On Tuesday, the EUR/USD pair was trading within the descending channel that was formed about a week ago. Thus, the European currency continues to decline but at a very slow pace. For example, today, the volatility of the pair was 71 pips. Compared to the previous day, the euro depreciated by 40 pips. Thus, the bulls do not see any reasons to take action. Given that there were no important fundamental factors in either the US or the EU, it is very strange to see the pair falling as it has already approached its yearly lows. The meaning of this is simple: the US dollar will continue to advance at least until some important fundamental events take place. For example, the inflation report in the US will be published on Friday. Besides, sellers do not seem to be willing to take profit on short positions, so the pair is not moving.
On a 5-minute time frame, the technical picture on Tuesday was average. There was a price movement although a very slow one. For example, novice traders missed the first round of the pair's downward movement as there was not a single sell signal at that time. Therefore, the first trade was a long position when the price bounced off the level of 1.1259. This level formed a support area together with the level of 1.1266. However, the price did not continue its rise. Beginners could not even set a Stop Loss to the breakeven point as the price dropped below the level of 1.1259 and the trade was closed with a loss of about 20 pips. However, sell positions should have been opened at the same moment, following a new breakout signal at 1.1259. This trade could have brought about 10 pips of profit as the downside movement ended around 1.1235 and the pair went down to 1.1227 in the course of a correction. A buy signal was also formed near the level of 1.1235. Long positions opened at this level allowed traders to earn about 10 more pips in profit, completely offsetting losses from the first trade. So, it was not possible to get a profit today. Anyway, not every day has to be profitable. The main thing is that we managed to close the session without losses.
Trading tips on Wednesday
A rather weak downtrend still persists on the 30-minute time frame. No clear signal was formed today near the lower boundary of the channel. Nevertheless, the pair may continue to decline in the coming days. On the 5-minute time frame, the key levels for December 8 are 1.1192, 1.1227, 1.1259-1.1266, 1.1307, and 1.1344. A Take Profit should be set at a distance of 30-40 pips. A Stop Loss should be placed to a breakeven point as soon as the price passes 15 pips in the right direction. On the M5 chart, the nearest level could serve as a target unless it is located too close or too far away. If it is, then you should act according to the situation or trade with a Take Profit. On Wednesday, ECB President Christine Lagarde will make a statement. In theory, her words may be followed by a strong market reaction and a rapid movement. After all, the last ECB meeting this year will take place in December, and the latest report on inflation in the EU was rather strong. However, this scenario is likely to happen with a 30-40% probability.
