not the other way around. No confirming messages have yet arrived from Tehran, and on Sunday, Tehran refused to sign the agreement. Thus, last night, the market experienced another wave of optimism, but it did not last long. If the deal is indeed signed, the dollar will continue to decline, and the downward trend on the hourly timeframe will be completed.
5M Chart of the EUR/USD Pair
On the 5-minute timeframe, three sell signals were formed on Friday. The price bounced three times from the 1.1584-1.1594 area, each time giving novice traders an opportunity to open short positions. However, volatility throughout the day was once again low, and price action remained sideways. Therefore, traders could not realize any profit or incur any losses on short positions. A buy signal formed overnight and may develop on Monday.
How to Trade on Monday:
On the hourly timeframe, the flat 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. If a full-scale war resumes in the Middle East, the dollar will resume its growth. If Tehran and Washington sign the deal, demand for risk currencies will increase.
On Monday, novice traders may open short positions targeting 1.1527-1.1531 if the price settles below the 1.1584-1.1594 area. Buy trades may be considered upon a rebound from the 1.1584-1.1594 area, with a target of 1.1655-1.1666.
On the 5-minute timeframe, the following levels should be considered: 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 Monday, data on industrial production will be published in the US and the European Union, which are not expected to be significant under the current circumstances, and no market reaction is expected. Today, the market will be waiting for confirmations of the deal's conclusion with Iran and the opening of the Strait of Hormuz.
Basic Rules of the Trading System:
- 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.
- If two or more trades were opened at a particular level on false signals, all subsequent signals from that level should be ignored.
- In a flat, any pair can form many false signals or none at all. Technical levels may be ignored.
- 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.
- If two levels are too close together (5 to 20 pips), they should be considered a support or resistance area.
- 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 key to long-term success in trading.
