Trade review for Tuesday:

1H chart of the EUR/USD pair

The EUR/USD currency pair on Tuesday generally retained the downward bias that has prevailed in the market over the past week. Simply put, the dollar continues to rise without any clear local justification. The market remains focused on an expected Federal Reserve rate hike, and that is the main topic of discussion right now. Although the dollar continues to strengthen, most market participants still doubt the Fed will raise the key rate in September — and if it does, that tightening is unlikely to be a one-off. It is obvious to all traders that any sustained acceleration in inflation would require at least several stages of monetary tightening. Are Kevin Warsh and the Fed ready for such measures? We will get answers to these questions this evening — at least we hope to. In any case, the market has essentially already priced in a Fed hike, so there is a high probability of a reversal higher in the pair this evening.

5M chart of the EUR/USD pair

On the 5-minute timeframe on Tuesday, one buy signal was formed, but intraday volatility was weak again, and the price action was mostly sideways. Novice traders were fully justified in opening long positions, but potential profits were limited to about 10–15 pips.

How to trade on Wednesday:

On the hourly timeframe, the EUR/USD pair continues a downward trend that can still be considered a corrective move. Given recent months, we believe the euro should continue to rise steadily in the medium term. The dollar currently has no growth drivers beyond the market's near-religious belief in a Fed rate hike.

On Wednesday, novice traders may open short positions targeting 1.1461–1.1474 if price consolidates below 1.1527–1.1531. Open long positions targeting 1.1584–1.1594 if price bounces from the 1.1527–1.1531 area.

On the 5-minute timeframe, consider the levels 1.1366–1.1377, 1.1461–1.1474, 1.1527–1.1531, 1.1584–1.1594, 1.1655–1.1665, 1.1745–1.1754, 1.1830–1.1837. On Wednesday, the euro area will publish industrial-production data and the US will release retail-sales figures. Under current circumstances, the market is unlikely to react strongly to these reports. In the evening — the Fed meeting, the dot-plot release, and Chair Kevin Warsh's press conference.

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.