Analysis of positions and tips for trading EUR
The test of 0.9936 occurred at a time when the MACD indicator was still in the negative zone. Therefore, a buy signal did not appear. Two subsequent tests of 0.9936, which took place shortly after, occurred at a time when the MACD was in the overbought zone. It led to a sell signal according to scenario No. 2. Unfortunately, the drop was quite insignificant due to mixed economic reports on the eurozone. In the second half of the day, the pair tested again 0.9936 at the moment when the MACD started moving up from the zero level. It was a confirmation of the correct entry point into long positions. As a result, the upward movement amounted to more than 40 pips.
The Manufacturing and Services PMI Indies for the eurozone, which includes 19 countries, declined for the second month in a row. In August, high prices for energy and food considerably undermined demand. It adversely affected many sectors of the economy. Analysts are worried that the services sector which was quite resilient also slowed down. Fabio Panetta, a Member of the Executive Board of the ECB, delivered a speech yesterday. However, it did not impact the trajectory of the euro as traders paid zero attention to it, waiting for US economic data. The figures turned out to be downbeat. A sharp decline in the US Manufacturing and Services PMI Indices pushed down the US dollar. The euro. on the contrary, gained momentum. As seen on the chart, the pair is unlikely to rise further. The economic calendar is empty in the morning today. So, there will be no drivers to resume an upward movement. The US will release fresh economic reports, namely Durable Goods Orders and Pending Home Sales, in the second half of the day. They are likely to be weak as well. If so, the euro could rise slightly again.
Buy signal
Scenario No.1: today, it is recommended to buy the euro if the price reaches 0.9959 (the green line on the chart) with the prospect of a rise to 1.0010. At 1.0010, it is better to close all long positions and open short ones, keeping in mind a 30-35 pip correction from the given level. The pair is likely to climb higher if it breaks above 0.9959. However, it is quite difficult as there will be no fundamental drivers today. 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 0.9926. At this moment, the MACD indicator should be in the oversold area. It will limit the downward potential of the pair. It may also trigger an upward reversal of the market. The pair is expected to advance to the opposite levels of 0.9959 and 1.0010.
Sell signal
Scenario No.1: it is recommended to sell the euro if the price hits 0.9926 (the red line on the chart). The target level is located at 0.9876 where I recommend closing all short positions and opening long ones, keeping in mind a 20-25 pip correction from the given level. Demand for the euro will return only in case of US weak economic reports. 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 No2: it is also possible to sell the euro today if the price drops to 0.9936. At this moment, the MACD indicator should be in the overbought area. It will limit the upward potential of the pair. It may also trigger a downward reversal. The pair is expected to tumble to the opposite levels of 0.9900 and 0.9864.
What's on the chart:
The thin green line is the entry price where you can buy the trading instrument.
The thick green line is the estimated price where you can place a Take profit order or lock in profits manually as the price is unlikely to rise above this level.
The thin red line is the entry price where you can sell the trading instrument.
The thick red line is the estimated price where you can place a Take profit order or lock in profits 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 the overbought and oversold zones.
Important. Novice traders need to make very careful decisions when entering the market. Before the release of important fundamental reports, it is better to stay out of the market. It helps you avoid losses due to sharp fluctuations in the exchange rate. If you decide to trade during the news release, then always place Stop Loss orders to minimize losses. Without placing Stop Loss orders, you can lose the entire deposit very quickly, especially if you do not use money management but trade in large volumes.
Remember that for efficient trading it is necessary to have a clear trading plan, following the example of the one I presented above. Relying on spontaneous trading decisions based on the current market situation is a losing strategy of an intraday trader.