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25.01.202100:04 Forex Analysis & Reviews: Analytics and trading signals for beginners. How to trade EUR/USD on January 25? Analysis of Friday. Getting ready for Monday

Company does not offer investment advice and the analysis performed does not guarantee results.
The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Hourly chart of the EUR/USD pair

Exchange Rates 25.01.2021 analysis

The EUR/USD pair strictly moved up last Thursday and Friday, very weakly and along the upper border of the rising channel. The price failed to overcome this line, which would mean the strengthening of the upward trend. But at the same time, it did not start a very logical pullback down to the lower border of the rising channel. Since all this time, in fact, there was an upward movement, there was no correction, then the MACD indicator did not discharge properly in order to form new and strong signals. Thus, there were simply no new signals on Thursday and Friday, therefore, novice traders should not have opened long positions. Short positions are also out of the question. One of the main tenets of successful forex trading is "trade with the trend". Thus, corrections are used in order to open positions on them along the trend, and not in order to trade against the trend. Therefore, sell orders should not have been opened at all.

The European Union published business activity indices in the services and manufacturing sectors. As expected, the service sector remained below the 50.0 level, which means it contracted. As expected, the manufacturing sector remained above the 50.0 level, which means its growth. However, it was not a secret for anyone that the service sector is the one that suffers the most from lockdowns and quarantines. Thus, the service sector fell when the lockdown was introduced. The more the GDP of a country (or bloc) depends on the service sector, the more the overall economy will fall. Thus, the European economy will fall in the fourth quarter. Similar indexes of business activity in the US were also in line with forecasts. In the manufacturing sector, business activity rose to 59.1, and in the service sector - to 57.5. The US economy showed that it is doing well with these reports and will continue to recover in the fourth quarter. However, all these data, albeit quite interesting, did not support the dollar, which continued to fall in the last two trading days.

A new speech from European Central Bank President Christine Lagarde on Monday, November 25. It is unlikely that she will communicate anything important to the markets, but still you should not miss her speech. Online, of course, it will not be broadcasted, so novice traders should just clearly know what time Lagarde will speak and trade more cautiously at this time, realizing that increased volatility or sharp reversals are possible.

Possible scenarios on January 25:

1) Long positions remain relevant, since the price continues to be within the rising channel. However, novice traders are advised to wait for a new buy signal from the MACD indicator, which should be discharged beforehand. It does it already, but the price won't fall. In any case, we are waiting for a correction. When the signal appears, you are advised to trade upward while aiming for resistance levels 1.2192 and 1.2217.

2) Trading for a fall is currently irrelevant. Now, to resume trading down, the new upward trend must be unequivocally reversed. To do this, the rising channel needs to be canceled, that is, the price has settled below it. So far, this development of events is not expected.

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.

Paolo Greco
Analytical expert of InstaForex
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