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Hourly chart of the EUR/USD pair
The EUR/USD pair, without a proper correction in terms of size, went back to moving up on Tuesday, October 20, and it was quite strong. In the morning, we advised you to consider options for opening new long positions if the MACD indicator discharges to zero and the price corrects sufficiently. However, the MACD did not discharge to the zero level and, as a result, was late with producing a new buy signal. Thus, formally, this signal could be processed, however, when it appeared, the price had already passed about half way up. Thus, novice traders could earn a maximum of 25 points of profit on this trade. Also, a new upward trend line appeared today, which now supports bull traders. Unfortunately, it has a large tinted angle, so it cannot be considered strong. Nevertheless, getting the pair to settle below it can be considered the first signal to change the trend back to a downward trend. Take note that trades are still held between the levels of $1.17-1.19, that is, in a horizontal channel.
No macroeconomic publications in either the European Union or the United States on Tuesday. Therefore, novice traders had nothing to pay attention to during the trading day. You can, of course, pay attention to the coronavirus epidemic that is now developing in Europe, however, firstly, COVID-19 also persists in the United States, and the infection rates are high there, and secondly, traders do not significantly react to epidemiological news right now. As well as news of an economic nature. Thus, technical factors remain the most important now.
The calendar of macroeconomic events in the United States is empty again on Wednesday, and we can expect European Central Bank President Christine Lagarde to deliver another speech in the European Union. Since she has appeared more often in recent weeks than the news is shown on TV, we do not expect to receive new and important information. Moreover, Lagarde's latest statement that the EU economy will lose from 8% to 12% in 2020 was ignored. Her words about the fact that the second wave of coronavirus in Europe may again have a negative impact on the economy, was also ignored. The euro rose in price quietly on these reports. Thus, we do not believe that fundamental factors will be able to affect the movement of the EUR/USD pair tomorrow. Based on this, we advise you to be aware of everything that happens in the world, but pay more attention to the technique.
Possible scenarios for October 21:
1) Buy positions on the EUR/USD pair remain relevant at the moment, since the downward trend line has been crossed, and now there is also an ascending line. Novice traders are advised to wait for a new round of downward correction, discharge of the MACD indicator and a new buy signal in order to open new long positions with targets at 1.1846 and 1.1899. Also, if one of the traders has opened longs, then they can keep them open until the MACD indicator turns down. Most likely, a new buy signal will not be generated before tomorrow morning.
2) You are advised to return to taking sell positions on the currency pair, but first the price should settle below the rising trend line. In this case, the price could fall with targets located above the level of 1.1696, from which the price has repeatedly rebounded off and which also is the lower border of the horizontal channel.
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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