Analysis of EUR/USD and trading tips
The euro/dollar pair tested 1.0185 for the first time when the MACD indicator had already dropped significantly, thus capping the upward potential. That is why I decided not to buy the euro and wait for a sell signal described in scenario 2. Some time later, the pair once again tested 1.0185. At that moment, the MACD indicator was in the overbought area, which provided traders with a perfect sell signal. However, the euro showed just a minor decline. That is why when the pair tested 1.0185 for the third time, bulls regained control over the market. Traders did not receive any other sell signal.
Data on Germany's factory orders and the ECB economic bulletin did not significantly affect the euro. Today, traders will pay attention to German and French industrial production figures, which are unlikely to alter the market situation. In the first part of the day, traders should bet on a further rise in the euro ahead of macroeconomic reports from the US.
In the second part of the day, traders will focus on very important macroeconomic reports, including the US unemployment rate and nonfarm payrolls, which will determine a further direction of the greenback. Strong data will lead to a decline in the pair, whereas weak reports will help buyers to cope with pressure. In this case, the euro/dollar pair may reach new monthly highs. A speech that will be provided by Richmond Fed President Thomas Barkin will hardly impress traders.
Signals to buy EUR/USD
Scenario 1: today, traders may go long if the price hits 1.0243 (a green line on the chart) with the target at 1.0296. At this level, traders should close buy orders and open the opposite ones, expecting a change of 30-35 pips. The pair may rise even more to hit new highs amid sufficient demand caused by lower tension between China and the US. Notably, before opening long positions, make sure that the MACD indicator is above the zero level and starts rising from it.
Scenario 2: it is also possible to buy the euro if the price touches 1.2014. At that moment, the MACD indicator should be in the oversold area to limit the downward potential. This may lead to the market reversal. The pair may climb to 1.0243 and 1.0296.
Signals to sell EUR/USD
Scenario 1: traders may sell the euro from 1.0214 (a red line on the chart) with the target at 1.0180. There traders should close sell positions and buy the euro, expecting a profit of 20-25 pips. Weak data from Germany and France as well as bulls' failure to protect yesterday's high may return the euro under pressure. Notably, before selling the euro, make sure that the MACD indicator is below the zero line and starts sliding from it.
Scenario 2: it is also possible to sell the euro if the price hits 1.0243. At that moment, the MACD indicator should be in the overbought area, which may cap the upward potential and cause a reversal. The pair may slide to 1.0214 and 1.0180.
What we see on the trading charts:
A thin green line is the entry price at which you can buy a trading instrument.
A thick green line is the estimated price where you can place a take-profit order or lock in profits by yourself, since the price will hardly go above this level.
A thin red line is the entry price at which you can sell the trading instrument.
A thick red line is the estimated price where you can place a take-profit order or lock in profits by yourself, since the price is unlikely to decline further.
The MACD indicator. When entering the market, it is important to take into account overbought and oversold zones.
Novice traders should be very cautious when making decisions to enter the market. It is better to open positions ahead of the publication of important reports in order to avoid price fluctuations. If you decide to enter the market amid the news release, place stop orders to minimize losses. Otherwise, you may lose all your funds, especially if you do not use money management and trade big volumes. Please remember that successful trading requires an accurate trading plan similar to the one described above. Knee-jerk decisions made amid the current market situation is a losing strategy of an intraday trader.