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Analysis of transactions in the EUR / USD pair
There was a signal to buy in EUR / USD on Monday, but the increase was limited because the MACD line was far from zero. Then, after some time, a signal to sell appeared, and this time it provoked a 30-pip decline because it coincided with the MACD line being at the overbought area. The similar signal after that though was unsuccessful because the indicator moved away from zero. But the succeeding buy signal led to a 10-pip increase, thanks to the MACD line going to the oversold area. After that the pair moved down again amid a sell signal that coincided with the indicator moving below zero. The fall was about 25 pips.
The monthly report of the Bundesbank did not affect euro, but the weak consumer confidence in the eurozone did. It was after the release of this report that EUR / USD declined.
But today things may change as there will be reports on manufacturing, services and composite PMI in the Euro area. If the figures come out weaker than anticipated, the pair will decrease even more. This is why it is best to take short positions today.
Meanwhile, the upcoming speech of ECB Vice President Luis de Guindos should not affect the market.
In the afternoon, US will release the same PMI reports, but the data should be much higher. If this happens, demand for dollar will rise, which will result in the further decline of EUR / USD. The Richmond Fed manufacturing index will be decisive as well.
For long positions:
Buy euro when the quote reaches 1.1253 (green line on the chart) and take profit at the price of 1.1299. Demand will increase if the Euro area reports very strong economic statistics.
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 1.1227, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.1253 and 1.1299.
For short positions:
Sell euro when the quote reaches 1.1227 (red line on the chart) and take profit at the price of 1.1185. Demand will decline if the situation with COVID-19 escalates. Weak data on economic activity will also provoke a decrease in EUR / USD.
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 1.1283, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1255 and 1.1216.
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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