Analysis of transactions and tips on trading the European currency
Yesterday was surprisingly quite a profitable day for trading the euro. The lack of statistics did not affect the volatility, which remained at a good level. The test of 1.0896 occurred at the moment when the MACD indicator was just starting its upward movement from zero, which, according to my strategy, was a confirmation of the formation of a signal to buy euros. As a result, the growth was more than 35 points. We managed to reach the target of 1.0930, where I advised selling the euro immediately for a rebound – and so it turned out. The drop was more than 40 points and by the end of the day trading returned to the area of 1.0875. The test of this price came at a time when the MACD went down quite a lot from zero, for this reason there were no short positions there.
Macron's victory in the first round of the French presidential election helped the euro to stabilize its position a bit, but as we can see, the pressure on the pair will remain. Yesterday's speeches by FOMC members Rafael Bostic and Charles Evans returned pressure on risky assets and led to a slight increase in the US dollar. Today promises to be a more eventful day. A number of reports on European countries will be released in the morning: data on the German consumer price index, as well as the index of sentiment in the business environment of Germany and the eurozone from the ZEW institute will be of great importance. In the event of a sharp inflationary pressure, the demand for the euro may return, but a poor performance from ZEW will once again remind traders of the current situation in the eurozone economy. In the afternoon, we need to closely follow the report on the consumer price index in the United States in March of this year. It is expected that annual inflation may reach the level of 8.5% and even exceed it – a very strong bullish signal for the US dollar, since for sure the Federal Reserve will definitely not delay changing its monetary policy any longer. The speech of FOMC member Lael Brainard will once again remind market participants of the central bank's plans – everything points towards the fall of the EURUSD pair.
For long positions
Today, you can buy euros when the price reaches 1.0887 (the green line on the chart) in order to rise to the level of 1.0930. I recommend leaving the market at 1.0930, as well as selling euros in the opposite direction, counting on a movement of 20-25 points in the opposite direction from the entry point. However, we shouldn't count on a strong growth from the euro today, since there are no special reasons for this, and strong inflation data in the United States will certainly lead to a strengthening of the dollar. Before buying, make sure that the MACD indicator is above the zero mark and is just beginning its growth from it.
It is also possible to buy euros today if the price reaches 1.0865, but at this moment the MACD indicator should be in the oversold area, which will limit the downward potential of the pair and lead to an upward reversal of the market. We can expect growth to the opposite levels of 1.0887 and 1.0930.
For short positions
You can sell the euro after reaching the level of 1.0865 (the red line on the chart). The target will be the 1.0841 level, where I recommend leaving the market and buying euros immediately in the opposite direction (counting on a movement of 20-25 points in the opposite direction from the level). The euro will continue to be under pressure, as geopolitical events will continue to negatively affect the exchange rate of risky assets, and weak data on the eurozone economy will once again confirm the existence of problems. Before selling, make sure that the MACD indicator is below the zero mark and is just beginning its decline from it.
It is also possible to sell the euro today if the price reaches 1.0887, but at this moment the MACD indicator should be in the overbought area, which will limit the pair's upward potential and lead to a reverse market reversal to the downside. We can expect a decline to the opposite level of 1.0865 and 1.0841.
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.