1-hour chart of EUR/USD.
On the first day of the trading week, EUR/USD made a minor downward correction within the overall short-term uptrend which was formed by having overcome two downward lines at the end of the last week. Later today, the currency pair carried on with its moderate climb. On the whole, the pair traded with weak volatility today. The pair's move today measures just 46 pips that is no surprise amid the empty economic calendar on Monday. As a rule, the market trades under lower volatility on Monday than on the other trading days for obvious reasons. Traditionally, the economic calendar lacks macroeconomic data and the market needs some time to wake up after a weekend.
In the last article, beginners were recommended to trade EUR/USD upwards provided that the MACD indicator generates a new strong buy signal. This has not happened on Monday. So, it was the wrong idea to open long positions. On the other hand, we should not have traded EUR/USD downwards. Hence, traders should have refrained from opening any positions on EUR/USD. Now the market is right for action. Beginners can make trading decisions bearing in mind the important and strong level of 1.2059. If the price surpasses it, the door will be open upwards. Alternatively, a pullback will trigger a new downward move.
On Monday, February 8, the market lacked any catalysts. ECB President Christine Lagarde spoke in front of the European Parliament policymakers. However, it is clear that she did not say anything significant as EUR/USD was drifting very quietly for the whole day. Thus, beginners have to trade now, adjusting their decisions for technical indicators. Another factor to price in is a new round of the US dollar's weakness across the board in case the US Congress and the Senate eventually pass a coronavirus relief package worth $1.9 trillion. If this actually happens, supply of the US dollar will increase under the same demand. Such market conditions could entail the US dollar's weakness or, in other words, growth of EUR/USD.
Tomorrow, on Tuesday, no events are scheduled either in the US or in the EU. Hence, the market volatility will remain low. Again, EUR/USD should be traded entirely on the grounds of technical indicators. This is to the advantage of beginners because they don't have to couple fundamental analysis with technical one. So, what we have to do is wait for new strong technical signals. Remember that they should be clear-cut and precise but not dubious and vague.
The following scenarios are possible on February 9
1)Long positions on EUR/USD are still relevant because the price has surpassed the trendline for the second time. Therefore, beginners are recommended to wait for a new correctional stage and discharge of MACD to the zero level. Once this happens, let's wait for a new buy signal and open pong positions on EUR/USD with upward targets coinciding with resistance levels of 1.2059 and 1.2081. Another option is to open buy orders if 1.2059 is tested. We should keep such positions open until MACD reverses downwards.
2)Trading the pair downwards is out of the question at present. Thus, beginners should wait until a new downtrend is formed. Only in this case, it will make sense to consider short positions on EUR/USD. Formally, it is possible to try trading the pair at a retracement off 1.2059, but this strategy is not recommended for beginners.
What's on the chart:
Support and Resistance levels are the levels that are targets when opening buy or sell orders. Take Profit levels can be placed near them.
Red lines are channels or trend lines that display the current trend and show which direction it is preferable to trade now.
Up / down arrows show whether the pair should be traded up or down when reaching or overcoming particular obstacles.
MACD indicator (14,22,3) - a histogram and a signal line. When they are crossed, this signals a market entry. It is recommended for use in combination with trend patterns (channels, trend lines).
Important speeches and reports in the economic calendar can greatly influence the movement of the currency pair. Therefore, during their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners in the forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
