FX.co ★ Analysis and trading recommendations for the EUR/USD and GBP/USD pairs on January 12

Analysis of transactions in the EUR / USD pair

Although market volatility was low yesterday, several trading signals emerged for the EUR / USD pair. First is the signal to buy at 1.2194, which unfortunately brought losses. Meanwhile, the next is to sell the euro at 1.2157, which should have been ignored since the MACD line was in the oversold zone, and everything clearly indicated that EUR / USD has already stopped falling. Lastly, there was a signal to sell at 1.2157, which led to a 20-pip decrease in the euro. But due to extremely low volatility, the result was not that great.

Trading recommendations for January 12

Data on Italy's retail sales will be published today, however, it is unlikely to deliver significant influence in the market. At most, the decline will continue in EUR / USD, but it will happen only if the quote drops below 1.2135. To add to that, the lack of economic reports further limits the upward potential of the euro today.

For long positions:

Buy the euro when the quote reaches 1.2175 (green line on the chart), and then take profit around the level of 1.2260. A rally is a bit difficult in EUR / USD, especially since there are many factors that limit the pair's upward potential in the market.

Anyhow, keep in mind that before buying, make sure that the MACD line is above zero and is starting to rise from it.

For short positions:

Sell the euro after the quote reaches 1.2135 (red line on the chart), and then take profit at the level of 1.2076. A weak economic report from Italy will put pressure on the euro, therefore, it would be better to trade along the trend rather than against it.

But of course, before selling, it is important to make sure that the MACD line is below zero and is starting to move down from it.

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.

Analysis of transactions in the GBP / USD pair

Although volatility was a bit low yesterday, GBP/USD still tested 1.3492, during which the MACD line went to negative. All in all, the decline was more than 40 pips, however, the bears failed to reach the key target.

Trading recommendations for January 12

GBP / USD is still expected to continue trading downwards today, however, the bulls could regain control of the market if they manage to overcome 1.3555. Aside from that, the lifting of the current economic lockdown could also bring back demand for the British pound.

For long positions:

Buy the pound when the quote reaches 1.3555 (green line on the chart), and then take profit at the level of 1.3623 (thicker green line on the chart). GBP / USD may start trading upwards if news emerge that a vaccine has been developed against the new strain of coronavirus.

But keep in mind that before buying, make sure that the MACD line is above zero and is starting to rise from it.

For short positions:

Sell the pound after the quote reaches 1.3512 (red line on the chart), and then take profit at the level of 1.3435. GBP / USD will continue to trade downwards if news emerge that supply chains are disrupted because of the new Brexit trade deal. Hints of a possible change in the Bank of England's monetary policy will also add pressure to the pound.

Keep in mind that before selling, make sure that the MACD line is below zero and is starting to move down from it.

What's on the chart:

The thin green line is the key level at which you can place long positions in the GBP / 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 GBP/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.