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Hourly chart of the EUR/USD pair
The EUR/USD pair continued its downward movement without any preliminary correction, which, again, was extremely difficult for novice traders to work out. The problem was that the EUR/USD pair did not correct at all, and it continued to move down last Friday night, although a flat or correction is usually observed at night. However, this time the trend on the hourly timeframe is very strong and there was no correction. And since there was no correction, then the MACD indicator did not discharge to the zero level and did not generate a new sell signal. Thus, the downward movement was strong and it was possible to make money on it, but it was not a classic one, so other, more aggressive trading systems are necessary for such movements. Take note that every move requires its own trading systems. There are trading systems that perform well in the flat, allowing you to make money; and there are also those that behave well on a strong trend. In general, we have a strong downward trend, so bearish trading should be considered. However, this requires a correction, and then a resumption of the downward movement. The downward trend line allows for this scenario.
No important reports from the European Union last Friday, but very important reports came out in America. Let's start with the unemployment rate, which fell from 6.3% to 6.2%, giving traders a reason to continue buying the dollar. Secondly, NonFarm Payrolls - the number of new jobs created outside the agricultural sector - is the most important indicator of the state of the labor market in the United States - reached +379,000 against a forecast of +197,000. Thus, the second most important report of the day turned out to be very optimistic. Basically, the markets were buying the dollar even without these reports. Over the past week and a half, a very important topic for the markets is the growth of government bond yields in the United States, which provokes the dollar's appreciation. It seems that this is the main reason for such a firm strengthening of the dollar on Friday.
No important reports planned for either the US or the European Union. However, if the yield on US government bonds continues to rise, then the dollar may continue to rise. However, we are more inclined towards a correction, since the pair has already gone down 350 points.
Possible scenarios on March 8:
1) Long positions remain irrelevant at the moment, and the situation remains confusing and ambiguous. You can buy the pair once it has finally surpassed the downward trend line. Take note that if at the moment the signal is formed, the price has already travelled a long distance, then the residual momentum can be extremely weak. At the moment, the price is very far from the trend line, therefore, most likely, no buy signals will be generated on Monday.
2) Trading for a fall looks more appropriate now, but it will require a signal from the MACD indicator during the day. The closer to the zero level such a signal is formed, the more chances it will be worked out. The targets are located at a distance of 40-50 points from the entry point. When a clear signal is formed and around 15-20 points of profit is gained, then we recommend setting Stop Loss to breakeven.
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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