Outlook for EUR/USD on May 17. A modest correction might not have happened

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Analysis of EUR/USD 5M

The EUR/USD pair went through a minor bearish correction on Thursday. It was so weak that it's unclear whether the pair will even drop to the Senkou Span B line. As mentioned before, the market has returned to its favorite routine of the past six months. This involves buying the euro on any pretext while buying the US dollar only on significant occasions. Much of the fundamental and macroeconomic background that is in favor of the dollar is either ignored or interpreted against it, which amounts to the same thing. To be fair, the last month has seen a lot of negative data from the US, which could and should have triggered the dollar's decline. However, the dollar has been falling much more frequently than the data would suggest. Moreover, the market ignores the fact that the Federal Reserve does not intend to lower the rate anytime soon.

Therefore, we do not see any reason for the euro to continue its upward movement and expect the downward trend to resume in the medium-term. However, we should also consider the possibility that if the market continues to maintain a bullish bias for no reason, the pair will not fall. Let's remember that the market is dominated by large players who can make trades independently of fundamental events and macroeconomic reports.

Only one trading signal was formed on Thursday – a sell signal. At the very beginning of the European trading session, the pair rebounded from the 1.0889 level, and by the evening, it had moved down by about 5-10 pips. Volatility was quite low, which naturally affected the number of signals and the size of the profit.

COT report:

The latest COT report is dated May 7. The net position of non-commercial traders has been bullish for quite some time, but now the situation has finally changed. The net position of non-commercial traders (red line) has been decreasing in recent months, while that of commercial traders (blue line) has been increasing. This shows that market sentiment is turning bearish, as speculators increasingly sell the euro. Currently, their positions coincide in terms of volume. We don't see any fundamental factors that can support the euro's strength, while technical analysis also suggests a downtrend. Three descending trend lines on the weekly chart indicate that there's a good chance of continuing the decline.

The red and blue lines have crossed, and now bears may have a significant advantage. So we strongly believe that the euro will fall further. During the last reporting week, the number of long positions for the non-commercial group increased by 3,400, while the number of short positions decreased by 7,900. Accordingly, the net position increased by 12,300. Overall, both the euro and the net position continue to decline. The number of buy contracts is only higher than the number of sell contracts among non-commercial traders by 4,000.

Analysis of EUR/USD 1H

On the 1-hour chart, the EUR/USD pair has been going through a steady bullish correction against the broader downward trend for a month. Since expectations for a Federal Reserve rate cut in 2024 have significantly decreased, we believe that the US currency should rise in the medium term. We still expect the price to consolidate below the ascending channel so the downtrend can resume. However, it seems that the market is not ready to buy the dollar under any circumstances.

On May 17, we highlight the following levels for trading: 1.0530, 1.0581, 1.0658-1.0669, 1.0757, 1.0797, 1.0836, 1.0886, 1.0935, 1.1006, 1.1092, as well as the Senkou Span B line (1.0734) and the Kijun-sen line (1.0830). The Ichimoku indicator lines can move during the day, so this should be taken into account when identifying trading signals. Don't forget to set a Stop Loss to breakeven if the price has moved in the intended direction by 15 pips. This will protect you against potential losses if the signal turns out to be false.

On Friday, the final estimate of the Eurozone inflation report will be published. Apart from this event, there will be nothing else of interest in either the US or the EU. Volatility will probably be low.

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;

The material has been provided by InstaForex Company - www.instaforex.com #

Will the dollar rise from its knees?

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After the party comes the hangover. The EUR/USD surged to its highest levels since the end of March, and it brings a sense of deja vu. Back then, just as now, all three major U.S. stock indexes hit new record highs. A few days later, a correction followed, triggered by rumors that the Federal Reserve would keep the federal funds rate at a peak of 5.5% longer than previously expected. Has anything changed following the April U.S. inflation report? Quite possibly not.

According to New York Fed President John Williams, there is currently no reason to adjust the Fed's current monetary policy stance. He does not expect any reasons to appear in the near future. Williams believes that inflation will slow to 2.5% by the end of 2024 and will reach the target on a sustainable basis only in 2025. His colleague from Chicago, Austan Goolsbee, is pleased with the slowing CPI but needs to see more similar reports before considering easing monetary policy.

Minneapolis Fed President Neel Kashkari believes the federal funds rate is in the right place, and the biggest question is whether it is slowing down the economy. After a series of disappointing reports, investors believe it is. However, the leading indicator from the Atlanta Fed has been fluctuating between 2.5-4.0% for a long time. What kind of GDP cooling can we be talking about?

U.S. GDP forecast dynamics

According to Nordea Markets, there is no talk of GDP slowing down. Employment growth of 150,000 and above indicates a healthy labor market. The upward revision of corporate profits points to high domestic demand, as do decent wage growth and still high household savings rates. The company changes its forecast for the start of the Fed's monetary expansion from September to December and expects EUR/USD to fall to 1.07 by mid-year, followed by a recovery to 1.1 by the end of 2025.

The reason for such a recovery is cited as the positive impact of lower U.S. rates on the global economy. As a result, pro-cyclical currencies like the euro and the pound will benefit. It seems that this is the scenario investors expect to see, but not in 2025—right now.

New records in U.S. stock indexes suggest that the markets are mistaking wishful thinking for reality. The Fed will not rush to cut rates based on a single Consumer Price Index report. The central bank needs more data, so it is quite likely that the EUR/USD rally has gone too far. The pair has established its trend, but it is on track to face challenges.

Technically, on the daily chart, EUR/USD bears are playing out the 20-80 bar. Typically, if quotes do not return to its base within two days, the initiative shifts back to the bulls. Therefore, a rebound from the resistance zone of 1.0830-1.0845 makes sense for buying the main currency pair. The target for long positions is set at 1.1080.

The material has been provided by InstaForex Company - www.instaforex.com #

The yen got its way

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Third time's the charm. Did the Bank of Japan intervene in the Forex market for the third time in the past two and a half weeks? Or was the sharp decline in USD/JPY solely the result of slowing US inflation? Whatever the case, the drop certainly lifted the spirits of both the government and the central bank. Their fight against speculators is about to succeed, much like in 2022. Back then, the Federal Reserve's reluctance to raise the federal funds rate as aggressively as investors had expected provided the necessary relief. Hopes for a rate cut are returning to the markets this May.

Japan's dependence on energy imports makes a weak yen a serious problem for the economy. The country's GDP contracted by 0.5% quarter-on-quarter and 2% year-on-year in the first quarter. The sluggish economic growth frustrates the population and haunts the government. This poor performance contrasts with the success of Japanese corporations, whose foreign earnings are converted into the significantly weakened yen of recent years. This allows stocks and indices to rise but leaves the authorities restless.

Dynamics of Japan's private consumption and GDP

It's no surprise that the government and the central bank decided to engage in currency interventions. Approximately $60 billion was spent on two of these interventions, a similar amount to what was used at the end of 2022. However, this time, the speculators did not back down. They pushed USD/JPY higher for seven consecutive trading days before the US dollar plunged.

Official Tokyo should thank the overly bearish speculators on the yen, who began closing their long positions in USD/JPY as soon as things started to heat up. This was triggered by the news of US inflation slowing to 3.4% in April. This effectively quashed fears of a federal funds rate hike. The futures market is now betting on rate cuts at two FOMC meetings—in September and December. This allows Treasury yields to fall and it also supports the yen against the US dollar.

According to Daiwa Securities, the Forex situation resembles last November when slowing US inflation led to falling Treasury yields and USD/JPY rates. Credit Agricole says that the pair is the most sensitive in the currency market to declines in US bond yields, so it could move south very quickly. Monex believes that it is unlikely to drop below 150 until the Fed eases its monetary policy.

In my opinion, the USD/JPY uptrend has been broken due to the return of the divergence theme in the monetary policies of the Fed and the BOJ in the Forex market.

Technically, there is a 1-2-3 pattern on the daily chart. According to the rules of harmonious trading, its target is located near the 149.5 mark. It makes sense to hold and increase the short positions on the US dollar against the Japanese yen, formed from 156.3, during pullbacks.

The material has been provided by InstaForex Company - www.instaforex.com #

Outlook for GBP/USD on May 16. The pound rises again

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Analysis of GBP/USD 5M

GBP/USD continued its upward movement on Wednesday. No event could have influenced the market to buy the British pound, as the only event on Wednesday was the US inflation report. This report did not serve as an impetus to sell the US dollar. As forecasted, headline inflation eased to 3.4% from a year ago, and core inflation slowed as forecasted to 3.6% year-over-year. In both cases, the current inflation level is so high that the Federal Reserve still cannot even begin discussing monetary policy easing. Both inflation values matched the forecasts. Both inflation values do not guarantee that it will resume the downward trend. Therefore, it was illogical for the pound to rise on Wednesday. But who is surprised by this?

The pound sterling has been rising since April 22. For a while, it seemed that it had found its place within another sideways channel, but yesterday the price effortlessly broke through the 1.2605-1.2620 area and surged. Even if we assume that the market had a justified reaction to the inflation report, since when does the dollar plummet due to a 0.1% change in the indicator? In general, we stick to our previous opinion. The pair can continue to rise for as long as it wants, but this movement has nothing to do with the fundamental and macroeconomic background.

Two buy signals were formed on the 5-minute timeframe. First, the pair overcame the 1.2605-1.2620 area, and then it bounced off it from above. As with the euro, the first signal was quite difficult to catch as the price instantly soared. However, the second buy signal was not only possible to execute but it also yielded profits—at least 35-40 pips.

COT report:

COT reports on the British pound show that the sentiment of commercial traders often changes in recent years. The red and blue lines, which represent the net positions of commercial and non-commercial traders, constantly intersect and, in most cases, remain close to the zero mark. According to the latest report on the British pound, the non-commercial group opened 8,100 buy contracts and 900 short ones. As a result, the net position of non-commercial traders increased by 7,200 contracts in a week. Sellers continue to hold their ground, but they have a small advantage. The fundamental background still does not provide a basis for long-term purchases of the pound sterling, and the currency finally has a real chance to resume the global downward trend. The trend line on the 24-hour TF clearly shows this. Almost all of the factors point to the pound's decline.

The non-commercial group currently has a total of 51,800 buy contracts and 73,600 sell contracts. Now the bears are in control and the pound has a huge potential to fall. We can only hope that inflation in the UK does not accelerate, or that the Bank of England will not intervene.

Analysis of GBP/USD 1H

On the 1H chart, GBP/USD continues to go through a bullish correction, which could turn into anything. The price easily overcame the 1.2605-1.2620 area on the second attempt. The British pound continues to show that the market is willing to buy regardless of the fundamental and macroeconomic background. Therefore, the pair's movement is illogical, so it's pointless to try to look for any patterns.

As of May 16, we highlight the following important levels: 1.2215, 1.2269, 1.2349, 1.2429-1.2445, 1.2516, 1.2605-1.2620, 1.2691-1.2701, 1.2786, 1.2863, 1.2981-1.2987. The Senkou Span B (1.2540) and Kijun-sen (1.2557) lines can also serve as sources of signals. Don't forget to set a 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.

On Thursday, no significant events are scheduled in the UK. The US docket will only feature secondary data on building permits and industrial production. The market is currently buying the pair without regard for news, reports, or speeches by Powell and his colleagues. Therefore, the actual values of today's reports are irrelevant.

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;

The material has been provided by InstaForex Company - www.instaforex.com #

The Bank of Japan will not allow the yen to weaken. Overview of USD/JPY

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The yen was able to strengthen against the dollar after the Bank of Japan published a Summary of Opinions from its monetary policy meeting on April 25 and 26. The summary contained rather aggressive comments on two key topics for the yen: rate hikes and reducing bond buying. The document provided additional confirmation that the BOJ is preparing for a series of rate hikes and will reduce its purchases of long-term Japanese government bonds (JGB). The minutes contain clear hints that the central bank will combat a sustained depreciation in the yen.

While the issue of raising rates is a fairly obvious one, reducing bond purchases is an ambiguous step. The Japanese central government has been running budget deficits since 1993, and the government's funding comes from the constant issuance of bonds that the BOJ buys because they are unappealing to foreign investors due to the near zero yields. The greater the yield differential between UST and JGB, the weaker the yen becomes.

If the BOJ is preparing to shift to quantitative tightening, then who will finance the government? Obviously, it is necessary either to achieve a sustainable budget surplus, which is currently impossible, or increase the appeal of bonds for foreign investors, which can only be achieved by raising yields. This, in turn, will again increase the burden on the budget due to higher interest payments.

The likely strategy will be to boost real household incomes, which explains the close attention to forecasts for average wage dynamics. Income growth would help keep inflation around 2%, justifying a rate hike and, consequently, higher bond yields.

Only time will tell whether this is the case or not, but the weak yen phase appears to be coming to an end as the negatives are clearly outnumbering the positives ones.

The net short JPY position sharply decreased by $2.4 billion to -$10.9 billion over the reporting week. The bearish bias remains intact, but the volume of short positions have been declining for two consecutive weeks, and the price no longer indicates a high probability of further growth in USD/JPY.

The yen is still trading near the 160 level, but there are lower chances of testing this level again. Objectively, the yen should weaken due to the substantial yield differential, but in the long term, the situation will change in its favor. The question is when these changes will be enough for the yen to start appreciating for objective reasons, rather than through monetary interventions. For speculators, betting on a weaker yen is becoming too risky. Therefore, the most obvious strategy is to sell USD/JPY on attempts to rise, anticipating a global reversal.

The material has been provided by InstaForex Company - www.instaforex.com #

Forecast for USD/JPY on May 15, 2024

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USD/JPY

The USD/JPY pair is entering a complex period of consolidation. On the daily timeframe, it is within the Fibonacci range of 50.0-61.8%. The target support at 155.75 is below this range.

If the price consolidates below this level, it could move towards the 23.6% Fibonacci level, which is approaching the MACD line. However, as long as the signal line of the Marlin oscillator moves sideways, a story similar to the period from March 20 to April 9 may continue. The only difference is that back then the consolidation led to a sharp rise, whereas this time it might result in a sharp decline.

On the hourly chart, the price is consolidating above the balance and MACD indicator lines. The MACD line is declining and entering the lower range at the 50.0% Fibonacci level on the daily chart. Below this range, there could be a third support level at 155.75 for the period from May 10 to May 13. The Marlin oscillator is in the bearish territory, indicating a 60% probability that the price will fall.

The material has been provided by InstaForex Company - www.instaforex.com #

The aussie will try to develop bullish momentum. Overview of AUD/USD

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Australia's NAB business confidence index held steady at 1 in April 2024, while its index of business conditions fell 2 points to +7. All three components used in the calculations – employment, capacity utilisation, and forward orders – slightly declined, indicating signs of a slowdown in economic activity.

In fact, this is the exact result the Reserve Bank of Australia is aiming for – a decline in activity as a key factor in reducing inflation. The only question is when this will happen. The RBA is monitoring the situation. Following last week's meeting, the markets have reduced the likelihood of a rate hike to almost zero and expect the rate pause to be prolonged. In other words, the rate will neither rise nor fall, making the RBA a passive observer in forecasts for the AUD/USD exchange rate, with everything depending on external factors such as changes in the Federal Reserve policy, global inflation, and recovery.

In the first quarter, inflation was higher than expected, and as RBA Governor Michelle Bullock admitted, the option of another rate hike was discussed but ultimately dismissed. Since the economy is slowing down, the likelihood of rising inflation decreases, which is exactly what is needed.

The April labor market report will be released on Thursday, with neutral forecasts. The main interest, as usual, will be the dynamics of average wages, but the report is unlikely to cause any significant market reaction. Everything will be decided on Wednesday when the US consumer inflation report is released. This is the event the markets are waiting for, and it is capable of causing movement in the otherwise dormant market. The Australian dollar will likely react in sync with other currencies.

The net short AUD position decreased by $1.13 billion to -$4.26 billion over the reporting week. Speculative positioning remains bearish, but the short position has been steadily decreasing for three consecutive weeks, indicating a bullish trend for the AUD. The price is above the long-term average and is headed upward.

AUD/USD is making another attempt to reach the technical level of 0.6679, we expect it to succeed. Passing the resistance area at 0.6670/80 will increase the chances of corrective growth. The long-term target is 0.6875/6900, but the movement is still under a big question and will depend primarily on changes in the Fed policy, not on internal factors.

The material has been provided by InstaForex Company - www.instaforex.com #

ECB prepares markets for June rate cut. Overview of EUR/USD

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The euro continues its bullish correction for the fourth consecutive week, but there is uncertainty regarding the sustainability of this movement. In the absence of economic news, the euro has not found a driver for growth, despite the efforts of some European Central Bank representatives who have commented on recent changes in inflation, employment, and economic recovery.

The minutes of the ECB meeting published on Friday showed increased confidence that inflation is on track back to 2% and it also confirmed rate cut intentions for June. Some ECB members were ready to cut rates as early as April, but the minutes suggested a preference for June if "...additional evidence received by then confirmed the medium-term inflation outlook embedded in the March projections." If the market becomes confident in a rate cut in June, the euro will likely fall against the dollar.

The second estimate of GDP for the first quarter will be published on Wednesday. The initial estimate was 0.3%, marking the first quarter of growth since the second quarter of 2023 and the strongest since the third quarter of 2022. This fairly confident recovery was a surprise following a very weak 2023 (only the COVID-affected 2020 was worse). If the initial estimate does not become worse, the euro may have grounds to correct higher. Supporting a "good" scenario is the rise in April's PMI, particularly in Germany, which left the negative territory for the first time since June 2023.

The weekly change in the euro amounted to +1.5 billion, the net short position was liquidated and a cumulative long position of 0.6 billion was formed. A neutral position; a fragile equilibrium has been established after large-scale closures of long positions on the euro. However, the report marked large volumes of euro purchases for the second consecutive week. The price has moved above the long-term average.

A week ago, we suggested that the EUR/USD pair has a high chance of rising further. The euro is trading near the upper boundary of the bearish channel. In the absence of a clear driver last week, the pair traded in a sideways range, with the nearest resistance at 1.0810/20 holding for now. However, the chances of successfully breaking through this resistance seem to have increased. The next target is 1.0980, and we expect stronger movements to start after the release of the US inflation report on Wednesday.

The material has been provided by InstaForex Company - www.instaforex.com #

Trading plan for EUR/USD on May 13. Simple tips for beginners

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Analyzing Friday's trades:

EUR/USD on 1H chart

EUR/USD did not show any interesting movement on Friday. The price moved sideways, and volatility was just 30 pips. The pair is still within the ascending channel, which shows that the bullish correction remains intact. This correction has been persistent for over three weeks now, and it should have ended a long time ago. However, first, the US kept releasing weak reports (as if it were better in Europe...), then the market interpreted the Bank of England's meeting results as hawkish (although this is not entirely true), and so the euro appreciated alongside the pound. Once again, there are questions regarding the logic behind these movements. Clearly, the euro should be falling, as there's a 90% chance that the European Central Bank is likely to lower the key rate next month. But until we can guarantee that the price has firmly settled below the ascending channel, we cannot talk about the end of the correction.

EUR/USD on 5M chart

On the 5-minute timeframe, the price bounced from the area of 1.0785-1.0797 twice . The maximum profit that novice traders could expect was about 15 pips during the US trading session. Traders could gain this amount of profit if the trade was manually closed at the lowest point of the price. Sell signals duplicated each other, so only one trade should have been opened.

Trading tips on Monday:

On the hourly chart, the EUR/USD pair continues to go through a corrective phase. We believe that the decline should resume in the medium term, as the euro remains expensive, and in general, the global trend is pointing downwards. The fundamental background still supports the US dollar, and the recent FOMC meeting proved this - now Federal Reserve Chair Jerome Powell doesn't even know when monetary policy easing will begin.

On Monday, we advise novice traders to closely monitor the area between 1.0785-1.0797. Traders may consider selling the pair if the price rebounds from this area, after that they can aim for 1.0725-1.0733. A breakthrough will allow traders to consider buying with 1.0838-1.0856 as the target.

The key levels on the 5M chart are 1.0483, 1.0526, 1.0568, 1.0611, 1.0678, 1.0725-1.0733, 1.0785-1.0797, 1.0838-1.0856, 1.0888-1.0896, 1.0940, 1.0971-1.0981. On Monday, there are no interesting events scheduled in the European Union and the United States. We may just see another "fun" and "volatile" day, which has been the case 4 out of 5 times lately.

Basic trading rules:

1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.

4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.

5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.

6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.

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 represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.

The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.

Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.

Beginning traders should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.

The material has been provided by InstaForex Company - www.instaforex.com #

What to expect for the dollar next week?

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The news background in the United States will attract the most attention. The dollar's course is crucial in the currency market and the global economy. Therefore, market participants focus on US reports and other events. Therefore, after analyzing the events in the EU and the UK, it will be useful to understand the events of the following week in America.

Events will unfold on Tuesday when the Producer Price Index (PPI) is released, and Federal Reserve Chair Jerome Powell will speak. The PPI is interesting because it directly affects overall inflation. If producers raise prices, then prices rise in retail networks, driving up overall inflation, and vice versa. As for Powell's speech it doesn't require any special explanations. Powell may say that the Fed will not begin to ease monetary policy until there is confidence that inflation will fall to 2% in the medium term. Since this isn't the case right now, and some members of the FOMC have already hinted at the potential need to raise interest rates again, there is no doubt that Powell will remain dovish.

The main report of the week will be released on Wednesday – the inflation report for April. The value is expected to remain unchanged compared to March or slow down by a maximum of 0.1% to 3.4% on an annual basis. Core inflation is also expected to remain relatively unchanged at around 3.8%. Such data could support the US dollar, as the market may once again be reassured that the decision to lower interest rates is clearly not imminent.

Data on the housing market and industrial production will be released on Thursday. With these reports, the week will essentially end in the United States. In my opinion, the key focus will be on the CPI report. If it turns out that the indicator has begun to slow down again, it could have very negative consequences for the US dollar, which the market is not eager to buy despite the news background. For me, a slight decrease will not change the general picture, but the market may react by reducing demand for the dollar, unfortunately. However, I remain faithful to the current wave analysis for both instruments and continue to expect a decline.

Wave analysis for EUR/USD:

Based on the conducted analysis of EUR/USD, I conclude that a bearish wave set is being formed. Waves 2 or b and 2 in 3 or c are complete, so in the near future, I expect an impulsive downward wave 3 in 3 or c to form with a significant decline in the instrument. I am considering short positions with targets near the 1.0462 mark. Failure to break 1.0787, which is equal to 76.4% Fibonacci, will indicate that the market is ready for new short positions.

Wave analysis for GBP/USD:

The wave pattern of the GBP/USD instrument suggests a decline. I am considering selling the instrument with targets below the 1.2039 level, because I believe that wave 3 or c is being formed. A successful attempt to break 1.2625, which corresponds to 38.2% Fibonacci, indicates the completion of an internal, corrective wave 3 or c, but 1.2470 is still holding back the sellers from attacking, preventing the British from building a downward wave.

Key principles of my analysis:

Wave structures should be simple and understandable. Complex structures are difficult to work with, and they often bring changes.

If you are not confident about the market's movement, it would be better not to enter it.

We cannot guarantee the direction of movement. Don't forget about Stop Loss orders.

Wave analysis can be combined with other types of analysis and trading strategies.

The material has been provided by InstaForex Company - www.instaforex.com #