Thursday Trade Review:

1H Chart of EUR/USD

The EUR/USD currency pair continued trading inside a sideways channel on Thursday. Nothing is helping so far—not fundamental events, nor macroeconomic data releases. This week, there was a relatively large number of important macroeconomic reports scheduled, at least in the US. But none of them managed to push the price out of its range so far. The strongest move we saw was on Tuesday, when the market actively reacted to the record rise in yields on European and British bonds. That is, most of the macro data from the US was ignored by traders, while they paid attention to the surge in bond yields, which had been building up for months. On Tuesday, that factor was finally priced in. As we can see, there is little logic and consistency in the current movements. The climax was Thursday, when the first dollar-positive report—the US ISM Services PMI—was published. The dollar responded with a 15-pip gain. Honestly, there's nothing more to say.

5M Chart of EUR/USD

On the 5-minute timeframe, Thursday saw at least five identical sell signals, and the total daily volatility was a paltry 40 pips. Thus, regardless of the trading signals, it was nearly impossible to make any profit under such weak movement. Novice traders might have opened short positions on Thursday; losses here would have been minor since there were no buy signals during the day—but even gaining a (small) profit was quite problematic.

How to Trade on Friday:

On the hourly chart, EUR/USD still has every chance to resume the uptrend that's been forming since the start of this year; however, right now, the market remains flat. The fundamental and macroeconomic backdrop is still disastrous for the US dollar, so we do not expect any strengthening of the dollar. In our view, as before, the US currency can only count on technical corrections.

On Friday, the EUR/USD pair could trade in any direction, as the price is still inside the sideways channel and the US macro background could cause absolutely any market reaction. Thus, it's unlikely we'll see the end of the flat today, and price action may be as chaotic as possible.

On the 5-minute timeframe, traders should watch these levels: 1.1198–1.1218, 1.1267–1.1292, 1.1354–1.1363, 1.1413, 1.1455–1.1474, 1.1527, 1.1552–1.1563–1.1571, 1.1655–1.1666, 1.1740–1.1745, 1.1808, 1.1851, 1.1908. On Friday, the Eurozone will see the third (final) estimate of Q2 GDP—unlikely to interest anyone. In the US, much more important reports will be released: Nonfarm Payrolls and the unemployment rate.

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.