Trade analysis and tips for trading the European currency
The test of the price levels I identified in the first half of the day did not occur. Despite releasing a fairly large range of statistics on the eurozone and GDP growth rates, the euro did not react to it, maintaining market volatility at a fairly low level, which did not even allow it to reach the support and resistance levels I identified. The eurozone GDP for the first quarter, left without revision, is less important than the data planned for the second half of the day. A fairly significant market reaction will occur to the figures for the Consumer Price Index and the Consumer Price Index, excluding food and energy prices in the US, as well as to changes in retail sales volume and the Empire Manufacturing Index. Inflation is very important for determining the future monetary policy of the Fed, so its rise will surely postpone plans to lower interest rates, which will strengthen the US dollar. If the data aligns with economists' forecasts or inflation decreases, this will trigger the purchase of risky assets, including the European currency. As for the intraday strategy, I plan to act based on the realization of Scenario #1 without paying attention to the MACD indicator readings, as I expect major market movements.
Buy Signal
Scenario #1: Today, I plan to buy the euro when the price reaches around 1.0837 (green line on the chart), with a target of rising to 1.0882. At 1.0882, I will exit the market and sell the euro in the opposite direction, expecting a movement of 30-35 points from the entry point. Euro growth can be expected today, but only after news of a decrease in inflation in the US. Important! Before buying, ensure the MACD indicator is above the zero mark and is just beginning to rise.
Scenario #2: I also plan to buy the euro today in the event of two consecutive tests of the price at 1.0819 when the MACD indicator is in the oversold zone. This will limit the downside potential of the pair and lead to a reverse market turnaround upwards. Expect growth towards the opposite levels of 1.0837 and 1.0882.
Sell Signal
Scenario #1: I will sell the euro after it reaches 1.0819 (red line on the chart). The target will be the level of 1.0779, where I plan to exit the market and buy the euro immediately in the opposite direction (expecting a movement of 20-25 points in the opposite direction from the level). Pressure on the pair will return in case of a lack of buyer activity around the daily maximum and news of inflation growth. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just beginning to decline.
Scenario #2: I also plan to sell the euro today in the event of two consecutive price tests at 1.0837 when the MACD indicator is in the overbought zone. This will limit the upside potential of the pair and lead to a reverse market turnaround downwards. Expect a decline towards the opposite levels of 1.0819 and 1.0779.
What's on the chart:
Thin green line – entry price, at which the trading instrument can be bought.
Thick green line – expected price where you can set Take Profit or independently fix profits, as further growth beyond this level is unlikely.
Thin red line – entry price at which the trading instrument can be sold.
Thick red line – expected price where you can set Take Profit or independently fix profits, as further decline below this level is unlikely.
MACD indicator. When entering the market, it is important to be guided by overbought and oversold zones.
Important. Beginner traders in the forex market must be cautious when making entry decisions. It is best to stay out of the market before the release of important fundamental reports to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. You can quickly lose your deposit without placing stop orders, especially if you don't use money management and trade with large volumes.
Remember, for successful trading, you need a clear trading plan similar to the one I presented above. Spontaneous trading decisions based on the current market situation are initially a losing strategy for an intraday trader.
