Hourly chart of the EUR/USD pair
The EUR/USD pair could not continue to move up during Wednesday night trading. Thus, the MACD indicator reversed to the downside (marked with red circles in the illustration) and the quotes fell to the upward trend line. If there is a rebound from this line, then the upward movement can still resume according to the new trend. However, setting the price below the trend line will force us to admit that the downward trend has resumed, and now we should trade precisely for the decline. In general, we can not say that the US dollar has somehow gained strength in recent days. Most likely, buyers simply did not take advantage of the given chances and felt that it was not yet time to make new purchases of the euro. In general, the demand for the dollar is small. Therefore, if we take into account the medium-term perspective (a week or more), then the pair can move in any direction from its current position.
The calendar of macroeconomic events in the European Union is empty on August 26. Meanwhile, a fairly important indicator of orders for durable goods will be published in the United States. Last night we already said that in order for the pair to continue moving up, the figures in the report should be worse than the forecasts. If today, the quotes overcome the upward trend line in the morning, then you will need to trade down, and then you will need stronger figures from the report than what market participants expect to see. In addition, Federal Reserve Chairman Jerome Powell will give a speech in Jackson Hole by tomorrow. The head of the US central bank will deliver a report on monetary policy, and Powell's speech is always interesting and important for the currency market. The Fed chief may notice that the economy is recovering too slowly and new stimulus tools will be needed. It may be noted that the lack of a new package of financial assistance to the economy, which has not been agreed by the Democrats and Republicans, hinders the recovery. On the contrary, he can say that "everything is going according to plan". The dollar's fate over the next week may depend on Powell's rhetoric and comments. At the same time, a new wave of protests and rallies began in the United States. With words of support for the nation, Melania Trump has already spoken, who called on everyone to calm down and not feel alone and defenseless. However, the words and actions of her husband, US President Donald Trump, are more important. He does not need new rallies and protests before the elections. But the harder he tries to break up new riots that have emerged on racial grounds, the more his political ratings may fall, and along with them the US dollar.
Possible scenarios for August 26:
1) You can consider buying the pair at this time, but this will require a price rebound from the upward trend line in the next hour or two and the MACD indicator has to turn to the upside. Then we recommend that novice traders start trading upward with the targets at 1.1858 and 1.1881. However, there is a high probability that the price will still go below the upward trend line.
2) But we recommend considering selling only after the price settles below the trend line. At the moment, the pair is trying to overcome it. If successful, the targets for short positions will be the support levels of 1.1798 and 1.1761. It will be possible to exit short positions by Take Profit near target levels or by a reversal of the MACD indicator to the upside.
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 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.
The material has been provided by InstaForex Company - www.instaforex.com