Analysis of trades and tips for trading the euro
The test of 1.1645 occurred when the MACD indicator had already moved significantly below the zero line, which limited the pair's downward potential. For this reason, I did not sell the euro.
The euro weakened in response to news of an unexpected decline in euro area retail sales in July, showing a drop of 0.5% — a figure that diverged from most economists' expectations. This sudden fall raised concerns about consumer confidence and the overall resilience of the regional economy. In the current conditions, although retail sales are an important indicator, they should be considered together with other economic data. It is important to analyze labor market dynamics, inflation levels, and business sentiment to gain a clearer picture of the eurozone economy and its future prospects.
Today, U.S. employment statistics will have a much stronger market impact. The ADP report on private-sector job creation in August is expected, along with figures for initial jobless claims. In addition, close attention will be paid to the trade balance and the ISM services PMI.
The ADP data, released ahead of the official Labor Department report, is often used for preliminary assessments of the labor market. A deviation from forecasts can trigger significant volatility in financial markets, as seen last month when a strong ADP report led to sharp dollar buying.
Besides labor data, traders will also monitor the U.S. trade balance. A widening deficit could weigh on the dollar, while a narrowing deficit could strengthen it. The ISM services PMI is another key indicator, based on surveys of purchasing managers, reflecting optimism and activity in the services sector, which is a major contributor to U.S. GDP. Readings above 50 indicate expansion, while below 50 point to contraction.
As for the intraday strategy, I will rely mainly on the implementation of scenarios #1 and #2.
Buy Signal
Scenario #1: Today I plan to buy the euro at around 1.1660 (green line on the chart) with a target at 1.1707. At 1.1707, I will exit the market and sell the euro in the opposite direction, expecting a 30–35-point move from the entry level. Strong euro growth today is possible after weak U.S. data. Important! Before buying, make sure the MACD indicator is above the zero line and just starting to rise from it.
Scenario #2: I also plan to buy the euro today in case of two consecutive tests of 1.1639, at the moment when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal upward. Growth toward 1.1660 and 1.1707 can then be expected.
Sell Signal
Scenario #1: I plan to sell the euro after it reaches 1.1639 (red line on the chart). The target will be 1.1592, where I plan to exit and immediately buy in the opposite direction (expecting a 20–25-point move upward from the level). Pressure on the pair will return in the case of strong reports. Important! Before selling, make sure the MACD indicator is below the zero line and just starting to fall from it.
Scenario #2: I also plan to sell the euro today in case of two consecutive tests of 1.1660, at the moment when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal downward. A decline toward 1.1639 and 1.1592 can then be expected.
What is shown on the chart:
- Thin green line – entry price for buying the instrument;
- Thick green line – suggested price for placing Take Profit or fixing profits manually, as further growth above this level is unlikely;
- Thin red line – entry price for selling the instrument;
- Thick red line – suggested price for placing Take Profit or fixing profits manually, 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 Forex traders must be very cautious in making entry decisions. Before major fundamental reports are released, it is best to stay out of the market to avoid sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without them, you can quickly lose your entire deposit, especially if you do not use money management and trade with large volumes.
And remember, successful trading requires a clear trading plan, like the one outlined above. Spontaneous decisions based on current market conditions are, from the start, a losing strategy for an intraday trader.
