Review of Monday's trades:

1H chart of the EUR/USD pair

On Monday, the EUR/USD currency pair continued its downward move. Last week, traders paused, hoping for at least a minor correction in the euro. However, after Monday, it is clear that nothing has changed. The market is still selling the euro and aggressively buying the dollar, as it has all month. It is probably no surprise that there were no reasons for the euro to fall further. The key theme of the week's first trading day was the energy truce between Ukraine and Russia that Donald Trump announced. As became clear by morning, no truce actually exists, and Kyiv and Moscow continued to strike during Monday. The conflict has been ongoing for a fifth year, and Trump has been promising for a second year to end it in the very near future — as well as his own conflict with Iran for the eighth consecutive month. Therefore, it is hard to say the dollar rallied once again because Trump failed to keep another promise.

5M chart of the EUR/USD pair

On the 5-minute timeframe on Monday, a very good sell signal was formed. During the European session, price closed below the 1.1198–1.1218 area, giving novice traders a clear opportunity to open short positions. By the end of the day, price fell about 30 pips, which traders could have captured as profit.

How to trade on Tuesday:

On the hourly timeframe, EUR/USD continues a downward trend that qualifies as a full trend. Considering the events of recent months, we do not believe the euro should collapse like a stone. But the market keeps buying the US dollar, ignoring any events or releases.

On Tuesday, novice traders may consider new short positions if price closes below the 1.1132–1.1140 area, targeting 1.1088. Beginners can open long positions on a rebound from the 1.1132–1.1140 area, targeting 1.1198–1.1218.

On the 5-minute timeframe consider the levels 1.1011, 1.1088, 1.1132–1.1140, 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, Germany will release its second estimate of September inflation, and the US will publish the existing-home sales report. Both reports are secondary, and the market will likely interpret each release in favor of the US dollar.

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.