Analysis of Thursday's Trades

1H Chart of EUR/USD

On Thursday, the EUR/USD pair continued trading with a slight downward bias within the horizontal channel of 1.0451–1.0596. As the price has now reached the lower boundary of this channel, a rebound, and a new upward movement are quite likely. However, it's worth noting that both sideways movement and correction cannot last indefinitely. Therefore, we lean towards the level of 1.0451 being breached. Yesterday, the European Central Bank lowered rates by 0.25%, as expected. It is unlikely that this decision directly triggered the euro's decline. The recent euro depreciation over the past few days was more driven by technical factors, namely, a rebound from the upper boundary of the horizontal channel. Christine Lagarde expressed a rather pessimistic outlook yesterday but did not announce new monetary policy easing measures. The market's weak reaction to her speech further confirms that the ECB's stance currently carries little weight. What matters is the ongoing downward trend and the overbought status of the euro, which has developed over two years.

5M Chart of EUR/USD

One sell signal was generated on Thursday's 5-minute time frame. The price bounced off the 1.0526 level during the European trading session and dropped to the 1.0451 level. Throughout the day, we observed "swings" in both directions, which can be easily explained by the ECB meeting and Lagarde's speech. Nonetheless, the target was reached, and now the euro needs to consolidate below the 1.0433–1.0451 area.

Trading Strategy for Friday:

The EUR/USD pair remains in a corrective phase on the hourly time frame, trading within the horizontal channel of 1.0451–1.0596. Following two months of declines, no significant buying activity has emerged for the euro. Today or early next week, the price may exit this channel through the lower boundary, signaling a resumption of the downtrend that began three months ago.

We expect the decline to continue on Friday, as the price has repeatedly failed to breach the 1.0596 level.

On the 5-minute time frame, the following levels should be considered: 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. On Friday, the Eurozone will release an industrial production report, which is unlikely to be of significant importance. The U.S. event calendar is empty today.

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.