Overview of Friday's trading and simple tips for today
Friday was not the most gainful day to trade the single European currency. The level of 1.0854 was testes when the MACD indicator moved downwards from the zero level. This price action generated a good market entry point for short positions. However, the EUR/USD sellers had different plans that activated their stop loss orders. The euro developed a rapid rally and printed a higher high at 1.0880. This level was tested when MACD moved upwards from the zero level, thus giving a signal to buy EUR. Unfortunately, after a climb by 10 pips pips upwards, the currency pair came under bearish pressure again. A higher high at 1.0854 in the second half of the day did not give a sell signal because MACD is far away from the zero mark.
The important events on Friday were Italy's retail sales and a speech by ECB Executive Board member Fabio Panetta. These events did not trigger volatility. So, EUR/USD ended up in a sideways channel in the first half of the day. Data on US wholesale inventories also did not cause considerable changes in market sentiment, though the sellers tried to break the lows. However, in the end the pair did not settle below 1.0850. The economic calendar lacks any data for the EU today. Nevertheless, the euro found support from the news that incumbent French President Emmanuel Macron was declared the frontrunner in the first round of the election. He will compete with far-right candidate Marine Le Pen who gained 24% in the first round. As for the US, the economic calendar is also empty today. Market participants will take notice of speeches by FOMC policymakers such Michelle Bowman, Raphael Bostic, and Charles Evans. The market is well aware of their rhetoric. The US dollar might come under pressure on condition that they give up their hawkish stance on further monetary policy.
Buy signal
Scenario 1. Today we could buy the euro when the price reached 1.0896 plotted by the green line on the chart with the target at 1.0930. I would recommend exiting the market at 1.0930 and sell the euro, bearing in mind a 20-25 pips downward intraday move. We can hardly rely on strong EUR's growth today because there are no reasons for that. A jump above 1.0896 could activate stop loss orders so that the currency pair gains fresh impetus early this week. Important! Before buying the pair, make sure MACD is above the zero mark, beginning its climb from that.
Scenario 2. We could buy EUR today provided that the price rises to 1.0875. However, the MACD indicator is in the oversold zone, thus putting a lid on the pair's bearish momentum. So, the currency pair might reverse upwards. We may expect the price growth to higher levels of 1.0896 and 1.0930.
Sell signal
Scenario 1. We could sell EUR/USD after the price reaches 1.0875 plotted by the red line on the chart. The target is seen at 1.0841 where I recommend leaving the market and immediately buying the euro upwards, bearing in mind a 20-25 pips upward intraday move. The euro is set to remain under pressure early in the week because the geopolitical tensions damped appetite for risk, thus effecting risky assets. Important! Before selling the pair, make sure that MACD is below the zero mark, beginning its decline.
Scenario 2. We could sell EUR/USD after the price reaches 1.0896, but at the moment the MACD indicator should be in the overbought zone, thus limiting the bullish momentum. So, the currency pair might reverse downwards. EUR/USD might slip to 1.0875 and 1.0841.
Description of the chart:
What's on the chart:
The thin green line shows the entry point where you can buy a trading instrument.
The thick green line is the estimated price where you can place a Take profit order or lock in profit manually as the price is unlikely to rise above this level.
The thin red line is the entry point where you can sell the instrument.
The thick red line is the estimated price where you can place a Take profit order or lock in profit manually 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 when entering the market. It is best to stay out of the market before the release of important fundamental reports. It will help avoid losses due to sharp fluctuations in the exchange rate. If you decide to trade during the news release, 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 to earn successfully, beginners should have a clear trading plan like the one I presented above. Spontaneous trading decisions based on the current market situation are a losing strategy of an intraday trader.