The EUR/USD currency pair experienced a slight downward pull during Thursday's trading, despite no macroeconomic or fundamental reasons. However, for a movement of 30-40 pips, no reasons are necessary; it's just ordinary market noise. Throughout the day, there were no significant publications or events to highlight. Thus, the market was fully focused on today. Reports on unemployment and the labor market, which are crucial for the dollar, will be published today. Recall that the last inflation report showed a sharp slowdown in consumer prices, with the next report set to be released next week. These reports will influence the Federal Reserve's decision at its next meeting in September. The market continues to expect a tightening of monetary policy by the end of the year, and it has even started to price this scenario in. However, we are quite skeptical of this, and weakness in the US labor market will confirm our concerns.
5M Chart for EUR/USDOn the 5-minute timeframe, the first trading signal on Thursday was formed only towards the end of the day. The price surpassed the 1.1527-1.1531 range, allowing novice traders to open short positions. However, it is uncertain whether the downward movement will continue today, as significant movements are not expected before the publication of the Non-Farm Payrolls, and post-publication movements can occur with any strength and in any direction.
How to Trade on Friday:On the hourly timeframe, the price has left the consolidation channel it spent a month in and is now forming a new upward trend. Considering the global events of recent months, we believe the European currency should continue its steady rise. Recently, the market has diligently ignored nearly all factors favoring the euro, leading to ongoing "consolidation" and adjustments towards the fair value.
On Friday, novice traders may remain in short positions with a target of 1.1527-1.1531, as the price has settled below the area of 1.1584-1.1594. Buy positions can be opened if the price consolidates above the 1.1527-1.1531 area, targeting 1.1584-1.1594. Before the publication of Non-Farm Payrolls, it's advisable to set a Stop Loss to break even on any positions.
On the 5-minute timeframe, levels to consider are 1.1267-1.1275, 1.1366-1.1377, 1.1461-1.1474, 1.1527-1.1531, 1.1584-1.1594, 1.1655-1.1666, and 1.1745-1.1754. On Friday, no important events or publications are planned in the Eurozone, while in the US, the reports that the market has been anticipating since Monday will be released. Therefore, we can expect high volatility during the American trading session.
Main Rules of the Trading System:The strength of the signal is determined by the time it takes to form the signal (bounce or level breakthrough). The less time required, the stronger the signal.If two or more trades are opened around a level based on false signals, all subsequent signals from that level should be ignored.In a flat, any pair can generate a multitude of false signals or none at all. Technical levels may be disregarded.When trading based on MACD signals on the hourly timeframe, it is advisable to do so only when volatility is high and a trend line or channel supports the trend.If two levels are too close to each other (from 5 to 20 pips), they should be regarded as a support or resistance area.After a 15-pip move in the correct direction, a Stop Loss should be set to break even.What the Charts Show:Support and resistance price levels (areas) are the targets when opening buy or sell orders or sources of signals.
Red lines denote channels or trend lines that reflect the current trend and indicate in which direction trading is currently favored.
The MACD indicator (14,22,3) – histogram and signal line – is a supporting indicator that can also be used as a source of signals.
Important speeches and reports (as listed in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be approached with utmost caution, or one should exit the market to avoid sharp price reversals against the preceding movement.
Beginners in Forex trading should remember that not every trade can be profitable. Developing a clear strategy and proper money management are essential for long-term trading success.