trend line

Monday was uneventful. There are no significant economic reports scheduled for Monday and Tuesday, and all the fundamental events are of secondary importance. Monday was a low volume trading day and both pairs had a slight inclination to correct after a strong rally last week.   The same situation will probably persist today. Among the economic events, the only one worth mentioning is the report on the number of building permits issued in the United States. Even with an empty events calendar, such a report can still provoke a market reaction. But what kind of reaction exactly?   For example, on Friday, when volatility was also quite low, the US Consumer Sentiment Index triggered a 30-point reaction (approximately). We might witness the same reaction today. The main point is that volatility is still low, which makes it difficult to trade, regardless of whether there are reports or not.   Analysis of fundamental events: Among today's fundamental events, the speeches by European Central Bank representatives Andrea Enria, Luis de Guindos, and Elizabeth McCaul stand out. De Guindos has already spoken earlier, and Enria and McCaul clearly carry less weight in the eyes of traders compared to Schnabel and Lane.   Therefore, if traders did not react to yesterday's speeches, it is even less likely that they would today. In the US, you can look forward to the speeches of Federal Reserve officials John Williams and James Bullard. However, Bullard does not have voting rights this year, so his hawkish stance (which is expected) is unlikely to affect morale. As for John Williams, the US central bank held a meeting just last week and we have already heard all the necessary information.   Furthermore, on Wednesday and Thursday, Fed Chairman Jerome Powell's speeches in Congress will attract much more attention. General conclusions: There are few important fundamental and economic events.   You can pay attention to the report on the number of building permits issued in the United States, as it is the only event that can truly provoke a reaction on a potentially low volume trading day. 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.  

The EUR/USD pair has been going through low volatility and volume. The chart above may suggest that the pair moved quite actively, but in reality, there was only a 53-pip range between the day's high and low. Thus, we have witnessed the third consecutive boring and uninteresting day. Yesterday's only notable report was the number of approved construction permits in the United States. The report turned out slightly better than expected, which helped strengthen the dollar to some extent. But what kind of reaction are we talking about?   A mere 20 pips, which is not interesting at all and does not affect the current technical picture. The pair continues to correct sluggishly downward against an empty calendar. Yesterday, one signal was even formed. During the European trading session, the pair rebounded from the level of 1.0943 and then moved down by the aforementioned 50 pips. However, the price could not reach the target level by the end of the day, and no further signals were formed. Therefore, it was advisable to manually close the sell trade anywhere closer to the evening. It was possible to earn around 30 pips from it, which is not bad considering the current volatility. COT report: On Friday, a new COT report for June 6 was released. In the last 9 months, COT reports have fully corresponded to what is happening on the market. The chart above clearly shows that the net position of big traders (the second indicator) began to grow again in September 2022.   At the same time, the euro resumed an upward movement. The net position of non-commercial traders is bullish. The euro is trading at its highs against the US dollar. I have already mentioned that a fairly high value of the "net position" indicates the end of the uptrend. The first indicator also signals such a possibility as the red and green lines are very far from each other. It often occurs before the end of the trend. The euro tried to start falling a few months ago but there was only a pullback. During the last reporting week, the number of long positions of the "Non-commercial" group of traders decreased by 5,700 and the number of short positions rose by 1,500. The number of long positions is higher than the number of short ones. This is a very large gap. The number of long positions is 59,000 higher than short ones.     The difference is more than three times. The correction has begun. Yet, it may not be a correction but the start of a new downtrend. At this time, it is clear that the pair is likely to resume a downward movement without COT reports. 1H chart of EUR/USD In the 1-hour chart, the pair is trying to start an uptrend but there are no drivers for growth. Last week, there were many events that bolstered its rise. However, in the medium term, there are still no reasons to go long. Technical indicators signal an uptrend.   It would be better not to sell the pair now. We need to wait at least for consolidation below the trend line and the target level. On June 21, trading levels are seen at 1.0581, 1.0658-1.0669, 1.0762, 1.0806, 1.0868, 1.0943, 1.1092, 1.1137, as well as the Senkou Span B line (1.0766) and the Kijun-sen line (1.0889) lines. 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. Several ECB and Fed officials are scheduled to deliver speeches today. However, traders are likely to ignore their statements. Federal Reserve Chairman Jerome Powell will deliver an important speech in Congress. The main focus is on that.  

Based on what we can see on its GBP/USD weekly chart, there is a few interesting things: 1. The appearance of Bearish Divergent between Stochastic with GBP/USD. 2. The appearance of Bearish Three Little Indian (Cyan circle). 3. The appearance of Rising Wedge weakening Pattern. 4. There is a Wolve Waves Pattern.     Based on those facts above, Cable seems has the chance to continue its quite huge downward tren, maximum in the next 2 weeks where as long as there is no upward correction rally that exceeds the 1.2850 level, GBP/USD will try to fall down towards the trend line ETA Line of its Wolve Wave or at least to the 1.2307 level as its main target.     

NAS100 Daily   It is currently trading within a zone that has been notable as resistance since the start of last year, with the price failing in February and March of 2022 and again in June and July this year. A move above this zone could be a very bullish signal and a sign that the tide has turned for the tech space. Above here, 16,000 and 16,500-16,700 will be interesting as well, having been significant when it peaked back in 2021. But with so much enthusiasm around AI, if interest rate risks and economic fears do subside, there may be a question of whether those levels could be tested earlier than some even recently assumed. Of course, these things don’t always move so smoothly and there’s been plenty of setbacks in recent years. A break of the blue trend line could suggest the market has become overbought or such as setback has occurred. But right now, enthusiasm only appears to be building and the stochastic may be saying something similar, having produced some higher highs recently. The MACD still looks less convincing.    

Analyzing Friday's trades: EUR/USD on 30M chart   The EUR/USD pair took a breather and traded flat on Friday. Let's refresh our memory a bit: the pair has been rising all week, in most cases without any apparent reasons, and on Friday, it failed to show even a bit of a correction! That's all you need to know about the current movement. The demand for the euro is as strong as it is unfounded. Throughout the week, the market desperately reacted to the inflation report. At least, that's the only assumption we can make because there were no other important events or reports. Moreover, the reaction to the US inflation began as early as Monday (two days before its release), and it continued on Thursday (one day after the release). Even the FOMC meetings had a much weaker impact. Nevertheless, the uptrend persists, supported by the trend line. Therefore, it would be wise not to consider short positions in the medium term until the price firmly breaks below this line (with the exception of intraday trading with strong signals).   EUR/USD on 5M chart   Several entry signals materialized on the 5-minute chart, which is completely normal for a flat market. Throughout the day, the price crossed the distant level of 1.1228 five or six times. Naturally, in a flat market, all trading signals turned out to be false. Beginners could only execute the first two signals. In the first case, the price moved in the right direction for about 15 pips, which was enough to set a stop loss at breakeven, but not in the second case. Thus, the day turned out to be not the most successful, but what could one expect when volatility was only 40 pips and there were no important reports or events?   Trading tips on Monday:   On the 30M chart, the pair continues to form an uptrend. On Friday, there was an excellent opportunity for a slight correction with an empty event calendar, but the market did not take advantage of it. Therefore, the euro may extend its upward movement for the rest of the week. The key levels on the 5M chart are 1.0871, 1.0901, 1.0932, 1.0971-1.0977, 1.1038, 1.1091, 1.1132, 1.1184, 1.1279-1.1292, 1.1330, 1.1367. A stop loss can be set at a breakeven point as soon as the price moves 15 pips in the right direction. On Monday, there are no important reports or events lined up in the US or the euro area, so we can see any type of movement. It is highly likely to be a flat, but we may well see both an increase and a correction.   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.      

Analyzing Friday's trades: GBP/USD on 30M chart     On Friday, the GBP/USD pair traded flat with a slight bearish bias. The new, upcoming, ascending trend line has not been broken. At the moment, the price has only tested it. However, since the market has entered a flat phase, breaking this trend line will not be a strong signal for a trend reversal.   Of course, the British currency cannot continue to rise indefinitely, especially considering the lack of reasons and grounds for such a move. A correction should start sooner or later, but it is extremely difficult to predict when it will start because the market is currently hardly reacting to fundamental and macroeconomic factors, as confirmed by the entire week.   There was only one report on Friday, and it was the consumer sentiment from the University of Michigan in the US. This indicator unexpectedly showed a much stronger increase than forecasted and... triggered a 20-25 point rise in the dollar. As before, all reports in favor of the dollar were ignored, while any reason to buy the British pound was used to its fullest extent, resulting in a 200% increase.   GBP/USD on 5M chart A huge number of signals materialized on the 5M chart, while the movement was sideways and volatility was only 55 pips, which is very low for the pound. Therefore, almost any level that the price encountered automatically became a source of false signals. Thus, beginners could attempt to execute one or two signals during the European trading session. It is highly likely that the first one resulted in a small loss, while the second one was closed at breakeven when the stop loss was triggered. It was quite challenging to expect other results in a flat market. Trading tips on Monday: As seen on the 30M chart, the GBP/USD pair continues to show strong growth despite the Friday flat. Even if the price consolidates below the trend line, it does not mean that a downtrend is brewing, as traders remain bullish, and crossing the trend line during a flat phase is not a strong signal. The key levels on the 5M chart are 1.2779-1.2801, 1.2848-1.2860, 1.2913, 1.2981-1.2993, 1.3043, 1.3107, 1.3145, 1.3210, 1.3241, 1.3272. When the price moves 20 pips in the right direction after opening a trade, a stop loss can be set at breakeven.   On Monday, there are no important events lined up in the UK or the US, but it is extremely difficult to predict the price movement in conditions of extreme overbought levels and without any news. It could be a correction, a continuation of the rise, or a flat market.     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.

Rate cut not coming yet from PBOC FTSE 100 nearing some key levels   It’s been a disappointing start to the week in Europe but I’m not sure investors will be too downbeat as a result given the strong gains recorded over the last five sessions. The Chinese data didn’t help kick things off in a more positive manner, with GDP figures for the second quarter falling well short of expectations as retail sales also decelerated sharply, recording their lowest increase since late last year. Of course, the data remains noisy due to varying base effects but the overall theme is clear, domestic demand is underwhelming and external demand isn’t inspiring either. Stimulus is likely going to be needed in the second half of the year backed up by some monetary support but we may have to wait a little longer for that to be announced. The MLF was left unchanged today at 2.65% which means the same will probably be true of the one and five-year LPRs later in the week. A cut could have helped offset some of the data disappointment although, in the absence of targeted fiscal measures, it may have ultimately been akin to pushing on a piece of string so waiting probably makes more sense.   Is a significant breakout coming? The small declines in the FTSE at the start of the week come on the back of Friday’s reversal which produced a shooting star candlestick around the two lows from last month. Whether that is a bearish signal, a confirmation of sorts, or simply a sign of some profit-taking isn’t yet clear. But it clearly hasn’t built on that negative momentum today.     If it does turn higher again then the area around 7,550 could be interesting from the perspective of it being roughly the high from earlier this month and the area of the 200/233-day simple moving average band. It’s worth noting that these MA bands haven’t been great as areas of support and resistance over the last year or so, which is normal when the price is ultimately trending sideways, but if we do eventually see it trend higher or lower, it may react to them more. Below, the rising trend line – from March 2020 lows – could be interesting as the price appeared to respond to it last week. A break below here may be significant, especially if followed by a move below 7,200. Ultimately, a lot of this could depend on the economic data, the most notable of which this week comes Wednesday in the form of the UK CPI data.  

RBA undecided on future policy moves Markets expect one more hike but not sure when AUDUSD facing significant resistance despite a weaker dollar   It’s safe to say there’s quite a balanced debate taking place at the Reserve Bank of Australia right now, with policymakers torn on whether conditions have become restrictive enough and if a little more will do more harm or good. While markets appear confident that the RBA will hike once more this year, when that will come is far less clear. And as we’ve seen so much this year, expectations have a knack of changing quite considerably over a matter of weeks, let alone months. In other words, investors are no more certain than the policymakers themselves.   Can AUDUSD break higher amid greenback weakness? The mixed messages aren’t helping to deliver much direction for the Australian dollar, with recent moves against the greenback being more driven by the latter’s weakness more so than the strength of the former.     AUDUSD Daily It ran into resistance recently around 0.6850-0.69 which has historically been a major barrier of support and resistance, most recently in mid-June. If it can break above here, 0.70 could be one to watch being a big round figure as well as a key level earlier this year when it made up both shoulders in a head and shoulders pattern. If the price continues to pull back as it has in recent days, 0.67 could be very interesting with it being the level that the 55/89 and 200/233-day simple moving average bands merge. It would also fall around the rising trend line from the May lows.        

The bearish trend, a significant aspect of Forex trading, plays a crucial role in shaping investment decisions. This article aims to elucidate the characteristics of the bear market and its implications for traders. Understanding the Downtrend As discussed in our previous articles, a trend represents the direction in which the price of a currency pair is moving. A fundamental trading principle is to align investments with the trend rather than against it. Therefore, comprehending the downtrend is essential. The identification of a downtrend can be facilitated by analyzing charts that reflect past price values. Analyzing the Downtrend In the chart, the descending peaks and troughs, marked in red, signify a downtrend. Connecting the peaks forms a clear trend line. The strength of the trend is proportional to the distance between the peaks, with a larger gap indicating a more robust trend. While charts may not always vividly display trend lines, recognizing a general downward price trend can serve as a signal to temporarily exit the market. Bear Market Dynamics A bear market, synonymous with a downtrend, occurs when prices consistently decline. In the long term, it signifies a bearish market. Adhering to the popular adage "the trend is your friend," in such scenarios, traders usually contemplate selling. Bear markets often exhibit greater volatility compared to bullish trends, attributed to the accompanying unease amid declining prices. Support and Resistance Lines Support and resistance lines denote potential reversal points in the price movement of a currency pair. In a downtrend, support comprises the successive troughs, each lower than the previous one. These levels represent the depths of prior downward movements, acting as points where the price resisted further decline. Conversely, resistance surfaces when there is a visible level at which the price resisted further upward movement. Referring to the "change of poles" principle, if a resistance level is breached, it transforms into a support level. This pivotal moment often prompts seasoned traders to enter the market. Understanding the dynamics of a bear market is crucial for Forex traders. By recognizing the signs of a downtrend, interpreting charts, and comprehending the roles of support and resistance lines, traders can navigate the complexities of bearish markets more adeptly.