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EUR/USD showed "stunning" volatility on Wednesday. The range from the day's high to the low was only 29 pips. However, we already warned you that volatility would significantly drop this week, as the previous week had a strong fundamental background, whereas this time it is extremely weak. And so it happened. Even the economic reports have virtually no impact because all the data is secondary of importance. And in any case, what difference does it make whether they have an impact or not if the market is practically standing still?
On Wednesday, there was generally no macroeconomic background. The price remains below the trend line, thus the downtrend persists. We are convinced that the euro will resume the decline, but novice traders can see for themselves the current nature of the movement: 3-4 days of low volatility, 1-2 more or less attractive trading opportunities.
One sell signal was generated on the 5-minute timeframe. At some point during the European session, the price bounced off the level of 1.0838, after which it managed to fall by about 20 pips. There were no signals to close the deal, so it could be closed manually anywhere closer to the evening. The profit on it amounted to 10-15 pips. Better than nothing.
On the hourly chart, EUR/USD continues to move downward, which corresponds to the fundamental background. We believe that the euro should fall anyway, as the price is still too high, and the global trend is downward. Unfortunately, the market doesn't always want to trade the pair in a logical manner, and from time to time, we observe unreasonable growth. Moreover, the movements are quite weak.
You can try trading on the rebound from the levels of 1.0797 and 1.0838. We don't expect strong movements on Thursday, so we don't expect breakthroughs from above and below the price ranges.
The key levels on the 5M chart are 1.0568, 1.0611-1.0618, 1.0668, 1.0725, 1.0785-1.0797, 1.0838-1.0856, 1.0888-1.0896, 1.0940, 1.0971-1.0981, 1.1011, 1.1043, 1.1091. On Thursday, Germany will release reports on retail sales and the unemployment rate. The US docket will feature the jobless claims, the final estimate of Q4 GDP, and the final Consumer Sentiment Index from the University of Michigan for March. We expect low volatility.
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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