descending trendline

Analyzing Tuesday's trades GBP/USD on 30M chart   On Tuesday, the GBP/USD pair displayed a significant rebound, which is difficult to explain from a fundamental or macroeconomic perspective. In addition, a new descending trendline has formed, which clearly passes through the three recent price peaks.   Thus, despite the British currency's growth, the downtrend persists. There was no macro data or fundamental background in either the UK or the US. Therefore, it is quite difficult for us to explain what caused the dollar's decline. However, technical corrections are still relevant, so the sudden growth shouldn't be that surprising. So far, nothing bad has happened to the downtrend.   The pound may fall as early as Wednesday, especially considering that the pair has already started to fall by the end of Tuesday. Moreover, there will be significant events and reports in the last three days of the week, which may prompt traders to buy the dollar again, regardless of their positions.     Several trading signals were formed on the 5-minute chart on Tuesday. The levels 1.2351 and 1.2367 will be removed from the charts. The levels 1.2307 and 1.2386 have been added, but they were not included in the signal formation process. The first sell signal was near the 1.2351 level. The pair managed to move down by only 15 pips, resulting in a loss when the price settled above the 1.2367 level. This same signal should have been executed using long positions, and the pair subsequently rose to the 1.2420 level and settled above it. The long position should have been closed when the price settled below this level. Immediately after that, short positions should have been opened, which should have been manually closed closer to the evening. As a result, the first trade ended in a loss, but the other two were profitable. Overall, novice traders made a profit. Trading tips on Wednesday: As seen on the 30M chart, the GBP/USD pair is generally moving down, but over the past week, we have seen more of a flat than a trend-driven movement. I expect the pound to fall further since it has not fallen enough yet. Breaking the new trendline may temporarily change market sentiment to bullish. The key levels on the 5M chart are 1.2171-1.2179, 1.2245, 1.2307, 1.2386, 1.2420, 1.2470, 1.2507-1.2520, 1.2597-1.2616. When the price moves 20 pips in the right direction after opening a trade, a stop loss can be set at breakeven. On Wednesday, there are no important events or reports scheduled in the UK, while the US will release the JOLTS report on job openings.   The market will only react to this report if the actual value significantly deviates from the forecast. Basic rules of the trading system: 1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.     2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.     3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.     4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.     5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.   6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.   How to read charts: Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them. Red lines are channels or trend lines that display the current trend and show which direction is better to trade. MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.   Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement. Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.    

The EUR/USD pair sharply fell on Friday. Volatility was high, but the day can be roughly divided into two parts: before Nonfarm Payrolls (NFP) and after. Prior to the release of US data, the market was relatively flat. This is not surprising as there were no significant events or reports in the first half of the day.     After the release of the NFP data, the pair sharply fell, which was logical, as the data exceeded expectations. Moreover, it exceeded forecasts twice as much, which speaks for itself: the US labor market is in excellent condition, despite the high interest rates set by the Federal Reserve.     The increase in the unemployment rate by 0.3% was no longer of particular importance. Trading signals were not the best due to the morning flat. During the European trading session, the pair rebounded from the level of 1.0762 thrice and failed to move up even by 10 pips each time.     After the release of the NFP data, the pair initially started to decline, then returned to the level of 1.0762, and then it fell again. Since the NFP data was very strong, it was reasonable to consider only trades that anticipated the dollar's growth, in other words, selling opportunities.     The last sell signal resulted in a profit of about 40 pips. The morning trade (which was only one) could have been closed at breakeven due to the same flat market conditions.   The COT report for May 30 was delivered on Friday. Over the past nine months, COT data has been in line with developments in the market. The net position (second indicator on the chart) has been on the rise since September 2022. The euro started to show strength approximately at the same time. Currently, the net non-commercial position is bullish and keeps growing further. Likewise, the euro is bullish.   Notably, we may assume by the extremely bullish net position that the uptrend may soon stop. The first indicator shows that, and the red and green lines are far away from each other, which is usually a sign that the end of the trend might be nearing.   The euro attempted to go down several months ago, but those were just minor pullbacks. In the reporting week, long positions of non-commercial traders decreased by 8,200 and short positions fell by 200. The net position dropped by 8,000. The number of long positions exceeds that of short ones by 165,000, a rather big gap. A correction or a new downtrend has started. So, it is clear that the pair will be bearish even without COT reports.     In the 1-hour time frame, the pair surpassed the descending trendline again, clearly indicating its intention to form an uptrend. This should be a correction, and afterwards the downward movement should resume. From a fundamental perspective, there are still no grounds for the pair to rise, but technically it may correct this week.   However, the price is below the Ichimoku indicator lines again, so it may fall again. On June 5, trading levels are seen at 1.0537, 1.0581, 1.0658-1.0669, 1.0762, 1.0806, 1.0868, 1.0943, 1.1092, as well as the Senkou Span B line (1.0785) and the Kijun-sen line (1.0708). Ichimoku indicator lines can move intraday, which should be taken into account when determining trading signals. There are also support and resistance although no signals are made near these levels. Signals could be made when the price either breaks or bounces from these extreme levels. Do not forget to place Stop Loss at the breakeven point when the price goes by 15 pips in the right direction.   In case of a false breakout, it could save you from possible losses. Today, both the EU and the US will release their respective Services PMIs for May. You should pay attention to the US ISM services, since it is more important than "ordinary" business activity indexes. Indicators on charts: Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals. Kijun-sen and Senkou Span B are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe.   They are also strong lines. Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals. Yellow lines are trend lines, trend channels, and other technical patterns. Indicator 1 on the COT chart is the size of the net position of each trader category. Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.    

Dow Jones Industrial Average (DJIA) has underperformed the S&P 500 and Nasdaq 100 in the past two weeks. Last Friday’s initial bullish price actions of DJIA retreated at 34,630 key range resistance. Minor uptrend from the 10 July 2023 low of 33,595 has shown signs of exhaustion.     Last week’s advance halted at 7-month range resistance     Fig 1:  US Wall St 30 medium-term trend as of 17 Jul 2023 (Source: TradingView, click to enlarge chart) Since the 13 December 2022 high of 34,944, the US Wall St 30 Index (proxy of the Dow Jones Industrial Average futures) has continued to oscillate within a 7-month sideways range configuration. The 3% rally from the 10 July 2023 minor low of 33,595 has been rejected at the 34,640 range resistance for the third time last Friday, 14 July, and confluences with a major descending trendline that capped previous up moves since the 29 March 2022 high.     Short-term momentum has flashed a bullish exhaustion signal     Fig 2:  US Wall St 30 minor short-term trend as of 17 Jul 2023 (Source: TradingView, click to enlarge chart) The hourly RSI oscillator has flashed a bearish divergence signal at its overbought region which suggests that it is likely the upside momentum of the minor short-term uptrend from the 10 July 2023 low of 33,595 has been exhausted which in turn increases the odds of a minor decline. Watch the 34,630 key medium-term pivotal resistance to maintain the short-term bearish bias with near-term support coming in at 34,320. A break below it exposes the next supports at 34,000 and 33,840. However, a clearance above 34,630 sees a potential bullish breakout from the 7-month range with the intermediate resistance coming in at 34,940 in the first step.  

Analyzing Monday's trades: EUR/USD on 30M chart   On Monday, EUR/USD corrected against Friday's correction. As a reminder, on Friday, the pair started an upward movement after breaking the descending trendline three times. Since the upward movement on that day was strong and sharp, a correction was expected, which we saw on the "quiet" Monday.   From a technical standpoint, the pair has been moving in an ideal manner in the last couple of days. The main question now is whether a new short-term uptrend will begin. Take note that in the medium-term perspective, the euro does not have any reason to rise. The short-term uptrend may simply be a correction on higher time frames. Therefore, the euro could still rise. But in the next couple of months, we believe that it should continue its downward movement.   EUR/USD on 5M chart   On Monday, there were two trading signals on the 5-minute chart and volatility was 54 pips, which is very low. It was quite inconvenient to trade due to such low volatility, but we were lucky to get such trading signals, as they turned out to be false only based on the fact that the pair did not reach the nearest target level. However, with such low volatility, it did not make sense to expect it to reach the target level anyway. The price bounced twice from the area of 1.0971-1.0977. In the first case, it moved up by 12 pips, so the trade should not have been closed at the time when the second signal was being formed. In the second case, the pair moved up by 20-25 pips. Beginners could have made such a profit by closing the trade manually closer to the evening.   Trading tips on Tuesday: On the 30M chart, the pair started to correct, but we still expect it to fall since it is significantly overbought in the long term and also lacks significant reasons to enter a new rally. The key levels on the 5M chart are 1.0835, 1.0871, 1.0901-1.0904, 1.0971-1.0977, 1.1038, 1.1091, 1.1132-1.1145, 1.1184, 1.1241, 1.1279-1.1292. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Tuesday, Germany will release the second estimate of its inflation report for July. In addition to that, Federal Reserve officials will speak. All of these events are considered secondary of importance.   Basic trading rules: 1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal. 2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored. 3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading. 4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually. 5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel. 6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.   How to read charts: Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them. Red lines are channels or trend lines that display the current trend and show which direction is better to trade. MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines. Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement. Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.