Hourly chart of the EUR/USD pair
The EUR/USD pair continued to move so that no one wanted to trade it on Wednesday. The results of the Federal Reserve meeting will be announced today, so the markets were in a very agitated state throughout the day. During the day there were also macroeconomic data, which will be discussed a little below. In the meantime, we should note that the euro/dollar pair soared up by 60 points at approximately 10 am, which is quite a lot at the current level of volatility. And that was the end of the upward movement. That is, novice traders had no opportunity to win back this movement, and when the candlestick closed, it was too late to open long positions. After that, the quotes began to decline and finally dropped to the lower border of the new rising channel, which was formed to replace the ascending trend line, which the price has overcome. Thus, the upward trend is formally maintained, so it is recommended to consider bull trading. But at the same time it is better to wait for the morning and assess the situation in a new way, when all the results of the Fed meeting will be announced.
The European Union published business activity indices in the services and manufacturing sectors. It turned out that the business activity in the service sector began to recover in December after a disastrous November (the second lockdown in Europe) and reached 47.3 (value for October 41.9). Business activity also increased in the manufacturing sector. However, the problem is that these reports were published following the euro's growth in the morning. Therefore, it is impossible to connect these two events, which means that the markets continue to ignore macroeconomic statistics. Macroeconomic reports in the US were weaker than traders expected, which did not prevent the dollar from appreciating in the afternoon. So yes, traders ignored macroeconomics again.
From the aforementioned, it follows that the EUR/USD pair continues to trade in an inconvenient manner, constantly generating false signals, which is usually extremely rare. So now is not the best time to trade. Therefore, novice traders are advised to track the clearest and strongest signals. The European Union will release a report on inflation on Thursday, and in America - a report on the number of applications for unemployment benefits. However, there is no doubt that these data will not cause any market reaction.
Possible scenarios for December 17:
1) Long positions are currently relevant again, since the pair surpassed the 1.2159-1.2177 area. There is a rising channel now. Thus, in the current situation, it is necessary to wait for a new buy signal from the MACD, and preferably a strong one. That is, the MACD will discharge as close to the zero level as possible and turn up there, while the price should remain within the channel. The targets are 1.2194 and 1.2219.
2) Trading for a fall does not seem appropriate, since the price is located inside the rising channel. Thus, formally, one should wait for the price to settle below the channel and only after that should you consider the possibility of opening short positions while aiming for 1.2125 and 1.2100.
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.
