Hourly chart of the EUR/USD pair
At first, the EUR/USD currency pair continued to go down on Monday, but it turned up towards the evening and began a round of correction against a new downward trend. We remind you that at the moment, we believe that a downward trend has developed for the pair, as the quotes have left the ascending channel. Therefore, traders, especially novice traders, should be interested only in selling now. Thus, during the present day, beginners are advised to look for new opportunities to sell the pair. But in order to return to buying the euro, new technical constructions, new trend lines or channels will be required, which is not yet available.
Novice traders should have paid attention to several secondary reports on business activity on Monday. We offered to review these reports solely for general development. They did not have any proper impact on the market and the movement of the pair. However, the values of these reports showed that the manufacturing sectors of the EU countries continue to recover. Recall that any value of the business activity index above 50 means that the sector itself is growing, not shrinking. However, in the current conditions, it is already obvious that the economies of all countries began to recover after the end of quarantines and lockdowns. Thus, at this time, novice players can get acquainted with such a concept as "the priority of factors". In other words, some factors that affect the pair's movements are now more significant than others. And we believe that technique is really important now. After a long, almost monthly growth of the euro/dollar pair, it is absolutely necessary to correct it. The correction started on Friday and continued for most of Monday. We believe that this is how it should be. Only after the completion of this correction will it be possible to take into account fundamental and macroeconomic factors again. However, in any case, traders will have nothing to pay attention to on Tuesday, August 4, since the news calendars for the European Union and America will be empty.
The following scenarios are possible on August 4:
1) Purchases are no longer relevant since the price left the ascending channel. Therefore, in order to trade the euro/dollar pair for an increase, new technical constructions are now needed (trend lines, channels, triangles, and others). Since none of this is currently available, we do not recommend buying the euro or doing it at your own peril and risk. The last upward reversal of the MACD indicator gave a signal with the 1.1803 target, and at the moment the pair went up about 40 points after its formed.
2) Sales of the currency pair are now much more promising, so we recommend waiting for the MACD indicator to turn down, and then open new sales with the goals of 1.1702 and 1.1648. Important macroeconomic statistics are not planned for today, so there should be no sharp price reversals.
What's on the chart:
Support and Resistance Price Levels - Levels that are targets when buying or selling. You can place Take Profit levels near them.
Red lines - channels or trend lines that display the current trend and show which direction it is preferable to trade now.
Arrows up/down - indicate when you reach or overcome which obstacles you should trade up or down.
MACD indicator is a histogram and a signal line, the crossing of which is a signal to enter the market. It is recommended to use in combination with trend lines (channels, trend lines).
Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners in the forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
The material has been provided by InstaForex Company - www.instaforex.com