Analysis of Wednesday's Trades:
1H Chart of the EUR/USD Pair
The EUR/USD currency pair showed a noticeable growth on Wednesday, which aligns well with the macroeconomic and fundamental backdrop. Recall that most of the recent reports in the U.S. have been, at the very least, contradictory, which did not imply a strengthening of the dollar. Essentially, the American currency has benefited from escalating tensions in the Middle East, but even this factor has not provided constant support. Yesterday, the macroeconomic reports were secondary and showed neutral values that matched forecasts. Thus, the euro's growth is not linked to events on Wednesday. We believe the dollar has once again exceeded its forecast growth, and the market has used all possible arguments to buy the American currency. Currently, the quotations of the pair have settled above the descending channel, indicating that the trend has shifted to a more logical upward direction.
5M Chart of the EUR/USD Pair
On the 5-minute timeframe, no trading signals were formed on Tuesday. Therefore, novice traders had no basis for opening any positions throughout the day. On the hourly timeframe, the pair has exited the descending channel for the second time, suggesting a trend change to the upside.
How to Trade on Thursday:
On the hourly timeframe, the downward correction has been canceled, as the price has consolidated above the descending channel. At the beginning of 2026, the long-term upward trend has resumed, so we expect new medium-term growth for the euro. The overall fundamental backdrop remains very challenging for the American currency, so we fully support further upward movement.
On Thursday, novice traders may consider short positions in case of a bounce from the 1.1830-1.1837 area, targeting 1.1745-1.1754. A price consolidation above the 1.1830-1.1837 area will allow opening long positions with a target of 1.1899-1.1908.
On the 5-minute timeframe, levels to consider are 1.1455-1.1474, 1.1527-1.1531, 1.1550, 1.1584-1.1591, 1.1655-1.1666, 1.1745-1.1754, 1.1830-1.1837, 1.1899-1.1908, 1.1970-1.1988, 1.2044-1.2056, 1.2092-1.2104. On Thursday, ECB President Christine Lagarde will speak in the Eurozone, but we do not expect any significant or pronounced statements from her. It will likely be a formal address that may not even touch on monetary policy. In the U.S., a report on jobless claims will also be released, which is considered secondary. Therefore, today, technical factors will take precedence for traders.
Main Rules of the Trading System:
- The strength of the signal is determined by the time it takes to form (rebound or breaking through the level). The shorter the time, the stronger the signal.
- If two or more trades were opened around a particular level based on false signals, all subsequent signals from that level should be ignored.
- In a flat market, any pair can generate numerous false signals or no signals at all. In any case, it is best to stop trading at the first signs of a flat.
- Trades are opened during the time period between the start of the European session and until the middle of the American session, after which all trades should be manually closed.
- On the hourly timeframe, signals from the MACD indicator should ideally be traded only when there is good volatility and a trend confirmed by a trend line or channel.
- If two levels are too close to each other (ranging from 5 to 20 pips), they should be considered as a support or resistance area.
- After moving 15 pips in the correct direction, it is advisable to set the Stop Loss to break-even.
What's on the Charts:
- Support and resistance levels are targets for opening buy or sell trades. Take Profit levels can be placed around them.
- Red lines indicate channels or trend lines that reflect the current trend and indicate the preferred direction for trading now.
- The MACD indicator (14,22,3) – the histogram and signal line – serves as a supplementary indicator that can also be used as a source of signals.
- Important speeches and reports (always found in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or it is advised to exit the market to avoid a sharp price reversal against the preceding movement.
- Beginners trading in the Forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing sound money management are the keys to long-term trading success.
