Hourly chart of the EUR/USD pair
The EUR/USD pair as a whole continued its downward movement on Monday and by the end of the day, it began some sort of upward correction. However, a 25-point pullback to the upside is not a correction. It's not even a pullback. However, the MACD indicator began to rise long before this "no pullback". The fact is that the indicator simply has nowhere to go and it began to discharge without a corresponding upward price movement. We warned about this in the morning. Thus, since the downward trend is now maintained, you should trade exclusively for a decline. However, not a single sell signal was generated during the day. Recall that the MACD indicator must discharge as close to the zero level as possible in order to be able to create a strong sell signal. Thus, novice traders can only wait for this discharge and only after that can they wait for a new signal. Also in the morning article, we talked about rebounding from the upper line of the downward trend channel as a sell signal. However, the EUR/USD pair did not even try to start moving towards this border during the day.
No important report from Europe and America on Monday, January 18. As in recent days, the entire fundamental background is now associated with the political crisis in America, the upcoming inauguration of Joe Biden, as well as the impeachment of Donald Trump. But all this news, although interesting, does not have any impact on the pair's movement. And there are no macroeconomic data now. No other fundamental topics. Therefore, you have to be content with what you have. It is good that the pair is now trading relatively calmly, without sharp jerks and frequent changes in direction. Although there are no signals yet, nevertheless it is better than false signals and losses.
No important event in the EU and the US on Tuesday. However, this is the last day before Biden's inauguration and Trump's departure. The closer January 20 is, the stronger the tension in America. Thus, theoretically, the dollar can also get nervous in the next two or three days, but the probability of this is not high. Most likely, the trades will continue to take place in a calm direction.
Possible scenarios on January 19:
1) Long positions are still irrelevant at the moment, since the downward trend remains in force. Those who wish to buy the euro/dollar pair should wait until the quotes have finally settled above the descending channel. In this case, you can consider long positions with targets at the support levels of 1.2194 and 1.2226.
2) Trading for a fall is more relevant now, but novice traders need to wait for a new sell signal. You are advised to open new short positions with targets at support levels 1.2048 and 1.2016. However, the MACD indicator must be discharged to the zero level, afterwards it can finally create a new strong signal. Also, a rebound from the upper border of a new descending channel can be considered as a sell signal.
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.