Trade review for Monday:

1H chart of the EUR/USD pair

The EUR/USD currency pair once again showed downward movement on Monday, even though there were no major events or releases in the EU or the U.S. during the day. Geopolitical tensions, however, continue to rise: the market is pricing in the Federal Reserve's most hawkish actions, while largely ignoring European Central Bank monetary policy. The Middle East conflict could flare again in early November and promises to be more extensive and bloodier than what we saw in the first half of this year. Donald Trump and Iran have failed to find common ground, leaving renewed hostilities as the likely outcome. Experts agree that once the U.S. midterm elections conclude, there will be little to stop Trump from ordering strikes on Iranian infrastructure. It is also certain that Iran has spent recent months preparing for new attacks and planning retaliatory strikes. As a result, we may face fresh attacks on oil and gas infrastructure in the region and a new rise in energy prices.

5M chart of the EUR/USD pair

On the 5-minute timeframe, two sell signals formed on Monday. First, the price held below the 1.1198–1.1218 area, then it retraced and bounced off that same area from below. The signals duplicated each other, so novice traders could have opened a single short position. That position is now in profit, and the euro's decline may continue today.

How to trade on Tuesday:

On the hourly timeframe, the EUR/USD pair retains a downward tendency that is a full-fledged trend, though there are reasons to believe the trend may be exhausted. Given recent months' events, we don't think the euro should have fallen as steeply as it did. The dollar is heavily overbought, and many euro-bullish factors remain ignored.

On Tuesday, novice traders can remain in shorts if the pair holds below the 1.1198–1.1218 area, targeting 1.1132–1.1140. Consider long positions on a bounce from the 1.1132–1.1140 area, targeting a return to 1.1198–1.1218.

On the 5-minute TF 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. ECB President Christine Lagarde will speak again in the EU on Tuesday, but meaningful policy commentary two days before the ECB meeting is unlikely. In the U.S., durable-goods orders are due today; they may provoke only a muted market reaction.

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.