Trade review for Thursday:

1H chart of the EUR/USD pair

The EUR/USD pair posted an unexpected, firm rise on Thursday. Of course, calling it a "firm" rise is difficult when the euro has been falling for two months straight, but the single currency still advanced in conditions that did not seem to favor it. Recall that yesterday the European Central Bank met and made no major policy changes. ECB President Christine Lagarde did not rule out further tightening—tightening the market has largely ignored for months. In addition, the U.S. Q3 GDP report beat forecasts, and the PCE matched forecasts but showed growth. Given that, another dollar advance yesterday wouldn't have surprised anyone. Yet the euro strengthened, which we view positively. The euro has declined for two months without strong justification, and the market has ignored virtually any positive news. At present, the pair is more in a sideways range between roughly 1.1114 and 1.1267, but the euro's rise looks like a first step toward a trend move.

5M chart of the EUR/USD pair

On the 5-minute timeframe, many signals formed on Thursday, and price action was choppy during the day because of the Federal Reserve and ECB meetings. We think trading signals right before the ECB meeting and before the U.S. GDP and inflation releases was risky, so novice traders could realistically only play the final buy signal once the direction became clear.

How to trade on Friday:

On the hourly timeframe, EUR/USD retains a downward tendency that remains a full-fledged trend, though it has moved into a sideways mode. The euro has not produced a proper correction in recent weeks, but an uptrend remains possible. Given recent months' events, we do not believe the euro should have fallen like a stone. The dollar is heavily overbought, and many euro-bullish factors are being ignored.

On Friday, novice traders can open short positions on a rebound from the 1.1198–1.1218 area, targeting 1.1104–1.1114. Open long positions after a close above 1.1198–1.1218, targeting 1.1267–1.1275.

On the 5-minute TF consider trading 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 Friday, Germany will publish Q3 GDP, inflation, and unemployment; the euro area will publish GDP and unemployment. The U.S. calendar is empty today. European data may prompt elevated volatility.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.
5. If two levels are too close together (within 5-20 pips), treat them as a support or resistance area.
6. After moving 15 pips in the right direction, a stop-loss should be set to break even.

What to Look for on the Charts:

Price levels (areas) of support and resistance serve as targets for opening buy or sell trades or as sources of signals.

Red lines indicate channels or trend lines that show the current trend and the preferred trading direction.

The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also provide signals.

Important speeches and reports (listed in the news calendar) can significantly influence currency pair movements. Therefore, during their release, traders should approach trading with utmost caution, or exit the market to avoid sudden reversals against the preceding move.

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