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Analysis of yesterday trades and tips for trading the euro
On Friday, the euro did not rise to new highs. It made several attempts to break through 1.1470 in the first half of the day. As a result, it led to the formation of entry points into long positions. The MACD indicator had just started to grow from the zero level. It confirmed the correct entry point into the market taking into account the uptrend the price resumed the day before. However, the upward movement was not large. In the afternoon, there was a sharp drop in the euro. It tried to break through 1.1434. At that moment, the MACD indicator had just started its downward movement from the zero mark, which was a confirmation of the correct entry point into the short positions. However, even after that, I did not see a powerful drop in the pair as trading was already conducted against the trend and selling at the intraday lows was not the right decision.
Data on factory orders in Germany, industrial production in France, as well as the eurozone retail sales report exerted pressure on the euro in the first half of the day. Therefore, it was unable to maintain its upward movement. Besides, economic reports turned out to be much worse than economists' forecasts. A strong NFP report forced euro bulls to close their positions at the end of the week, which led to a big drop in the pair.
Today, there are no drivers. It is quite possible that in the first half of the day, data on factory orders in Germany and the Sentix Investor Confidence Index could strip up market activity. However, figures should be much better than economists' forecasts. Only in this case, the euro may resume growth. If there is no market reaction, I advise you to consider long positions on the euro only according to scenario No. 2, which is presented below. ECB President Christine Lagarde is scheduled to give a speech in the afternoon. Bulls may return to the market following her speech as the rhetoric of the speech is likely to be more hawkish. It will make risky assets attractive. Traders are likely to ignore US Consumer Credit data.
Entry points to open long positions
Scenario No.1: today, it is recommended to open long positions on the euro when the price reaches 1.1443 (the green line on the chart). If so, it may hit the level of 1.1481. I would advise you to close long positions at the 1.1481 level and open short ones. Bear in mind a 10-15 pips correction in the opposite direction from the level. Bullish sentiment is likely to strengthen only if the eurozone data is upbeat and ECB President Christine Lagarde's statements are hawkish. Important! Before opening long positions, make sure that the MACD indicator is above the zero mark and it has is just started its growth from it.
Scenario No. 2: it is also possible to buy the euro today if the price approaches 1.1419. At this moment, the MACD indicator should be in the oversold area, which will limit the downward potential of the pair. It may also lead to an upward reversal. If so, the pair may rise to the opposite levels of 1.1443 and 1.1481.
Entry points to open short positions
Scenario No.1: it is recommended to open short positions on the euro if the price hits the level of 1.1419 (the red line on the chart). The target level will be 1.1382. I would advise closing short positions at this level and opening long ones immediately. Do not foregut about a 10-15 pip correction in the opposite direction from the level. The lower the euro falls, the stronger demand will be. Be careful when selling at the lows against the bull market. Important! Before opening short positions, make sure that the MACD indicator is below the zero mark and it has just started to decline from it.
Scenario No.2: it is also possible to sell the euro today if the price approaches 1.1443. At this moment, the MACD indicator should be in the overbought area, which will limit the upward potential of the pair. It may also lead to a downward reversal. The pair is expected to drop to the opposite levels of 1.1419 and 1.1382.
Description of the chart:
The thin green line shows the entry points to open long positions on a trading instrument.
The thick green line is the estimated price where you can place a take-profit order or lock in profits by yourself as the price is unlikely to rise above this level.
The thin red line shows the entry points to open short positions on a trading instrument.
The thick red line is the estimated price where you can place a take-profit order or lock in profits by yourself as the price is unlikely to decline below this level.
The MACD indicator. When entering the market, it is important to pay attention to overbought and oversold zones.
Important. Novice traders need to make very careful decisions on entering the market. Before the release of important fundamental reports, it is better to stay out of the market to avoid losses due to sharp fluctuations. If you decide to trade during the news release, then always place stop orders to minimize losses. Without placing stop orders, you can lose the entire deposit very quickly, especially if you do not use money management, but trade in large volumes.
Remember that for successful trading it is necessary to have a clear trading plan, following the example of the one I presented above. Relying on spontaneous decision making based on the current market situation is initially a losing strategy of an intraday trader.
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