Hourly chart of the EUR/USD pair
The EUR/USD pair continued to trade in an upward direction on Friday, August 27 and then it reached the 1.1903 level by the end of the day, which we have repeatedly designated as the upper line of the ascending channel. Thus, the price managed to overcome the 1.1851 level, which we said was critical for maintaining the downward trend, and earlier - the upward trend line. Therefore, at the moment, it is not even possible to make a clear conclusion about the current trend for the euro/dollar pair. At first glance, it is going up. However, buyers did not overcome the 1.1903 level, thus, a new downward movement may begin on Monday, and the trend, accordingly, will become downward. Thus, we recommend novice traders to be careful in the market at this time, since the price continues to trade between the levels of 1.1700 and 1.1900, that is, in a sideways, 200-point channel. Therefore, there is no trend in the long term. If the quotes manage to overcome the 1.1903 level, then, of course, the probability of going up in the long term will increase, but now we cannot even build an upward trend line, since the price jumped both up and down by 100 points on Thursday.
There were few macroeconomic events on Friday. By and large, the markets were trying to digest information received from the Federal Reserve Chairman Jerome Powell the day before. Moreover, the European markets and traders did not have time to work out this information, since Powell's speech came out rather late. The same was true for the Asian markets, which opened after Powell's speech. Therefore, on Friday, the markets continued to trade under the influence of what was said in Jackson Hole. And the US dollar became cheaper again. Several US macroeconomic reports were nevertheless published, but there was no reaction to them, as we warned.
August 31, Monday, is absolutely empty in terms of macroeconomic statistics. Inflation data for August (preliminary values) will be released on this day in Italy, Spain and Germany, but these figures are unlikely to cause at least some market reaction. Thus, we can assume that the calendar of events for Monday is empty. If so, the pair may begin to correct. There are two reasons for this - there is no news and an unsuccessful attempt to overcome the 1.1903 level. Thus, novice traders will need to fear only unplanned news and events on this day. However, unplanned news is unexpected and it is impossible to predict their appearance and essence.
Possible scenarios for August 31:
1) Novice traders are not recommended to consider buying the pair at this time, since there are no new patterns supporting the upward movement at the moment. Thus, to buy the pair, you need to wait for a short-term upward trend to form and corresponding buy signals from the MACD (at this time, it has turned down). Even overcoming the level of 1.1903 does not guarantee a continuation of the upward movement, but in this case, novice traders, if there is a signal to buy from MACD, can still try to open longs with the target of 1.1968.
2) We also do not recommend considering sales now, because there are no patterns supporting the downward movement either. Theoretically, a rebound from the 1.1903 level can provoke a downward movement to the lower border of the side channel of 1.17-1.19, however, one cannot be sure of this either, since the borders of the channel are not clear-cut. Thus, in the next few days, we recommend that novice traders behave with extreme caution.
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 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.
