I decided to prepare long-term analysis for EUR/USD before Federal Reserve System will announce its decision on September 17 for the issue of raising interest rates. A rate hike would likely lead to a stronger dollar and entice global investors to park more of their money in the United States instead of emerging markets. That could ultimately affect developing nations’ currencies, exports, and even employment levels. Also it will influence further development of EUR/USD exchange rate. Right after the announcement there will be high volatility in the market, so it is better to avoid opening trades in short time frames.
- This was a weak signal on the top of the market (no-demand bar), which marked the beginning of downward trend. Low volume on the top of the market shows that professional buying has withdrawn from the market. The market is unlikely to go up without interest in this move from the smart money.
- Here we see a very weak signal – up-thrust. The price is marked up and premature short traders are liable to panic and cover with buy orders. Traders looking for breakouts will buy, but their stop-loss orders are usually triggered as the price plummets back down. All those traders who are not in the market may feel they are missing out the move and start buying. An up-thrust is usually indicates lower prices. This action brings weakness to the market, but it is important to look at the overall picture – in this case wait confirmation of this effort and further weak signals.
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