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Analysis of transactions in the EUR / USD pair
EUR / USD fell by 40 pips on Friday, thanks to the signal to sell that coincided with the MACD line moving below zero. The indicator allowed traders to safely take short positions, provoking a downward movement in the pair. Then, in the afternoon, the price dropped by 15 pips, this time thanks to the signal to sell that coincided with the MACD line being at the overbought area.
EUR / USD fell amid disappointing data in the whole Euro area. Reports on retail trade and industrial output turned out weaker than anticipated, so demand for euro dropped sharply. Meanwhile, the unemployment data in the US failed to help dollar, even though it came out much better than projected.
Trading may lag today because there are no important reports expected in the morning. But by mid-day, there will be data on investor confidence from Sentix and a speech by ECB member Philip Lane, which traders should pay attention to. There will also be a Eurogroup meeting, but the results are unlikely to affect the market. In the afternoon, Fed representatives Richard Clarida, John Williams and Charles Evans are going to talk, followed by an interview with Fed Chairman Jerome Powell. If Powell mentions future actions on monetary policy, market volatility will surge.
For long positions:
Buy euro when the quote reaches 1.1573 (green line on the chart) and take profit at the price of 1.1604. Growth will be observed if the Euro area reports good statistics and if the US Fed makes dovish statements on the monetary policy.
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 1.1552, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.1573 and 1.1604.
For short positions:
Sell euro when the quote reaches 1.1552 (red line on the chart) and take profit at the price of 1.1527. A decline will occur if the Euro area shows poor performance and if the US Fed makes hawkish statements.
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 1.1564, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1546 and 1.1512.
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.
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