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EUR/USD continued to gradually fall amid low volatility after consolidating below the ascending trendline. The market ignored several secondary reports from the EU and the US. The ZEW institute indices for Germany and the EU turned out better than expected, but the euro was still falling during the European trading session. Similarly, the US reports on building permits and housing starts also exceeded expectations, but the dollar was already falling during the US session. Therefore, there was no discernible correlation between macroeconomics and the pair's movements on Tuesday.
Nevertheless, it's a good thing that the euro is falling, albeit slowly. Unfortunately, it is difficult to trade the pair with daily volatility at just around 40 pips, but traders have to work with what they have at the moment.
Three trading signals were generated on the 5-minute timeframe. However, as one might guess, all of them left much to be desired. Initially, the pair consolidated below the level of 1.0855 and it fell by about 10 pips. Then there was a consolidation above the level of 1.0855, and the price climbed by another 10 pips. And that's it. Once again, we remind you that when the pair shows low volatility, it's very difficult to expect profits from any trading signals.
On the hourly chart, EUR/USD has started to move downwards, and we can only hope that this time the dollar will rise. We still expect a pronounced decline from the euro, which, in our opinion, should continue for quite some time. We assume that the bullish correction, which lasted for over a month, has finally ended. If that's the case, then a new downward trend will form. Take note that the euro still lacks significant factors that can support its growth.
The key levels on the 5M chart are 1.0568, 1.0611-1.0618, 1.0668, 1.0725, 1.0785-1.0797, 1.0855, 1.0888-1.0896, 1.0940, 1.0971-1.0981, 1.1011, 1.1043, 1.1091. On Wednesday, European Central Bank President Christine Lagarde will speak. This is quite interesting, but there have been no economic reports since the ECB meeting, so it's unlikely for Lagarde to provide traders with any interesting information. The FOMC meeting in the evening, Federal Reserve Chief Jerome Powell's speech, and the Fed's forecasts for interest rates over the next two years will be in focus.
1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.
2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.
3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.
4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.
5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.
6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.
The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.
Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.
Beginning traders should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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