Analysis of transactions and tips for trading EUR/USD
The test of 1.0635 occurred when the MACD line was already far from zero, so the downside potential was limited. Sometime later, another test took place, but this time the MACD line was in the oversold area, which was a good signal to buy. Still, there was no strong move upwards, and only during the third test did the pair show strong fluctuation. At that time, the MACD line had just started sliding below zero, which was a pretty good signal to sell. It resulted in a price decrease of about 30 pips. No other signals appeared for the rest of the day.
CPI data from the eurozone capped the downside potential of EUR/USD in the morning, but then the fall continued in the afternoon. Buyers do not need to worry though as a rise is possible today due to the upcoming services PMI reports from Germany and the eurozone. The data should prompt a surge in the pair. Trade balance in Germany, as well as the speech of ECB member Luis De Guindos, are unlikely to affect the market.
The afternoon will feature non-manufacturing PMI data in the US, followed by a speech from FOMC member Raphael Bostic. A decline in the former will reflect badly on the US dollar, which could lead to a stronger upward correction in the pair.
For long positions:
Buy euro when the quote reaches 1.0629 (green line on the chart) and take profit at the price of 1.0655. Growth will occur if economic reports from the Euro area exceed expectations. However, make sure that when buying, the MACD line is above zero or is starting to rise from it. Euro can also be bought at 1.0605, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0629 and 1.0655.
For short positions:
Sell euro when the quote reaches 1.0605 (red line on the chart) and take profit at the price of 1.0568. Pressure will return if there is an unexpected decline in service sector activity in the eurozone. However, make sure that when selling, the MACD line is below zero or is starting to move down from it. Euro can also be sold at 1.0629, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0605 and 1.0568.
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.
