Hourly chart of the EUR/USD pair
The EUR/USD pair initially corrected on Wednesday, and by the end of the trading day, it decided to resume its upward movement. Thus, although the price surpassed the first trend line, the upward trend is still preserved, which means that the European currency has excellent chances for proceeding with the upward movement. The outlook for the dollar is still extremely dim, as traders still refuse to actively buy this currency, seeing no reason or justification. This year, the US dollar managed to rise by 350 points and it seems to be the high for the current environment. The fundamental background has not changed in recent weeks, so what could be the reasons to expect the trend to change dramatically in the near future? Rather, everything looks like a one and a half month correction, and now a long-term upward trend can and should resume. In our last review, we advised you to consider bullish trading based on buy signals from the MACD indicator. Since the writing of the last article, two of them have been formed. Each did not lead to the expected growth and the most that traders could earn on them would be 10-15 points of profit. Thanks for that too. It is the same with the signal to break the upward trend line. In this case, we recommended selling while aiming for 1.2109. The price perfectly reached this level, which could bring another 23 points of profit to traders. In general, all three signals turned out to be profitable, but it did make much money.
No important macroeconomic or fundamental event in the European Union. Meanwhile, Federal Reserve Chairman Jerome Powell's second speech to the US Congress took place in America. The text of his speech did not differ from yesterday's. And since there was no reaction to this speech yesterday, there was no response to today either. Thus, the decline in the pair's quotes, which changed towards the evening with an upward movement, is most likely of a technical nature.
All the most interesting news and publications will be in America. The most important report of the day is the fourth quarter GDP report in the second estimate. The figure is expected to be +4.1% in annual terms. Also, data on durable goods orders will be published, which promise to increase compared to the previous period. The number of applications for unemployment benefits, according to analysts, should decrease. Thus, in general, the entire package of reports promises to be positive for the dollar. But won't traders ignore it?
Possible scenarios on February 25:
1) Long positions are still relevant now, as the second trend line continues to be at the disposal of traders. In the next few hours, a buy signal from the MACD indicator (it is below the zero level) may form with resistance levels 1.2174 and 1.2200 as targets. Also, a price rebound from the trend line can be considered a buy signal.
2) Trading bearish is currently irrelevant, since the price continues to be above the trend lines. On the other hand, traders managed to overcome the first trend line, therefore, the downward movement may continue. You can open short positions with 1.2110 and 1.2084 as targets in case a new sell signal from MACD appears (it must first be discharged to the zero level).
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.
