Hourly chart of the EUR/USD pair
The EUR/USD pair continued to correct, and not at a very high pace. A moderate upward movement continued throughout the day, and by the end of the day the price went near the downward trend line. Thus, since the trend line has not yet been crossed, the downward trend continues, which means that novice traders should still monitor sell signals. For example, such a signal could be a rebound off a trend line. During the day, one more or less strong sell signal was generated from the MACD indicator. The indicator turned down at night and formally it was a sell signal. If novice traders did not track signals at night, then this is for the best, since a flat is often observed at night. And false signals are often formed in the flat. However, traders still had certain grounds for opening short positions. Thus, it was possible to open short positions at the 1.1885 level. This deal did not bring any profit, but losses could have been avoided. The price moved in the right direction, by exactly 15 points, so Stop Loss should have been moved to breakeven. It was on this order that the deal was closed at zero profit later. Also, the MACD indicator turned down in the afternoon, however, there was no need to open a short position, since the US inflation report was set to be published literally in half an hour. That is, there could potentially be a reversal or strengthening of the movement. And so it happened. The price turned up sharply and continued the correction.
The only macroeconomic report of the day was released in the US. And it was extremely controversial. Inflation in the United States accelerated from 1.4% y/y to 1.7% y/y and this is a positive moment for the dollar. However, at the same time, the second inflation indicator - excluding energy and food prices - fell from 1.4% y/y to 1.3%, and this is already a negative moment. As you can see, the euro/dollar pair immediately began to grow after the report was published, therefore the dollar fell in price. Accordingly, the markets reacted precisely to the second indicator.
The European Union will publish the European Central Bank's key rate decision on Thursday, as well as a monetary policy report and an ECB press conference. These events can trigger a reaction from traders, so at this time you should be careful with opening new positions and maintaining those that are already open. The key rate is unlikely to be changed, so everyone will focus on ECB President Christine Lagarde's speech.
Possible scenarios on March 11:
1) Long positions are currently irrelevant. You can buy the pair when it has finally surpassed the downward trend line, that is, after canceling the downward trend. Again, if the signal is generated at night, then you should clearly accompany it, not leaving it unattended. In case a strong signal appears, you can aim for levels around 1.1964 or slightly higher.
2) Trading bearish still looks more appropriate. Therefore, a clear rebound from the trend line or a downward reversal of the MACD indicator may serve as a basis for opening short positions. When a clear signal is formed and you accumulate profit worth 15-20 points, then we recommend setting Stop Loss to breakeven. You should take profit when passing 30-40 points in the right direction or following an upward reversal of MACD.
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.
