Monday trade review:

1H chart of the EUR/USD pair

The EUR/USD currency pair remains in a downtrend, although it showed quite a decent rise on Monday. The decline of the US currency was triggered by the initiation of a criminal case against Fed Chair Jerome Powell for overspending related to the reconstruction of Fed buildings four years ago. In reality, no criminal case has been opened, and charges have not been brought. However, the very fact that the presidential administration is suing the Fed chair could not help but provoke a market reaction. Traders understand that the investigation was initiated for only one reason — Powell's refusal to cut the key rate as demanded by the White House, which has no right to influence monetary policy. Nevertheless, Trump's tasks are not impossible. Powell leaves the Fed chair position in four months, but the US president still exerts pressure on him, likely as a lesson for the new Fed chair and other FOMC officials. There were no other events or news during the day.

5M chart of the EUR/USD pair

On the 5-minute TF on Monday, one trading signal was formed. At the beginning of the European trading session, the area 1.1655–1.1666 was broken, which allowed novice traders to open long positions. As we can see, the rise did not last long, but the price ended the day above that area. A bounce and a new rise are possible. At the same time, movement to the north may be constrained by the descending trendline on the hourly TF.

How to trade on Tuesday:

On the hourly timeframe, the formation of a downtrend continues, as evidenced by the trendline. It was not possible to overcome the area 1.1800–1.1830, which is the upper boundary of the flat on the daily TF, so the technical decline is logical and may continue down to the 1.1400 level. The overall fundamental and macroeconomic background remains very weak for the US dollar, but the flat on the daily TF plays a priority role, and traders practically ignore the macroeconomic background.

On Tuesday, novice traders can again trade from the area 1.1655–1.1666. A bounce off this area will allow opening long positions with a target of 1.1745–1.1754. A close below this area will make shorts relevant with a target of 1.1584–1.1591.

On the 5-minute TF, the levels to consider are 1.1354–1.1363, 1.1413, 1.1455–1.1474, 1.1527–1.1531, 1.1550, 1.1584–1.1591, 1.1655–1.1666, 1.1745–1.1754, 1.1808, 1.1851, 1.1908, 1.1970–1.1988. Today, no important events or reports are scheduled in the EU, but an important inflation report will be published in the US, which may significantly increase the likelihood of an earlier resumption of Fed easing if the report shows further slowdown.

Main rules of the trading system:

1. Signal strength is judged by the time required to form the signal (rebound or breakout). The less time required, the stronger the signal.
2. If two or more trades were opened on false signals near a level, then all subsequent signals from that level should be ignored.
3. In a flat, any pair can generate many false signals or none at all. In any case, at the first signs of a flat, it is better to stop trading.
4. Trades are opened during the period between the start of the European session and the middle of the American session; after that, all trades must be closed manually.
5. On the hourly timeframe, MACD-based signals should ideally be traded only when there is good volatility and a trend confirmed by a trendline or trend channel.
6. If two levels are located too close to each other (5–20 pips), they should be considered as a support or resistance area.
7. After the price moves 15 pips in the correct direction, place a stop loss at breakeven.

What is shown on the charts:

Support and resistance price levels — levels that serve as targets when opening buys or sells. Take Profit can be placed near them.

Red lines — channels or trendlines that reflect the current tendency and show which direction is preferable to trade now.

MACD indicator (14,22,3) — histogram and signal line — an auxiliary indicator that can also be used as a source of signals.

Important speeches and reports (always listed in the news calendar) can strongly affect a currency pair's movement. Therefore, during their release, trading should be done with maximum caution, or positions should be closed, to avoid a sharp price reversal against the preceding move.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and effective money management are the keys to long-term trading success.