trend reversal

EUR/USD On Tuesday, the euro went through a correction, defined by the convergence with the Marlin oscillator. The price once again tested the target level of 1.0738 and the embedded line of the descending channel. The signal line of the oscillator has entered its own descending channel.     According to the main scenario, the price can now consolidate below the support level of 1.0692 and continue moving towards 1.0620, which is the lower embedded line of the price channel. The alternative scenario is simple - after settling above 1.0738, a test of the target resistance at 1.0804 is possible. This would extend the correction.     On the four-hour chart, the price has returned below the MACD indicator line after a false breakout above it. The Marlin oscillator has moved into the negative territory after briefly staying in the positive area. The trend is bearish.  

  Gold shorts certainly worked perfectly on Friday with a $19 drop from the high of the day. Longs at strong support at 1938/34 worked perfectly yesterday as we held above 1930. We wrote: ''Gold remains oversold on the daily chart so a good chance of another bounce from this strong support at 1938/34 to target 1945/47, perhaps as far as first resistance at 1952/57. Take profits on any remaining longs here if you do manage to buy at 1938/34.''   An easy profit of up to 15 points on our longs. However shorts here were stopped above 1960. Note the bullish engulfing candle after we bounced from the 100 day moving average in severely oversold conditions.   Strong resistance at 1963/66 today. Shorts need stops above 1971. A break higher see 1966/63 act as strong support so try to reverse & buy in to a long with stop below 1960, targeting 1975, perhaps as far as strong resistance at 1984/88 for profit taking. Try shorts with stop above 1992.   Silver longs at my buying opportunity at the 38.2% Fibonacci, 100 week & 500 day moving average support at 2280/65 worked perfectly on Friday, after I gave the signal on Thursday, so there was no excuse for missing this trade!   Targets for our longs of 2315 & 2330 were both hit to add to our profits for the week.   I expect strong resistance at 2340/50 again today. Shorts need stops above 2365.   We can try longs again this week at 2280/65 with stops below 2250. However a break below 2250 would be an important longer term sell signal. First target would be 2200/2190.

On Friday, there will be a few macroeconomic reports, but all of them will be very important. Neither the European Union nor the United Kingdom will issue data today. All the information will come from the US. There will be three reports, two of which are of the highest significance. Nonfarm Payrolls show the number of jobs created in a month outside the agricultural sector. This is a key labor market indicator. It is expected that 180-190 thousand jobs were created in May. Any number lower than this will be considered negative.       The unemployment rate is the second key labor market indicator. It is expected that by the end of May, the rate will increase to 3.5%. However, even 3.6% should not shock traders as it is still a very low value, close to the lowest one recorded 50 years ago. The average hourly earnings is the last report that will be issued today.   This indicator has a direct impact on the inflation rate. The annual increase in wages should not exceed the previous month's value. However, this data is less significant than the first two reports. Analysis of fundamental events:     There are no fundamental events planned for Friday. In recent days, both pairs have been showing a persistent desire to grow, which is not always justified by specific factors. If the growth in the euro makes sense, the pound's appreciation is raising many questions. However, the short-term trend has changed to ascending for both pairs. Thus, further growth can be expected unless the reports from the US are much stronger than the forecasts.   General conclusions: On Friday, there will be two important reports. Both of them will be published at the start of the US trading session. There will be no important events in the first half of the day. Also, yesterday, it was reported that the US House of Representatives approved an increase in the debt ceiling. Thus, there will be no default in the US. Yesterday's fall in the dollar was partially caused by this event. However, it is not logical. The market could have priced in the approval of the increase (since there were no other options, really), and now it could be benefiting from short orders. Nevertheless, we still expect a stronger drop from the euro and the pound.   Basis trading rules: 1) The strength of a signal is judged by the time it took to form the signal (a bounce or overcoming level). The less time it took, the stronger the signal is. 2) If two or more trades were opened around any level based on false signals, then all subsequent signals from this level should be ignored. 3) In a flat market, any pair can form a multitude of false signals or not form them at all. In any case, at the first signs of a flat movement, it is better to stop trading. 4) Trades are opened in the time period between the beginning of the European session and the middle of the US one when all trades should be manually closed. 5) In the 30-minute period, you can trade using signals from the MACD indicator only when there is good volatility and a trend, which is confirmed by a trend line or a trend channel. 6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered as a support or resistance area.     What we see on the chart: Price levels of support and resistance are levels that act as targets when opening buy or sell orders. Take profit levels can be placed near them. Red lines are channels or trend lines that show the current trend and indicate in which direction it is preferable to trade now. MACD indicator (14,22,3) is a histogram and signal line, that is an auxiliary indicator, which can also be used as a source of signals. Important speeches and reports (always included in the macroeconomic calendar) can have a significant influence on the movement of a currency pair. Therefore, during their release, you should trade with maximum caution or exit the market to avoid a sharp price reversal against the previous movement. Beginners should remember that not every trade can be profitable. A clear strategy and money management are key to success in long-term trading.      

GBP/USD Yesterday, the British pound grew (by 0.47% compared to a 0.20% decline in the dollar index) and its upper shadow managed to reach the target level of 1.2443. As the signal line of the Marlin oscillator has already approached the boundary of the growth area, it may start to reverse downwards in the direction of the main trend.   If the reversal occurs and the price establishes itself below the MACD line (1.2400), the first target will be 1.2273 (the April 3 low and the high of February 14). If the price stays above 1.2443, it can rise towards 1.2583. However, the pound may not reach this level, and a reversal could occur from any intermediate resistance.       On the 4-hour chart, the price has settled above the balance and MACD indicator lines, and the Marlin oscillator has shown slight growth in the growth area but is now showing initial signs of a downward reversal.   Since the MACD line is located below the 1.2400 level, overcoming the support level (1.2365) will serve as the final condition for the price to reverse into a medium-term decline.  

Technical outlook: EUR/USD has carved a fresh low at 1.0845 last week remaining just shy of initial support around 1.0830. The single currency pair has pulled back since then and is seen to be trading above 1.0880 at this point in writing. The bulls are likely to push prices towards the 1.1000-50 area before the next leg resumes lower. EUR/USD has broken its one-year trend line support as seen on the daily chart here. The probability remains for a push through the backside of the support-turned-resistance zone, which is seen around the 1.1000-50 zone before turning lower towards the 1.0500 Fibonacci target. Also, note that the entire rally between 0.9535 and 1.1275 could be retraced with prices reaching 1.0200. EUR/USD seems to have also carved a lower-degree downswing between 1.1275 and 1.0845 which could be retraced in the next few trading sessions. The Fibonacci 0.618 retracement is seen passing through 1.1150 which could be tested before the next leg resumes lower again. A push through 1.0920 will confirm that a corrective rally is underway.       Trading idea: A potential rally towards 1.1150 in the near term remains possible.  

Buyer liquidity began to accumulate behind the very important extreme for buyers in EUR/USD located at 1.08340.   In fact, on the M15 timeframe, a breakdown occurred around the level of 1.09.   Market players can take this opportunity to open short positions at the test of 1.0930, with stop-loss placed at 1.09200 and take-profit set upon the breakdown of 1.08350. The trading idea came from the framework of the "Price Action" and "Stop Hunting" strategies. Good luck in trading and don't forget to control the risks! Have a nice day.  

Expect the US dollar rally to extend    The US dollar broadly weakened across the board, helping majors to take some breather. The dollar index fell back towards its 200-DMA, the EURUSD settles above the 1.09 mark this morning, while Cable bulls eye a further rise toward the 50-DMA, which stands a touch below the 1.28 level. But looking at the US dollar and the real yields, the end of last year's dollar really coincides with a peak in 10-year real yield. Both started retreating in Q3 of last year. The dollar retreated relatively faster. And now that the real yields are on the rise again, there is little reason to keep the USD on a bearish trend for the months ahead.   The dollar rally which started by mid-July should further develop, and there is significant room for further correction before we could technically call the end of the dollar's bearish trend. In numbers, the dollar index will still be in a bearish trend below the 105.40 mark. Until that level is reached, investors don't have much to lose for jumping on the back of a bull.  

Medium-term downtrend phase of AUD/USD has reached an oversold condition with downside momentum easing. Key short-term support to watch will be at 0.6385. Intermediate resistance at 0.6490. The price actions of AUD/USD have been oscillating in a medium-term downtrend phase in place since the 17 July 2023 high which has been reinforced by the bearish breakdown of its former medium-term ascending trendline support from 13 October 2022 low on 9 August 2023. So far, the AUD/USD has plummeted by -530 pips from its 17 July 2023 high to its 17 August 2023 low of 0.6365, and the recent four weeks of decline have led to an oversold condition in terms of price actions     Fig 1:  AUD/USD medium-term trend as of 28 Aug 2023 (Source: TradingView, click to enlarge chart) The daily RSI oscillator of the AUD/USD, a gauge that measures momentum, oversold, and overbought conditions on price actions reached an oversold condition recently on 17 August 2023 and shaped a bullish divergence condition (a higher low) thereafter on last Friday, 25 August. These observations suggest that the downside momentum of the ongoing medium-term downtrend of AUD/USD may have eased which supports a potential imminent minor countertrend/consolidation phase. These positive elements have also occurred at a key support of 0.6385 that coincided with the 10 November 2022 low and the 76.4% Fibonacci retracement of the prior medium-term up move from 13 October 2022 low to 2 February 2023 high.     Fig 2:  AUD/USD minor short-term trend as of 28 Aug 2023 (Source: TradingView, click to enlarge chart) Since its 17 August 2023 low, the price actions of AUD/USD have started to evolve into a minor range configuration with its key short-term pivotal support at 0.6385 and respective minor range resistance at 0.6490 (also the 20-day moving average). A clearance above 0.6490 sees the next resistances coming in at 0.6510 and 0.6600 (5 August/10 August 2023 minor swing highs areas, pull-back resistance of the former medium-term ascending trendline support from 13 October 2022 low & the 50-day moving average). However, failure to hold the 0.6385 key short-term support invalidates the minor countertrend rebound scenario for a continuation of the impulsive down move sequence of the medium-term downtrend phase towards the next supports at 0.6310 and 0.6270 in the first step.

The recent minor corrective pull-back of -4.7% from its 19 September 2023 high of US$93.05 is likely to have ended. Bullish reversal candlestick, a daily “Hammer” sighted after a retest on its upward-sloping 20-day moving average. Key short-term support to watch will be at US$90.30, the pull-back of the former minor “pennant” range resistance. This is a follow-up analysis of our prior report, “WTI Oil Technical: Bullish exhaustion sighted below US$93.80 per barrel key resistance” published on 20 September 2023. Click here for a recap. West Texas Oil (a proxy of WTI crude oil futures) has indeed shaped the bearish counter-trend pull-back movement of -4.7% from its 19 September 2023 minor swing high of US$93.05/barrel to a low of US$88.66/barrel printed yesterday, 26 September which fell short of the earlier highlighted short-term support zone of US$86.30/US$84.90 as per highlighted in our prior analysis. Overall, the price actions of West Texas Oil are still evolving within a major uptrend phase which is still intact since its 4 May 2023 low of US$63.67 per barrel.     Key bullish reversal sighted after a retest on the 20-day moving average   Fig 1:  West Texas Oil medium-term& major trends as of 27 Sep 2023 (Source: TradingView, click to enlarge chart) Interestingly, there was a significant change in sentiment yesterday that led to the formation of a daily bullish reversal “Hammer” candlestick pattern right after a retest on the upward-sloping 20-day moving average that is acting as a support at around US$88.90/barrel. These positive technical elements where price actions have staged an intraday reversal from yesterday, 26 September intraday low of US$88.66/barrel and closed near the upper end of its intraday range suggests a potential start of another medium-term impulsive up move sequence within its major uptrend phase.   Bullish breakout from minor “pennant” range configuration Fig 2:  West Texas Oil minor short-term trend as of 27 Sep 2023 (Source: TradingView, click to enlarge chart) Yesterday’s price actions of West Texas Oil have also staged a bullish breakout from a 5-day minor “pennant” range configuration which indicates a potential continuation of its prior short-term bullish movement above the 20-day moving average. Watch the US$90.30 key short-term pivotal support for a potential push up towards US$93.80 and a clearance above it sees the next intermediate resistance coming in at US$95.80. On the other hand, failure to hold at the US$90.30 key support invalidates the minor bullish breakout scenario for another round of corrective pull-back to expose the next intermediate support zone of US$88.90/US$88.06.  

The EUR/USD currency pair continued its downward movement throughout Tuesday. Volatility remained relatively weak, and the decline was not too strong. Nevertheless, it is very stable and raises no questions. We have repeatedly mentioned in recent weeks that such a movement is expected from the European currency, even if it seems illogical at first glance. For example, on Monday and Tuesday, there were no significant events or publications to justify the continued decline of the European currency. Last week, we expected an upward correction, which has yet to materialize. However, this market situation is the most logical one after the euro either rose unjustifiably in the first half of the year or simply held at a very high level without a correction. We believe that this factor is crucial for the euro and the dollar right now.   Consider this: if the Federal Reserve has raised and is raising interest rates more aggressively than the ECB, why have we seen the euro currency rise over the past year? Assume that the market has already set prices for all rate increases in the United States. In that case, why weren't rate hikes in the European Union priced the same way? The European economy has been struggling for several quarters, while in the US, we have seen quarterly growth of 2-3%. Based on all these factors, we have constantly stated that it's time for the pair to move downward. Significantly and for the long term. We do not rule out the possibility that, by the end of the year, the euro currency will return to parity with the dollar. In the 24-hour timeframe, the pair has breached the important Fibonacci level of 38.2% (1.0609) and is now almost guaranteed to drop to the 5th level. Remember that we have long referred to level 1.05 as the target. However, the movement to the south may not end there. We fully consider the possibility of a drop to the next Fibonacci level of 23.6% (1.0200). Muller and de Cos are once again pushing the euro lower. There have been no significant macroeconomic publications in the past few days. Only today in the United States will the report on durable goods orders be published, which can be considered more or less significant. However, over the past few days and the entire last week, we have witnessed speeches by representatives of the ECB's monetary committee. Several times a day. In principle, it became clear last week that the ECB is on the home stretch and will raise rates at most one more time. As we have mentioned, in the case of the ECB or the Federal Reserve, such actions can be considered logical, as the central banks have raised (or will raise by the end of the year) rates to almost 6%. Further rate hikes would be risky for the economy. But the situation is different with the ECB. The rate is slightly above 4%, which is clearly insufficient to bring inflation back to the target level in the near future.     But we are not here to judge the ECB; we are merely stating a fact: the ECB's rate has increased too weakly compared to the Federal Reserve's rate, and the euro currency has risen for too long based on expectations of a strong tightening of monetary policy in the European Union. The European currency may continue to decline peacefully because a wave of disappointment has now covered the market. On Tuesday, Madis Muller from the ECB stated that he does not expect a new rate hike. De Cos and de Galhau, the heads of Spain's and France's central banks, as well as Vice President de Guindos, had previously made similar statements. In one way or another, all ECB representatives have indicated that further tightening will only be possible in the event of accelerated inflation. However, the market is not too satisfied with this formulation because everyone understands that the European Union will be battling high inflation for several years to come. Just like the United Kingdom, but at least with Britain, it can be said that the central bank has done everything it could.   The average volatility of the EUR/USD currency pair over the last 5 trading days as of September 27th is 65 points and is characterized as "average." Thus, we expect the pair to move between the levels of 1.0495 and 1.0625 on Wednesday. A reversal of the Heiken Ashi indicator upwards will indicate a new attempt to make a slight correction. The nearest support levels are: S1: 1.0498 Nearest resistance levels: R1 = 1.0620 R2: 1.0742 R3: 1.0864     Trading recommendations: The EUR/USD pair maintains a downtrend. Short positions can be held with targets at 1.0510 and 1.0495 until the price consolidates above the moving average. Long positions can be considered if the price consolidates above the moving average with a target of 1.0742. Explanations for the illustrations: Linear regression channels help determine the current trend. If both are pointing in the same direction, it means the trend is strong right now. The moving average line (settings 20.0, smoothed) determines the short-term trend and the direction in which trading should be conducted at the moment. Murray levels: target levels for movements and corrections. Volatility levels (red lines): the probable price channel in which the pair will move in the next day based on current volatility indicators. CCI indicator: its entry into the overbought region (above +250) or oversold region (below -250) indicates that a trend reversal in the opposite direction is approaching.  

Higher Timeframes Yesterday, the bears couldn't hold their ground. As a result, by the end of the working week, the market arrived with a looming lower shadow, the size of which could influence the overall sentiment and market possibilities. It is worth noting that the daily cross has changed. If the bulls can now take control of the range 1.0601 - 1.0610 (daily short-term trend + weekly cloud boundary), they can use it as a basis for a new attempt to rise. Failures and market uncertainty at this moment may lead to the formation of consolidation.   On the lower timeframes, the decline has stopped. At this moment, the bulls have already managed to reclaim the central pivot point of the day (1.0552). Their next target is the weekly long-term trend (1.0593). Consolidation above and a reversal of the moving average will allow for a change in the current balance of power towards further bullish sentiment. Additional intraday targets can be marked at the resistances (1.0580 - 1.0599 - 1.0627) and supports (1.0533 - 1.0505 - 1.0486) of the classic pivot points. Higher Timeframes Over the past day, there have been no significant changes. The monthly medium-term trend (1.2135) continues to hold the market in its attraction zone, and the tasks facing market participants remain relevant. In the current situation, bulls need to eliminate the daily Ichimoku cross (1.2186 - 1.2221) and update the highs of the current correction (1.2287 - 1.2336). For bears, it is important to exit the zone of weekly and daily correction (1.2036) and enter the weekly cloud (1.2027).    

EUR/USD   Higher Timeframes The encounter with the zone 1.0862–1.0868, which merged several strong resistances, did not go unnoticed. As a result, yesterday, we observed a slowdown and some bearish activity. The upcoming days will determine the outcome of the encounter. Bearish activity and a decline will draw the market's attention to the supports accumulated at 1.0756-1.0766 (weekly and daily levels), while overcoming 1.0862-68 will pave the way to the final resistance of the weekly death cross (1.0960) and the daily target for breaking through the Ichimoku cloud (1.1004-1.1065).     H4 - H1 On the lower timeframes, there is a corrective decline, but bulls maintain a general advantage. At the moment, the reference points for the resumption of the ascent could be 1.0855-1.0879-1.0910-1.0934 (classic pivot points). Strengthening bearish sentiments today may occur through breaking the supports at 1.0824-1.0800-1.0769 (classic pivot points). To change the current advantage to the bears' side, it is necessary to break and reverse the moving average—the weekly long-term trend, which, in the current situation, is at 1.0745.   Higher Timeframes As of yesterday, the pound can boast more impressive results than the euro. The market failed to overcome the accumulation of strong resistances, such as the weekly Fibonacci Kijun (1.2458), the monthly short-term trend (1.2471), and the monthly Fibonacci Kijun (1.2505). If bears continue to recover their positions, there is a broad support zone on this part of the market, consisting of levels from various timeframes and located at 1.2346-1.2325-1.2287-1.2248-1.2231.     H4 - H1 Bulls failed to update the previous day's high and continue the ascent, while the opponent, developing the decline, has now consolidated below the central pivot point of the day (1.2437). The continuation of the descent now lies through testing and breaking the supports at 1.2376-1.2341 (classic pivot points). A shift in the main advantage and the current sentiment is possible after testing, overcoming, and reversing the weekly long-term trend (1.2315). *  

On the hourly chart, the GBP/USD pair reversed in favor of the US currency on Wednesday, consolidating below the corrective level of 38.2% (1.2477). However, this closure has not given bears anything, as today, the pair has returned to the zone between 1.2477 and 1.2513. If a rebound occurs from this zone, there is a high probability that the quote decline will resume toward the corrective level of 23.6% (1.2321). Closing above this zone will allow traders to expect a resumption of growth towards the Fibonacci level of 50.0% (1.2603).     The wave situation has become simpler and clearer. Waves still have a relatively large size, which adds inconvenience to trading. However, the trend is currently "bullish," and a breakthrough of the last low at 1.2372 is required to complete it. In this case, there will be signs of the pair transitioning to a "bearish" trend, which is more logical after a fairly strong rise. However, at the moment, the "bullish" trend persists, and bears cannot firmly establish themselves on the hard-won positions.   Late Tuesday evening in the US, the minutes of the last FOMC meeting were released. The report stated that the regulator would continue to make decisions based on incoming information. FOMC members almost unanimously agreed that tightening monetary policy should only continue in the case of unsatisfactory inflation dynamics. Not all policymakers are confident in a sufficiently restrictive policy to return inflation to 2%. None of the FOMC members voted for an increase or decrease in the interest rate. Thus, the Fed has again "left the door open" but has not provided any signals about future decisions. Inflation in the US decreased in October, which may further weaken the "hawkish" sentiment.   On the 4-hour chart, the pair reversed in favor of the pound and a new consolidation above the level of 1.2450. Thus, the growth process can be continued toward the next level at 1.2620. The upward trend corridor characterizes traders' sentiment as "bullish," and the "bullish" divergence on the CCI indicator warns of a possible continuation of the rise. Commitments of Traders (COT) Report:   The sentiment of the "Non-commercial" trader category for the last report is slightly less "bearish." The number of long contracts in the hands of speculators decreased by 6180 units, and the number of short contracts decreased by 10299 units. The overall sentiment of major players has long changed to "bearish," between the number of long and short contracts, the gap is increasing, but now in the opposite direction: 57 thousand versus 74 thousand. There are still excellent prospects for the pound to continue falling. I do not expect a strong rise in the pound soon. Over time, bulls will continue to get rid of buy positions, as is the case with the European currency. The growth we have seen in recent weeks is corrective. News Calendar for the US and the UK: UK - Manufacturing Purchasing Managers' Index (PMI) (09:30 UTC). UK - Services Purchasing Managers' Index (PMI) (09:30 UTC). On Thursday, the economic events calendar contains only two fairly interesting entries. The impact of the information background on market sentiment today may be weak. Forecast for GBP/USD and Trader Tips: I recommend selling the pound this week on a rebound from the zone of 1.2477– 1.2513 on the hourly chart with a target of 1.2321. Or on a rebound from the level of 1.2603. I advised buying the pair on a consolidation above the level of 1.2513 with targets of 1.2603 and 1.2620, but such deals look excessively risky to me. They should be closed at the first sign of doubt.

COT reports on the British pound show that the sentiment of commercial traders has been changing quite frequently in recent months. The red and green lines, representing the net positions of commercial and non-commercial traders, often intersect and, in most cases, are not far from the zero mark. According to the latest report on the British pound, the non-commercial group closed 10,000 buy contracts and 4,200 short ones. As a result, the net position of non-commercial traders decreased by 5,800 contracts in a week. Since bulls currently don't have the advantage, we believe that the pound will not be able to sustain the upward movement for long . The fundamental backdrop still does not provide a basis for long-term purchases on the pound.   The non-commercial group currently has a total of 58,800 buy contracts and 44,700 sell contracts. Since the COT reports cannot make an accurate forecast of the market's behavior right now, and the fundamentals are practically the same for both currencies, we can only assess the technical picture and economic reports. The technical analysis suggests that we can expect a strong decline, and the economic reports have also been significantly stronger in the United States for quite some time now.   On the 1H chart, GBP/USD is making every effort to correct lower, but the uptrend remains intact. We believe that the British pound doesn't have any good reason to strengthen in the long-term. Therefore, at the very least, we expect the pair to return to the level of 1.2513. However, there are currently no sell signals, so the uptrend is still intact. On Tuesday, there are few reasons for the pair to show volatile movements. We may see a flat phase, a downtrend, or an uptrend (intraday), so we need to purely rely on technical analysis. We expect the pound to consolidate below the trendline, and in that case, we can consider selling while aiming for the Senkou Span B line. A n upward movement is theoretically possible today, but we see no reason for it, so you shouldn't consider buying at the moment. As of January 2, we highlight the following important levels: 1.2215, 1.2269, 1.2349, 1.2429-1.2445, 1.2513, 1.2605-1.2620, 1.2726, 1.2786, 1.2863, 1.2981-1.2987. The Senkou Span B line (1.2646) and the Kijun-sen (1.2753) lines can also be sources of signals. Don't forget to set a breakeven Stop Loss to breakeven if the price has moved in the intended direction by 20 pips. The Ichimoku indicator lines may move during the day, so this should be taken into account when determining trading signals. Today, the UK and the US will release their second estimates of business activity indices in the manufacturing sector for December. These are not significant reports so it is unlikely for traders to react to them. Description of the chart: Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals; The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals; Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals; Yellow lines are trend lines, trend channels, and any other technical patterns; Indicator 1 on the COT charts is the net position size for each category of traders; Indicator 2 on the COT charts is the net position size for the Non-commercial group.  

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.

Horizontal trends, often referred to as consolidation, describe a stable market situation where prices neither exhibit a clear upward nor downward trend. This article delves into the significance of horizontal trends, exploring their characteristics and implications for traders. Recognizing Sideways Trends Consolidation, characterized by a balance between price peaks and troughs, differs in investment strategy from both downward and upward trends. Thus, understanding how to identify horizontal trends becomes crucial for traders. Key Elements of Sideways Trends Horizontal trends, also known as sideways or ranging trends, have distinctive features clearly visible on price charts. The longevity of prices staying in such a pattern makes recognizing this trend crucial for traders. Identifying Horizontal Trends To identify a horizontal trend, historical data spanning two to three weeks is necessary. This allows the identification of at least two maximum and two minimum values of the currency pair's price. If these points are at or near the same level, a sideways trend is assumed. Confirmation occurs when a subsequent peak or trough appears within the previously identified range. Strength of the Trend The strength of a horizontal trend is determined by two factors: the number of peaks/troughs within the range and the significant distance between them. A robust trend is indicated by numerous maximum or minimum points, along with substantial time intervals between peak and trough values. Occurrence of Consolidation Sideways trends commonly occur in two scenarios. Firstly, as a short-term pause within either an upward or downward trend. Secondly, it can manifest as an extended transitional phase between an upward and downward trend, signaling a potential change in price direction. Potential Outcomes of Sideways Trends The future course of a sideways trend depends on price behavior. Stability prevails when prices do not surpass support or resistance lines. The emergence of a higher peak or lower trough likely signals the beginning of a bullish or bearish market, depending on the direction of change. Strategies During Sideways Trends Consider various scenarios based on breakout direction and your market position. In an upward breakout, indicating a trend change, consider buying if you don't have an open position. If a downward breakout occurs during consolidation, signaling a price decline below the line, decide to sell if you have open positions. If a price drop is observed, it could signify the start or continuation of a downward trend, prompting caution or staying out of the market if you haven't initiated positions. Navigating sideways trends requires a keen understanding of consolidation patterns. Traders must recognize the signs, interpret price movements, and make informed decisions during horizontal market phases to enhance their success in Forex trading.

Understanding the terms like "uptrend," "bull market," and their significance is paramount for seasoned traders, but they might pose challenges for newcomers in the stock market. This article delves into the meanings and importance of these concepts when making investment decisions. Unveiling the Concept of Uptrend As discussed in our previous articles, a trend signifies the direction in which the price of a specific currency pair is moving. The ability to determine a trend is crucial in Forex trading. Adhering to the widely accepted principle, "the trend is your friend," aligning investments with the trend rather than against it is fundamental. Today, we'll focus on the rising trend. Bull Market – Definition and Characteristics: First and foremost, let's clarify that terms like "bull market," "uptrend," "rising trend," or "uptrend" all refer to the same market situation. If an upward trend persists over an extended period, it's referred to as a bull market. The graphical representation of an uptrend looks like this: Clearly, in an uptrend, each successive trough is higher than the previous one, along with each successive peak. This indicates that the price is consistently rising. It's crucial to remember that occasional price drops, known as corrections, may occur, but the overall upward trend is maintained. Following the basic trading principle for long-term investing, always act in line with the trend; during an uptrend, transactions should predominantly be buying. However, when the last trough is breached or no new peak is evident, it could signal the end of the uptrend. In such situations, refraining from investments and waiting for a clearer direction is advisable. Support and Resistance Lines: While discussing the uptrend, it's essential to mention support and resistance lines, critical moments in the cycle that can indicate significant changes in the trend. The resistance line marks the point where supply is stronger than demand, signifying the beginning of a price decline. Typically, the resistance line is determined by the previous peak (based on historical data). Overcoming levels of successive resistance peaks is necessary to sustain an uptrend. Conversely, if breaking the resistance line occurs after bouncing off the support line, a change in the current trend can be anticipated. The support line is the level where demand outweighs the force of supply. This halts the price decline, resulting in a resurgence of values. Usually, the depth of the previous price drop defines the support line. In summary, understanding uptrends, such as bull markets, involves recognizing the graphical representations, following the basic trading principle, and considering critical moments like support and resistance lines. This knowledge equips traders to navigate the complexities of rising markets more adeptly.