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EUR/USD hourly chart
On March 4, EUR/USD continued the downward movement, but it was extremely difficult for beginners to trade within this trend. First of all, the MACD indicator had generated several signals during the day which should have been properly analyzed. And this is where problems could arise. The signals began to form at night. Usually, we do not recommend opening any positions during night time as it is always associated with risks, although volatility is rather low. The first signal that deserves our attention was formed in the morning (circled in picture). Unfortunately, the price did not immediately continue the downward movement. So, we had to close positions following the reversal upside signal of the MACD indicator. The approximate entry point was the level 1.2042. It is good that the price still went down by 20 pips. Yesterday, we recommended setting the Stop Loss at the breakeven point in case the price moves 15-20 pips in the right direction. Thus, this trade should have been closed with zero profit. Then, another sell signal was formed but it was not a god idea to follow it. By the time this signal was formed, the price had already moved down by almost 50 pips. And this is just the last candlestick. Thus, novice traders could avoid losses.
On Thursday, March 4, the data on retail sales and unemployment was released in the EU. You can see straight away that the reports were very weak. To be more precise, the unemployment rate came out unchanged, but retail sales fell significantly in January. Although analysts predicted a fall, the actual figures turned out to be much worse than expected. At the time of the release, the euro did not show any signs of a decline. Therefore, we can conclude that market participants have downplayed this statistical data. The real collapse started later in the day as Jerome Powell was giving a speech.
On Friday, we do not expect any important macroeconomic reports form the EU. So, all attention is on the data from the US. First, the Nonfarm Payrolls will be released which is the main indicator of the state of the US labor market. If the number of new jobs created outside the agricultural sector turns out to be less than 133,000, then the US dollar may come under pressure, while the euro/dollar pair will rush to the upside. However, we would like to remind you that a huge number of reports are ignored by traders, and a similar scenario is possible on Friday.
Possible scenarios for March 5:
1) Long positions are not relevant at the moment as the situation is rather unclear. On Friday, a new round of an upward movement is possible if the data from the US disappoints traders. However, it is not recommended to buy the pair until the price breaks through the descending trendline. You should also remember that if the price has already passed a long distance by the moment the signal is formed, then the momentum can be extremely weak.
2) Trading downwards looks more appropriate now. However, going short will require the formation of a sell signal from the MACD indicator during the day. The signal should be formed close to the zero level so that we can use it more efficiently. The targets are located at 40-50 pips from the entry point. When a clear signal is formed and a profit of 15-20 pips is accumulated, we recommend setting Stop Loss at the breakeven point.
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.
Díky analytickým přehledům společnosti InstaForex získáte plné povědomi o tržních trendech! Jako zákazníkovi společnosti InstaForex je Vám k dispozici velký počet bezplatných služeb umožňujících efektivní obchodování.
