Hourly chart of the EUR/USD pair
The EUR/USD pair tried to continue the upward movement on Wednesday, but it came across the resistance level of 1.1889 on its way, which it had already reached yesterday, and once again it failed to overcome the area. Therefore, it rebounded from this level and fell to the upward trend line, which the price also failed to overcome. The upward trend is still present. In the morning review, we warned that the upward movement is unlikely to resume and mentioned that it is not entirely advisable to buy the pair in the upper area of the horizontal channel at 1.1700-1.1900, since it is uncertain whether the price will be able to get out of it. In practice, this is what happened. The price did not leave the channel and is now preparing for a new round of downward movement within the same channel. Therefore, getting the price to settle below the trend line will change the current trend to a downward one within the horizontal channel. In this case, novice traders will be able to start trading down.
Only one more or less significant macroeconomic report was published on Wednesday – inflation in the European Union. As expected, the consumer price index in October remained unchanged at -0.3% y/y. Therefore, the weak inflation report might have triggered the slight decrease in the euro’s quotes during lunchtime. At the same time, the overall volatility of the day was only 40 points. This is an extremely low value. And this volatility has persisted since the beginning of the week. Therefore, we cannot generally conclude that traders reacted to something today. During the day, the euro/dollar pair was initially up by 30 points, and then about 40 points down. By and large, it’s just flat.
European Central Bank President Christine Lagarde is set to speak on Thursday. She has recently been speaking almost every day, but by and large these are not speeches, but participation in various video conferences. Of course, the head of the ECB can report something important there, but, as practice shows, this happens extremely rarely. Thus, we are inclined to the option that Lagarde will not report anything important on Thursday either. No more important reports or events scheduled for November 19. Accordingly, volatility might be extremely low during the day, and novice traders can only rely on unexpected and unplanned news.
Possible scenarios for November 19:
1) Long positions are relevant since the price is trading above the upward trend line. The euro’s growth potential, as always, is limited by the 1.1903 level, and now the price is as close as possible to it. Thus, formally, when opening new buy positions while aiming for 1.1889 and 1.1903, you need to wait for a new signal to buy MACD, but traders must decide for themselves whether they are ready to take risks on such a transaction. As we have already mentioned, there is now a high probability of starting a new round of downward movement.
2) Trading for a fall at this time is irrelevant, since there is a pronounced upward trend. Novice traders are advised to wait until the price settles below the upward trend line. In this case, we open sell orders while aiming for 1.1837 and 1.1814.
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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