Analysis of trades and tips on trading EUR
The euro/dollar made an attempt to break through 1.0882 at a time when the MACD indicator has already dropped significantly. In my opinion, it limited the downward potential of the pair. For this reason, I did open short positions on the euro. A bit later, the pair tried to test the level for the second time. However, it repeated the morning scenario. For this reason, I chose scenario No. 2 for long positions. The third breakout of 1.0882 occurred at the moment when the MACD indicator was in the oversold area. It gave a buy signal on the euro. As a result, the pair grew by more than 60 pips. Everything happened according to the plan I outlined in my yesterday's article. Short positions for a rebound at 1.0885 enabled speculators to gain 15 pips.
Investors almost ignored industrial production data for Italy and the consumer price index for Spain. During the US session, traders began to gradually close short positions on the euro. The reason is the upcoming ECB meeting. Investors are looking forward to its results as they will determine a further trajectory of the pair. The question is whether the ECB will raise the key rate. If so, it is better to open long positions, counting on a sharp jump in its quotes in the near future. Besides, it is likely to reach quite favorable levels. If there are no shifts in the ECN monetary policy this year, then the pair could remain within the current range. In this case, I recommend trades stick to scenario No. 2. However, such a scenario looks unlikely, especially given soaring inflation in the eurozone. In the afternoon, the US is going to release a batch of economic reports, for example, retail sales data. This indicator is crucial for the economy as its expansion depends on it. If the March figure declines, the US dollar may decline even more against the euro. If the reading exceeds economists' forecasts, the pressure on the EURUSD pair will definitely return. Investors are likely to pay zero attention to the initial jobless claims report as weekly data have little effect on the market. They are more focused on the consumer sentiment index and inflation expectations from the University of Michigan. If the figures are not in line with the forecasts, the US dollar will peak steam. FOMC member Loretta J. Mester's statements are likely to be hawkish. It is also a bullish factor for the greenback.
Buy signal
Scenario No.1: it is recommended to open long positions on the euro if the price reaches 1.0930 (the green line on the chart) with the upward target of 1.1001. I would advise closing long positions and opening short ones, keeping in mind a downward correction of 20-25 pips from the given level. The euro may climb today after the meeting of the European Central Bank. The regulator is expected to hint at monetary policy tightening. Important! Before opening long positions, make sure that the MACD indicator is above the zero level and it has just started to rise from it.
Scenario No. 2: it is also possible to buy the euro today if the price approaches 1.0899. At this moment the MACD indicator should be in the oversold area. It may limit the downward potential of the pair. It could also trigger an upward reversal of the market. The pair is expected to jump to the opposite levels of 1.0930 and 1.1001.
Sell signal
Scenario No.1: it is recommended to open short positions on the euro if it hits the level of 1.0899 (the red line on the chart). The target level will be1.0855. It is better to close short positions at this level and open long ones, keeping in mind an upward correction of 20-25 pips from the given level. Pressure on the euro will return only if the ECB maintains a dovish stance on monetary policy and retail sales data is upbeat. Important! Before opening short positions, make sure that the MACD indicator is below the zero level and it has just started to decline from it.
Scenario No.2: it is also possible to sell the euro today if the price drops to 1.0930. At this moment, the MACD indicator should be in the overbought area, which will limit the upward potential of the pair. It may also trigger a downward reversal. The pair is expected to slide down to the opposite levels of 1.0899 and 1.0855.
Description of 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.