Hourly chart of the EUR/USD pair
The EUR/USD pair made another upward spurt in the upward trend. However, it was extremely difficult for novice traders to trade today, since early in the morning the pair immediately grew by around 30 points in an hour, and it was on this candle that a buy signal from MACD was formed. And so a signal appeared while the price had already gone up a decent distance. Nevertheless, even if traders opened buy positions on this signal, they only lost a few points at the time of the MACD indicator’s reverse downward reversal. In any case, the losses were small. Unfortunately, the EUR/USD pair came close to the upper border of the horizontal channel and, accordingly, there is a very high probability of a downward reversal in this area and it could start moving towards the lower border of the 1.1700-1.1900 channel, which is where the price has been for about three months. Confidently overcoming the 1.1903 level can provoke a succeeding upward movement, which novice traders can reach. In the meantime, we are still leaning towards the option of a new downward movement.
Novice traders had nothing to pay attention to on Tuesday. There was quite interesting news regarding the adoption of the EU budget for 2021-2027. There were interesting messages from Donald Trump, as well as some interesting reflections on his prospects as president of the United States and actions in the next and remaining ten weeks. However, nothing that could trigger an increase in volatility. As a result, the pair passed only about 50 points in a day, which is quite small, but it eloquently shows that there were no important news and reports during the day. The US currency began to rise in price even towards the evening, which is completely inconsistent with the nature of the retail sales report that was just published and showed a smaller increase in the indicator in October than it was predicted.
The European Union is set to publish a relatively important report on inflation for October. However, it is unlikely to please the buyers of the European currency. The main indicator is forecast to remain at the level of -0.3% y/y. That is, deflation will be recorded in the European Union for the fourth consecutive month. Deflation, like high inflation, is considered a negative factor for any economy. Therefore, this report is unlikely to cause additional demand for the euro. But, in conjunction with the approach to the 1.1903 level, there are increasing chances of a downward reversal and a new fall by 100-150 points.
Possible scenarios for November 18:
1) Since the price continues to trade above the upward trend line, long positions are now relevant. The upside potential of the euro, as always, is limited by the 1.1903 level, and the price is near it. Thus, formally, to open new buy positions, you need to wait for a new signal to buy MACD and trade upward with the target of 1.1900, however, due to the proximity of this level, we recommend that novice traders brace for a downward reversal or they should overcome 1.1903. And only after that, should you consider the possibility of opening new deals.
2) Trading for a fall at this time is not relevant, since there is a pronounced upward trend. Thus, novice traders are advised to wait for the upward trend to end in order to have a reason to open short positions. Namely, the price should settle below the trend line. In this case, open sell orders while aiming for 1.1820 and 1.1790.
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
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