My EURUSD Trade Sentiments

[Jag757]

The recent price action on the EUR/USD highlights the challenges of trading in a ranging market, particularly when relying on indicators like MACD. The price movement from the 61.8% Fibonacci retracement level down to the 0% level, followed by a bounce back up, illustrates how these levels can act as critical support and resistance points. However, capturing these moves can be challenging without a focus on Fibonacci retracements, as the maximum gain from these swings was about 15 pips down and 10 pips up, which isn’t substantial unless you’re specifically targeting these levels.

The Role of MACD in Analysis

While the MACD crossover did coincide with the bounce, it’s important to note that such lagging indicators often repaint after the fact, making them less reliable for real-time decision-making. This lagging nature is why backtesting strategies based solely on indicator crosses can be misleading. The indicators may appear more predictive in hindsight than they are in live market conditions due to their tendency to repaint or adjust as new data comes in.

Combining Indicators with Price Levels

Despite these limitations, MACD can still be valuable when used in conjunction with other strategies, such as trading around key support and resistance levels or Fibonacci retracements. This combination can help filter out false signals and provide more robust trade confirmations. For instance, while one might avoid trading solely based on a MACD cross, using it to confirm a bounce off a significant Fibonacci level can be a more effective approach.

In summary, a well-rounded trading strategy should incorporate multiple elements, including price action, key levels, and confirming indicators, to navigate the complexities of the market more effectively. This holistic approach helps mitigate the risks associated with relying on a single method or indicator.

[Torchwave]

You are indeed right. I am particularly glad for the opportunity to drink from your wealth of experience, and I am sure others have found gems in your approach to trading the markets they can add to their trading arsenal. The range has kept giving buy and sell signals. I guess the markets are waiting for the the Core PCE economic data release spurring a breakout in either direction. I haven’t taken any position. Not even likely when the data release is a couple of minutes away.

There was a period in time when I adopted the fibonacci indicator to help guage market direction and optimum entry level but had mixed results leading to my abandoning it. You, on the other hand, have years of mastery with it. I may give it another go at including it as one of my tools. Right now, I am neutral on market direction with this range in the EU and with the red folder news slated to be released in a few minutes.

[Torchwave]

Although, I am neutral on price direction I expect a movement to the north. Bears and bulls have been fighting to gain dominance and I think the bulls may win today’s battle.

[Jag757]

I simply try to give an analysis of what could happen in either direction. I have used Fibonacci as one of the tools in my arsenal for a very long time. Different pairs follow different rules. The EUR/USD and the GBP/USD will follow Fibo rules very well but much more in trending markets.

Trading can humble the smartest person at times. There are days when I think I am a genius while other days I feel like the biggest idiot in the world. Money management keeps me going. That’s it!

[Jag757]

“Although, I am neutral on price direction I expect a movement to the north. Bears and bulls have been fighting to gain dominance and I think the bulls may win today’s battle.”

I am not trading this at all today. Nothing is setting up for me. I would like to see the price settle in a significant spot on the 4 hour or Daily charts and then make a move from there. Basically it is just scalping right now. It’s not fun for me and even 20 years of experience won’t make it fun.

[Jag757]

And this is why you don’t trade news. You could easily get knocked out in both directions. The only way to trade news is to do it without a Stop loss or Take profit and that’s a fool’s move.

J

[Torchwave]

@Jag757

I simply try to give an analysis of what could happen in either direction. I have used Fibonacci as one of the tools in my arsenal for a very long time. Different pairs follow different rules. The EUR/USD and the GBP/USD will follow Fibo rules very well but much more in trending markets.

Trading can humble the smartest person at times. There are days when I think I am a genius while other days I feel like the biggest idiot in the world. Money management keeps me going. That’s it!

Truly humbling a fact that the smartest trader can get whipped by the markets. Like you, MM keeps me going, it is the only thing that keeps any trader going. No matter the heights attained, the possibility of falling should keep the climber focused.

[Torchwave]

In my case, it has set up for a buy which has been confirmed so that my previous bearish anticipation no longer holds, I won’t be hitting the buy button. Price has not made a convincing bullish story. It is bullish at the moment but there is the added possibility of sideways movement or movement in the opposite direction before heading North. That notwithstanding, hitting the buy or sell button and getting whipsawed is not fun. Trading is business that should be treated as such.

[Torchwave]

A reason to always avoid it. The only exception is the person who has mastered trading using fundamentals.

[Jag757]

I try and have tried to use a combination of fundamentals and technicals. Obviously I want to know what is going on that might cause a long term switch. But, I have no idea whatsoever is keeping the dollar as strong as it is right now. I would say while the stock markets make us look strong, the underlying economy could not be worse. Meaning for the people who have to eat and pay for utilities. But, as I have said, on a yearly basis I clearly beat any other traditional return on my money. Nothing more!

J.
BTW, are you in the states?

[Torchwave]

I think technicals and fundamentals do not fully capture the innumerable factors; political, >geographic, financial, and sentiment changes which all drive the markets. It is a human impossibility to keep abreast of all the metrics responsible for the markets’ ever dynamic nature. The best we can do, as traders, is to speculate through making informed decisions from the data available to us.

I cannot hazard a guess for the dollar strength. My knowledge of fundamentals is average. It may have something to do with the elections in the US. That doesn’t explain why companies and traders are heavily investing in the US dollars and stocks. The most important thing is to leverage on the move and make some profit. As long as one can do that, such a person is golden.

I don’t reside in the States.

[Jag757]

So here is my analysis for today going into tomorrow. I would mark this with more areas where you believe you are going to find Support and Resistance and on several time frames. I will probably avoid this pair tonight because I am in a position on the GBP/USD long since last night. Good luck.

EUR/USD Technical and Fundamental Analysis

Technical Analysis: EUR/USD

1. Daily Chart:

• Trend: The EUR/USD pair is showing signs of consolidation within a broader upward trend, oscillating between key support and resistance levels.

• Key Levels: The recent low is approximately 1.0802, and the high is around 1.0869.

• Indicators:

• ATR (Average True Range): Indicates relatively low volatility, suggesting potential for a breakout.

• RSI (Relative Strength Index): Positioned around the neutral 50 mark, indicating a lack of strong directional momentum.

• MACD (Moving Average Convergence Divergence): The MACD line is near the signal line, showing market indecision.

2. 4-Hour Chart:

• Trend: A clearer short-term bearish trend is observed, with the price moving below key moving averages (50, 100, and 200 periods).

• Indicators:

• ATR: A slight increase in volatility, suggesting potential for more pronounced price movements.

• RSI: Below 50, indicating bearish momentum but not yet oversold.

• MACD: A bearish crossover has occurred, with a negative histogram indicating decreasing momentum.

3. 1-Hour Chart:

• Trend: The pair continues in a short-term downtrend, struggling to maintain levels above previous support.

• Indicators:

• ATR: Shows increasing volatility, which could indicate potential for sharp movements.

• RSI: Hovering around 30, indicating possible oversold conditions and potential for a short-term bounce.

• MACD: Shows decreasing bearish momentum, potentially signaling a near-term stabilization.

4. 15-Minute Chart:

• Trend: The pair appears to be consolidating after a decline, indicating indecision among traders.

• Indicators:

• ATR: Low volatility, typical of a consolidation phase.

• RSI: Close to 50, indicating neutrality.

• MACD: Flat near the signal line, suggesting a lack of strong directional momentum.

Fundamental Analysis: Upcoming Economic Events

1. Eurozone and UK Manufacturing PMI:

• Eurozone: German and broader Eurozone PMIs are expected to show contraction, with the German PMI forecast at 43.5. This could exert downward pressure on the EUR if the data comes in weaker than expected .

• UK: The UK’s PMI is forecast at 50.9, indicating marginal expansion. Stronger-than-expected data could bolster the GBP .

2. Eurozone Inflation Data:

• German Prelim CPI: The expected 0.1% increase is modest, and any significant deviation could influence market sentiment regarding ECB monetary policy .

3. Speeches from Central Bank Officials:

• ECB President Lagarde and German Buba President Nagel: Their comments could provide insights into future monetary policy, influencing EUR sentiment, especially concerning inflation and economic outlook .

4. U.S. Economic Data:

• ISM Manufacturing PMI: Expected at 48.5, indicating contraction. A significant deviation could impact the USD, with potential implications for broader market sentiment .

Strategic Considerations

• Trading Strategy:

• EUR/USD: Given the technical bearish indicators and potential for weak Eurozone data, consider short positions if the pair breaks below the 1.0802 support level. A break above current consolidation, accompanied by positive news, could signal a buying opportunity.

• GBP/USD: Strong UK PMI data could provide a bullish setup, particularly if it surpasses the resistance levels.

• Risk Management:

• Tight stop-loss orders are advisable, particularly given the expected volatility around key economic releases and speeches.

This comprehensive analysis combines technical and fundamental perspectives, providing a holistic view of potential trading strategies for EUR/USD amidst significant economic events. Traders should remain vigilant and responsive to market changes, particularly during high-impact news releases.

[Jag757]

I couldn’t resist throwing a 15 minute chart up here as well. I have a Fibonacci retracement drawn from the last dominant move. You could potentially adjust this based on the hour as well. In my analysis, this did a retracement almost to the 61.8 which is significant on the 15 chart. If it’s to move lower, it’s probably from here. I would not consider consolidation broken unless you have some volume in the market when it does and sometimes, it’s better to let in come back and test the same area again. You may miss the trade but you are a lot less likely of getting into a false breakout. Just my thoughts. Trade well and make your own decisions based on your trading style!

[Torchwave]

A comprehensive analysis indeed as usual. Tells me why you have been in the game for a very long time. I didn’t take the EU trade though I saw bearish sentiment for the AU I carried out an analysis on. I didn’t trade that either. I have been super busy along with other reasons for which trading was impossible. This is the reason I didn’t update the thread. Congrats, if you did take the trade.

[Torchwave]

Last week, I said I would not buy because the bullish move did not give the breakout I was anticipating to convince me that buyers had stepped into the market. The reason is that the bears are still dominating market sentiment. Although I have not looked at the charts for EU, the path of least resistance is Southward given the move yesterday. Ultimately, like you rightly said, a person must make their own decision. Good pip hunting day to you.

[Jag757]

As I said last week, I can’t understand why the dollar is as strong as it is right now. Obviously the anticipation of a rate cut, which I believe you mentioned before might be part of it. I would have thought by now it would be baked in. I think most of the numbers I am seeing are weak for the USD and thus, I can’t get my head around it.

[Torchwave]

It is funny the way fundamentals seem to defy logical explanation. There is, however, something I suspect behind the dollar strength that is not visible in the reports. There are market professionals or trading syndicates who use the opportunities provided by bad news to buy from those selling from panic. In VSA, this is known as Accumulation. They have been actively buying the dollar so that the weak numbers for the dollar seem to have no impact on its determined upward slope. That may also explain why the news and the price reaction from the news seem to conflict on occasions.

Apologies for the delayed reply. Just logged in.

[Jag757]

Living in the USA and understanding the economy as a professional and as a consumer, I can’t remember a worse economy than we have now! I think the only thing propping the dollar up right now is Europe is worse and Great Britain not much better. We need the US election to be over but who knows what may happen after that? Anyway, good trading tonight!

[Torchwave]

That raises the question whether it is a coincidence that the dollar suddenly gained momentum in the period leading to the elections without justifiable economic recovery. The elections may also be a factor to take into consideration for the high demand of the dollar. In agreement, I guess we never can tell until the elections are over.

Congrats on a good trading day. On my part, I did not make any trades. Had other engagements. Good luck on another day of pip hunting.

[Jag757]

We attempted to break out but it turned right back into the consolidation. It probably suckered a lot of traders and that’s why you wait. Getting ready for some serious news very soon so I am not trading and depending on what happens, I will probably be done for the day.