Friday Trade Review:

1H Chart of EUR/USD

On Friday, the EUR/USD currency pair showed a strong upward move, which fully reflected the macroeconomic background. It was impossible to predict in advance what the labor market and unemployment reports would be, so there was only one thing to do—wait for the reports themselves. In principle, betting on another failure of US statistics made sense. Since Donald Trump became the US President, the American economy has not been doing well, despite Trump's own claims that "everything is great." Almost all macroeconomic indicators have been falling in recent months—precisely the period when Trump's tariffs and sanctions were working at full force. Thus, the conclusion is obvious: Trump's trade war is causing more trouble and problems for the US itself than for its trading partners. Naturally, in such circumstances, the US dollar will continue to decline. The weakening labor market also means that the Federal Reserve will have to cut the key rate, starting in September.

5M Chart of EUR/USD

On the 5-minute timeframe, there was one trade signal on Friday worth noting. During the European session, the price bounced off the 1.1655–1.1666 area, which allowed novice traders to open long positions. At the time of the US data release, it was wise to set a Stop Loss to breakeven to avoid any risk. The target area was easily reached, but it made no sense to consider signals around this area since the price movements at that time were too emotional.

How to Trade on Monday:

On the hourly timeframe, EUR/USD still has every chance to resume the uptrend that has been forming since the beginning of the year, but for now, the market remains flat. The fundamental and macroeconomic background remains disastrous for the US dollar, so we still do not expect USD strength. In our opinion, as before, the US currency can only count on technical corrections.

On Monday, EUR/USD may trade in either direction, as the price remains inside the sideways channel. Despite Friday's strong rally, the pair is still flat overall, so a new drop from the upper boundary of the channel is quite possible. Trend resumption will only be possible after a confident break above 1.1737.

On the 5-minute timeframe, watch these levels: 1.1198–1.1218, 1.1267–1.1292, 1.1354–1.1363, 1.1413, 1.1455–1.1474, 1.1527, 1.1571–1.1584, 1.1655–1.1666, 1.1737–1.1745, 1.1808, 1.1851, 1.1908. On Monday, there are no important events or reports planned for either the Eurozone or the US. The only thing to note is German industrial production, which is unlikely to spark much market reaction.

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.