Analysis of transactions in the EUR / USD pair
A signal to sell emerged after EUR/USD hit 1.1379. Coincidentally, the MACD line was in the overbought area, so the pair dipped by more than 50 pips. The second attempt was also successful as it prompted a 40-pip decrease to 1.1319. No other signal appeared for the rest of the day.
Ongoing political tensions led to a sharp collapse in risky assets, including the European currency. But on Monday morning, EUR/USD rose briefly, thanks to strong data on business activities in the manufacturing and services sectors in Germany, France and Italy, as well as the composite PMI of the whole Euro area. Markets were closed in the afternoon in celebration of US Presidents' Day.
Several reports are scheduled to be released today, namely the business climate index, present situation index and economic expectations from the IFO. Growth in these indicators, together with a strong inflationary surge in Italy, will allow euro to partially offset yesterday's fall, but this will only be an additional reason to build up short positions. As such, selling is ideal today, but not for the whole day as in the afternoon, the US may post data on consumer confidence. Even if that shows a decrease, it will not lead to a dip in dollar demand nor a further rise in EUR/USD. Meanwhile, data on US home prices, manufacturing PMI and service PMI are unlikely to lead to a serious spike in volatility.
For long positions:
Buy euro when the quote reaches 1.1320 (green line on the chart) and take profit at the price of 1.1347 (thicker green line on the chart). A rally will occur if data from the eurozone exceed expectations.
But before buying, make sure that the MACD line is above zero or is starting to rise from it before taking long positions. It is also possible to buy at 1.1299, but the MACD line should be in the oversold area as only by that will the market reverse to 1.1320 and 1.1347.
For short positions:
Sell euro when the quote reaches 1.1299 (red line on the chart) and take profit at the price of 1.1253. Pressure will return if data from the eurozone turns out weaker than expected and if tension in Ukraine escalates.
But before selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro can also be sold at 1.1320, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.1299 and 1.1253.
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.
