05.10.202023:36 Forex Analysis & Reviews: Analytics and trading signals for beginners. How to trade EUR/USD on October 6? Getting ready for Tuesday session

Hourly chart of the EUR/USD pair

The EUR/USD pair moved up on Monday, October 5. The pair grew from the very morning and continued to do so throughout the day. In the morning we talked about the fact that the upward trend line was rebuilt and therefore we recommend trading up while aiming for 1.1745 and 1.1773. However, the euro/dollar pair exceeded the morning plan and reached the third resistance level of 1.1798 during the day. Novice traders who opened trades according to our recommendations in the morning could earn about 40 points if they closed buy trades near the 1.1773 level, and around 60 points if they are still in the longs (buy orders). You can close long positions by turning the MACD indicator down or even right now, without waiting for it. The fact is that the upward trend is still maintained, so the price needs to correct in order to possibly resume the upward movement later. The same goes for the MACD indicator. It needs to ease as close to the zero level as possible in order to form a new buy signal in time.

Several macroeconomic reports were published in the European Union and in the United States during the first trading day of the new week. However, we tend to believe that the markets completely ignored them. But do take note that the ISM index of business activity in the US services sector was at a high level (and did not provoke a rise in the US dollar), and the index of business activity in the EU services sector was at 50.0 (and did not put pressure on the European currency). The only exception was the report on retail sales in the European Union, which grew by 4.4% m/m in August, but it is unlikely that this one report provoked the euro's growth, while traders ignored other reports. Market participants showed much more interest in Donald Trump's condition, who is in the hospital right now after being infected with the coronavirus. All of the media covered this topic. However, the very fact that the US president was seriously ill a month before the election (Trump is at high risk, since he is 74 years old and overweight), it put pressure on the US currency.

European Central Bank President Christine Lagarde is scheduled to speak in the European Union on Tuesday, October 6, and Federal Reserve ChairmanJerome Powell is set to speak in the United States. Therefore, we have two speeches by high-ranking officials that are directly related to the EU and US economies. However, the recent speeches of Powell and Lagarde did not give the markets any fundamentally new information. However, no one knows in advance what the heads of the central banks of America and the European Union will be talking about this time.

Possible scenarios for October 6:

1) Buy positions on the EUR/USD pair remain relevant at the moment, since the ascending trend line has been rebuilt, and the price has not managed to gain a foothold below the 1.1696 level. Thus, we recommend novice traders to stay in long positions until the MACD indicator turns down. You are advised to open new buy orders after the price corrects downward and a new buy signal from MACD appears. In other words, tomorrow morning you will be able to see at what stage of implementation of this plan the pair is.

2) Sell positions may become relevant again if the pair settles below the trend line. This is the first prerequisite. However, it may be necessary to wait for the price to settle below the 1.1696 level and only after that consider the possibility of opening sell orders. Take note that the dollar seems reluctant to rise in price, and the fundamental background is not in its favor.

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 (10,20,3) 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.