12.10.202109:06 Forex Analysis & Reviews: Analysis and trading recommendations for EUR/USD on October 12

Analysis of transactions in the EUR / USD pair

There was a signal to sell in EUR / USD on Monday that coincided with the MACD line being at the overbought area. This allowed bearish traders to take short positions, which provoked a 20-pip drop in the pair. Sadly, succeeding signals were no good and even brought losses to the market.

Industrial output in Italy led to a brief increase in EUR / USD, but shortly after that the pair went down again amid strong selling pressure. Meanwhile, statements of ECB board member Philip Lane went unnoticed by the market.

Most likely, euro will continue to decline today because of weak ZEW data in Germany and the Euro area. At the same time, by afternoon, there will be a report from the NFIB, followed by speeches from FOMC members Richard Clarida and Raphael Bostic. If they address inflation and potential bond tapering, demand for dollar will rise, which will accordingly lead to a further drop in EUR / USD.

For long positions:

Open a long position when euro reaches 1.1576 (green line on the chart) and take profit at 1.1611. However, there is little chance that price will increase today, especially amid weak data from the Euro area. In any case, before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.1553, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.1576 and 1.1611.

For short positions:

Open a short position when euro reaches 1.1553 (red line on the chart) and take profit at 1.1522. Pressure will return amid weak ZEW data and statements from Fed representatives. But before selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro could also be sold at 1.1576, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1553 and 1.1522.

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 decisions based on the current market situation is an inherently losing strategy for an intraday trader.