Hourly chart of the EUR/USD pair
The EUR/USD pair tried to start a new downward movement last Wednesday night, which we are waiting for, but the sell signal that the MACD provided turned out to be false, and trading over the past 12 hours has been extremely weak. A sell signal from MACD appeared around midnight, but the majority of traders are already asleep at this time. However, if there were those who opened sell positions on the pair, then the current loss on this deal is only 5 points and it can be closed, since the MACD indicator has already moved up again. Therefore, we can expect another round of upward corrective movement and again we have to wait until the MACD indicator turns tp to the downside. Recall that there are more chances for the downward movement to continue after quotes of the euro/dollar pair have gone beyond the ascending channel. At least the price should fall to the 1.1696 level. We have also formed a new downward trend line, which currently has four points of contact with the price. This line also supports the option of moving downward, however, if the price settles above it, this will mean that traders are preparing new buy positions. In general, we can't call this line strong, since it was formed in two days.
The fundamental background for the EUR/USD pair remains unchanged. Nothing new in America, which has been the main factor in changes in the exchange rate in recent years. The election topics are smoothly approaching their finale, and the topic of negotiations between Democrats and Republicans has stalled again, but the differences in views on the size of the aid package for the American economy are not as big as before, so there is hope that the two opposing parties can still agree. But there is no news on this right now. A report on US unemployment benefits will be released today. An interesting report in our opinion, but not interesting from the markets' perspective. They probably won't react to it. European Central Bank President Christine Lagarde will deliver another speech in the evening, which she has done almost every day now and this significantly reduces the importance of her speeches. As before, everything will depend on what exactly Lagarde says, and whether she touches on the topic of monetary policy at all. Thus, we advise beginners to pay more attention to technical factors and watch news feeds for unplanned news and events.
Possible scenarios for October 15:
1) Buy positions on the EUR/USD pair have ceased to be relevant at the moment, since the pair left the ascending channel. However, if the price settles above the new trend line today, then novice traders can try to open long positions with targets at the resistance levels of 1.1771 and 1.1796. However, we recommend that you be as careful with these positions since the trend line is not strong.
2) Sell positions are still relevant at the moment. However, there is still a lack of a sell signal from MACD. If it forms in the next few hours, and the price remains below or near the trend line (a delicate moment), then novice traders will have the right to open new sell orders with targets at 1.1720 and 1.1696. You can sell the pair even if the price breaks the trend line, but be careful, since the trend line is weak.
On the chart:
Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator (14,22,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).
Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.The material has been provided by InstaForex Company - www.instaforex.com