Monday's Trade Review:

1H Chart of the EUR/USD Pair

The EUR/USD pair recovered slightly on Monday, but the euro's overall rise remains extremely weak. Essentially, even within the sideways channel 1.1114–1.1267, the euro is rising with great difficulty and reluctance. Therefore, the euro can be supported by absolutely every factor, but if the market refuses to buy it, we will see no growth, let alone a trend. On Monday, notable events included the US ISM manufacturing business activity index and the possible resumption of talks between Iran and the US in the near future. We do not expect a new round of negotiations to succeed; most likely, it will be another formal attempt to achieve peace. As a result, the euro did not receive significant support. US congressional elections are also taking place today, and the results will likely be known tomorrow night. Few doubt the outcome of the vote, but market volatility may spike because of this event.

5M Chart of the EUR/USD Pair

On the 5-minute timeframe, two trading signals were formed on Monday, but intraday movement was choppy and nervous, and the most important ISM index was ignored. Price first overcame the 1.1198–1.1218 area but could not continue higher, and on Tuesday night fell back below it. The euro still cannot show a sustained rise, and the market remains reluctant ahead of important events.

How to Trade on Tuesday:

On the hourly timeframe, the EUR/USD pair retains a downtrend that is a full-fledged trend and has moved into a flat mode. The euro failed to correct properly in recent weeks, but a chance for an upward trend still exists. Considering all the events of recent months, we do not believe the euro should have fallen like a stone. At the moment, the dollar is heavily overbought, and many euro-positive factors are being ignored.

On Tuesday, novice traders can open short positions if the pair consolidates below the 1.1198–1.1218 area, targeting 1.1104–1.1114. Open long positions on a close above the 1.1198–1.1218 area, targeting 1.1267–1.1275.

On the 5-minute timeframe consider the levels 1.1011, 1.1104–1.1114, 1.1198–1.1218, 1.1267–1.1275, 1.1366–1.1377, 1.1461–1.1474, 1.1527–1.1531, 1.1584–1.1594, 1.1655–1.1665. On Tuesday, notable events include the US JOLTS report on job openings, but this release is unlikely to provoke a strong market reaction. The euro will continue to trade inside the sideways channel today.

Main rules of the trading system:

1. Signal strength is judged by how long the signal took to form (a bounce or a breakout). The less time required, the stronger the signal.
2. If two or more false signals have been generated around a given level, all subsequent signals from that level should be ignored.
3. In a flat (range), any pair can produce many false signals or none at all. Technical levels can be ignored.
4. On the hourly timeframe, ideally trade MACD signals only when volatility is strong, and a trendline or trend channel confirms the trend.
5. If two levels are placed very close to each other (5–20 pips), treat them as a support/resistance area.
6. After a price moves 15 pips in the intended direction, move the Stop Loss to breakeven.

What is shown on the charts:

Price levels (areas) of support and resistance — levels that serve as targets when opening longs or shorts or as sources of signals.

Red lines — channels or trendlines that display the current trend and indicate the preferred trading direction.

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 (listed in the news calendar) can strongly affect a currency pair's movement. Therefore, when they are released, one should trade as cautiously as possible or step aside to avoid a sudden price reversal against the prior direction.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and money-management rules is the key to long-term success in trading.