Trade Review and Tips for Trading the European Currency
The price test at 1.1134 occurred as the MACD indicator began moving down from the zero line, confirming a good entry point to sell the euro. As a result, the pair fell by more than 40 pips.
The euro continued to fall against the dollar, although yesterday's euro-area data were quite acceptable; US data nevertheless carried more weight. Final German inflation data confirmed a 2.8% year-on-year rise in October after 3.3% in September and 2.9% in August, while prices fell 0.2% month-on-month after a 0.6% rise in September. The harmonized index also came in at 2.8% year-on-year. Destatis head Ruth Brand linked high inflation to energy prices. It noted that the fuel discount introduced in early October likely slightly restrained price growth, so part of the slowdown may be temporary. Italy's industrial production rose 1.2% month-on-month in September, beating the 0.7% forecast and recovering from a 1.2% decline the prior month. For context, Eurostat's preliminary flash showed euro-area inflation at 4.0% in October versus 3.8% in September, with core at 2.5%, supporting expectations the European Central Bank will raise rates to 2.75% on December 17.
Today, the absence of major euro-area data in the first half will shift attention to the ECB Economic Bulletin, and its tone will determine whether the euro can at least modestly recover after the recent fall. If the central bank confirms a hawkish stance, demand for the single currency will rise because the market already prices a 2.75% deposit rate on December 17. But support will likely be limited, since the dollar rests on Federal Reserve-hike expectations—the probability of a December move was assessed at 96.3% after Waller's remarks.
For intraday strategy, I will mainly rely on scenarios No. 1 and No. 2.
Scenarios to Buy
Scenario No. 1: Today you can buy the euro when the price reaches around 1.1092 (green line on the chart), targeting 1.1121. At 1.1121, I plan to exit the market and also sell the euro in the opposite direction, expecting a 30–35 pip move from the entry point. Expect euro strength today only after good data. Important! Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.
Scenario No. 2: I also intend to buy the euro today in the event of two consecutive tests of 1.1073 while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. You can expect a rise to the opposite levels of 1.1092 and 1.1121.
Scenarios to Sell
Scenario No. 1: I plan to sell the euro after it reaches the 1.1073 level (red line on the chart). The target will be 1.1042, where I plan to exit the market and immediately buy in the opposite direction (expecting a 20–25 pip move away from the level). Pressure on the pair will return if data is weak. Important! Before selling, make sure the MACD indicator is below the zero line and is just beginning to fall from it.
Scenario No. 2: I also intend to sell the euro today in the event of two consecutive tests of 1.1092 while the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a downward reversal. You can expect a decline to the opposite levels of 1.1073 and 1.1042.
What's on the Chart:
Thin green line – the entry price at which you can buy the trading instrument;
Thick green line – the suggested price where you can place a Take Profit or manually lock in gains, since further upside above this level is unlikely;
Thin red line – the entry price at which you can sell the trading instrument;
Thick red line – the suggested price where you can place a Take Profit or manually lock in gains, since further downside below this level is unlikely;
MACD indicator. When entering the market, it is important to follow the overbought and oversold zones.
Important. Beginner Forex traders must be very cautious when making entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid getting caught in sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes.
Remember, successful trading requires a clear trading plan, like the example I presented above. Spontaneous trading decisions based on the current market situation are a losing strategy for an intraday trader from the start.
