Hourly chart of the EUR/USD pair
The EUR/USD pair did not start an upward correction yesterday, but simply returned to moving down. It continued to fall to the lower border of the 1.1696 horizontal channel, and the pair turned to the upside when it approached this level and started to pull back. The most interesting thing is that the MACD indicator has been pointing down all this time. Therefore, those traders who opened short deals on Tuesday evening could stay in them until yesterday evening, when the MACD signaled the beginning of a correctional movement. The price quickly left the descending channel, however, it still remains within the horizontal channel of $1.17-1.19. Therefore, since the EUR/USD pair dropped to the area of the lower border of this channel, now we have the right to expect an upward reversal and move to the upper border of this channel. In principle, this kind of movement has been going on in pairs for about three months.
As for the fundamental background, very interesting events await the pair today. First, the report on US GDP for the third quarter. Recall that the American economy lost around 31% in the second quarter. An increase of 31% is expected for the third quarter. If this figure comes true, then it will be just an excellent result, although it will not mean a full recovery from the pandemic crisis. In this case, the US dollar will be able to gain an advantage over the euro in the coming weeks and even months. Also the results of the European Central Bank meeting will be summed up today. And we do not expect any important and new information, since the key interest rate will remain unchanged, accordingly, novice traders will be able to pay attention to the ECB press conference, at which we may receive more or less interesting information. However, we would say that the response to the GDP data is even more important than the ECB meeting. And, of course, the topic of the US elections will not disappear, which is just several days away. Whatever the results and subsequent events, it is very difficult for the dollar to rise in price in a state of uncertainty. And this particular state of uncertainty before the elections will continue to persist. As soon as the elections are left behind, the trend movement may resume, and we are inclined to believe that this will be a downward trend, which means that the dollar will strengthen. However, there is no need to guess now what will happen in a week. There is a technical picture and a trading strategy, we recommend following it.
Possible scenarios for October 29:
1) Buy positions on the EUR/USD are irrelevant at the moment, however, an upward movement to 1.1900 itself is very, very likely, since the quotes have reached the bottom of the horizontal channel. However, we do not recommend novice traders to start buying without an upward trend.
2) Trading for a fall at this time remains relevant, although the pair dropped to the area of the lower border of the horizontal channel. After completing the current round of correction, you can reopen sell orders while aiming for levels of 1.1713 and 1.1696 based on a new sell signal from MACD. Nevertheless, you should be careful with trading for a fall in the area of the lower border of the horizontal channel.
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.