Analysis of transactions in the EUR / USD pair
A signal to sell emerged after EUR/USD hit 1.1280. However, the MACD line was far from zero, so the downside potential was limited. Some time after, the pair hit the level again, but this time the market signal was to buy, which coincided with the MACD line being at the oversold area. That allowed traders to safely take long positions, resulting in a more than 150-pip increase in the pair.
EUR/USD rose on Thursday, thanks to hawkish statements from the European Central Bank. Its president, Christine Lagarde, said inflation risks are now skewed to the upside, but they are not going to jump to conclusions as it is necessary to wait for new statistics to have a better judgment on whether the central bank really needs to tighten monetary policy . She said the meetings in March and June will determine their plans on interest rates, but some economists already believe that there will be a 10 bp rate hike in June and a 40 bp increase at the end of the year.
Most likely, the pair will continue rallying today as upcoming reports from France, Germany and the whole Euro area are expected to be better than previous figures. Weak data on US employment will also prompt a further increase in the pair.
For long positions:
Buy euro when the quote reaches 1.1470 (green line on the chart) and take profit at the price of 1.1529. A rally will occur if the Euro area reports strong economic data and if the US posts weak employment for January. But before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.1434, however, the MACD line should be in the oversold area, as only by that will the market reverse to 1.1470 and 1.1529.
For short positions:
Sell euro when the quote reaches 1.1434 (red line on the chart) and take profit at the price of 1.1372. Strong data on the US labor market will prompt a decrease in the pair. But before selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro could also be sold at 1.1470, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.1434 and 1.1372.
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.
