Hourly chart of the EUR/USD pair
The EUR/USD currency pair continued to move down at night trading on Wednesday. Yesterday evening we recommended trading down, but called for being careful with night deals, not forgetting to set Stop Loss and Take Profit. As it turned out in the morning, these precautions were in vain.
The pair has been declining all night, and continues to do so now, approaching the target level of 1.1696 in the morning, which is the last price low. Thus, after reaching this level, it will be necessary to see if traders can overcome it. If yes, then the downward movement may continue.
If the price rebounds from 1.1696, buyers can get down to business again, who will try to return the pair to 1.1903. And do not forget about the readings of the MACD indicator, the upward reversal of which may indicate the beginning of an upward correction. Also the opportunity presented itself to build the downward trend channel this morning, which you see in the illustration.
The European Union will release a rather important report on industrial production for June. The indicator may decrease by 11.5% in annual terms (relative to June 2019), however, the monthly indicator (relative to May 2020) is more important, which could increase by 10%. A higher value of this indicator may cause the euro to grow in the first half of the day.
A lower one will help sellers overcome the 1.1696 level. The US consumer price index (inflation) for July will be released in the afternoon. If core inflation exceeds forecasts (you need to look at annual indicators), which are 1.1% and 0.8%, then the US dollar may continue strengthening in the US trading session (after lunch). If not, then some fall may begin.
These two macroeconomic reports are the main ones for today, and the mood of traders will depend on them. The following scenarios are possible on August 12:
1) Buying the pair is still irrelevant, since the price left the ascending channel and could not overcome the 1.1903 level. The downward trend channel is now clearly supporting the sellers of the pair, and can also show when the mini downward trend will end. Thus, we believe that it is not advisable to trade up now, but if the price consolidates above the channel, it will be a good signal to consider buying.
2) Selling the currency pair is still more promising now. Yesterday we advised selling the pair on the downward reversal of the MACD indicator (marked with a red circle). Therefore, at the time of this writing, those novice traders who followed this advice are in profit of about 40-50 points. These deals can be closed in profit near the levels of 1.1705 and 1.1696, or by an upward reversal of the MACD indicator.
We recommend opening new sales of the pair after an upward correction or if the price is pinned below the 1.1696 level (in that case, the targets will be today the levels of 1.1670 and 1.1619).
What’s on the chart:
Support and Resistance Price Levels – Levels that are targets when buying or selling. You can place Take Profit levels near them.
Red lines – channels or trend lines that display the current trend and show which direction it is preferable to trade now.
Arrows up/down – indicate when you reach or overcome which obstacles you should trade up or down.
MACD indicator is a histogram and a signal line, the crossing of which is a signal to enter the market. It is recommended to use in combination with trend lines (channels, trend lines).
Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, 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.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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