Friday's Trade Analysis:

1H Chart of the EUR/USD Pair

The EUR/USD currency pair maintained bullish momentum during Friday's trading, which is the most important takeaway. Last week, the European currency showed solid growth, which we believe was entirely justified and should have occurred even without the resonant decision by the U.S. Treasury. Of course, there were corrections, but the European currency should continue to grow against the dollar in the medium term. The situation for the American currency worsens week by week, while technical analysis on higher timeframes indicates the continuation of a global upward trend. On Friday, the macroeconomic background alternately supported both the euro and the dollar. Initially, fairly positive indices of business activity in the services and manufacturing sectors for August were released in the Eurozone and Germany. Then, contradictory business activity indices were released in the U.S., but the services sector set an almost world record in August, thus overshadowing the negative data from the manufacturing sector. As a result, the euro rose in the morning, while the dollar gained in the afternoon. However, we must reiterate that macroeconomic data do not currently determine market sentiment.

5M Chart of the EUR/USD Pair

On the 5-minute timeframe, no trading signals were formed on Friday. During the U.S. trading session, the price approached the area of 1.1655-1.1665 but failed to act on it; hence, no signals were generated.

How to Trade on Monday:

On the hourly timeframe, the EUR/USD pair continues its upward trend. Considering all the events of recent months, we believe that the European currency should continue its confident growth even without local support. In recent months, the market has stubbornly ignored many factors favoring the euro, which is why we continue to anticipate upward movement.

On Monday, novice traders may consider short positions with targets of 1.1584-1.1594 if the price settles below the 1.1655-1.1665 area. Long positions can be initiated on a bounce from the 1.1655-1.1665 area, targeting 1.1745-1.1754.

On the 5-minute timeframe, levels to consider include 1.1366-1.1377, 1.1461-1.1474, 1.1527-1.1531, 1.1584-1.1594, 1.1655-1.1665, 1.1745-1.1754, and 1.1830-1.1837. There are no significant reports or events scheduled for Monday in the Eurozone or the U.S. Thus, today, the macroeconomic and fundamental backdrop will be absent, leaving traders with nothing to react to throughout the day.

Main Rules of the Trading System:

1. 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.
2. If two or more trades are opened around a level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can generate a multitude of false signals or none at all. Technical levels may be disregarded.
4. 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.
5. If two levels are too close to each other (from 5 to 20 pips), they should be regarded as a support or resistance area.
6. 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.