Analysis of Tuesday's Trades

1H Chart of EUR/USD

On Tuesday, the EUR/USD pair experienced a downward correction, as anticipated. On Monday, the pair had demonstrated an unexpectedly strong rally, which began even before the release of the German inflation report, a potential catalyst for this movement. It seemed that the market was buying euros in anticipation of Tuesday's EU inflation report. However, the report revealed no stronger-than-expected growth in consumer prices, with core inflation remaining flat. As a result, we returned to what is considered a "fair exchange rate" on Tuesday. Additionally, the ISM Services PMI report from the US added pressure to the euro, as it exceeded expert forecasts by a few points. We therefore maintain our view that the euro lacks the basis for medium-term growth. A corrective move has occurred, but what lies ahead? For further growth, the pair needs new, preferably occasional, catalysts.

5M Chart of EUR/USD

On the 5-minute timeframe, Tuesday saw the formation of a nearly perfect sell signal. During the European trading session, the price rebounded from the 1.0433 level, subsequently declining to the 1.0334–1.0359 area, where profits should have been taken. This area may serve as a rebound point again today. However, as noted earlier, the euro requires new drivers to support growth, as the global fundamental backdrop continues to favor the dollar.

Trading Strategy for Wednesday:

In the hourly timeframe, the EUR/USD pair has emerged from its "holiday flat" phase, experiencing both a sharp decline and a quick rise. We believe that the euro's medium-term drop has resumed, with parity now within reach. As mentioned earlier, further declines in the euro are expected, as the fundamental and macroeconomic landscape continues to favor the US dollar.

For Wednesday, novice traders can consider trading within the range of 1.0334 to 1.0359. The macroeconomic outlook today is not particularly strong.

On the 5-minute timeframe, the following levels are noteworthy: 1.0156, 1.0221, 1.0269–1.0277, 1.0334–1.0359, 1.0433–1.0451, 1.0526, 1.0596, 1.0678, 1.0726–1.0733, 1.0797–1.0804, and 1.0845–1.0851. In the EU, only German retail sales data will be released, while in the US, the key reports will include the ADP employment report and jobless claims. The FOMC meeting minutes will be available in the evening. The most significant report for the day is the ADP employment report.

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.