1-hour chart of EUR/USD
On Monday, EUR/USD was still trading mixed. On the one hand, the currency pair left the trading range of 1.2111 – 1.2144. On the other hand, the pair has not resumed the downtrend yet, but the upper border of the channel again did not allow traders to move further upwards. All in all, the overall trend is still bullish. However, the pair is not able to surpass 1.2144. At the same time, the bears cannot take advantage of this, insisting on the downtrend. Under such market conditions, we should certainly wait for new signals.
Let me remind beginners that recently EUR/USD has been trading with low volatility. In other words, the price makes no more than 50 pips from a local low to a local high. Another thing is that it is always hard to enter the market at the very beginning of price action and enter at the end of this price action. I mean that all beginners can earn is a profit of 20-25 pips intraday. Another trouble is that it is essential to catch the right moment in the market. For example, today at the early trading day it was a good idea for beginners to open long positions because formally the uptrend line had been already formed and MACD indicator pointed upwards being at about the zero level. However, we could have earned no more than 20 pips on this deal on condition that such positions had been opened in the early morning.On Monday, February 15, the macroeconomic background lacked market catalysts. This is confirmed by low volatility. Traders remained indifferent to industrial production data from the Eurozone, though the reading was disappointing. Industrial output contracted 1.6% in January month-on-month. The indicator dropped 0.8% from December a year ago. The economic calendar contained no other economic data.
Tuesday is going to be a more interesting day in terms of the information environment, though it does not contain a lot of reports. Let me turn your attention to the only macroeconomic report, the revised eurozone's GDP for Q4 2020. Analysts project a drop in the economic output of the euro area in the final quarter of 2020. So, the EU economy continued to slow down without any signs of recovery. This is bearish for the single European currency. If the flash estimates come true or if the actual scores are worse than expected, the euro could make another downward correction, breaking the uptrend line. Tomorrow, investors will get to know ZEW surveys with economic sentiment indicators for Germany and the Eurozone, but this will be a report of secondary importance. It will give insight into investors' morale in February.
The following scenarios are possible on February 16
1)Long positions are still valid at present in view of the clear-cut uptrend line. Thus, beginners are recommended to wait until MACD indicator generates a new buy signal. Please be aware that the price has not been able to climb above 1.2144. Besides, it would be a good idea to open long positions if the price fixes above 1.2144 with upward targets of 1.2165 and 1.2180.
2)Trading the pair downwards is not a good idea at the moment as the overall trend is still bullish. Nevertheless, if the price fixes below the downtrend line, the time will be ripe to open short positions with caution, setting targets at 1.2089 and 1.2059.
What's on the chart:
Support and Resistance levels are the levels that are targets when opening buy or sell orders. Take Profit levels can be placed near them.
Red lines are channels or trend lines that display the current trend and show which direction it is preferable to trade now.
Up / down arrows show whether the pair should be traded up or down when reaching or overcoming particular obstacles.
MACD indicator (14, 22, 3) is a histogram and a signal line. When they are crossed, this signals a market entry. It is recommended for use in combination with trend lines (channels, trend lines).
Important speeches and reports in the economic calendar can greatly influence the movement of the currency pair. Therefore, during their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners in the forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.