Hourly chart of the EUR/USD pair
The EUR/USD pair continued its upward movement on Wednesday, and reached the first resistance level of 1.2144 by the end of the day. However, if we only take the previous trading day into account, it becomes clear that there was no upward movement today, and volatility was low. Thus, it was extremely inconvenient to trade the pair, despite the seemingly present strong upward trend. Yesterday, we said that there is no point in building an upward trend line. Considering that the upward movement is practically recoilless, any more or less strong correction will lead to consolidation below such a trend line, which will be (with a high degree of probability) a false signal about a trend change. However, we still built such a trend line in order for novice traders to visualize that nothing would change in trading if the trend line existed. In the last article on the euro/dollar, we advised you to trade bullish if a strong buy signal from the MACD is generated, which is previously discharged to the zero level. You were also advised to open long positions if the pair rebounds from the 1.2059 level. Neither the first nor the second condition was met. It was not recommended to trade bearish at all. Therefore, novice traders today should not have opened any positions.
The macroeconomic background was extremely weak on Wednesday. Only one report published - US inflation. However, traders did not react to it, although the consumer price index decreased compared to December. In addition, two speeches from Wednesday - Christine Lagarde and Jerome Powell - however, they did not provide anything interesting in terms of new information. However, all this is obvious judging by the pair's volatility indicator for February 10. From the low to the high, the quotes passed 35 points for almost the entire day.
The situation with the foundation and macroeconomics will be even more deplorable on Thursday. One report on claims for unemployment benefits in the United States, which with almost a 100% likelihood, will not provoke any retaliatory actions from traders. There are no more events and reports in the news calendar. Thus, the pair may have very low volatility again, and trading decisions will have to be made solely on the basis of technical factors, which, in principle, is better for novice traders.
Possible scenarios on February 11:
1) Long positions are currently relevant, since the trend has been upward after trend lines were surpassed. So now novice traders are advised to wait for a new round of correction and the MACD indicator to discharge to the zero level, afterwards we wait for a new buy signal and buy the pair while aiming for resistance levels 1.2144 and 1.2170.
2) Trading bearish has ceased to be relevant at the moment. So now novice traders need to wait for a new downward trend and you could only consider trading bearish after that. Such a scenario is not expected in the near future, since there isn't even a trend line or channel right now.
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.
