1-hour chart for EUR/USD.
On Thursday, EUR/USD began a stage of an upward correction following yesterday's drop of 140 pips. Such developments are quite predictable because a correction is needed after such a steep fall. Thus, the overall trend remains bearish as earlier the price fixed below the upward trendline. Hence, forex beginners are still recommended to search for buying opportunities of EUR/USD tomorrow.
Speaking about trade on Thursday, the pair has not generated any signal today. I didn't recommend beginners to trade the pair upwards because the overall trend is bearish. MACD indicator has just discharged to zero and will try to form a buy signal in the nearest hours. This could happen even at night. Forex operates nonstop 24 hours a day. The market doesn't close at night and doesn't wait until traders relax and regain energy for the next day. In the near time, a downward trendline could be shaped, so it will be easier to plan trading with it.
On Thursday, February 18, the economic calendar was empty with macroeconomic data. The only report of some importance was a weekly update on unemployment claims in the US. The data was rather neutral. Anyway, this report has never been a market catalyst. It goes without saying that EUR/USD was trading depending entirely on technical factors. The US dollar is still keeping afloat, albeit it has not moved far away from 2.5-year lows. To sum up, we cannot confirm the beginning of a long-term downtrend. Importantly, as I mentioned in my fundamental articles, if the US Congress passes a new stimulus bill worth $1.9 trillion, this could be a serious bearish factor for the US currency.
On Friday, investors will get to know a series of PMIs for the service and manufacturing sectors. The market attaches importance to the services PMI as the index has got stuck below the threshold level of 50.0 points for a few recent months. Any reading above 50 means expansion and any score below means contraction. In other words, if the services PMI stays again way under 50, the euro will have no fundamental reasons to gain ground tomorrow. Let me remind you that the market takes little notice of economic data over the recent year. All in all, traders give priority to technical indicators.
The following scenarios are possible on February 19
1)Long positions are not considered anymore as the price fixed below the upward trendline. Thus, beginners are not recommended to trade the pair upwards. Moreover, tomorrow the price will hardly develop a new uptrend. The odds are that we won't have to plan any long positions on Friday.
2)Currently, the preferable trading strategy is to trade EUR/USD downwards. At the moment of writing this article, the price is still making a correction. In the nearest hours, we can expect MACD to generate a sell signal. If the sell signal actually appears, traders will be able to sell the pair with downward targets 40-50 pips away from the market entry point.
What's on the chart:
Support and Resistance levels are the levels that are targets when opening buy or sell orders. Take Profit levels can be placed near them.
Red lines are channels or trend lines that display the current trend and show which direction it is preferable to trade now.
Up / down arrows show whether the pair should be traded up or down when reaching or overcoming particular obstacles.
MACD indicator (14,22,3) is represented by a histogram and a signal line. When they are crossed, this signals a market entry. It is recommended for use in combination with trend patterns (channels, trend lines).
Important speeches and reports in the economic calendar can greatly influence the movement of the currency pair. Therefore, during their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners in the forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
