Analysis of trades. Recommendations as to how to trade EUR/USD
Despite the decreased trading volume, the euro was volatile enough on Friday. The price tested 1.1339 when the MACD was far above zero, which limited the pair's upside potential. There was no buy signal. The quote tested this level when the MACD was in the overbought zone. As a result, a sell signal was produced. The price fell by 20 pips. In the second half of the day, a test of 1.1322 at the moment the MACD was in the oversold zone triggered a buy signal. However, the pair failed to show significant growth.
Today, the eurozone's macroeconomic calendar will be empty, and many markets will be closed for Christmas. Both volatility and traders' activity are expected to be at a low level. Therefore, refraining from trading seems like the best option today. It will not be possible to rely on fundamentals in the second half of the day either. If you decide to enter the market, you should start with a small trading volume, as movements can be unpredictable. Trading against the trend from the below-indicated levels seems reasonable today. Scenario 2 could be used to confirm the accuracy of the entry point.
Buy signal
Scenario 1. Long positions could be opened today in case the price reaches 1.1326 (green line) with the target at 1.1346. At this level, traders should lock in profits and sell the euro (allowing 10-15 pips correction). The euro is unlikely to show significant growth today due to the low trading volume. Important! Before buying the instrument, make sure that the MACD is above zero and starts rising from there.
Scenario 2. Long positions could also be opened if the quote approaches 1.1309 and the MADC is in the oversold zone, which could limit the pair's downside potential. Consequently, the market may reverse upward. We can expect growth to the opposite levels of 1.1326 and 1.1346.
Sell signal
Scenario 1. Traders could go short today as well. It will become possible if the quote reaches 1.1309 (red line). The target is seen at 1.1293 where traders should lock in profits and buy the euro (allowing 10-15 pips correction). A Take Profit should be set for long positions and short positions, according to the above-mentioned scenario. Important! Before selling the instrument, make sure that the MACD is below zero and starts to go down from there.
Scenario 2. Likewise, short positions could be opened today if the price reaches 1.1326 and the MACD is in the overbought zone at this moment. This could limit the pair's upside potential and lead to a downward reversal. We can expect a fall to the opposite levels of 1.1309 and 1.1293.
What's on the chart:
The thin green line indicates a buy entry point.
The thick green line is the estimated price where you should place a take-profit order or lock in profit manually since the quote is unlikely to grow above this level.
The thin red line indicates a sell entry point.
The thick red line is the estimated price where you should place a take-profit order or lock in profit manually since the quote is unlikely to fall below this level.
MACD. When entering the market, it is important to pay attention to the overbought and oversold zones.
Remember that novice forex traders should be very careful when deciding to enter the market. Before the release of important fundamentals, you should stay out of the market in order to avoid sharp fluctuations in the rate. If you decide to trade during news releases, make sure to always place a stop-loss order to minimize losses. Without it, you may quickly lose your entire deposit, especially if you do not use money management but trade large volumes.
Remember that in order to succeed in the market, you should have a clear trading plan, like the one I presented above. Spontaneous decisions based on the current state of the market are a losing strategy for an intraday trader.
