Hourly chart of the EUR/USD pair
The EUR/USD pair rose by 60 points at night and in the morning, then dropped by the same amount for two hours in the afternoon, afterwards it calmed down and stabilized around the 1.2220 level. Since the pair's quotes settled above the downward trend line during the day (which is now indicated by a dotted line), novice traders could open long positions in order to get the price to settle above this area. We mentioned the 1.2254 level as a target. The price fell short by around 4 points and significantly dropped. Thus, novice traders could earn 20-25 points today, but they could also incur losses if they did not exit long positions in time. However, it was impossible to predict the drop in quotes at lunchtime. No important news that could support the dollar at that time. We warned that the holidays are not the best time to trade. The price can trade in any way, and it will be extremely difficult to predict its behavior. At the same time, we have the rising trend line at our disposal, which is now the only one in the chart. The price rebounded off it five times in total, but it is very difficult to say that an upward trend has now formed. Thus, formally, long positions have now become relevant at least until the price settles below the trend line.
No macroeconomic report from the European Union and the United States on Monday, December 28. And, in principle, there was no news, which is absolutely not surprising for the holiday period. Donald Trump signed the 2021 budget in America, which also includes a $900 billion stimulus package. However, this is not the kind of news that could affect the movement of the euro/dollar pair. In fact, this package can only exert additional pressure on the dollar, since it is not clear where the United States government will take almost a trillion dollars from. It is one thing to raise money, if you just print - then the supply of the US dollar in the foreign exchange market will grow and its rate may sink even more.
The US consumer confidence indicator will be published on Tuesday, which, you can be sure, will not have any impact on the pair's movement. Most likely, the "swing" will continue, which is to move in different directions. Or flat.
Possible scenarios on December 29:
1) Long positions have become relevant at the moment, since the pair surpassed the downward trend line, and the upward trend has been preserved. Thus, formally, we should now wait for the MACD indicator to discharge and create a new buy signal from it, afterwards you should consider opening new long positions while aiming for 1.2230 and 1.2245. Rebounding from the trend line can be used as a buy signal. But at the same time, there is a high probability that the pair will continue to move in different directions.
2) Trading for a fall does not seem appropriate now. In order to be able to re-examine sell orders, the price needs to settle below the rising trend line. In this case, you can open short positions while aiming for 1.2167 and 1.2152.
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.