Analysis of Monday's Trades

1H Chart of EUR/USD

The EUR/USD currency pair attempted to continue its upward movement on Monday without any reason, but this trend quickly halted. Over the weekend, the results of the German parliamentary elections were announced, which initially triggered a rise in the euro when the market opened on Monday. However, it is quite difficult to explain why the initial reaction was so positive. Although the German government has changed, the immediate or even short-term benefits for the European economy remain unclear. We believe the market's response was largely emotional, fading quickly, and the pair returned to its original position near the ascending trendline. We anticipate that this trendline will be breached this week, leading to a new wave of downward movement. Currently, the price is situated near the upper boundary of a flat range on the daily timeframe, and substantial reasons would be needed for the euro to continue rising.

5M Chart of EUR/USD

On the 5-minute EUR/USD chart, two reliable trading signals were generated on Monday. Overnight, the price rebounded precisely from the 1.0526 level, suggesting that short positions could have been opened at the start of the European session. During the U.S. session, the price dropped to 1.0451, from which we observed another rebound, providing an opportunity to enter long positions in the latter half of the day. Both trades proved to be profitable.

Trading Strategy for Tuesday:

On the hourly timeframe, EUR/USD remains in a medium-term downtrend and a local uptrend. As before, a decline in the euro should be expected, as the fundamental and macroeconomic background continues to support the U.S. dollar much more than the euro. Several trend fluctuations may occur on the hourly timeframe before the primary downtrend resumes, but we expect a decline soon.

On Tuesday, the pair's movements may remain very weak. Even breaking the trendline may not significantly impact volatility, as there will be very few economic news releases again.

On the 5-minute timeframe, key levels to watch are 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, 1.0845-1.0851. The only significant event on Tuesday will be the release of Germany's Q4 GDP report (third estimate). We do not expect any significant market reaction to this report, as Germany's economy will likely show a result of -0.2%.

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.