EUR/USD hourly chart
On Tuesday, the EUR/USD pair resumed its upward movement and tested the first key target level of 1.2250. A downward correction started just a few hours ago. Before that, the pair had been developing a steady uptrend. Last night, the MACD indicator formed a new buy signal. Those traders who managed to enter the market using this signal should have gained a profit of about 25 pips, even though there was a pullback to the downside. Those who joined the trend in the morning could have also earned some pips if they had closed their trades near the resistance level of 1.2250. The ascending trendline still confirms the uptrend. So now we should wait until the downward correction is completed and a new buy signal from the MACD indicator is formed, or until the price rebounds from the trendline. If the quotes settle below the trendline, we can start selling the pair, but it is still a long way to go. In general, the euro/dollar pair is trading quietly around 2.5-year highs ahead of the new year.
On December 29, no important economic reports were released. This means that beginners had to trade using only technical signals, which could be quite a successful strategy. However, in the course of the New York session, the pair faced a sharp fall by 30 pips. On the other hand, there was no important news during the day, so markets had no drivers to react to.
On Wednesday, the EU and the US do not expect any major macroeconomic news. So, the fundamental picture will stay mostly unchanged during the day. Traders will again have to rely on technical analysis as long as the trend persists. Currently, the pair is trading in an upward trend.
Possible scenarios for December 30
1) Long positions on the pair remain relevant at the moment since the price has passed the descending trendline, while the uptrend is still in place. Now we should again wait until the MACD indicator reaches a zero level and forms a new buy signal. After that, we can consider opening new long positions with the targets at 1.2270 and 1.2284. Also, a price rebound from a trendline can be used as a buy signal.
2) Trading short does not seem appropriate now. You can consider placing new sell orders only when the price settles below the ascending trendline. In this case, you can open short positions with the targets at 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 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.