Hourly chart of the EUR/USD pair
The EUR/USD pair began a new round of downward movement last Tuesday night, which we talked about and waited for last night. The MACD indicator generated a sell signal after the article was written and, accordingly, novice traders could open short positions while aiming for the lower border of the new descending channel. In this case, they made profit by around 30 points. And the price has almost reached the lower border of the channel, so an upward reversal is very likely now. Therefore, we recommend closing short positions and waiting for new sell signals to appear. The pair will likely attempt to return to the upper border of the channel or, at least, to correct slightly upward. Take note that the pair continues to trade within the $1.17-1.19 channel all this time (for about three months already). Therefore, we do not expect strong trend movements right now. Basically, what we are doing now is catching short-term trends inside the horizontal channel.
The fundamental background for the EUR/USD pair is still the same. This means that the very background that contributed to the strengthening of the euro currency by 13 cents in the last six months is still present to this day. Thus, traders simply have no reason to buy the US dollar at this time. Especially until the stage of the presidential elections is over. After all, elections are always uncertain. Therefore, the euro/dollar pair can continue to trade in a horizontal channel, at least until November 3, and even until the time when all votes are counted and the new president is announced, who will take office on January 20, 2021. Macroeconomic reports do not have any particular influence. Yesterday's relatively important report on durable goods orders was completely ignored. And as of today, not a single macroeconomic report or event is included in the news calendar. Therefore, novice traders, like all other traders, will continue to be hungry for news rations. In principle, we can not even say that some other topics have an impact on the euro or dollar. For example, the epidemiological situation in the European Union continues to deteriorate, which inevitably threatens to slow down the European economy. However, the markets are not paying attention to this either, since the euro has not depreciated much in recent days or weeks.
Possible scenarios for October 28:
1) Buy positions on the EUR/USD pair are currently irrelevant, since the ascending trend line has been overcome, and the price is currently trading within the descending channel. Therefore, you may consider long deals, but the price should settle above the descending channel first, and even then, you have to be very careful, with targets of 1.1878 and 1.1903.
2) Trading for a fall at this time is more relevant, since the price is inside the descending channel. However, at the moment we are waiting for a new round of correction. Therefore, novice traders are advised to wait for an upward pullback, form a new sell signal from the MACD, and then resume trading downward with targets at 1.1766 and 1.1747.
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.
The material has been provided by InstaForex Company - www.instaforex.com