Analysis of transactions in the EUR / USD pair
EUR/USD tested 1.0223. At that time, the MACD was far from zero, so the upside potential was limited. Sometime later, the pair tested the level again, but this time the MACD line was in the overbought area, which was a good signal to sell. That proved to be correct because the quote fell by more than 30 pips. Following that was the test of 1.0200, which took place when the MACD line was just starting to move below zero. It was another good signal to sell, and resulted to a 35-pip price decrease to 1.0165. Long positions from 1.0165 led to losses.
EUR/USD fell on Thursday morning because even though the report on consumer confidence in the Euro area, as well as the index for consumer prices in Germany, did not surprise traders, the inflation data in Germany brought about a negative market reaction. Quotes turned around only in the afternoon, when Q2 GDP of the US showed a weaker-than-expected figure.
Ahead are important reports on the Euro area, which could put quite serious pressure on the pair, provided that their numbers are disappointing. Risk appetite may also fall if the attempt to break through monthly highs fail. Most importantly, particular attention should be paid to US reports on personal consumption, expenditures, income and consumer sentiment, because a decrease, especially on spending, will certainly deal a negative impact on dollar, which, in turn, will push EUR/USD up.
For long positions:
Buy euro when the quote reaches 1.0240 (green line on the chart) and take profit at the price of 1.0279. There is a chance for a rally today, but only after good statistics for the Euro area.
Take note that when buying, the MACD line should be above zero or is starting to rise from it. Euro can also be bought at 1.0208, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0240 and 1.0279.
For short positions:
Sell euro when the quote reaches 1.0208 (red line on the chart) and take profit at the price of 1.0165. Pressure will return if the attempt to hit new local highs fail and if reports on the Euro area are weaker than expected.
Take note that when selling, the MACD line should be below zero or is starting to move down from it. Euro can also be sold at 1.0240, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.0208 and 1.0165.
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 decision based on the current market situation is an inherently losing strategy for an intraday trader.