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Analysis of trades. How to trade EUR/USD:
The price tested the level of 1.1230 when the MACD was in the oversold zone. So, scenario 2 unfolded. As a result, the euro retraced up by 20 pips. However, pressure on the pair increased when Russia declared war on Ukraine. Another test at 1.1230 was an unsuccessful one. The MACD just started to move down from the zero line, which confirmed the accuracy of the sell entry point. Eventually, the pair plunged by another 50 pips. Long positions at 1.1179 were unprofitable due to the bearish market.
The greenback was in demand yesterday. Nevertheless, EUR bulls did not hesitate to purchase the pair at such an attractive price. ECB Schnabel's speech had no effect on the market whatsoever as well as US weekly jobless claims. In addition, the second Q4 GDP estimate in the US came in line with the market consensus. Today, the greenback is expected to add gains. Due to the armed conflict in Ukraine, macroeconomic data on GDP in Germany and France as well as consumer spending and inflation in the latter are highly unlikely to have any influence on the market. Meanwhile, the eurozone's consumer confidence and ECB President Laragde's speech may create an opportunity to buy the euro. In the US, personal spending and personal income reports will be released. A sharp increase in spending could affect high inflation and make the Fed act more aggressively. The market is unlikely to react to the Michigan consumer sentiment index and inflation expectations statistics either.
Buy signal
Scenario 1: You could go long today if the price reaches 1.1244 (the green line on the chart) with the target at 1.1293 where you should take profit and immediately sell the euro, allowing a 10-15 correction. The euro is highly unlikely to strengthen today as Moscow is planning to attack Kyiv, which will only aggravate the conflict between the two countries. Important! Before buying the instrument, make sure the MACD is above zero and just starts moving up from this level.
Scenario 2: Likewise, long positions could be opened today if the quote touches 1.1200 when the MACD is in the oversold zone. This could limit the pair's downside potential and lead to an upward reversal in the market. The price may either go down to 1.1244 or up to 1.1293.
Sell signal
Scenario 1: You could go short today if the price hits 1.1200 (the red line on the chart) with the target at 1.1138 where you should close short positions and immediately buy the euro, allowing a 10-15 pips correction. The bearish market will continue if the Russia-Ukraine conflict escalates further. Important! Before selling the instrument, make sure the MACD is below zero and just starts to move down from this level.
Scenario 2: Likewise, short positions could be opened today if the price reaches 1.1244 when the MACD is in the overbought zone. This could limit the pair's upside potential and lead to a downward reversal in the market. The quote may either go down to 1.1200 or up to 1.1138.
On the chart:
The thin green line indicates a buy entry point.
The thick green line is the estimated price where you should place a take-profit order or lock in profit manually since the quote is unlikely to grow above this level.
The thin red line indicates a sell entry point.
The thick red line is the estimated price where you should place a take-profit order or lock in profit manually since the quote is unlikely to fall below this level.
MACD. When entering the market, it is important to pay attention to the overbought and oversold zones.
Remember that novice forex traders should be very careful when deciding to enter the market. Before the release of important fundamentals, you should stay out of the market in order to avoid sharp fluctuations in the rate. If you decide to trade during news releases, make sure to always place a stop-loss order to minimize losses. Without it, you may quickly lose your entire deposit, especially if you do not use money management but trade large volumes.
Remember that in order to succeed in the market, you should have a clear trading plan, like the one presented above. Spontaneous decisions based on the current state of the market are a losing strategy for an intraday trader.
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