Analysis of transactions in the EUR / USD pair
The price test of 0.9656 happened when the MACD line was already far from zero, limiting the downside potential of the pair. Some time later, another test took place, but this time the MACD line was already recovering from the oversold area, which was a good signal to buy. This led to an increase of over 50 pips. Selling at 0.9736 also resulted with a 50-pip price movement.
Euro fell on Thursday amid disappointing data on consumer confidence in the Euro area and consumer prices in Germany. ECB members also reiterated the need to continue fighting inflation as the level remains high.
If upcoming economic reports, such as the volume of retail trade and the unemployment rate in Germany, as well as data on consumer prices and unemployment rate in the Euro area, show that inflation keeps on rising, volatility in markets will surge. Even so, euro will be under pressure as such data will force the ECB to act more aggressively. US report on personal consumption expenditures may also strengthen the dollar's position, provided that the data exceed expectations. Household spending will affect economic growth, while income will not play such a significant role. The day will end with speeches from Fed members Michelle Bowman and John Williams.
For long positions:
Buy euro when the quote reaches 0.9818 (green line on the chart) and take profit at the price of 0.9871. Growth will occur if economic reports in the Euro area exceed expectations.
Take note that when buying, the MACD line should be above zero or is starting to rise from it. Euro can also be bought at 0.9793, but the MACD line should be in the oversold area as only by that will the market reverse to 0.9818 and 0.9871.
For short positions:
Sell euro when the quote reaches 0.9793 (red line on the chart) and take profit at the price of 0.9746. Pressure may return after the speeches of Fed representatives, and if the US publishes good economic statistics.
Take note that when selling, the MACD line should be below zero or is starting to move down from it. Euro can be sold at 0.9818, but the MACD line should be in the overbought area as only by that will the market reverse to 0.9793 and 0.9746.
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 decision based on the current market situation is an inherently losing strategy for an intraday trader.