Analysis of Trades and Tips for Trading the EuroThe test of the 1.0531 level occurred when the MACD indicator was well above the zero line, limiting the pair's upward potential. For this reason, I refrained from buying the euro. A second test of this level shortly after provided an opportunity to implement Scenario 2 for selling, but a significant decline in the pair failed to materialize.
Despite weak Eurozone retail sales data that fell well below economists' forecasts, the pair avoided a significant drop. There is currently more buying interest in the euro than selling, reflecting traders' continued trust in the European economy despite anticipated challenges. However, the weak retail sales figures serve as a reminder to exercise caution. Consumer activity remains under pressure from inflation and high energy prices, weighing on overall demand. Nonetheless, expectations of upcoming changes in monetary policy may provide support for the euro.
This afternoon, key U.S. data on initial jobless claims and the trade balance will be released, which could significantly impact currency markets. A rise in initial jobless claims often signals higher unemployment, which weakens the dollar by undermining investor confidence. Meanwhile, the trade balance is a critical indicator of economic health. A widening deficit may point to weaker domestic demand or higher import costs, negatively affecting the dollar. Conversely, a surplus highlights the competitiveness of national goods in global markets.
Buy Signal
Scenario 1:Buy the euro today if the price reaches 1.0539 (green line on the chart); aim for a rise to 1.0568. At 1.0568, exit the market and consider selling the euro in the opposite direction, targeting a 30-35 point movement. A strong rise in the euro today is likely only if U.S. labor market data disappoint.Important: Ensure the MACD indicator is above the zero line and beginning its upward movement before entering a buy position.
Scenario 2:Buy the euro if the 1.0523 level is tested twice consecutively and the MACD indicator is in the oversold zone. This should limit the pair's downward potential and trigger an upward reversal, with targets at 1.0539 and 1.0568.
Sell Signal
Scenario 1:Sell the euro after the price reaches 1.0523 (red line on the chart); aim for a decline to 1.0481. Exit the market at 1.0481 and consider buying in the opposite direction, targeting a 20-25 point upward movement. Strong U.S. data will maintain pressure on the pair.Important: Ensure the MACD indicator is below the zero line and beginning its downward movement before entering a sell position.
Scenario 2:Sell the euro if the 1.0539 level is tested twice consecutively and the MACD indicator is in the overbought zone. This should limit the pair's upward potential and trigger a downward reversal, targeting 1.0523 and 1.0481.
Chart Notes
- Thin green line: Entry price for buying.
- Thick green line: Target price for Take Profit or manually fixing profit, as further growth above this level is unlikely.
- Thin red line: Entry price for selling.
- Thick red line: Target price for Take Profit or manually fixing profit, as further declines below this level are unlikely.
- MACD Indicator: Focus on overbought and oversold zones when entering trades.
Important Note for Beginner Traders:Beginner Forex traders should approach market entries cautiously. Avoid trading during the release of significant reports to minimize exposure to sudden price fluctuations. If you choose to trade during news events, always use stop-loss orders to limit potential losses. Trading without stop-losses or proper money management, especially with large volumes, can lead to rapid account depletion.
A clear trading plan, such as the one above, is essential for success. Spontaneous trading decisions based on current market conditions often lead to poor outcomes for intraday traders.
