Analysis of Friday's Trades

1H Chart of EUR/USD

The EUR/USD currency pair traded higher on Friday, but solely on "pure" technicals. There were no notable events or reports in the European Union that day, yet the euro began rising overnight and spent virtually the entire day moving up. Thus, after Thursday's decline, which the U.S. Producer Price Index triggered, we saw a logical recovery in line with the current technical picture.

It is worth recalling that the sharp increase in the PPI does not fundamentally change the outlook for the Federal Reserve's monetary policy. Yes, inflation in the U.S. may begin to accelerate at a much faster pace than in recent months. And the reason is clear—Donald Trump's tariffs, which so far have impacted the economy by only about 20%. However, the Fed's main task now is to save the labor market. It may be unrealistic to expect the most dovish outcome of all, but everything points to the key rate being cut twice by the end of the year. Accordingly, the dollar has new, tangible reasons to continue its decline.

5M Chart of EUR/USD

In the 5-minute timeframe, one trading signal was formed on Friday, and it proved highly effective. At the very start of the European session, the price broke through the 1.1655–1.1666 area, after which it moved only upward. Volatility was not high, but the trade could yield around 30 pips with minimal effort.

Trading Strategy for Monday:

On the hourly timeframe, EUR/USD has every chance of continuing the uptrend that has been forming since the beginning of this year. The "house of cards" for the U.S. dollar has collapsed, and the situation for the greenback continues to deteriorate. The Fed may soon resume the cycle of monetary policy easing, while the de-escalation of the military conflict between Ukraine and Russia could increase demand for riskier currencies rather than for the dollar.

On Monday, EUR/USD may resume upward movement, as it rebounded from the trendline. Thus, long positions remain relevant today with a target of 1.1740–1.1750. Short positions can be considered if the pair consolidates below the trendline, with a target of 1.1563.

On the 5-minute timeframe, the levels to consider are: 1.1198–1.1218, 1.1267–1.1292, 1.1354–1.1363, 1.1413, 1.1455–1.1474, 1.1527, 1.1552–1.1563–1.1571, 1.1655–1.1666, 1.1740–1.1745, 1.1808, 1.1851, 1.1908. No significant events or reports are scheduled in the EU or the U.S. on Monday, so volatility is again likely to remain low.

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.