Hourly chart of the EUR/USD pair
After leaving the descending channel, the EUR/USD pair immediately started a strong upward movement on Tuesday, November 3, and was in it all day. Therefore, those novice traders who followed our morning recommendations, namely to trade up, are currently in profit from around 40 to 70 points. The MACD indicator did not turn down during the entire day, so traders could either take profits near the target levels, or wait for the MACD indicator to turn down. In any case, novice traders have profit, and we congratulate them on this. As for the future prospects for the euro/dollar pair, after such a strong growth it would be nice to correct a bit to the downside. However, we remind traders that the elections in America are not over yet, for another 5-6 hours, Americans will continue to come to the polls, respectively, and the markets can continue to trade quite actively. The same applies to tomorrow, when volatility can be very high, and there can also be sharp reversals in the pair. You can leave long positions on the MACD downward signal if traders want to try to extract the maximum profit from open trades.
No major macroeconomic publications or other events scheduled in the US or the EU on Tuesday. Markets were entirely focused on the elections. Actually, this event alone was enough for the pair to trade actively all day. So far, no riots or clashes have been reported among the US population. Recall that many media outlets predicted riots on election day. However, at the moment everything is going on in the most cultural and civilized way. Nearly 100 million Americans voted early or by mail.
The European Union and America will publish business activity indices for the services sector on Wednesday, November 4. The index is forecast at a fairly high level in the United States - 56 (Markit) and 57.5 (ISM). But the situation with business activity in the service sector is much worse in the European Union. It began to fall back in July this year, and it went below 50.0 in September, below which, we recall, it is believed that the industry is contracting. Well, with the introduction of the new lockdown in many European countries, the service sector suffered the most once again. Therefore, based on these publications, the euro is unlikely to receive market support. In addition, the ADP report on the change in the number of employees in the private sector will be published in the United States, which is similar to the NonFarm Payrolls indicator. The forecast is +650,000. However, whatever the real value, we believe that tomorrow traders will also make decisions based on data from the American elections.
Possible scenarios for November 4:
1) Buy positions on the EUR/USD pair are still relevant at the moment, since the price has settled above the descending channel. However, in order to open new long positions, it is necessary for the pair to correct to the downside now, and the MACD indicator discharges slightly downward, preferably to the zero level. As for long deals that are still open, they can be closed by the MACD signal down or you can do it right now.
2) Trading for a fall at this time has ceased to be relevant, since the price failed to overcome the 1.1623 level and left the descending channel. Therefore, now it is necessary to expect a new downward trend or an eloquent completion of an upward trend, and only after that should you consider the options for opening short positions. In general, not in the near future.
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.