Hourly chart of the EUR/USD pair
The EUR/USD pair continued its upward movement at night trading and reached the first target level of 1.1890. The pair also came close to the 1.1903 level, which we have designated as the upper limit of the side channel with a width of 200 points. A downward reversal and movement towards the 1.1696 level is very likely near the upper border of the channel. However, to implement such a scenario, we would recommend waiting for the price to settle below the upward trend line. However, a price rebound from the 1.1903 level can also be regarded as a signal to sell. At the same time, we remind novice traders that if there is a side channel (or any channel), it does not mean that the price will constantly bounce off its borders. Sooner or later, overcoming will happen.
No important publications or news from the European Union and America are scheduled for August 18. Therefore, novice traders can continue to trade calmly in accordance with the technical picture. And the technical picture now raises one question: what will happen around the 1.1903 level? Previously, the price fought back from this level three times. Let's try to look at the overall picture: the US dollar continues to fall in price, as in the past three months. Only this time it's inside the side channel. There are no good reasons for the dollar to fall. The fundamental background is not in favor of the dollar, but there is no new data on the basis of which traders could begin to form new sales of the US currency. There are no economic reports at all at the beginning of the week. Therefore, it is logical for the pair to currently strengthen inside the side channel, but further growth above the 1.1903 level isn't. Thus, we are more inclined to the option of resuming the downward movement in the coming days. It should also be noted that any negative news from America can help traders overcome the 1.1903 level. For example, coronavirus, which has already claimed the lives of 170,000 Americans and infected 5.4 million. However, only 42,000 cases were recorded in America on August 16, which means that the epidemic is on the wane. This is a positive factor for the dollar.
The following scenarios are possible on August 18:
1) Buying the pair on Tuesday is still relevant, since the price continues to be above the trend line. However, all buy orders can be closed on the way to the 1.1903 level, since there is a high probability of a downward reversal around this level and also a drop of points by 200. Thus, we recommend buying the pair again after clearly breaking the 1.1903 level and after a correction down, its completion will be signaled by the MACD indicator. Aim for 1.1912 and 1.1942.
2) But we advise you to start selling the pair if the price rebounds from the 1.1903 level. A rebound is unambiguously required, on one bar (novice traders can look at how the price bounced from this level earlier in order to understand how a rebound is required). Then the pair can be sold with the goal of an upward trend line, and if the price overcomes this, then it is advised to keep selling open with targets at 1.1838 and 1.1808.
What's 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 preferable to trade now.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator 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 (you can always find them in the news calendar) can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal.
Beginners in the Forex market should remember that not every single trade should 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