Analytics and trading signals for beginners. How to trade the EUR/USD pair on August 19? Plan for opening and closing trades
Hourly chart of the EUR/USD pair
The EUR/USD pair started a weak downward correction during night trading. The current correction is only 35 points, if you count from yesterday’s high. Therefore, we believe that the downward movement should continue to the trend line today. The MACD indicator has turned down, but the histogram and signal line values are still very high. The specifics of working with this indicator is that the lower the upward trend is reversed, the better. Now, it is simply difficult for the indicator to move up, and it may be too late to react to the resumption of the upward trend. However, novice traders still have an ascending trend line at their disposal, which means that you are advised to not consider sales in any case at the moment. Moreover, the price broke out of the side channel in which it had been trading for three weeks before.
One relatively important event each for the European Union and America is planned for August 18, which we advise novice traders to consider. The EU will release the consumer price index for July in the morning, which has a forecast of +0.4% y.y and +1.2% y/y (base). Core inflation is inflation that does not take into account changes in prices for food and fuel, since these goods are very volatile (often change in price) or seasonal (their price depends on the season). Thus, core inflation is a more accurate indicator of the rate of price growth in any country. However, in any case, if the report turns out to be better than forecasts, then traders will have new reasons to buy the European currency, which is growing now and without the help of news. The minutes of the last meeting of the Federal Reserve (the US central bank) will be released in the evening. This event is interesting because it can reflect the mood of members of the Fed’s Monetary Committee (it manages monetary policy) and contain hints about future policy changes. For example, it may contain hints about a change in the key rate or a change in the amount of further economic stimulus. However, in most cases, this document does not contain any fundamentally new information. This document will be released very late in the evening, so it will be possible to conduct an analysis immediately around the time of its release. As for the overall fundamental picture, traders continue to get rid of the US dollar based on the overall negative economic and political background. We advise novice traders to continue studying the US news feeds to keep up with what is happening in this country. As you can see, this is reflected on the chart of the euro/dollar currency pair.
The following scenarios are possible on August 19:
1) Buying the pair remains relevant on Tuesday, as the price continues to be above the trend line. The price is currently correcting after yesterday’s significant growth. Therefore, it is recommended to consider a reversal of the MACD indicator or a rebound from the trend line itself as today’s buy signals. If one of these conditions is met, it will be possible to count on the resumption of the upward movement with the targets of 1.1975 and 1.2020.
2) But we recommend to start selling the pair, but not before breaking the upward trend line, which we slightly rebuilt (note). If the price settles below the trend line by the end of the hour, this will mean a reversal of the trend for the euro/dollar pair and we will recommend opening short positions with targets at 1.1876 and 1.1822. We still believe that the euro is growing with the last bit of strength and the moment is approaching when sellers will go on the attack.
What’s 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 preferable 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 (you can always find them in the news calendar) can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal.
Beginners in the Forex market should remember that not every single trade should 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