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Hourly chart of the EUR/USD pair
The EUR/USD currency pair resumed its downward movement last night. Unfortunately, the MACD indicator turned upward beforehand, so a buy signal was formally generated, and the signal is strong enough. Thus, traders who slept at night and traded had the right to open long positions on this signal. At the moment, the MACD indicator has turned down again, so the buy signal is canceled. This trade could end up with 15 points worth of losses. But at the same time, the upward trend remains, therefore, we will monitor buy signals again. The price is likely to drop to the lower channel line and here the euro's fate will be decided. Either there will be a rebound from this line, or the price will settle below the channel. Traders will receive a new buy signal in the first case and a sell signal in the second. The price is in close proximity to the lower border of the channel, so a signal may appear in the near future.
In terms of foundation, today will be another boring day. The calendar of events contains data for the UK, but nothing interesting for the US and the eurozone. We continue to draw the attention of beginners to the fact that most of the macroeconomic reports and fundamental data are ignored. Unfortunately, the whole world remains in an unfamiliar state. The coronavirus pandemic is not over yet and it is not a fact that humanity will be able to defeat it by the end of 2021. Currency and stock markets are now trading in unfamiliar conditions, when the epidemic factor must be taken into account, and many market participants draw ambiguous conclusions, which are then translated to charts in the form of ambiguous movements. Thus, technique is still the trader's best friend. Moreover, the euro is moving at least more or less calmly. In contrast, for example, from the same pound, which has been thrown from side to side in the past few months, but now it stuck to the 1.3700 level and cannot fail to continue its growth, nor start a downward correction.
Possible scenarios on January 26:
1) Long positions remain relevant while the price continues to be within the rising channel. However, novice traders are advised to continue to wait until a new buy signal forms from the MACD indicator or a rebound from the lower border of the channel. When the signal is formed, you are advised to trade bullish while aiming for resistance levels of 1.2177 and 1.2200.
2) Trading for a fall is currently irrelevant. To resume trading down, the new upward trend must be undoubtedly reversed. To do this, the rising channel needs to be canceled, that is, the price should settle below it. Such consolidation can occur in the next few hours, so you need to be careful. Given the average volatility of the pair, it is unlikely for the price to fall below the 1.2080 level after consolidation. Therefore, the target is the support level of 1.2080.
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.
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