Analysis of Thursday's Trades
1H Chart of EUR/USD
The EUR/USD currency pair traded throughout Thursday, both before and after the publication of the U.S. Nonfarm Payrolls and unemployment data. A total flat movement was observed both before and after the release of the U.S. macroeconomic data. As soon as the reports were published, the price immediately plummeted, but within the next hour, it almost fully recovered.
The U.S. unemployment rate, contrary to forecasts, fell to 4.1%, and the number of Nonfarm Payrolls increased by 147,000, compared to a forecast of +110,000. The third report — on ISM Services PMI — also favored the U.S. dollar: the index rose from 49.9 points to 50.8 points, significantly exceeding weaker expectations.
Thus, fate itself favored the dollar on Thursday, yet by the end of the day, it managed to gain only an unimpressive 30 pips, which once again proves the complete lack of willingness among traders to buy the U.S. currency. On the hourly timeframe, it is visible that even in the short term, the price cannot sustain a meaningful correction.
5M Chart of EUR/USD
On the 5-minute timeframe, several interesting signals were formed on Thursday. During the European session, the price rebounded from the 1.1808 level, and during the U.S. session, it plunged downward. However, the fall didn't last long, so once the price consolidated above the 1.1740–1.1745 area, short positions should have been closed and long positions opened. The pair did not show any significant upward movement by the end of the day, but it did move about 15 pips up, so long trades closed at breakeven.
Trading Strategy for Friday:
On the hourly timeframe, the EUR/USD pair remains in an uptrend, despite breaking the ascending trendline. In general, the fact that Donald Trump is the U.S. President continues to be a sufficient reason for the dollar to weaken on a regular basis. Of course, the dollar may occasionally correct, but the overall fundamental backdrop remains such that expecting strong growth from the U.S. currency is still very difficult.
On Friday, the EUR/USD pair may remain flat for most of the day. Today is Independence Day in the U.S., so all banking and stock market institutions will be closed.
On the 5-minute TF, we should consider the levels of 1.1198-1.1218, 1.1267-1.1292, 1.1354-1.1363, 1.1413, 1.1455-1.1474, 1.1527, 1.1561-1.1571, 1.1609, 1.1666, 1.1740-1.1745, 1.1808, 1.1851, 1.1908. On Friday, European Central Bank President Christine Lagarde will deliver another speech in the Eurozone, but we expect nothing significant from it. In the U.S., the economic calendar is empty for obvious reasons.
Core Trading System Rules:
- Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
- False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
- 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.
- Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
- 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.
- Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
- 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.
