Analysis and tips on how to trade EUR/USD
The price tested 0.9987 at the moment the MACD plunged below zero, which limited the indicator's downside potential. BUY Scenario 2 did not play out. No more signals were generated.
The euro advanced during the European session after the release of data on Germany's GDP and Ifo indices. Although the quote failed to reach the target. The greenback strengthened amid better-than-expected US GDP. As a result, equilibrium in the market was restored. Today, the GfK consumer confidence report will come out in Germany. The reading is expected to drop. In this light, the euro may feel pressure due to the current state of the German economy. Data on the M3 money supply will be published in the eurozone. The market will show little interest in these results due to their secondary importance. During the North American session, the United States will see the release of the personal spending and personal income reports, as well as the goods trade balance. These figures are of great importance to the economy because economic growth is usually slower when spending is lower. Still, the market is focusing on Fed Chairman Powell's speech today. The euro will nosedive to new lows if Powell is hawkish on monetary policy.
Buy signal
Scenario 1: long positions could be opened today from the 0.9975 level (green line on the chart), with a target at 1.0040. Long positions should be closed at 1.0040 and short positions opened, allowing a 30-35 pips correction in the opposite direction from the level. The euro is likely to extend growth if macro data in the eurozone and Germany comes in strong, with the main entry decisions made already after Mr. Powell's speech. Important! Before buying the instrument, make sure the MACD is above zero and just starts moving up from this level.
Scenario 2: when the price reaches 0.9947 with the MACD being in the oversold zone at that moment, it will become possible to go long. This could limit the pair's downside potential and lead to an upward reversal in the market. The quote may go either to 0.9975 or 1.0040.
Sell signal
Scenario 1: today, short positions could be considered when the price hits 0.9947 (red line on the chart), with the target at 1.2128, where short positions should be closed and long ones opened, allowing a 20-25 pips correction in the opposite direction from the level. Demand for the euro could increase if Mr. Powell takes a dovish stance on monetary policy. Important! Before selling the instrument, make sure the MACD is below zero and just starts to move down from this level.
Scenario 2: the euro could be sold today when the price touches 0.9975 and the MACD is in the overbought zone at the same time. This could limit the pair's upside potential and lead to a downward reversal in the market. The quote may go either to 0.9947 or 0.9912.
Indicators on charts:
The thin green line indicates a buy entry point.
The thick green line is the estimated price where you should place a take-profit order or close positions manually since the quote is unlikely to grow above this level.
The thin red line indicates a sell entry point.
The thick red line is the estimated price where you should place a take-profit order or close positions manually since the quote is unlikely to fall below this level.
MACD. When entering the market, it is important to pay attention to the overbought and oversold zones.
Remember that novice forex traders should be very careful when deciding to enter the market. Before the release of important fundamentals, you should stay out of the market in order to avoid sharp fluctuations in the rate. If you decide to trade during news releases, make sure always to place a stop-loss order to minimize losses. Without it, you may quickly lose your entire deposit, especially if you do not use money management but trade large volumes.
Remember that in order to succeed in the market, you should have a clear trading plan, like the one I presented above. Spontaneous decisions based on the current state of the market are a losing strategy for an intraday trader.