Analysis and tips on how to trade EUR/USD
The price tested the mark of 1.0400 at the moment the MACD was well below the zero level, which limited the pair's downside potential. That is why I decided not to sell the euro. In the second half of the day, buy trades on a rebound at 1.0360 brought a profit of about 40 pips.
Germany's Q3 GDP came better than expected. However, the country's consumer climate for December missed the market forecast. In this light, traders were reluctant to purchase the pair on Friday. In the second half of the day, a strong bearish sentiment was felt across the market. Today, Christine Lagarde will once again speak about the ECB's commitment to fighting stubborn inflation. With more rate increases looming, the euro may strengthen. Meanwhile, interviews by some of the Fed's policymakers are likely to confirm the regulator's intention to reduce the pace of rate hikes in December. Therefore, the greenback may post losses.
Buy signal
Scenario 1: long positions could be opened today when the quote touches the mark of 1.0397 (green line of the chart) with the target at 1.0461 where it would be wiser to close buy trades and sell the euro allowing a correction of 30-35 pips. The pair is unlikely to show a steep fall in value. The market will focus on the speeches of the ECB officials. Important! Before buying the instrument, make sure the MACD is above zero and just starts moving up from this level.
Scenario 2: it will become possible to go long when the price reaches 1.0346 with the MACD being in the oversold zone. This would limit the pair's downside potential and lead to a bullish reversal in the market. The quote may go either to 1.0397 or 1.0461.
Sell signal
Scenario 1: today, short positions could be considered when the price tests the mark of 1.0346 (red line on the chart). The target is seen at 1.0292 where it would be wiser to close sell trades and go long, allowing a correction of 20-25 pips. The euro may come under pressure if the pair fails to go above 1.0397. Important! Before selling the instrument, make sure the MACD is below zero and just starts moving down from this level.
Scenario 2: the euro could be sold today when the price approaches 1.0397 and the MACD is in the overbought zone at the same time. This could limit the pair's upside potential and lead to a bearish reversal in the market. The quote may then go either to 1.0346 or 1.0292.
Indicators on charts:
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 close positions 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 close positions 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 always to 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.
