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EUR/USD continued to gradually trade higher on Monday. In fact, it's difficult to talk about yesterday's rise, as the pair's volatility was just around 40 pips and the euro only gained 17 pips. By the way, this amount is just typical market noise. Nevertheless, the upward trend has remained intact for about a month, and it is part of a corrective growth since the preceding decline was stronger. Therefore, we're still waiting for this correction to end, hoping the downtrend will resume. We still believe that the euro has no grounds to rise in the medium-term.
Yesterday, there were no significant events in either the US or the Eurozone. Nevertheless, the pair tried to rise, although it is already near the upper boundary of the channel. Therefore, a move to the lower boundary would be more logical at the moment. However, the euro continues to rise by 10-20 pips per day.
No trading signals were formed on the 5-minute timeframe. Formally, the pair consolidated above the area of 1.0785-1.0797, but within an hour it returned to this area and stayed there for the rest of the day. It remains within this 12-pip wide area even now, having traded within it all night. This is all you need to know about the strength of the current movements.
On the hourly chart, the EUR/USD pair continues to go through a corrective phase. We believe that the decline should resume in the medium term, as the euro remains expensive, and in general, the global trend is pointing downwards. The fundamental background still supports the US dollar, and the recent FOMC meeting proved this - now Federal Reserve Chair Jerome Powell doesn't even know when monetary policy easing will begin.
On Tuesday, we advise novice traders to closely monitor the area between 1.0785-1.0797. Traders may consider selling the pair if the price consolidates below this area and they can aim for 1.0725-1.0733. A breakthrough will allow traders to consider long positions with 1.0838-1.0856 as the target.
The key levels on the 5M chart are 1.0483, 1.0526, 1.0568, 1.0611, 1.0678, 1.0725-1.0733, 1.0785-1.0797, 1.0838-1.0856, 1.0888-1.0896, 1.0940, 1.0971-1.0981. Tuesday will be interesting. Germany will release the second estimate of its inflation report, ZEW institute indices for the EU and Germany will be published, the US producer price index, and Powell will deliver a speech in the evening. Therefore, the price should move at least a bit more today.
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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