Monday, November 16, 2020

Analytics and trading signals for beginners. How to trade the EUR/USD currency pair on November 16? Analysis of Friday's deals. Preparation for trading on Monday.

 On Friday, the EUR/USD currency pair "went" along the downward trend line for quite a long time. However, it overcame this line and continued the upward movement that began a few days ago. Thus, the first and most important thing to note is that the euro/dollar pair continues to trade inside the side channel of 1.1700-1.1900. Moreover, it is currently trading exactly in the middle of this channel. Thus, in the long term, sideways movement is maintained. Secondly, if we look at short-term trends inside this side channel, we see a new trend – an upward one. However, once the descending line has been overcome, then novice traders should now consider trading for an increase. As for the prospects of the currency pair, the upward movement may continue up to the upper line of the side channel – 1.1903. For the movement to continue above this level, the level of 1.1903 must be overcome.


During the fifth and last trading day of the week, there were a lot of planned events, however, most of them were boring and uninteresting. If you look at the chart of the pair's movement on Friday, it becomes clear that traders were not interested in any event of the day, since the total volatility was as much as 38 points. This is a minimal value, which is very rare. The speeches of Jerome Powell (Fed Chairman) and Christine Lagarde (ECB Chairman) did not attract any attention at all, because the speeches of both central bankers did not contain anything interesting related to the economy or monetary policy. Thus, the main event of the day was the report on inflation in the United States. And this indicator disappointed traders. The main indicator decreased from 1.4% per annum to 1.2% per annum. The consumer price index excluding food and energy declined from 1.7% to 1.6% y/y. Thus, in general, the decline in the US currency during the day was logical but very weak.


No major events are scheduled for Monday in either the European Union or the United States. Therefore, novice traders can only track the news of the general fundamental background. For example, messages from Donald Trump, who continues to fight for the 2020 election. Or reports of a coronavirus or a vaccine. However, we believe that Monday can be extremely boring and volatility will be low, just like on Friday. However, this does not mean that there can't be a stronger movement in principle. We remind novice traders that it is traders who drive markets, not news or reports.


On November 14, the following scenarios are possible:


1) Since traders managed to take the pair above the downward trend line, long positions have now become relevant. The growth potential of the euro currency, as always, is limited to the level of 1.1903, but even before this level, you can manage to earn several dozen points. The bad thing is that now the movement is very weak, which is fraught with frequent reversals of the MACD indicator in different directions. Therefore, it is recommended to trade for an increase cautiously, with targets of 1.1860 and 1.1896.


2) Trading on the downside is no longer relevant at this time, as the downward trend has been canceled. Thus, novice traders are advised to wait now for the eloquent end of the upward trend or the formation of a new downward trend to have a reason to open short positions.