Analysis of transactions in the EUR / USD pair
EUR/USD reaching 1.0560 led to a sell signal in the market, but having the MACD line far from zero limited the downside potential of the pair. Similarly, the upside potential was limited because the indicator was also far from zero when the pair tested the level again and prompted a buy signal. Immediately after moving by 10 pips, the quote turned down again. The third test of the level, on the other hand, successfully provoked a 20-pip decrease because the sell signal that time coincided with the MACD line moving below zero. No other signal appeared for the rest of the day.
There was a brief rally in EUR/USD yesterday because the business sentiment indices in Germany and Eurozone showed less active contractions in May according to the ZEW institute. However, the present situation index continued to decline, which once again confirms the complexity of the situation in eurozone countries. In the afternoon, demand for dollar rose again because of statements from Fed members John Williams and Loretta Mester. That, however, did not prompt a surge in volatility.
Today, markets will focus on the CPI report from Germany and economic forecasts from the European Commission, which are likely to put pressure on the euro. However, more interesting is the scheduled speech of ECB President Christine Lagarde as that may provide support to the pair if it hints at future changes in monetary policy.
In the afternoon, the US will release its CPI data for April, which, if indicates a decline, will lead to a dip in dollar demand and increase in EUR/USD. But if inflation shows a jump, the Fed will be forced to act more aggressively, that is, raise rates by 0.75% during the June meeting. The speech of FOMC member Raphael Bostic is unlikely to have much weight in the overall fundamental picture.
For long positions:
Buy euro when the quote reaches 1.0555 (green line on the chart) and take profit at the price of 1.0595 (thicker green line on the chart). A rally is possible if inflation data from Germany and the European Commission report exceeds expectations.
But note that when buying, make sure that the MACD line is above zero or is starting to rise from it. It is also possible to buy at 1.0532, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0555 and 1.0595.
For short positions:
Sell euro when the quote reaches 1.0532 (red line on the chart) and take profit at the price of 1.0497. Pressure will return if the upcoming data on the Euro area is weaker than expected and if US inflation is reported to have risen sharply in April.
But note that when selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro can also be sold at 1.0555, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.0532 and 1.0497.
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.