Here are the details of the economic calendar from August 30:
Yesterday, Britain was not around due to a Bank Holiday. The trading volumes for the GBP/USD pair were reduced, which was reflected in the chart in the form of low quotes activity.
As for the United States, the pending real estate sales index was published, which recorded a 1.8% decline in July.
If there was a market reaction to the negative flow of statistical data from the United States, it was minimal. In general, the market was standing still.
Analysis of trading charts from August 30:
The EUR/USD pair still managed to show activity after a short stagnation around the level of 1.1800, forming an upward momentum in the market. Based on the time frame of the impulse, it can be seen that it arose during the Asian session, where there was no information and news background, and trading volumes were reduced. Thus, it is very likely that we are dealing with local speculations.
The GBP/USD pair approached the resistance level of 1.3800 while on a correction. This caused the pound sterling to be overbought in the market, which will quite possibly lead to a reduction in the volume of long positions.
It is worth noting that the correctional move from August 20 is only a part of the downward cycle from the area of the 1.4000 psychological level.
* Overbought market – a situation that occurs after prices have risen too high and quickly, and prices are expected to fall soon.
* Short positions or Short means sell positions.
* Psychological levels are round values (1.2000, 1.3000, 1.4000,1.5000, etc.) that serve as the main coordinates in the market, which traders pay special attention to. These levels are often used as support or resistance.
The resistance level is the so-called price coordinates, from which the quote can slow down or stop the upward movement. The principle of constructing this level is to plot price stopping points on the chart history, where the price reversal in the market has already taken place.August 31 economic calendar:
Today, the UK lending market data will be published at 8:30 Universal time, where not everything is so bad according to forecasts. The main event today is considered to be the publication of preliminary inflation estimates in Europe, which could grow from 2.2% to 2.7%. Such an intense rise in consumer prices scares investors since this situation requires immediate action from the European Central Bank, which is still doing nothing. At the same time, the regulator does not even give hints about a change in the course of monetary policy, which puts even more pressure on the market due to complete uncertainty.
In such a situation, speculators appear, where the growth of inflation can be won back by the market both by a local decrease and by growth in the value of the euro. This does not exclude local surges in the market.
* The consumer price index is prepared by the Statistical Service of the European Union (Eurostat), which determines the change in prices of the selected basket of goods and services for a given period. This indicator is considered a key indicator for assessing inflation.
From the point of view of fundamental analysis, inflation growth is a positive signal for the national currency, but when consumer prices rise faster than forecast, this is not considered the best signal.
Trading plan for EUR/USD on August 31:
The ascending inertial move has already led to the fact that the euro is overbought in the market.
In this situation, two possible scenarios can be considered:
The first one comes from the downward cycle from the beginning of June, where the current correction is already at the limit of possibilities. This can lead to the early completion of growth and the resumption of the downward cycle. This forecast will be confirmed if the price is held below 1.1800, which will open the way towards 1.1760-1.1700.
The second scenario considers an inertial move, where speculators are not stopped by an overbought signal. This leads to a movement towards the level of 1.1900.
Trading plan for GBP/USD on August 31:
The resistance level of 1.3800 is still putting pressure on buyers, which may lead to a reduction in the volume of long positions. If the price rebounds from the resistance level, a movement may occur towards the level of 1.3735.
An alternative scenario of the market development will arise if the price is kept above the level of 1.3830. This could jeopardize the downside cycle from 1.4000.
What is reflected in the trading charts?
A candlestick chart view is graphical rectangles of white and black light, with sticks on top and bottom. When analyzing each candle in detail, you will see its characteristics of a relative period: the opening price, closing price, and maximum and minimum prices.
Horizontal levels are price coordinates, relative to which a stop or a price reversal may occur. These levels are called support and resistance in the market.
Circles and rectangles are highlighted examples where the price of the story unfolded. This color selection indicates horizontal lines that may put pressure on the quote in the future.
The up/down arrows are the reference points of the possible price direction in the future.
Golden Rule: It is necessary to figure out what you are dealing with before starting to trade with real money. Learning to trade is so important for a novice trader because the market is constantly dynamic and it is important to understand what is happening.