Hourly chart of the EUR/USD pair
The EUR/USD pair continued to move up throughout Tuesday, September 29. This movement is still characterized as a correction, as it proceeds within the descending channel, which continues to signal a downward trend. Thus, quotes have currently reached the upper border of this channel and now the question is as follows: will traders be able to overcome this border? If so, the pair's trend will change to an upward one. If not, the downward trend will continue. In the first case, the situation will become quite confusing, since it will now be necessary to wait for a downward correction in order to open long positions. The pair has gone up over the past few days by around 120 points, which is not too much, but not too little as well. It passed them almost without retreating, therefore, to open longs, a pullback to the downside is required. Moreover, the MACD indicator is now overbought and needs to ease to the zero level. Therefore, in any case, it makes no sense to rush to open positions right now, whatever the behavior of the pair near the upper border of the channel is.
Only one more or less important macroeconomic report was published on Tuesday - inflation in Germany. According to the German Statistics Office, annualized inflation fell to -0.2% in September. The harmonized consumer price index (a more important indicator) fell by just 0.4% y/y. Thus, something similar can now be expected from the pan-European inflation, which will be published shortly. However, as we can see, market participants did not pay any attention to this report, as the euro rose in price throughout the day. Meanwhile, European Central Bank President Christine Lagarde is not surprised by this inflation. According to Lagarde, inflation may continue to remain negative for some time due to a serious increase in the rate of the euro in the foreign exchange market.
A large number of various events are planned for the European Union and the United States on Wednesday, September 30, which can affect the movement of the euro/dollar currency pair. First of all, Lagarde will deliver another speech tomorrow, who has recently often made forex market participants happy with her speeches. In America, a rather important ADP report on the level of employment in the private sector will be published. The number of employees is expected to increase by 648,000, but the real value and its comparability will play a key role. The annual US GDP data for the second quarter in the third estimate will also be released. Recall that the previous, second assessment showed a slight improvement in the indicator, up to -31.7%. Thus, tomorrow's reports do not look as if they are capable of supporting the dollar. At the same time, the looming downward correction may force traders to slightly pull down the pair.
Possible scenarios for September 30:
1) Novice traders are still not recommended to place buy positions at this time, since the price is still inside the descending channel. Thus, consider long positions after the price settles above the descending channel. However, we also recommend waiting for a downward correction and afterwards you can open new long positions with approximate targets - around 1.1800.
2) Selling remains relevant, as the pair remains inside the descending channel. If a rebound follows from the upper line of the descending channel, this will be a signal to open a new short position with targets at 1.1653 and 1.1627. The probability of a rebound is quite high, since, at least, there should be a downward correction. Nevertheless, a clear rebound off the channel line and a downward reversal of the MACD indicator is needed to open sell orders.
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 (10,20,3) 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.
