Hourly chart of the EUR/USD pair
The EUR/USD pair continued its downward movement on Monday. It did not "resume", but it "continued" to do so. There was no upward correction, so the MACD indicator did not discharge at all and, accordingly, create a new, strong sell signal. Thus, the euro/dollar pair fell by around 80 points on Monday, but novice traders were deprived of the opportunity to open new positions on MACD signals. However, beginners could open short positions as early as Friday, after the price rebounded from the upper border of the descending channel. In this case, the total profit could be around 60 points. However, such a deal was difficult enough. It was necessary to combine the far from the strongest MACD signal (created below the zero level) and a rebound from the upper border of the channel, which did not exist at that time. We recommend trying to trade using strong signals. That is, trade with the trend, opening trades on corrections. Fewer deals, but better quality. Thus, in the current conditions, you should wait for a correction and expect the downward trend to continue.
Not a single important macroeconomic report from the European Union or the United States on Monday, January 11. However, there was no other news that would directly be reflected on the currency pair's chart. There is a lot of news of a political nature in the United States, interesting, but isn't that important, especially for beginners. It is very difficult to make a correlation between political events and future changes in the currency pair. So far, we can say the following: with a high degree of probability, the current drop in quotes is provoked by the closure of long positions. It works like this: long positions are closed, respectively, the demand for the euro decreases, respectively, and its rate decreases in the foreign exchange market. That is, the reasons are purely technical.
No major releases scheduled in the United States or Europe on Tuesday, January 12. Thus, novice traders will have nothing to pay attention to. Although Friday showed us that all statistics, even the most important reports, are still ignored. The pair continues to trade according to its own rules, so the best advice for novice traders is to trade exclusively by technical signals and, most importantly, by strong technical signals.
Possible scenarios on January 12:
1) Long positions are currently irrelevant, since the upward trend line has been overcome. Therefore, those who wish to buy the EUR/USD pair on such a market should wait for a new upward trend or the downward trend to end (consolidation of quotes above the descending channel). In this case, you can consider long positions with targets around the 1.2271 level.
2) Trading for a fall is more relevant now, since a downward channel has been created. Thus, you are advised to open new short positions with targets at the support levels of 1.2140 and 1.2087 (to be revised in the morning), if a new MACD sell signal is created, which should be discharged to the zero level. Also, a rebound from the upper border of the descending channel can be considered as a sell signal.
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 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.
