Hourly chart of the EUR/USD pair
The EUR/USD pair failed to settle below the 1.1696 level on Friday, October 16, which acted as the lower line of the side channel of $1.17-1.19 for a long time. Traders tried to take the pair below this level twice, but both times were unsuccessful. Thus, the quotes began to move upward, which led to having the pair settle above the downward trend line. This changes the trend to an upward one, therefore, novice traders can now consider options for opening long positions. A downward correction immediately began after breaking the trend line on Friday, and so the MACD indicator discharged quite well to the zero level. Therefore, novice traders can already expect a buy signal from the MACD as soon as the trading session on Monday starts. Of course, there is also an alternative scenario. If the euro/dollar pair resumes the downward movement. However, you are advised to switch to this option after confirmation, that is, after overcoming the 1.1696 level.
Several macroeconomic reports were released on Friday. However, it is very difficult to say whether any of them influenced the pair's movement during the day. Volatility remained fairly low on October 16. Inflation in the European Union was fully in line with traders' expectations and reached -0.3% in annual terms in September. Core inflation remained at 0.2% y/y. These are very low values of inflation, and since the euro was strengthening in the first half of the day, this report could hardly be the reason for this growth. Quotes slightly retreated in the afternoon, and the dollar's appreciation can be linked to the report on retail sales, which significantly exceeded the forecasts of experts. The main indicator was +1.9%, although according to forecasts no more than +0.7% was expected. However, on the other hand, the September industrial production report turned out to be much weaker than forecasts and amounted to -0.6% m/m.
European Central Bank President Christine Lagarde is set to deliver a speech on Monday, who continues to make public statements almost every day. We do not expect any new and important information from her that could affect the course of trading. In addition to her, Federal Reserve Chairman Jerome Powell, who also speaks quite often in recent weeks, will also make a speech, so we are also extremely well acquainted with his opinion on the current state of the economy. Most likely, Powell will again talk about the need to support the economy with a new stimulus package, which Republicans and Democrats, who are already busy with the US presidential elections, cannot agree on. No macroeconomic publications scheduled for Monday.
Possible scenarios for October 19:
1) Buy positions on the EUR/USD pair have become relevant at the moment, since the descending trend line has been overcome. Novice traders are advised to wait for the MACD indicator to reverse upwards in order to open long positions with targets at 1.1747 and 1.1787. Since the market will open at night, it may be better to wait until morning and reassess the situation. Perhaps by that time the required signal will have already been generated.
2) You are advised to return to placing sell positions on the currency pair, but first the price should overcome the 1.1696 level, which is where the price rebounded twice in the last few days. The downward trend would only resume if this happens. The first targets for sell orders in this case will be the support levels of 1.1677 and 1.1647.
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.
