Hourly chart of the EUR/USD pair
The EUR/USD pair almost corrected to the upward trend line last night, but did not even make an attempt to gain a foothold below it. Therefore, the upward trend is still present, and long positions on the European currency remain relevant. However, in yesterday's article we already mentioned the fact that long deals in the upper area of the horizontal channel do not look as attractive as in the lower one. Take note that the EUR /USD pair is still trading within the 1.1700-1.1900 horizontal channel, thus, no one has canceled the rules for trading in a flat. And these rules say: buy in the lower area of the horizontal channel, sell in the upper one. Therefore, now we are more inclined towards starting a new round of the downward movement. And to confirm this, you need to wait until the pair settles below the trend line and then start trading down. Of course, any flat ends sooner or later. Therefore, if the price manages to overcome the 1.1903 level, then the upward trend will continue and in this case it will be possible to take risks and buy the euro.
No major macroeconomic reports in America today, Wednesday, November 18. Therefore, traders will be drawn to the inflation report for the European Union. Unfortunately, there is little chance that this report will somehow influence the course of trading. We do not expect this indicator to change significantly, and its value is such that it is unlikely to support the euro. So now novice traders should try to understand the general fundamental background of the pair. That is, the totality of all important topics and their possible consequences for the euro and dollar. Since the greenback (dollar) has not been growing in recent weeks and even months, we can reasonably conclude that the general fundamental background is not in favor of the dollar. Therefore, only positive news from America regarding important topics like the fight against the coronavirus or the transfer of power by Donald Trump to Joe Biden can support the US dollar. Or negative news from the European Union can create pressure on the euro, for example, on the topics of coronavirus and Poland and Hungary blocking the EU budget for 2021-2027 or something of a similar scale. Without this, the pair will either be inside the horizontal channel of 1.17-1.19, or it will try to continue the upward movement. But for this you need to overcome the 1.1903 level.
Possible scenarios for November 18:
1) Long positions are now relevant since the price is trading above the upward trend line. The growth potential of the euro, as always, is limited by the 1.1903 level, and the price has come close to it. Thus, formally, when opening new buy positions, you need to wait for a new signal to buy the MACD and trade up while aiming for 1.1889 and 1.1903, but traders must decide for themselves whether they are ready to take risks on this transaction. As we have already said, there is a high probability of starting a new round of downward movement.
2) Trading for a fall at this time is irrelevant, since there is a pronounced upward trend. Therefore, novice traders are advised to wait until the upward trend has ended in order to have a reason to open short positions. Namely, the price should settle below the trend line. In this case, we open sell orders while aiming for 1.1837 and 1.1814.
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.
The material has been provided by InstaForex Company - www.instaforex.com