EUR/USD hourly chart
Trading activity on the EUR/USD pair was again very slow today. The pair’s movement during the day was just 36 pips. With such low volatility, it can be difficult to make money in the foreign exchange market. In this case, trading makes no sense. Thus, beginners could safely take a break today. On the chart, you can see a sideways channel where the price has moved. The channel is quite narrow, and it will not be difficult to get out of it. However, the price needs to leave this channel so that we can confirm the resumption of the trend. After a 200-pip rally without a pullback, we should definitely expect a downward correction. However, anything can happen. We need to be prepared for any scenario. Interestingly, novice traders could have earned 15-20 pips on the current flat movement. Yesterday, we recommended buying the pair if the MACD indicator reaches the zero level and forms a new buy signal. In this case, the target was set at the level of 1.2144. The signal was finally generated (marked with a circle on the chart), and the price has tested the target. Therefore, newcomers could even finish this slow trading day with a small profit.
On Thursday, February 11, the macroeconomic background was rather weak. There were no important releases during the day apart from the report on initial jobless claims in the US. The actual figures did not differ greatly from preliminary estimates. Besides, the data on jobless claims is not considered crucial. More important were the words of Jerome Powell a day earlier. He said that the real unemployment rate in the US was significantly higher than 6.3% reported by the official statistics. It is actually close to 10%. In general, the US dollar remains under pressure, but we still expect to see a correction.
Tomorrow, the fundamental picture will not impress traders as well. In the EU, the Industrial Production Index will be published, while the US will release the data on consumer confidence. Usually these reports do not generate much interest among traders even in times when markets take this data into account. Thus, tomorrow we should not expect any drastic changes. The only thing that novice traders need to be prepared for is possible profit taking by bulls (buyers). We have already mentioned this scenario with a possible correction. Traders do not always make trading decisions based on fundamental factors or macroeconomic data. They may decide to close some of their positions to take profit before the weekend. This may also cause a drop in the pair.
Possible scenarios on February 12
1) Long positions remain relevant at the moment although the pair is trading flat. So, we recommended that beginning traders wait for the price to settle above the level of 1.2144 (the upper boundary of the sideways channel). Only then can you consider opening long positions with the targets at 1.2159 and 1.2184.
2) Trading short is currently not relevant. However, if the price consolidates below the sideways channel, that is, below the level of 1.2113, you can consider opening short positions with the targets at the support levels of 1.2089 and 1.2071.
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 trendlines 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, and 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 patterns (channels and trendlines).
Important announcements and economic reports that you can always find on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exit the market in order to avoid sharp price fluctuations.
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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