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18.12.202408:34 Forex Analysis & Reviews: How to Trade the EUR/USD Pair on December 18? Simple Tips and Trade Analysis for Beginners

Relevance up to 01:00 2024-12-19 UTC--5

Analysis of Tuesday's Trades

1H Chart of EUR/USD

Exchange Rates 18.12.2024 analysis

On Tuesday, the EUR/USD pair continued trading within a clear sideways channel. Neither macroeconomic nor fundamental factors can break the pair out of this flat range. We previously warned that a correction could take a long time, as this is standard market behavior. Corrections are often used to accumulate new positions, and we believe that the current phase involves building up short positions on the euro. Until the flat ends, no clear direction in movement can be discussed. Flat trading is always chaotic and random.

Yesterday, the Eurozone released several secondary reports that did not impact the pair's movement. In the U.S., reports on industrial production and retail sales were published. The first report showed weaker-than-expected results, while the second exceeded forecasts. As expected, the flat movement continued.

5M Chart of EUR/USD

Exchange Rates 18.12.2024 analysis

Only one signal was formed on Tuesday in the 5-minute timeframe. There was a bounce from the 1.0526 level overnight, but the price hadn't moved far from the signal's formation point by the time the European trading session opened. The pair failed to reach the nearest target level of 1.0451, but novice traders had numerous opportunities throughout the day to close the trade with profit.

Trading Strategy for Wednesday:

On the hourly timeframe, EUR/USD continues to correct within the sideways channel of 1.0451–1.0596. After a two-month decline, no one is rushing to buy the euro. This week, the price may break out of this channel through the lower boundary, signaling the resumption of the downtrend that began three months ago. However, much will depend on macroeconomic and fundamental developments.

It will be difficult to anticipate any specific movement from the pair on Wednesday. The FOMC meeting is scheduled for the evening, so the price will likely remain within the sideways channel during the day.

On the 5-minute timeframe, the levels of 1.0269-1.0277, 1.0334-1.0359, 1.0433-1.0451, 1.0526, 1.0596, 1.0678, 1.0726-1.0733, 1.0797-1.0804, 1.0845-1.0851, and 1.0888-1.0896 should be considered. On Wednesday, the European Union will release its second inflation estimate for November, a minor event. There are a few minor reports in the US, the Fed meeting with Powell's speech, and an updated dot-plot chart.

Core Trading System Rules:

  1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
  2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
  3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
  4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
  5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
  6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
  7. Stop Loss: Set a Stop Loss to breakeven after the price moves 15 pips in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.

Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.

*تعینات کیا مراد ہے مارکیٹ کے تجزیات یہاں ارسال کیے جاتے ہیں جس کا مقصد آپ کی بیداری بڑھانا ہے، لیکن تجارت کرنے کے لئے ہدایات دینا نہیں.

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