Analysis of Tuesday's Trades
1H Chart of EUR/USD
On Tuesday, the EUR/USD currency pair once again traded with an upward bias and ended the day with gains. The new ascending trendline indicates the continuation of the current upward trend on the hourly timeframe, and the macroeconomic background of the day had no significance or influence on the pair's movement. As previously mentioned, the macroeconomic background currently holds little importance for traders. Individual reports may trigger a market reaction, but this reaction has no significant impact on the overall movement of the pair, as the fundamental backdrop continues to exert pressure on the dollar on a daily basis.
Three reports are worth noting from Tuesday: Inflation in the Eurozone rose to 2% in June, which is expected to have no impact on the European Central Bank's monetary policy. U.S. ISM Manufacturing PMI rose to 49, which is still considered negative, as any reading below 50 indicates contraction. JOLTs job openings exceeded forecasts. During the U.S. session, the dollar saw a modest uptick, which did not affect the prevailing upward trend.
5M Chart of EUR/USD
On the 5-minute timeframe, two trading signals were generated on Tuesday. First, the pair consolidated above the 1.1802 level, and then below it. By the end of the day, this level was adjusted to 1.1808. In both cases, the price moved at least 15 pips in the correct direction, resulting in no loss on any open positions. The short trade even yielded a profit of approximately 15–20 pips.
Trading Strategy for Wednesday:
On the hourly chart, the EUR/USD pair maintains its upward trend, which began during Donald Trump's presidency and will likely continue until the next president takes office. The mere fact that Trump is president remains enough to keep the dollar under pressure. Even in the absence of direct Trump news, it does not guarantee strength for the U.S. currency. Trade wars, economic slowdown, and the ongoing conflict between Trump and the Federal Reserve all undermine long-term trust in the dollar.
On Wednesday, the EUR/USD pair could continue its rise, supported by the trendline. The nearest target is the level of 1.1851.
On the 5-minute chart, consider the following levels for trading: 1.1198–1.1218, 1.1267–1.1292, 1.1354–1.1363, 1.1413, 1.1455–1.1474, 1.1527, 1.1561–1.1571, 1.1609, 1.1666, 1.1740–1.1745, 1.1808, 1.1851, 1.1908.
There are a few major events scheduled globally for Wednesday, but it's worth noting that Trump's various battles against all dissenters in the U.S. continue. The ADP employment report in the U.S. will be released on Wednesday, but it's not expected to significantly influence the pair's movement.
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.
