Analysis of Friday's Trades:
1H Chart of EUR/USD Pair
The EUR/USD currency pair saw a slight correction on Friday, following a strong rise on Thursday, driven by the European Central Bank meeting and a shift in the central bank's stance towards a less dovish stance. With the onset of the war in the Middle East and skyrocketing oil and gas prices, central banks began to expect an acceleration in inflation, and the ECB is no exception. However, while the Fed is not inclined to raise the key rate, both the ECB and the Bank of England are prepared to do so at their next meetings in April, as revealed last Thursday. This helped the euro and the pound slightly recover. However, by Friday, the pound sterling plunged again, and the euro was also under pressure to decline, although it didn't fall significantly. The bulls were unable to sustain their upward momentum, so despite breaking the trend line, it will be extremely difficult for the euro and pound to show further growth. The situation in the Middle East remains highly dangerous for the entire world.
5M Chart of EUR/USD Pair
On the 5-minute timeframe, exactly one trading signal was formed on Friday. During the US trading session, the price reacted to the 1.1527-1.1531 area, triggering a bounce that allowed beginner traders to open long positions. By the end of the day, the pair managed to rise about 25-30 pips, which newcomers could have captured. During the European trading session, the price approached the 1.1584-1.1591 area twice, but there was still no clear bounce.
How to Trade on Monday:
On the hourly timeframe, the downward trend is complete, but we might be dealing with another typical upward correction. At the beginning of 2026, a long-term upward trend resumed, so we still await new medium-term growth for the euro. The overall fundamental background remains very challenging for the US dollar, as confirmed by reports on the labor market, GDP, and unemployment. However, geopolitics remains the primary focus for the market at this time, preventing the dollar from falling.
On Monday, beginner traders may consider short positions if the price consolidates below the 1.1527-1.1531 area, targeting 1.1455-1.1474. A bounce from the 1.1527-1.1531 area would allow for opening long positions with targets at 1.1584-1.1591.
On the 5-minute timeframe, the following levels should be considered: 1.1267-1.1292, 1.1354-1.1363, 1.1413, 1.1455-1.1474, 1.1527-1.1531, 1.1584-1.1591, 1.1655-1.1666, 1.1745-1.1754, 1.1830-1.1837, 1.1899-1.1908. On Monday, there are no important events scheduled in either the Eurozone or the US. Therefore, movements during the day will be purely technical. However, it should be remembered that Trump could strike Iran's energy sector at any moment.
Key Principles of the Trading System:
- The strength of a signal is determined by the time it takes to form the signal (bounce or breakout). The less time taken, the stronger the signal.
- If two or more trades have been opened at a particular level based on false signals, all subsequent signals from that level should be ignored.
- In a flat market, any pair can form many false signals or none at all. In any case, at the first signs of a flat trend, it is best to stop trading.
- Trading deals are to be opened during the period between the start of the European session and the mid-American session, after which all trades should be closed manually.
- On the hourly timeframe, it is preferable to trade based on signals from the MACD indicator only when there is good volatility and a trend confirmed by a trend line or trend channel.
- If two levels are positioned too close together (5-20 pips apart), they should be considered a support or resistance area.
- Upon moving 15 pips in the correct direction, a Stop Loss should be set to breakeven.
What to Look for on the Charts:
Price levels of support and resistance are levels that serve as targets when opening buys or sells. Take Profit levels can be placed around them.
Red lines represent channels or trend lines that show the current trend and indicate the direction in which it is preferable to trade now.
The MACD indicator (14,22,3) – the histogram and the signal line – is a supporting indicator that can also be used as a source of signals.
Important speeches and reports (always included in the news calendar) can significantly affect the movement of the currency pair. Therefore, during their release, trading should be done with utmost caution, or traders should exit the market to avoid sharp price reversals against the previous movement.
Beginning traders in the forex market 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.
