Hourly chart of the EUR/USD pair
The EUR/USD pair not only traded ambiguously, but also strangely on Tuesday. If a day earlier we talked about a flat in a narrow horizontal channel, today the pair was trading in different directions, forming signals in batches, mostly false. However, first things first. The price initially settled above the 1.2144 level and after an hour it went back below it, although it had rebounded three times before. Then it followed a new consolidation above this level, this time more successful. After that, the price turned sharply to the downside and settled below the upward trend line, thus forming the third signal of the day. Now let's take a closer look at the signals themselves. The first buy signal was canceled almost immediately, and novice traders could have received a 6 point loss on it. The second buy signal could bring 10 points of profit to beginners, since the first target we gave, the 1.2165 level, was reached. The last, third signal is still relevant and has not been canceled, and the current profit on it is approximately zero. This way, novice players can finish the day without a loss. The movements on Tuesday were really very strange and it was an extremely difficult task to not get losses in such a market. At the same time, the trend for the pair changed to a downward one and now short positions have become relevant.
Only one interesting report on Tuesday - the report on eurozone GDP for the fourth quarter of 2020. Despite the fact that it turned out to be slightly better than the market's expectations, it did not help the bulls, as they lost ground in the afternoon and allowed the pair to fall. Thus, we once again state the lack of an adequate reaction of traders to macroeconomic statistics.
One important report on Wednesday - retail sales in the United States. This figure is expected to rise by 1.1% m/m, which may provide additional support to the US dollar. However, there is a high probability that this report will also be ignored. The same goes for reports on industrial production in the US or PPI there. This data is even less important than retail sales. The minutes of the Federal Reserve meeting will be released late in the evening, and beginners can leave the market until that time comes.
Possible scenarios on February 17:
1) Long positions have lost their relevance, since the price settled below the rising trend line. So now novice traders are advised to trade bullish. Moreover, a new upward trend is unlikely to form on Wednesday, therefore, most likely, sell orders will not have to be considered on Wednesday.
2) Trading bearish has become relevant at the moment. The sell signal is still valid, which was formed when the trend line was crossed. It will be canceled only after the MACD indicator turns up. However, this can happen at night, so beginners themselves must decide whether they will continue to accompany this trade at night while aiming for 1.2086. You are still advised to open new short positions after the MACD indicator discharges to the zero level and a new downward reversal.
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 in the Forex market should remember that every trade cannot be profitable. Developing a clear strategy and money management are the keys to success in trading over a long period of time.
