The EUR/USD currency pair continued its downward movement on Wednesday and ended up near the level of 1.0636 by the end of the day. Thus, although we had some doubts that surpassing the ascending trendline was not false, nevertheless, Wednesday's trading clearly showed that the pair could well resume the global downward trend, which has been going on for two years. It should be immediately noted that today's fall of the European currency happened during the US trading session, when the data on business activity in the US manufacturing sector were published. The most important ISM index turned out to be slightly better than forecasts, however, even exceeding the forecasts should not have provoked an 80-point dollar growth. We believe that this was an inadequate reaction of the market, or the market was already preparing for new short positions, and the ISM index became just a formal reason to start them. Thus, at the moment, the pair continues its downward movement and, if it manages to overcome the level of 1.0636, it will most likely continue its movement towards 20-year lows. Unfortunately, in fundamental terms, the euro still has nothing to oppose the US dollar.
The technical picture on the 5-minute timeframe does not look the best. The pair traded in an open flat in the morning, and suddenly fell in the afternoon. But even when the downward movement began, the first signal was formed far from immediately. Only when the ISM index of business activity in the US was published did the first sell signal form - overcoming the level of 1.0697. Here, traders could open short positions, but they should have been closed already at the next level of 1.0663, since a buy signal was formed. Unfortunately, this buy signal confused everything for novice traders, as it turned out to be false, and the downward movement resumed almost immediately. Therefore, beginners could open new short positions, which again should be closed near the nearest target level of 1.0636. As a result, a total of three deals were opened, of which two turned out to be profitable. But the total profit of the day turned out to be small - about 15-20 points. The movement today was strong, but unstable.
How to trade on Thursday:
The ascending trendline is no longer relevant on the 30-minute timeframe. A new decline has already started for the euro and judging by how strong it was today, the pair may continue to fall in the coming weeks until the renewal of 20-year lows. There is no downtrend line yet, but it may appear in the near future. On the 5-minute timeframe, it is recommended to trade at the levels of 1.0564, 1.0607, 1.0636, 1.0663, 1.0697, 1.0749, 1.0787-1.0806. When passing 15 points in the right direction, you should set Stop Loss to breakeven. There are no important events on the calendar of events in the European Union. Meanwhile, only the ADP report on the number of employees in the private sector will be released in the US. This is a kind of analogue of NonFarm Payrolls, but much less significant. The market rarely reacts to it. However, now traders can continue to be active, and the price moves much more volatility than it could, based on the macroeconomic background.
