Analysis of Wednesday's Trades

1H Chart of EUR/USD

On Wednesday, the EUR/USD currency pair remained stationary throughout the day, holding its position until the Federal Reserve meeting results were announced in the U.S. Late in the evening, it was revealed that the U.S. central bank reduced the key interest rate by another 0.25%. The market had already fully anticipated this decision and priced in. However, the unexpected news that the Fed's projections for rate cuts in 2025–2026 had become significantly more hawkish (as shown in the "dot plot") provided strong support for the dollar.

For a long time, the market had been pricing in 6-7 rate cuts in 2024 alone, then adjusted its expectations to several 0.5% cuts consecutively. It has become clear that the Fed will lower rates much more slowly, at least in 2025, than expected. Essentially, the market had already factored in the entire easing cycle, and now it is rebalancing the pair to a fair value as those expectations were not met. The downtrend remains intact.

5M Chart of EUR/USD

Only one trade signal was formed on Wednesday in the 5-minute timeframe, which could theoretically be acted upon. When the sharp decline began, entering the market in the 1.0433–1.0451 zone was nearly impossible. The next buy signal formed almost overnight and was corrective. A rebound from the 1.0334–1.0359 area could have been considered for long positions, but, as mentioned, this occurred overnight.

Trading Strategy for Thursday:

In the hourly timeframe, the EUR/USD pair had been trading within a horizontal channel for almost three weeks, but the Fed meeting results triggered a strong market reaction, breaking the flat trend. We believe that the euro's decline has resumed, though it is worth noting that the pair could quickly return to its previous range. We maintain that the downtrend has resumed, setting a course toward parity.

On Thursday, the price may correct upward due to a buy signal near the 1.0334–1.0359 area, and trading is expected to be calmer today.

In the 5-minute timeframe, consider the following levels for trading: 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, 1.0845–1.0851, 1.0888–1.0896.

The economic calendar is empty on Thursday in the Eurozone. In the U.S., a single significant report—the third GDP estimate for Q3—will be released. If there are no deviations from the previous estimate, the market reaction is unlikely.

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.