Deal Analysis for Thursday:
1H Chart for EUR/USD
The EUR/USD currency pair continued its upward movement on Thursday following the Federal Reserve's meeting on Wednesday evening. Recall that the results of the last Fed meeting of the year cannot be considered unequivocally "dovish," as the central bank lowered the rate but essentially announced a prolonged pause for the following year. Only one easing of monetary policy is planned for the entire next year, which is positive news for the dollar. However, this time the market traded as if the Fed announced plans for 4-5 more cuts. It's also worth noting that the last two Fed meetings ended with a rate cut, after which the dollar rose. Therefore, the current decline of the American currency is more related to the flat trend on the daily timeframe. The price turned around near the lower boundary of the sideways channel at 1.1400-1.1830, so an expectation of a rise to the upper boundary could have been anticipated without the Fed meeting. In the long term, we expect the resumption of the 2025 global trend, with a breakthrough of the 1.1800 level and further growth.
5M Chart for EUR/USD
On the 5-minute timeframe, the first trading signal was formed during the US trading session yesterday. The price reached the resistance area of 1.1745-1.1754 but was unable to continue rising. As of Friday morning, the price has bounced off this area. The previous buy signal was formed on Wednesday evening. Traders who opened long positions based on this signal realized a profit of about 60 pips.
How to Trade on Friday:
On the hourly timeframe, the EUR/USD pair continues to trend higher, though the price has breached the trend line this week. The overall fundamental and macroeconomic background remains very weak for the US dollar; therefore, we expect further growth. Even technical factors currently support the euro, as the flat trend on the daily timeframe persists, and after turning around near the lower boundary, it was reasonable to expect growth toward the upper boundary.
On Friday, beginner traders can trade from the area of 1.1745-1.1754. A price bounce from this area will allow opening short positions with a target of 1.1655-1.1666. A consolidation above this level will signal a long position, with a target at 1.1808.
On the 5-minute timeframe, levels to consider include 1.1354-1.1363, 1.1413, 1.1455-1.1474, 1.1527-1.1531, 1.1550, 1.1584-1.1591, 1.1655-1.1666, 1.1745-1.1754, 1.1808, 1.1851, 1.1908, 1.1970-1.1988. On Friday, there are no important events or reports scheduled in the Eurozone and the US. Only the second estimate of November inflation will be released in Germany. Thus, volatility today may drop to minimal levels, and trading will need to be performed based on technical analysis.
Key Rules of the Trading System:
- The strength of a signal is determined by the time it takes to form the signal (bounce or breakout). The less time required, the stronger the signal.
- If two or more trades were opened near any level based on false signals, all subsequent signals from that level should be ignored.
- In a flat, any pair may form numerous false signals or none at all. At the first signs of a flat, it is better to stop trading.
- Trades are opened during the period between the beginning of the European session and the middle of the American session, after which all trades should be closed manually.
- On the hourly timeframe, it is preferred to trade only when there is good volatility and a trend confirmed by the trend line or channel, using signals from the MACD indicator.
- If two levels are too close to each other (5 to 20 pips), they should be viewed as a support or resistance area.
- Upon moving 15 pips in the right direction, set the Stop Loss to breakeven.
Chart Explanations:
- Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed near them.
- Red Lines: Channels or trend lines that reflect the current trend and indicate the preferred direction for trading.
- MACD Indicator (14, 22, 3): A histogram and signal line; a supplementary indicator that can also be used as a source of signals.
Important Note: Significant speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their release, it is advisable to trade cautiously or exit the market to avoid sharp reversals against the preceding movement.
Remember: For beginners trading in the Forex market, it is important to understand that not every trade can be profitable. Developing a clear strategy and practicing money management are keys to long-term trading success.
