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Hourly chart of the EUR/USD pair
The EUR/USD pair started a downward movement last night in accordance with the signal that was created that night. We wrote about this MACD sell signal in our morning article. We advised you to work it out, but at your own peril and risk, since the previous signals were false, and in general, now it is far from the most beautiful trade. Nevertheless, this signal was processed with interest. The first target at 1.2278 was reached in the morning, and now the pair can continue to fall to the second target of 1.2231. As usual, we do not recommend you to keep a profitable deal to the bitter end. There is profit - great, you can close the deal and go to bed. Moreover, those who opened a deal exactly on the signal are now in profit of about 65-70 points. Those who joined in the morning are in profit of over 50 points. From our point of view, this is a very good result. In general, the downward trend continues for the EUR/USD pair after it surpassed the rising trend line. Thus, the trading strategy for Friday is outrageously simple: we are waiting for an upward rollback and a new sell signal.
The EU released its inflation data for December, while the US released the ISM service sector PMI for December. The first report was a failure for the sixth consecutive month, as it recorded a negative value of inflation. Simply put, prices in the European Union fell by 0.3% compared to December 2019. The US ISM index, on the contrary, exceeded the forecasted value and, moreover, quite strongly. In addition to these reports, the less important retail sales in the EU was also published, which also failed. Thus, for the first time in a long time, we can conclude that the markets have worked out macroeconomic reports. We can only hope that this is not a coincidence.
No important data in the European Union on Friday, January 8, but a very important report will be published in America. We deliberately omit the unemployment and wages reports, as although important, they rarely affect price movements. But the NonFarm Payrolls report, which shows how many jobs outside agriculture were created during the reporting period, is of great importance. Therefore, we advise you to focus on it. The forecast is +70-110,000. Any value higher will help the dollar, lower will create pressure on it.
Possible scenarios on January 8:
1) Long positions are no longer relevant at the moment, since the trend line was crossed. Thus, those who wish to buy the EUR/USD pair on such a market should wait for a new upward trend. So far, such a scenario is not expected on Friday.
2) Trading for a fall is more relevant, since buyers did not keep the pair above the trend line. Thus, you are advised to open new short positions while aiming for support levels of 1.2231 and 1.2195 (will be revised in the morning) if a new MACD sell signal is generated, which will be discharged to a zero level or so before that. However, you should remember that many signals are false right now, and it is not the most favorable time to trade.
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.
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