Monday Trade Review:

1H Chart of EUR/USD Pair

The EUR/USD currency pair mainly traded sideways on Monday. During the European session, a downward movement was observed, raising many questions from both a fundamental and macroeconomic perspective. No important or even secondary reports were published on Monday. There was also nothing noteworthy among fundamental events.

On Friday, Donald Trump announced new tariffs on China—100%—which essentially marks a new escalation in the global trade war. Nevertheless, the dollar again barely declined in the foreign exchange market. For over two weeks in a row, the market has been ignoring all negative news for the U.S. currency. We believe the current downward movement of the pair is completely illogical — or perhaps a result of market-maker manipulation. The dollar has had no reason to strengthen. On the daily timeframe, a kind of flat trend is being maintained, and this is the only plausible explanation for the current decline in EUR/USD.

5M Chart of EUR/USD Pair

On the 5-minute timeframe, a single buy signal was formally generated. During the European session, the price reached the 1.1584 level and rebounded from it. However, the pair's upward movement lasted only about 5 minutes.

We had assumed that Monday would bring either a low-volatility flat or growth fueled by Trump's new tariffs. In fact, the European session already indicated that an upward move wasn't going to happen.

How to Trade on Tuesday:

On the hourly timeframe, the EUR/USD pair broke through the trend line several times, but the downward movement resumed for very questionable reasons. We view the current price action as completely illogical. The overall fundamental and macroeconomic background remains disastrous for the U.S. dollar, so a strong rally in the USD is not expected.

In our opinion, just as before, the American currency can only count on technical corrections — one of which we are currently observing.

On Tuesday, the EUR/USD pair may move in any direction. There's little logic behind current movements, and much noise. A correction could begin after a fairly extended decline, especially given that Donald Trump stirred the markets with his new tariffs. However, guessing is pointless. It's better to act on the trading signals generated on the 5-minute timeframe.

On the 5-minute TF, consider the levels 1.1354-1.1363, 1.1413, 1.1455-1.1474, 1.1527, 1.1571-1.1584, 1.1655-1.1666, 1.1745-1.1754, 1.1808, 1.1851, 1.1908, 1.1970-1.1988. On Tuesday, the Eurozone will release German industrial production figures and ZEW economic sentiment indices. These are not considered top-tier data. In the U.S., Jerome Powell will deliver another speech, which could be interesting but likely won't be impactful due to the complete lack of macroeconomic data from the U.S.

Basic Trading System Rules:

1. The strength of a signal is determined by how long it takes to form (bounce or breakout from a level). The less time it takes, the stronger the signal.
2. If two or more trades were opened based on false signals around a level, all subsequent signals from that level should be ignored.
3. In flat markets, any pair can generate many false signals—or none at all. Either way, at the first signs of flat behavior, it's best to stop trading.
4. Trades should be opened between the start of the European session and the midpoint of the U.S. session. All trades must be closed manually after this window.
5. On the hourly timeframe, MACD signals should only be used when there is good volatility and a confirmed trend based on a trend line or trend channel.
6. If two levels are located too closely together (5 to 20 pips), they should be viewed as a support or resistance zone.
7. After a trade moves 15 pips in the correct direction, the Stop Loss should be set to breakeven.

What's on the Charts:

• Support and resistance price levels are targets for opening buy or sell orders. These levels are also appropriate for placing Take Profit orders.
• Red lines: trend lines or channels indicating the current trend and preferred trading direction.
• MACD indicator (14,22,3): histogram and signal line — a supplementary indicator that can also be used for signal confirmation.

Important speeches and reports (always listed in the economic calendar) can strongly affect the movement of a currency pair. Therefore, during such events, it is recommended to trade with maximum caution or exit the market altogether to avoid sharp price reversals.

Beginner traders should remember that not every trade will be profitable. Developing a strict trading strategy and proper money management are key to long-term success in forex trading.