Analysis of transactions in the EUR / USD pair
Demand for risky assets is expected to decrease sharply, especially since economic performances of EU countries are weak in the 4th quarter of 2020. In that regard, many expect the US dollar to more actively trade in the market, as compared to the euro and other world currencies.
Trading recommendations for January 4
Activity in the EUR / USD pair will surely return today, after the release of economic reports in eurozone countries, on which further bullish momentum for the euro will depend. Demand for the currency will increase if these reports indicate good performances, as only such will keep traders’ confidence in a less serious economic contraction. The latest data on investor confidence, although unlikely to seriously affect the balance of power, should be taken into account when making trading decisions.
For long positions:
Buy the euro when the quote reaches 1.2277 (green line on the chart), and then take profit around the level of 1.2325. A rally is a bit difficult in EUR / USD, especially since 1.2277 is a very strong resistance level that could limit all upward potential in the market.
Also, keep in mind that before buying, make sure that the MACD line is above zero and is starting to rise from it.
For short positions:
Sell the euro after the quote reaches 1.2246 (red line on the chart), and then take profit at the level of 1.2186. There is a high chance that EUR / USD will decline in the market, since the EU economy was not able to demonstrate good growth rates in the 4th quarter of 2020.
But of course, keep in mind that before selling, make sure that the MACD line is below zero and is starting to move down from it.
What’s on the chart:
- The thin green line is the key level at which you can place long positions in the EUR / USD pair.
- The thick green line is the target price, since the quote is unlikely to move above this level.
- The thin red line is the level at which you can place short positions in the EUR / USD pair.
- The thick red line is the target price, since the quote is unlikely to move below this level.
- MACD line – when entering the market, it is important to be guided by the overbought and oversold zones.
Important:
Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.
Analysis of transactions in the GBP / USD pair
There are a lot of restraining factors in the GBP / USD pair today. One of which is the strict quarantine measures implemented in the country, while the other are possible disruptions in the supply chains due to the new Brexit agreement. However, the upward potential of the pound remains, therefore, there is still a chance that the pair will rise in the markets.
Trading recommendations for January 4
Data on UK PMI will be released today, and it will indicate the state of the manufacturing sector late last year. A strong performance could push the pound upwards, while a weaker-than-expected report will drag the GBP / USD pair down in the charts. Data on net loans, as well as the UK money supply will also be released. And even if these indicators do not really play an important role, they also show how the UK economy was at the end of 2020.
For long positions:
Buy the pound when the quote reaches 1.3702 (green line on the chart), and then take profit at the level of 1.3761 (thicker green line on the chart). Good data on industrial activity, as well as on a vaccine for the new strain of coronavirus, can strengthen the position of the pound.
But keep in mind that before buying, make sure that the MACD line is above zero and is starting to rise from it.
For short positions:
Sell the pound after the quote reaches 1.3673 (red line on the chart), and then take profit at the level of 1.3607. Demand for the pound is expected to decrease, especially if there are news covering disruptions on supply chains caused by the new Brexit agreement.
Also, keep in mind that before selling, make sure that the MACD line is below zero and is starting to move down from it.
What’s on the chart:
- The thin green line is the key level at which you can place long positions in the GBP / USD pair.
- The thick green line is the target price, since the quote is unlikely to move above this level.
- The thin red line is the level at which you can place short positions in the GBP / USD pair.
- The thick red line is the target price, since the quote is unlikely to move below this level.
- MACD line – when entering the market, it is important to be guided by the overbought and oversold zones.
Important:
Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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