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On Wednesday, the EUR/USD currency pair continued its downward movement. A week ago, we mentioned that this movement didn't surprise us, even though novice traders might notice that there are no specific local reasons for the euro to fall daily. This indicates that the market is consistently selling the euro in small portions. This is the key point. After two years of growth in the euro, the time has come to bring the pair's rate to a fair value. Previously, the U.S. dollar was continuously falling as the market priced in the future easing of monetary policy, but now it's the euro that keeps dropping because the market has already priced in this easing.
Moreover, today, the European Central Bank may lower rates for the third time, a factor the market had not previously considered. From a technical standpoint, the price is below the trendline and is not even attempting to consolidate above it. Therefore, even technically, there are no reasons to buy or expect the pair to rise at the moment.
Exactly one trading signal was formed in the 5-minute time frame on Wednesday. At the overlap of the European and U.S. trading sessions, the price entered the area of 1.0888-1.0896, consolidated there for several hours, and then started a new round of decline, reaching the 1.0856 level by the end of the day. Volatility remains weak, making it quite challenging to trade and expect profit on lower time frames. Nevertheless, it was possible to make a profit yesterday.
The EUR/USD pair continues its first step toward a new downward trend in the hourly time frame. At this point, it already looks like a leap. Unfortunately, illogical dollar sales could resume in the medium term, as no one knows how long the market will continue pricing in the Federal Reserve's monetary easing. However, the pair still shows a clear downtrend in the hourly time frame. We can expect further declines in the euro without a correction, as it remains highly overbought, but a correction would be more aesthetically pleasing.
On Wednesday, trading can be based on the nearest levels. Today's fundamental and macroeconomic backgrounds will be quite strong, so higher volatility can be expected.
In the 5-minute time frame, consider the following levels: 1.0726-1.0733, 1.0797-1.0804, 1.0838-1.0856, 1.0888-1.0896, 1.0940-1.0951, 1.1011, 1.1048, 1.1091, 1.1132-1.1140, 1.1189-1.1191. On Thursday, the ECB will announce the results of its meeting, followed by a press conference with Christine Lagarde. In the U.S., several less significant reports will be released, including industrial production and retail sales.
Support and Resistance Price Levels: These levels serve as targets when opening buy or sell positions. They can also be used as points to set Take Profit levels.
Red Lines: These represent channels or trend lines that display the current trend and indicate the preferred trading direction.
MACD Indicator (14,22,3): The histogram and signal line serve as an auxiliary indicator that can also be used as a source of trading signals.
Important Speeches and Reports (always found in the news calendar) can significantly impact the movement of a currency pair. Therefore, trading should be done with maximum caution during their release, or you may choose to exit the market to avoid a sharp price reversal against the preceding movement.
For Beginners Trading on the Forex Market: It's essential to remember that not every trade will be profitable. Developing a clear strategy and practicing money management is key to achieving long-term success in trading.
¡Los informes analíticos de InstaForex lo mantendrá bien informado de las tendencias del mercado! Al ser un cliente de InstaForex, se le proporciona una gran cantidad de servicios gratuitos para una operación eficiente.
