Analysis of Wednesday's Trades

1H Chart of EUR/USD

The EUR/USD currency pair showed strong growth and decline on Wednesday. Lately, both moves have been triggered by Donald Trump. First, news broke that the U.S. was imposing additional tariffs on China, raising the total rate to an astronomical 104%. Then Trump decided to push it further to 125% (apparently to avoid half-measures) but introduced a 90-day grace period for all other countries, during which a 10% tariff would apply to all imports.

The first announcement pointed to an escalation in the trade war, while the second eased tensions slightly and gave rise to hopes of negotiations and a softer resolution to the trade conflict. However, these "Trump discounts" are unlikely to lead to a strong dollar rally since tariffs remain in place and Trump continues to play his cards in any way he sees fit. From the outside, it looks absurd to impose tariffs and then offer a discount on tariffs.

5M Chart of EUR/USD

On the 5-minute chart, three trading signals were formed during the day on Wednesday, not counting the sharp evening moves triggered again by Trump. The price bounced three times off the 1.1011 and 1.1091 levels, and the nearest target was hit in each case. Given the strong intraday volatility, novice traders could have made around 150 pips from just these three trades.

Trading Strategy for Thursday:

In the 1-hour timeframe, the EUR/USD pair is still in an uptrend. It's uncertain how long this will continue, as no one can predict how many additional tariffs Trump may introduce. Multiple escalations in the trade war are possible since many countries are preparing mirrored responses to U.S. actions. Trump has already stated that any retaliation will provoke further U.S. tariffs. Due to Trump's "discounts," the dollar may strengthen slightly but not significantly, as nothing has fundamentally changed.

On Thursday, markets will likely remain in shock. We won't attempt to predict price movements, as trade-related headlines appear almost every two hours. What's happening in the global markets right now is difficult to describe.

On the 5-minute chart, consider the following levels: 1.0596, 1.0678, 1.0726–1.0733, 1.0797–1.0804, 1.0859–1.0861, 1.0888–1.0896, 1.0940–1.0952, 1.1011, 1.1091, 1.1132–1.1140, 1.1189–1.1191, 1.1275–1.1292.

On Thursday, traders should watch the U.S. inflation report, which currently carries limited significance for market participants. The trade war headlines will remain the top priority.

Core Trading System Rules:

1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
7. Stop Loss: Set a Stop Loss to breakeven after the price moves 15 pips in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.

Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.