A Volatile Bearish Trend: AI-Assisted 4-Hour Analysis of EUR-USD
Updated
Dear Esteemed TradingView Members,
In the world of financial trading, precision and insight are invaluable assets. In today's dynamic market environment, it's imperative to embrace the right tools that provide clarity amid the ever-shifting tides of economic forces.
In this piece, I delve into the intricate currency trading, focusing on the EUR-USD market. To capture the essence of this dynamic market, I've chosen to examine it through the lens of 4-hour candles. The rationale behind this choice is rooted in the recent uptick in EUR volatility. While lower timeframes may drown you in noise, the 4-hour candles offer an equilibrium, making it easier to discern patterns and identify emerging trends.
Why 4-hour candles, you ask? Well, because they're versatile. Whether you're a swing trader, day trader, or even planning longer-term positions, these candles are a reliable tool in your arsenal. They filter out the commotion and provide a steady view of the market's ebbs and flows.
I looked at recent developments, and I saw a bearish trend that persisted until November 1, 2023. However, it's essential to note that the trend didn't seamlessly transition to a bullish one; instead, it appears to be exploring potential support levels. What's intriguing is the gradual deceleration of the decline, as evidenced by the volume indicator.
Volume plays a pivotal role in assessing market health, and traders frequently employ indicators like On-Balance-Volume (OBV) to confirm their analyses. Our chart showcases a possible demand zone, spanning from $1.044 to $1.052, accentuated by a prominent blue rectangle. This range is more than just a potential support zone; it's an indicator of market sentiment and a battleground of supply and demand.
OBV, the blue indicator at the bottom of the chart, corroborates the significance of this zone. It started a noticeable ascent on October 3, 2023, coinciding with the EUR price's descent into this area. This rise indicates a considerable demand that might be a precursor to multiple bullish surges, emerging from this very platform. Yet, each of these attempted upswings met the resolute barrier of the ascending resistance line, denoted by the striking purple trendline, nudging the price back toward the aforementioned demand zone.
This oscillation serves to intensify the latent buying potential within the zone. However, it also reveals that the demand isn't robust enough yet to trigger a full-scale shift from a bearish to a bullish trend. The latest encounter with the resistance line on November 6, 2023, adds another layer to the analysis.
At this juncture, our Random Forests machine-learning technique enters the fray. It paints a picture of a potential retreat in price towards the historical support zone. Remarkably, OBV barely budged in response to this rejection, suggesting that there's a substantial interest sandwiched between the resistance and support levels. This interest might lead to the execution of limit orders, propelling the EUR price downwards to the demand zone.
To further enrich our analysis, the Gradient Boosting Machines (GBMs) algorithm highlights a crucial point. It indicates that the EUR price has begun to veer away from Exponential Moving Average (EMA) graphs in a manner that typically hints at weakness in the local bullish trend. This divergence could signify a probable return to the overarching bearish trend or, at the very least, a period of consolidation—a characteristic often observed on-demand platforms.
In the ever-evolving landscape of financial markets, precision is the compass and insight of the North Star. As the EUR-USD market continues to unveil its secrets, your mission is to decode them with sophistication, warmth, and genuine expertise.
Stay tuned for more insights, and remember, in the world of trading, adaptability is the key to success.
It is not a financial advice. You are responsible for your funds. Take care of retaining volume more than fast gains. Do your research. The idea proposes only possibilities, and the market might act in a different way. Historic results don't guarantee future results. AI isn't omniscient.
Warm Regards,
Ely
In the world of financial trading, precision and insight are invaluable assets. In today's dynamic market environment, it's imperative to embrace the right tools that provide clarity amid the ever-shifting tides of economic forces.
In this piece, I delve into the intricate currency trading, focusing on the EUR-USD market. To capture the essence of this dynamic market, I've chosen to examine it through the lens of 4-hour candles. The rationale behind this choice is rooted in the recent uptick in EUR volatility. While lower timeframes may drown you in noise, the 4-hour candles offer an equilibrium, making it easier to discern patterns and identify emerging trends.
Why 4-hour candles, you ask? Well, because they're versatile. Whether you're a swing trader, day trader, or even planning longer-term positions, these candles are a reliable tool in your arsenal. They filter out the commotion and provide a steady view of the market's ebbs and flows.
I looked at recent developments, and I saw a bearish trend that persisted until November 1, 2023. However, it's essential to note that the trend didn't seamlessly transition to a bullish one; instead, it appears to be exploring potential support levels. What's intriguing is the gradual deceleration of the decline, as evidenced by the volume indicator.
Volume plays a pivotal role in assessing market health, and traders frequently employ indicators like On-Balance-Volume (OBV) to confirm their analyses. Our chart showcases a possible demand zone, spanning from $1.044 to $1.052, accentuated by a prominent blue rectangle. This range is more than just a potential support zone; it's an indicator of market sentiment and a battleground of supply and demand.
OBV, the blue indicator at the bottom of the chart, corroborates the significance of this zone. It started a noticeable ascent on October 3, 2023, coinciding with the EUR price's descent into this area. This rise indicates a considerable demand that might be a precursor to multiple bullish surges, emerging from this very platform. Yet, each of these attempted upswings met the resolute barrier of the ascending resistance line, denoted by the striking purple trendline, nudging the price back toward the aforementioned demand zone.
This oscillation serves to intensify the latent buying potential within the zone. However, it also reveals that the demand isn't robust enough yet to trigger a full-scale shift from a bearish to a bullish trend. The latest encounter with the resistance line on November 6, 2023, adds another layer to the analysis.
At this juncture, our Random Forests machine-learning technique enters the fray. It paints a picture of a potential retreat in price towards the historical support zone. Remarkably, OBV barely budged in response to this rejection, suggesting that there's a substantial interest sandwiched between the resistance and support levels. This interest might lead to the execution of limit orders, propelling the EUR price downwards to the demand zone.
To further enrich our analysis, the Gradient Boosting Machines (GBMs) algorithm highlights a crucial point. It indicates that the EUR price has begun to veer away from Exponential Moving Average (EMA) graphs in a manner that typically hints at weakness in the local bullish trend. This divergence could signify a probable return to the overarching bearish trend or, at the very least, a period of consolidation—a characteristic often observed on-demand platforms.
In the ever-evolving landscape of financial markets, precision is the compass and insight of the North Star. As the EUR-USD market continues to unveil its secrets, your mission is to decode them with sophistication, warmth, and genuine expertise.
Stay tuned for more insights, and remember, in the world of trading, adaptability is the key to success.
It is not a financial advice. You are responsible for your funds. Take care of retaining volume more than fast gains. Do your research. The idea proposes only possibilities, and the market might act in a different way. Historic results don't guarantee future results. AI isn't omniscient.
Warm Regards,
Ely
Note
Over the weekend, I used AI to analyze financial and business news from social media and prestigious digital newspapers. I found that investor uncertainty is growing, which often correlates with people seeking refuge in the national currencies of economically and militarily strong countries. Historically, the USD has outperformed the EUR in these situations.This finding supports the scenario presented in the chart. I found even more signals that this scenario could indeed come to pass. However, I must reiterate that historical trends are not guarantees of future results. I am simply trying to assist your analysis with my own, albeit unguaranteed, insights.
Trade closed manually
I closed this trade on 10 November because of a shift in sentiment. Not too much profit, but profit nevertheless. As for the shift, I was writing about it in my newer ideas if you're interested. I place this update here to let you know I discontinued updates here in favor of continuing them in the new post.
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