Analysis of Friday's Trades

1H Chart of EUR/USD

On Friday, the EUR/USD currency pair rebounded after the sharp decline observed on Thursday. It's important to note that there were no significant reasons for the euro's drop at the start of the new year. However, the medium-term decline of the euro is justified. For novice traders, it's essential to understand that price declines don't solely occur due to macroeconomic reports or major fundamental events. When a trend is established, price movements can happen at any time in the trend's direction, even overnight, since the Forex market operates 24/7.

On Friday, market volatility was low, and there was little reaction to the important US ISM Manufacturing PMI report. This report could have led to a renewed strengthening of the US dollar, but it did not. Nonetheless, it remains another positive indicator for the dollar.

5M Chart of EUR/USD

In the 5-minute time frame, trading movements on Friday were relatively weak, but two trading signals were formed. First, the price broke above the 1.0269–1.0277 range and then rebounded from it. In both instances, the price moved only 15–20 pips in the desired direction after the signals were generated. As a result, these buy trades did not yield significant profits. However, the buy signals remain valid, suggesting that the euro may continue to grow on Monday or Tuesday.

Trading Strategy for Monday:

On the hourly chart, the EUR/USD pair has exited its "holiday flat" phase, concluding it with a fresh decline. We believe that the euro's downtrend has resumed in the medium term, with little distance remaining to parity. Further declines in the euro are expected, supported by fundamental and macroeconomic factors that favor the US dollar.

Nevertheless, the pair may experience upward movement on Monday, as two buy signals formed in the 1.0269–1.0277 range.

On the 5-minute time frame, the following levels should be considered: 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.

On Monday, the US, Germany, and the EU will release second estimates for their services PMI. These are unlikely to cause any significant market reaction. Additionally, Germany will publish its December inflation figures, which are of greater interest but need to deviate significantly from expectations in order to provoke a notable market response.

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.