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The EUR/USD currency pair continued its sluggish decline from the upper boundary of the sideways channel to the lower one during Wednesday's trading. There was no macroeconomic background yesterday, so the market had nothing to react to throughout the day. Thus, we continue to observe purely technical movements within the sideways channel. After reaching the lower boundary of the channel at 1.1377-1.1461, a movement back to the upper boundary may begin. The European Central Bank meeting is scheduled for today, but this event may not have any influence on market sentiment. The ECB is highly likely to keep rates unchanged, meaning traders will again have nothing to respond to. Inflation in the Eurozone decreased in June but may increase in July. Therefore, even if the ECB decides to tighten monetary policy, it is unlikely to happen before September. The flat trend for the euro has been ongoing for almost a month, and there is nothing to be done about it.
On the 5-minute timeframe on Wednesday, novice traders may have witnessed the apex of the trend over the last month. This time, volatility was 25 pips, and the price traded exclusively sideways throughout the day. Given the nature of the movement, even if trading signals had been formed, it would have been impossible to make a profit.
On the hourly timeframe, both trend lines have been broken and are no longer relevant. Considering all the events and movements in the market over the past months, we believe that the European currency should show confident growth—much stronger than in recent weeks. However, the current upward movement is essentially a correction, and in recent weeks the movement looks much more like a flat than a trend.
On Thursday, novice traders may open short positions targeting 1.1363-1.1377 if the price bounces from the area of 1.1461-1.1466. Long positions can be opened with a target of 1.1461-1.1466 if the price bounces from the area of 1.1363-1.1377. We would still not expect strong movements.
On the 5-minute timeframe, the following levels should be considered: 1.1267-1.1275, 1.1363-1.1377, 1.1461-1.1466, 1.1527-1.1531, 1.1584-1.1594, 1.1655-1.1666, 1.1745-1.1754. On Thursday, the ECB meeting and Christine Lagarde's speech will take place in the Eurozone. The ECB is unlikely to raise rates, so the meeting may turn out to be "eventless," and the market's reaction may be absent. Recall that a month and a half ago, the market did not respond at all even to monetary policy tightening.
Price levels (areas) of support and resistance are targets when opening long or short positions or sources of signals.
Red lines indicate channels or trend lines that display the current trend and indicate the preferred direction for trading.
The MACD indicator (14,22,3) – histogram and signal line – is a supplementary indicator that can also be used as a source of signals.
Important speeches and reports (contained in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or one should exit the market to avoid sharp reversals against preceding movements.
Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.
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