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Hourly chart of the EUR/USD pair
The EUR/USD pair went down another 15-20 points as part of a downward correction on Friday, August 14, after overnight trading, afterwards it resumed its upward movement in a sideways channel. The upper and lower boundaries of this channel are marked with horizontal red lines in the illustration. The pair is moving between the levels of 1.1696 and 1.1903 and is currently moving to the upper channel line. On Friday morning, we advised traders to wait until the correction has been completed, and then resume trading upward while aiming for 1.1858 and 1.1902. Based on the results of this trading day, it can be concluded that the first target of the euro/dollar quotes did not reach some 5-6 points, but at the same time there was no strong movement within the day. The volatility of the pair (the distance between the lowest and the highest of the day) was only 70 points on Friday. Thus, it was inconvenient to work off the pair on the last trading day of the week.
From a fundamental point of view, on Friday we recommended paying attention to the GDP reports for the second quarter in the European Union, as well as to retail sales and industrial production in America. In practice, traders were disappointed in all three reports. We were disappointed not by their values, but by the fact that the deviation from the forecasts was minimal or it did not do so at all. We remind novice traders that the market strongly reacts to macroeconomic reports when expectations do not coincide with real numbers. Thus, the contraction of the EU's GDP by 12.1% in the second quarter did not particularly "hit" the positions of the European currency. Because traders were waiting for -12.1%. The same goes for the US industrial production report. +3% in July, which is exactly what the markets expected to see. Only the retail sales report turned out to be worse than traders' expectations and reached 1.2% m/m instead of 1.9%, which could put pressure on the dollar in the afternoon.
Important macroeconomic publications from the European Union and the United States are not scheduled for August 17. Moreover, there are no global themes that could now have an impact on the movement of the EUR/USD currency pair. Thus, we believe that calm movement will continue within the sideways channel of 1.1696-1.1903 at the beginning of the new trading week. We have even built a new upward trend line within the sideways channel, which should support the euro's rise to the 1.1903 level. It is difficult to expect a stronger growth from the European currency now, as the euro is trading near its two-year highs. Therefore, new good reasons are needed for traders to start buying this currency again. At the same time, sellers of the pair have shown that they are absolutely not interested in moving the pair down at this time. Hence, either a flat or resumption of the upward trend.
The following scenarios are possible on August 17:
1) Purchasing the pair continues to be relevant at this time, since the price has settled above the downward channel and a new upward trend line has appeared. Thus, at this time, we advise novice traders to consider long positions while aiming for 1.1858 and 1.1902. As we mentioned earlier, it is quite difficult to open and maintain trades at night, so wait until morning comes and also for a new signal to buy in the form of an upward reversal of the MACD indicator.
2) Selling the currency pair is temporarily irrelevant, since the price has left the downward channel. We suggest novice traders to close the price under the trend line at the end of the hour, and in this case, it will be possible to consider quotes falling to 1.1696 through the nearest targets of 1.1775 and 1.1736, which are recommended to be reached on Monday-Tuesday.
What's 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 preferable to trade now.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator 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 (you can always find them in the news calendar) can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal.
Beginners in the Forex market should remember that not every single trade should be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
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