U.S. Stocks Move Moderately Lower After Seeing Early Strength

Stocks experienced a downturn on Tuesday after initially showing promise, continuing the decline seen on Monday. The major indices, including the Nasdaq and the S&P 500, retreated further from the record highs set last Friday.

Throughout the latter part of the trading day, the primary averages hit new session lows. By the close, the Dow Jones Industrial Average had decreased by 154.10 points, or 0.4%, closing at 44,247.83. The Nasdaq Composite dropped 49.45 points, or 0.3%, to 19,687.24, while the S&P 500 fell 17.94 points, or 0.3%, ending at 6,034.91.

The slide in Wall Street's performance occurred as investors keenly anticipated the Labor Department's upcoming report on consumer price inflation, set to release on Wednesday. Investor sentiment appeared to be cautious, as expressed by Danni Hewson, head of financial analysis at AJ Bell, noting, "The anticipated 'Santa rally' has not materialized today as markets remain preoccupied with tomorrow's inflation data."

Forecasts for the report suggest a fifth consecutive month of a 0.2% rise in consumer prices for November, with the annual growth rate anticipated to inch up to 2.7% from 2.6% in the previous month. Excluding food and energy, core consumer prices are projected to rise by 0.3% for the fourth consecutive month, with the annual growth rate holding steady at 3.3%.

Although the Federal Reserve is largely expected to reduce rates by another 25 basis points next week, this data could influence projections for subsequent rate cuts. According to the CME Group's FedWatch Tool, there is an 86.1% probability that the Fed will lower rates by a quarter-point next week, but a 69.1% chance they will maintain rates in late January.

In sector-related news, computer hardware stocks faced significant losses, with the NYSE Arca Computer Hardware Index plummeting 3.8% after reaching a near five-month high at the previous close. Semiconductor stocks also fell, evidenced by a 2.5% decline in the Philadelphia Semiconductor Index. Housing stocks followed suit, as the Philadelphia Housing Sector Index dropped 2.1%. Toll Brothers (TOL) notably drove this sector down, reporting fourth-quarter earnings that exceeded estimates but with a lower-than-expected gross margin in homebuilding.

Conversely, airline stocks performed strongly, with the NYSE Arca Airline Index rising by 1.7%. Alaska Air Group (ALK) soared by 13.2% after an optimistic fourth-quarter profit forecast revision.

Globally, markets in the Asia-Pacific region had a mixed performance on Tuesday. Japan's Nikkei 225 Index increased by 0.5%, while Hong Kong's Hang Seng Index decreased by 0.5%. In Europe, stocks predominantly saw a downturn. The French CAC 40 Index declined by 1.1%, the U.K.'s FTSE 100 Index by 0.9%, and Germany's DAX Index edged down by 0.1%.

The bond market saw treasury yields continue their upward trend from the previous session, with the yield on the benchmark ten-year note rising by 2.2 basis points to 4.221%.

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

Overview of the GBP/USD Pair for December 10; Sterling's Rise Should Not Be Misleading

The GBP/USD currency pair also traded in both directions on Monday, as if the market deliberately aimed to confuse traders. Last week, the British pound gained strength despite very few reasons for such a move. Some U.S. reports were weaker than expected, and Andrew Bailey announced four rate cuts for next year. However, those rate cuts represent a dovish stance, which should have triggered a decline in the pound. At the same time, Jerome Powell reiterated that the Federal Reserve is not in a hurry, emphasizing that the economy is in excellent shape, giving the Fed the time it needs. Friday's Nonfarm Payrolls report supported Powell's statements. Thus, we believe the dollar had more reasons to appreciate last week than the pound.

The reasons for the pound's strengthening are similar to those of the euro: technical factors. The pair had declined for two consecutive months, making at least a minor correction necessary. Understanding this leads to the same assumption as with the euro: the decline could resume this week. Of course, no one can predict the outcome of Wednesday's inflation report, the week's key event (apart from the European Central Bank meeting). If inflation shows no growth or decline, it could justify further dollar selling. However, regardless of how strong the correction becomes, it remains a correction.

It's worth noting (clearly visible on the weekly timeframe) that the last corrective wave reached 76.4%, with the price correcting over two years. At the same time, this observation pertains to a long-term perspective; even if the growth over the past two years represents the start of a new multi-year trend (for which there is currently no basis), a downward correction is now required to return the pound to at least the 1.18 level. For the 16-year downtrend to be considered over, the British currency would need to rise above 1.4230. What reasons are there for such a strong rise in the pound after it has already gained over 2,000 pips?

The conclusions remain the same as before. The pound may continue to rise for a while, and the market may keep ignoring the Bank of England's monetary policy easing, which will either begin or accelerate regardless. Similarly, the market may continue to overlook its misjudgment regarding easing U.S. monetary policy. In addition, large players may irrationally continue pushing the pound higher in the long term without any logic. However, none of this changes the bigger picture. Any growth in the pound is a correction. Any strong growth is an illogical movement that cannot be predicted. Such movements can only be explained retrospectively by emphasizing supportive factors while ignoring opposing ones.

The average volatility of the GBP/USD pair over the last five trading days is 78 pips, which is considered "moderate" for this pair. On Tuesday, December 10, we expect the pair to move within a range defined by the levels 1.2684 to 1.2840. The higher linear regression channel is pointing downward, signaling a bearish trend. The CCI indicator has formed multiple bullish divergences and has entered the oversold zone several times. While a correction has begun, its strength is difficult to predict.

Nearest Support Levels:

• S1: 1.2695
• S2: 1.2573
• S3: 1.2451

Nearest Resistance Levels:

• R1: 1.2817
• R2: 1.2939
• R3: 1.3062

Trading Recommendations:

The GBP/USD pair maintains a bearish trend but continues to correct upward. We are not considering long positions at this time, as we believe that all growth factors for the British currency have already been priced in by the market several times. For those trading based on "pure" technicals, long positions may be possible with targets at 1.2817 and 1.2840 if the price moves above the moving average line. Short positions, however, are currently more relevant, with a target of 1.2573, provided the price consolidates back below the moving average.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

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

Three Nightmares for the Euro

When all the negative factors are already priced into a currency pair, even bad news fails to reignite a downtrend. Why didn't EUR/USD collapse in response to the November 227,000 increase in U.S. employment? This figure did not alter investor expectations that the Federal Reserve would lower the federal funds rate by 25 basis points in December. The euro wasn't intimidated by the strong U.S. labor market. Is there anything that could push the major currency pair further south?

MUFG identifies three bearish drivers that could eventually push EUR/USD toward parity. The European Central Bank lowers the deposit rate by 50 basis points in December or hints at a more significant cut in the future. The Fed pauses its rate cuts, keeping borrowing costs unchanged at the upcoming FOMC meeting. Finally, Donald Trump intensifies rhetoric on trade tariffs against the EU.

Projected Dynamics of ECB Monetary Expansion

Although investors are nearly certain the deposit rate will drop from 3.25% to 3% at Christine Lagarde and her colleagues' meeting on December 12, the futures market hints at the possibility of a larger move during one of the next four Governing Council meetings. Derivatives have priced in the eurozone's economic weakness, as evidenced by highly disappointing business activity data and falling inflation expectations.

Some ECB officials are seriously concerned about the eurozone returning to deflation—a problem the central bank fought for years using unconventional measures, including QE. To prevent extreme scenarios, it's better to accelerate the monetary easing cycle now. Should this happen, EUR/USD is likely to continue its decline, especially since Bloomberg experts foresee Frankfurt rapidly cutting borrowing costs to 2%. Meanwhile, Washington is expected to act more cautiously.

ECB Rate Dynamics and Forecast

A Fed pause in December is possible but unlikely. The November inflation data is the only significant report left before the FOMC meeting. FOMC officials have repeatedly emphasized that they won't make long-term conclusions based on a single data point. Therefore, the federal funds rate will most likely be reduced from 4.75% to 4.5% by the end of 2024. However, Jerome Powell has recently remarked that the September 50 basis point cut was a lifeline for the labor market. With the labor market now performing well, why lower rates further?

Lastly, the European Union plans to impose fines on U.S. tech companies under the Digital Markets and Digital Services Acts. This could irritate Donald Trump and prompt him to escalate a trade war.

On the daily EUR/USD chart, the bulls attempted to activate the 1-2-3 reversal pattern, but the effort failed. A drop in the pair's rate below the fair value of 1.055 would be a sell signal, while another attempt to breach resistance at 1.061 would justify buying.

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

Overview of the EUR/USD Pair for December 9; ECB Meeting and Nothing Else

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The EUR/USD pair traded poorly on Friday. While this wasn't apparent in the 4-hour timeframe, it was evident in the 5-minute chart. The price oscillated between stagnation, sharp rises, and equally sharp declines. Friday proved particularly challenging as the European trading session appeared to be merely a prelude to the release of US labor market data, which, once published, triggered volatile price swings. Mixed signals can explain the initial upward movement followed by a subsequent decline: a rising unemployment rate (negative for the dollar) countered by a stronger-than-expected increase in non-farm payrolls (positive for the dollar). This duality makes sense in hindsight, but trading through it was exceedingly difficult.

The entire past week was convoluted and ambiguous. Although the economic calendar was packed with macroeconomic reports and fundamental events, no groundbreaking information emerged. Reports such as ISM, ADP, JOLTs, NonFarm Payrolls, and the unemployment rate are not minor data points, yet the market traded as if no significant updates were received, relying instead on technical corrections. This aligns with our expectations, as we've consistently maintained that there are no compelling reasons for the euro to strengthen, especially after last week's statements from Christine Lagarde and Jerome Powell. As anticipated, the upward correction appears to be prolonged.

The upcoming week in the Eurozone and Germany features a light event schedule. Reports on German inflation (second estimate) or European industrial production are unlikely to attract much attention. However, Thursday will see the final European Central Bank meeting of the year, where a decision to cut key rates by 0.25% is highly likely. There's also a possibility of a 0.5% cut, but in either case, it could deal another blow to the euro.

It's worth noting that the market hasn't yet priced in the ECB's monetary policy easing. The ECB initially intended to cut rates once every two meetings but has now adopted a policy of easing at every meeting. This is another factor that could contribute to the euro's decline. We've long held a bearish view on the euro, and this outlook has only strengthened.

A few weeks ago, the euro found temporary relief from a horizontal channel on the weekly timeframe, rebounding from its lower boundary. However, this bounce doesn't guarantee a move toward the opposite boundary. We believe the downtrend will resume in due course.

The EUR/USD pair's average volatility over the past five trading days as of December 9 is 82 pips, considered "average." For Monday, we anticipate the pair moving within the range of 1.0486 to 1.0650. The higher linear regression channel is directed downwards, and the global downtrend persists. The CCI indicator has dipped into oversold territory several times, sparking an ongoing upward correction.

Support Levels:

• S1: 1.0498
• S2: 1.0376
• S3: 1.0254

Resistance Levels:

• R1: 1.0620
• R2: 1.0742
• R3: 1.0864

Trading Recommendations:

The EUR/USD pair could resume its downtrend at any moment. For months, we've emphasized a bearish medium-term outlook for the euro and continue to favor the overall bearish trend. Likely, the market has already priced in—or nearly priced in—any forthcoming Federal Reserve rate cuts. As such, there are still no significant reasons for a medium-term dollar decline, which was scarce even before. Short positions can be considered with targets at 1.0376 and 1.0254 if the price consolidates below the moving average. If you are trading on the "pure" technique, then long positions can be considered only if the price holds above the moving average, with targets at 1.0620 and 1.0643, but we currently advise against opening long positions.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

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

Trading Recommendations and Review of EUR/USD on December 9: A Strong Finish to the Week

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EUR/USD 5-Minute Analysis

On Friday, the EUR/USD pair rose for most of the day but ended up falling. With limited news from the Eurozone in the morning, the market anticipated weak US labor and unemployment data. These expectations were only partially met: unemployment increased, but nonfarm payrolls exceeded forecasts for both November and October. Consequently, the most pessimistic expectations were not realized, and the dollar quickly regained its unjustly lost ground.

The US reports once again demonstrated no significant issues in the US economy. While unemployment has steadily risen, even Federal Reserve officials have repeatedly stated that this level is acceptable. The Fed has aimed to cool the US labor market to slow inflation, and the robust job creation figures highlight the strength of the American economy. This also suggests that the Fed will continue reducing rates cautiously.

Unfortunately, Friday's market movement was such that trading opportunities were scarce. Even during the European session, it became clear that there would be no reliable signals. The 1.0581 level was ignored throughout the day, and no other signals were generated. During the US session, with the release of key US data, the market became even more unpredictable, making trades riskier.

COT Report

The latest Commitment of Traders (COT) report is dated December 3. As shown in the chart, the net position of non-commercial traders remains "bullish," though bears are gradually gaining ground. About six weeks ago, professional traders significantly increased their short positions, turning the net position negative for the first time in a long while. This indicates that the euro is now being sold more frequently than bought.

Fundamentally, there are no clear reasons for euro appreciation. Technically, the pair remains in a consolidation zone or a flat trend. On the weekly chart, EUR/USD has been trading between 1.0448 and 1.1274 since December 2022, making further declines more likely. A breakout below 1.0448 could open new downside potential for the euro.

The red and blue lines have crossed, signaling a bearish market trend. During the latest reporting week, the number of long positions among the "non-commercial" group increased by 11,400, while short positions rose by 12,800. As a result, the net position decreased by 1,400.

EUR/USD 1-Hour Analysis

On the hourly chart, the pair continues to correct. The correction remains slow and complex, as anticipated. We still see no justification for a strong rally in the euro, so we expect the correction to conclude and the pair to resume its decline toward parity. A break below the Senkou Span B line could signal a potential resumption of the downtrend.

On December 9, we highlight the following levels for trading - 1.0269, 1.0340-1.0366, 1.0485, 1.0585, 1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, as well as the Senkou Span B (1.0464) and Kijun-sen (1.0545) lines. The Ichimoku lines may shift throughout the day, so they should be monitored closely when identifying trading signals. Always set a Stop Loss at breakeven if the price moves 15 pips in the desired direction to safeguard against potential losses in case of a false signal.

No significant events are scheduled in the US or Eurozone on Monday, and the overall economic calendar for the week is relatively light. As a result, the pair's behavior is unlikely to change dramatically today, and volatility is expected to remain low.

Illustration Explanations:

• Support and Resistance Levels (thick red lines): Key areas where price movement might stall. Not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the H4 timeframe to the hourly chart, serving as strong levels.
• Extreme Levels (thin red lines): Points where the price has previously rebounded. They can serve as trading signal sources.
• Yellow Lines: Trendlines, channels, or other technical patterns.
• Indicator 1 on COT Charts: Reflects the net position size of each trader category.

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

GOLD – Results and Outlook

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Gold

Throughout the past week, gold traded within a narrow range inside the daily Ichimoku cloud. The primary resistances limiting its movement were the weekly short-term trend at 2662.95 and the daily medium-term trend at 2662.83. Bullish players must surpass the weekly Tenkan level (2662.95) and neutralize the daily Ichimoku cross to extend the upward trend. The levels of the cross are currently at 2635.38, 2649.00, and 2675.60. Beyond that, it will be critical to exit the daily cloud at 2722.58. If the bulls overcome these resistances, their next objectives will include breaking the last significant high at 2789.61 and testing the critical psychological level of 2800.00.

Should the uncertainty of the past week resolve in favor of the bears, breaking into the bearish zone below the daily cloud (2630.50) will establish a downward target to breach the cloud. To achieve the daily target, bearish players must test and overcome weekly supports at 2598.24, 2537.92, and 2478.56, further reinforced by the monthly short-term trend at 2509.30.

H4 – H1

Uncertainty is also evident in the lower timeframes. The pair has been trading near the gravitational zone of key levels, which, on the last trading day of the week, were positioned at 2636.50 and 2641.13 (central Pivot level + weekly long-term trend).

If the current indecision ends with bearish activity, the downward targets will include the supports of the classic Pivot levels, complemented by the objective of breaking through the H4 cloud at 2575.93 – 2559.83. Conversely, if the bulls take the initiative, their intraday targets include classic Pivot levels. Additionally, solid consolidation in the bullish zone above the H4 cloud will establish an upward target to break the H4 cloud. The values of the classic Pivot levels are updated daily, with new data available at the start of trading.

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Technical Analysis Components:

• Higher Time Frames – Ichimoku Kinko Hyo (9.26.52) + Fibonacci Kijun levels
• H1 – Classic Pivot Points + 120-period Moving Average (weekly long-term trend)

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

Overview of the GBP/USD Pair for December 6: The Pound Rose Without Even Knowing Why After Powell and Bailey's Speeches

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The GBP/USD currency pair exhibited sluggish movement on Thursday. While no significant events were scheduled in the UK or the US that day, Wednesday was packed with notable occurrences. Bank of England Governor Andrew Bailey and Federal Reserve Chair Jerome Powell gave speeches. Although neither made groundbreaking announcements, Bailey did mention the possibility of the BoE lowering its key rate four times by 0.25% each in the coming year. Conversely, Powell noted that the Fed has the flexibility to take its time with monetary policy easing. At first glance, these statements offered no new information to the market. Still, even such well-known facts should have logically triggered a new rise in the US dollar.

Throughout 2024, the market has anticipated monetary policy easing by the Fed—ideally at every meeting and preferably by 0.5%. With only one meeting left this year, the market remains optimistic about significant easing in December. This is despite Powell and several other Fed officials almost explicitly stating that there is no urgency to lower the key rate quickly. The market's expectations continue to price in more aggressive easing than is likely to materialize. Thus, we maintain that the dollar remains undervalued and oversold, even after a two-month decline.

Meanwhile, Bailey signaled that a rate cut in December is unlikely—a point the market appears to trust. Given that UK inflation is rising again (as it is in the US), the BoE will likely cautiously cut rates. The BoE has already been slower than the Fed, especially the ECB, in easing monetary policy. This cautious stance is the primary reason the pound falls less sharply than the euro and rises more robustly.

However, this advantage may not be enough to support the pound in the medium term. The BoE will inevitably lower rates as it faces significant economic growth challenges like those in the EU. The UK economy isn't likely to grow spontaneously—it needs stimulation and favorable conditions, which are currently lacking. High rates and visible economic struggles—exacerbated since Brexit—continue to weigh on growth prospects.

From a technical perspective, the daily chart shows that the price has corrected to the Kijun-sen line of the Ichimoku indicator (default settings). A rebound from this line is likely. Today, crucial reports on unemployment and the labor market will be released in the US, potentially leading to further dollar weakness. However, even if the GBP/USD pair rises today, it will not alter our long-term outlook.

The average volatility of the GBP/USD pair over the last five trading days is 85 pips, categorized as "medium." On Friday, December 6, we expect the pair to move from 1.2664 to 1.2834. The higher linear regression channel is directed downward, indicating a bearish trend. The CCI indicator has formed several bullish divergences and entered oversold territory multiple times. While a correction has begun, its strength remains difficult to predict.

Nearest Support Levels:

• S1: 1.2695
• S2: 1.2573
• S3: 1.2451

Nearest Resistance Levels:

• R1: 1.2817
• R2: 1.2939
• R3: 1.3062

Trading Recommendations:

The GBP/USD pair retains its bearish trend. We still do not recommend long positions, as we believe the market has already priced in all growth factors for the British currency multiple times. For traders using "pure technical analysis," long positions with targets at 1.2817 and 1.2834 are possible if the price moves above the moving average line. However, short positions are currently much more relevant, with a target of 1.2573 if the price falls below the moving average.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

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

Trading Recommendations and Review of GBP/USD on December 6; The Pound Continues Its Upward Correction, Unlike the Euro

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GBP/USD 5-Minute Analysis

The GBP/USD currency pair also traded higher on Thursday, appreciating more strongly than the euro. Despite a nearly absent and identical macroeconomic backdrop, the pound sterling continues to rise, while the euro remains relatively stagnant. This dynamic does not surprise us, as we have repeatedly mentioned that the British currency demonstrates greater resistance against the dollar. In other words, it tends to rise more readily than the euro and fall more reluctantly. However, the overarching trend remains unchanged. The euro and the pound are correcting within a downward trend that began 2.5 months ago.

Thus, we expect the current correction to end and the downward movement to resume. We had warned that the corrections might be lengthy, slow, and complex. There is no guarantee they will conclude anytime soon. Today, significant U.S. data releases could strengthen the U.S. dollar. However, strengthening within a day does not necessarily mean the correction is over. Secondly, a new decline could begin after a rise in the dollar. Thirdly, the U.S. labor market and unemployment data are not guaranteed to be strong.

Yesterday, only one trading signal was formed, but it was reasonably effective. Early in the European trading session, the price rebounded from the 1.2691–1.2701 area and subsequently increased by about 40–50 pips. Traders could have captured these points if they manually closed their positions in the evening. Long positions could also remain open, as further growth is possible today. However, we caution against taking such risks before key U.S. data releases.

COT Report

The COT reports for the British pound show that sentiment among commercial traders has frequently shifted in recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, often cross and mostly remain close to the zero mark. The recent downward trend occurred when the red line was below zero. The red line is above zero, while the price has breached the key 1.3154 level.

According to the latest report on the British pound, the Non-commercial group closed 18,300 BUY contracts and 2,500 SELL contracts. Thus, the net position of Non-commercial traders decreased by another 15,800 contracts during the week.

The fundamental backdrop still does not justify long-term purchases of the British pound, and the currency has a real chance of resuming a global downtrend. On the weekly timeframe, there is an ascending trendline. Until this line is broken, a long-term decline in the pound is unlikely. While the pound has tested this trendline, it hasn't yet consolidated below it. A rebound and correction could occur in the long term, but we believe the line will eventually be breached, and the downtrend will continue.

GBP/USD 1-Hour Analysis

The GBP/USD pair maintains a bearish outlook on the hourly timeframe, yet it continues to correct upward. We still do not see any fundamental reasons for the pound sterling to rise apart from the technical necessity of periodic corrections. However, the pound's remarkable resistance once again plays in its favor. The pound sterling is rising again, even as the euro remains stagnant.

For December 6, we highlight the following important levels: 1.2429-1.2445, 1.2516, 1.2605-1.2620, 1.2796-1.2816, 1.2863, 1.2981-1.2987, 1.3050. Senkou Span B (1.2616) and Kijun-sen (1.2688) lines can also be sources of signals. A Stop Loss is recommended to be set at breakeven once the price moves 20 pips in the desired direction. Note that the Ichimoku indicator lines may shift during the day, so adjustments may be needed when interpreting signals.

No significant events are scheduled in the UK on Friday. However, the U.S. will release four noteworthy reports, three of which will be published simultaneously. This could result in strong momentary market reactions. The most critical reports are on non-farm payrolls and the unemployment rate. For the dollar to strengthen, these figures need to surpass official forecasts.

Illustration Explanations:

• Support and Resistance Levels (thick red lines): Key areas where price movement might stall. Not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the H4 timeframe to the hourly chart, serving as strong levels.
• Extreme Levels (thin red lines): Points where the price has previously rebounded. They can serve as trading signal sources.
• Yellow Lines: Trendlines, channels, or other technical patterns.
• Indicator 1 on COT Charts: Reflects the net position size of each trader category.

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

Trading Recommendations and Review of EUR/USD on December 6; Flat Persisting, Expecting Further Decline

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EUR/USD 5-Minute Analysis

The EUR/USD currency pair traded with slight gains on Thursday, but this upward movement of the euro is essentially insignificant. The pair remains within a horizontal channel between the levels of 1.0485 and 1.0581. It has tested the upper boundary of this channel, which had previously been tested three times. Therefore, traders can reasonably anticipate a fourth rebound, after which the price may head downward toward the Senkou Span B line. This would hold true if the flat scenario continues to develop. The downward trend persists on a broader scale, making it possible to expect a renewed decline below the 1.0340 level.

The macroeconomic background on Thursday was quite weak, as was the euro's rise. The retail sales report cannot be classified as positive or negative since its monthly figure was worse than forecasts, while the annual figure was better. The number of initial jobless claims in the U.S. was slightly higher than expected, but it is neither a significant figure nor a report likely to trigger a dollar selloff. In any case, the most important day of the week is still ahead, and tomorrow, the U.S. dollar could either make up for its losses or continue its decline.

Two trading signals were formed during yesterday's session. Initially, the pair bounced off the Kijun-sen line and the 1.0533 level for an entire session but eventually rebounded. A few hours later, the euro was already near the 1.0581 level, forming a somewhat imprecise rebound and generating a sell signal. As a result, traders could have opened two trades yesterday, both of which were profitable.

COT Report

The latest Commitments of Traders (COT) report is dated November 19. The data clearly shows that the net position of non-commercial traders has been bullish for a long time, but the bearish sentiment is gradually gaining strength. A month ago, the number of short positions among professional traders surged, and for the first time in a long time, the net position turned negative. This indicates that the euro is now being sold more frequently than bought.

We continue to see no fundamental factors supporting euro strengthening, and technical analysis points to consolidation—a flat movement. On the weekly timeframe, the pair has been trading between 1.0448 and 1.1274 since December 2022. Thus, further decline remains likely. A break below 1.0448 would open up new space for a downward move.

The red and blue lines have crossed and changed their relative positions. During the last reporting week, the number of long positions in the non-commercial group fell by 5,700, while short positions rose by 29,400, leading to a net position decrease of 35,100.

EUR/USD 1-Hour Analysis

On the hourly timeframe, the pair continues to correct. As we anticipated, the correction remains complex and slow. We still believe there are no grounds for a significant rise in the euro, so we will wait for the correction to end and for the pair to resume its decline toward price parity. For example, consolidation below the Senkou Span B line would signal a potential resumption of the downward trend.

For December 6, we highlight the following trading levels: 1.0269, 1.0340-1.0366, 1.0485, 1.0581, 1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, as well as the Senkou Span B line (1.0473) and the Kijun-sen line (1.0526). Note that the lines of the Ichimoku indicator may shift during the day, which should be considered when identifying trading signals. Remember to set a Stop Loss order to break even if the price moves 15 pips in the desired direction. This will help protect against potential losses if the signal is false.

On Friday, the U.S. will release the NonFarm Payrolls and unemployment rate reports, significant enough to drive the EUR/USD pair 100 pips in either direction. The Eurozone GDP report for the third quarter (final estimate) is less impactful. Reports on wages and U.S. consumer confidence will also take a back seat to the unemployment and labor market data.

Illustration Explanations:

• Support and Resistance Levels (thick red lines): Key areas where price movement might stall. Not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the H4 timeframe to the hourly chart, serving as strong levels.
• Extreme Levels (thin red lines): Points where the price has previously rebounded. They can serve as trading signal sources.
• Yellow Lines: Trendlines, channels, or other technical patterns.
• Indicator 1 on COT Charts: Reflects the net position size of each trader category.

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

Overview of the EUR/USD Pair December 5; The Most Interesting is Yet to Come

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On Wednesday, the EUR/USD currency pair showed little interest in active movements. Many had anticipated high volatility and trending movements this week, but nothing has materialized as most of the week has passed. This serves as another reminder of a truth well-known to experienced traders: in the market, nothing is certain. Simply put, even if a day is packed with events like Christine Lagarde and Jerome Powell's speeches and major macroeconomic reports, this doesn't guarantee strong, trending movements. The same uncertainty applies to the direction of movements. Even if all factors point south, the price can move in the opposite direction as quickly as possible. This happens because the exchange rate of any pair is determined purely by the balance of supply and demand, and market makers, with their large liquidity volumes, can manipulate prices.

Thus, a trader's job involves identifying high-probability patterns and signals that might work out. A trader's profitability is determined by performance over the long run. Returning to this week, the euro remains stationary, maintaining its local and global downtrends. For most of Wednesday, the price traded below the moving average, suggesting that further decline remains more likely. At this point, even local fundamentals and macroeconomics have minimal influence on the euro and dollar outlook. The current situation is no different from one or three months ago.

For two years, the market focused solely on pricing in the Federal Reserve's future monetary policy easing. Now, it's processing other factors that primarily favor the US dollar. So, even if an isolated ISM report underperforms, what difference does it make? What impact can comments from Christine Lagarde or Jerome Powell have when the factors driving the sale of the US dollar have already been priced in? If the 16-year downtrend persists and the euro is likely to fall below parity with the dollar in 2025, what's left to debate?

As a result, this week's events are likely to have only a local impact on the EUR/USD exchange rate. A correction may continue, but we see the euro steadily drifting downward so far. The CCI indicator has repeatedly entered oversold territory and drawn numerous bullish divergences, yet we've only observed a modest retracement. What does this tell us? From our perspective, it reinforces the view that the decline will continue over time. This is precisely what we expect.

The average volatility of the EUR/USD currency pair over the last five trading days, as of December 5, is 68 pips, which is considered "average." We expect the pair to move from 1.0455 to 1.0591 on Thursday. The higher linear regression channel points downward, indicating that the global downtrend remains intact. The CCI indicator has repeatedly entered the oversold area, triggering an upward correction that is still ongoing.

Nearest Support Levels:

• S1: 1.0498
• S2: 1.0376
• S3: 1.0254

Nearest Resistance Levels:

• R1: 1.0620
• R2: 1.0742
• R3: 1.0864

Trading Recommendations:

The EUR/USD pair may resume its downward trend. In recent months, we have consistently emphasized expectations for a continued decline in the euro over the medium term, fully supporting the overall bearish trend. There is a high likelihood that the market has priced in most or all of the future Fed rate cuts. If this is the case, the dollar still lacks reasons for a medium-term decline, although such reasons have been sparse.

If the price remains below the moving average line, short positions can be considered, with targets at 1.0376 and 1.0254. If the price consolidates above the moving average, long positions may be considered for "pure" technical trading, with targets at 1.0620 and 1.0695. However, we do not recommend long positions due to the bearish outlook.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

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