Hourly chart of the EUR/USD pair
The EUR/USD pair was trading in line with our morning expectations on Monday, September 28. Recall that we did not recommend traders to trade up, but advised waiting for the correction to end and the MACD indicator to ease to the zero level. At the moment, both of these conditions are met. In the next hour or two, the MACD indicator may turn down and form a new sell signal. Therefore, if novice traders wait for this signal in time, then it is quite possible to resume trading down. As for the general picture of the state of affairs, it did not change on Monday. Volatility was only 65 points during the day, which is below the recent average. The price failed and did not even try to leave the descending channel. No new channels or trend lines can be drawn at this time. There are currently no signs of a change in the trend.
No important report published in the US or the EU, and no major event happened or Monday. Everything still revolves around future elections in America. Meanwhile, the situation is more stable in the European Union, but recently there has been an increase in cases of the coronavirus, which may support the dollar in the medium term. Also, with the arrival of a new wave in Europe, a new stimulus package for the economy may be necessary. Recall that the EU agreed on the Economic Recovery Fund worth 750 billion euros with great difficulty. The new package may no longer be approved by all EU members. And it may be necessary if the second wave turns out to be stronger and more destructive than the first. It is also not necessary to attach great importance to the words of the top officials of the EU that there will be no new lockdown. In our humble opinion, if the second wave of the pandemic is indeed stronger than the first, then a lockdown will have to be introduced. Even if this does not happen, there will definitely be a hard quarantine, which in principle will have the same negative impact on the economy as a full-fledged lockdown. The most important thing is people. And you can't kick them out to work, you can't force them to go to cinemas and cafes, and you can't spend money as usual, so that the economy continues to work as the European Central Bank needs. Thus, the second wave is almost 100% equal to a new economic decline.
No important events or reports scheduled in the European Union and the United States on Tuesday, September 29. With the exception of one report from Germany, the preliminary inflation figure for September. All inflation indicators (basic and core) are expected to be -0.1% y/y. Thus, deflation will be fixed in Germany for the second consecutive month. Most likely, in the entire European Union too. This is bad for the euro.
Possible scenarios for September 29:
1) Novice traders are still not recommended to place buy positions at this time, since there is a clear downward trend, and trading against the trend is not recommended in principle. Thus, you can consider longs but the price should settle above the descending trend channel or there should be a new upward trend supported by a trend line or other channel.
2) Selling remains relevant, since the pair is still inside the downtrend channel. Thus, by tonight or Tuesday you can open new short positions with targets at 1.1600 and 1.1570 after the MACD indicator generates a new sell signal. Goals will be finalized tomorrow morning.
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.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.