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On Tuesday, the EUR/USD currency pair again attempted a correction, only to fail again. The price approached the 1.0596 level for the fourth time but could not break it. We've previously noted that the euro's inability to perform a meaningful correction indicates a lack of buyers in the market. Alternatively, buyers may not see any justification for purchasing the euro. This doesn't surprise us, as the euro's two-year rally was often illogical. Now, it's the dollar's time to rise.
We believe the U.S. dollar will continue to appreciate, as the fundamental backdrop strongly supports it. On Tuesday, a few reports were released in the Eurozone and the U.S., but they had virtually no impact on the pair's movements. The euro may attempt further gains this week, but recent price action increasingly resembles flat trading.
On Tuesday, several excellent trading signals formed in the 5-minute timeframe. First, the pair bounced off the 1.0596 level, allowing novice traders to open short positions. Hours later, the 1.0526 level was tested, and the price also demonstrated a precise bounce. The price then returned to the 1.0596 level, where profits could have been taken.
On the hourly chart, the EUR/USD pair continues to attempt a correction, but the market shows little interest in buying the euro or locking in profits on short positions. We believe a new correction is unlikely to be strong, as it would require news supporting the euro. However, even favorable news might struggle to assist the euro since the market is now oriented toward buying the dollar.
We anticipate that the downtrend could resume on Wednesday, given Jerome Powell's recent hawkish rhetoric and the pair's inability to break the nearest resistance level at 1.0596. Continuing flat trading is also possible, as a few significant events are scheduled for this week.
For the 5-minute timeframe, the key levels to watch are 1.0433-1.0451, 1.0526, 1.0596, 1.0678, 1.0726-1.0733, 1.0797-1.0804, 1.0845-1.0851, 1.0888-1.0896, and 1.0940-1.0951. On Wednesday, the only somewhat important event is Christine Lagarde's speech. However, her previous addresses have offered no new information to the market. Today's speech will likely follow the same pattern.
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.
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