Hourly chart of the EUR/USD pair
The EUR/USD pair was trading very anxiously on Tuesday, but less volatile than the day before. The pair seemed to have started a new round of downward movement at night, but during the day it also made a breakthrough to the upside by 50 points, afterwards it slumped again. The overnight sell signal from MACD looked quite promising in the morning, however, as a result, sell deals had to be closed almost at zero due to this upward spurt. It is good that a new sell signal was formed from the same MACD in the afternoon, which should also have been worked out according to our morning recommendations. Those who did so are now in profits by around 40 points. The pair has reached the first target - the support level of 1.2164, but so far there are no signs of ending the downward movement. Therefore, if the pair manages to overcome this level, then short positions can be left open. Although we believe that 40 points of profit in the current environment is quite good. In any case, novice traders can decide for themselves whether to be content with such a level of profit or take the risk and wait for more. We would like to note that the downward trend is still present since the price has already left the rising channel earlier. A new downward trend line has appeared today, which currently supports those who are trading down.
No important news from the European Union on Tuesday, meanwhile, the US released its GDP report for the third quarter in the third estimate. Despite the fact that few people expected the discrepancy between the forecast and the actual value, this is how everything turned out in the end. US GDP in the third quarter grew not by 33.1% q/q, but by 33.4% q/q. The difference is not that big, but still. Thus, market participants could react to macroeconomic statistics for the first time in a long time, and the US dollar rose in price and it began to grow when this report was released.
The US is set to publish the number of jobless claims and the number of orders for durable goods on Wednesday. Let us remind you that the number of initial orders has been increasing recently, while the number of repeated ones has decreased. If the number of initial applications increases this week, it will already be a wake-up call for the unemployment rate, which has also been declining recently. Traders have ignored all the recent reports on durable goods orders, so we believe that they would only react to this report if the actual values differ greatly from the forecast.
Possible scenarios for December 23:
1) Long positions are currently irrelevant, since a downward trend has formed and there is a trend line. Therefore, we would not recommend going long until a new upward trend has been established.
2) Trading for a fall looks more appropriate now. Today novice traders can continue to hold open short positions while aiming for 1.2130 if the price surpasses the 1.2164 level. You can also close sales now and be content with a profit of 40 points. Short deals should be opened when the MACD indicator discharges and creates a new signal.
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.