Hourly chart of the EUR/USD pair
The EUR/USD pair continued to move up without any correction throughout the day on Wednesday, October 21. On the one hand, such a strong movement is easy enough to work out, since there are no pullbacks. On the other hand, we advise novice traders to look for the most ideal signals to enter the market, since such recoilless movements are generally quite rare. Therefore, since there was no correction, the MACD indicator did not discharge to the zero level and, accordingly, was unable to form strong and clear buy signals. This means that novice traders should not have opened new long positions, at least based on our recommendations. We remind you that the price, in fact, continues to move inside the horizontal channel of 1.17-1.19 all this time, having previously rebounded from its lower border. Thus, a downward reversal may occur in the 1.1903 area and we may return to a downward movement. The upward trend line continues to support those who are trading down, but almost any correction in the pair will lead to the fact that quotes will settle below this line. This will be the first signal to change the trend.
No important macroeconomic publications in the European Union and America on Wednesday. European Central Bank President Christine Lagarde delivered a speech, but she did not report anything important and interesting for market participants. Moreover, the euro and the pound both grew almost simultaneously all day, which suggests that the reason for this growth lies in America or the dollar. However, the US did not provide any important information either. Democrats and Republicans still cannot agree on a new package of assistance to the US economy, but still express hope for an agreement in the coming days. However, this kind of information should have caused the dollar to rise, as well as its fall.
The calendar of macroeconomic events in the European Union and America is practically empty again on Thursday. You can turn to the report on applications for unemployment benefits in the United States. However, the market will likely ignore this report. Therefore, novice traders will have to look for news and closely monitor technical factors tomorrow, which, by the way, do not add too much clarity to the current picture. We expect a downward reversal around 1.1900.
Possible scenarios for October 22:
1) Buy positions on the EUR/USD pair remain relevant at the moment, since the price continues to trade above the rising trend 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 1.1888 and 1.1903. Also, if one of the traders is now in the longs, then they can keep them open until the MACD indicator turns down.
2) You can 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 drop with the first targets at the support levels 1.1807 and 1.174, and in general it will aim for the lower border of the horizontal channel at 1.1696, from which it has rebounded several times.
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.