FX.co ★ Analysis and trading tips for EUR/USD on December 17

Analysis of transactions in the EUR / USD pair

Market signals on Thursday said to buy EUR / USD, however, the MACD line was already in the overbought area so the increase was very limited. That is why it was more appropriate to sell, and doing so set off a 15-pip decrease in the pair.

Another buy signal appeared after the ECB published its decisions. This time, the MACD line was above zero, so the pair was able to increase by 55 pips.

The European Central Bank decided to expand its bond purchase program to smooth out shocks that could occur in the economy when the emergency stimulus program ends in March next year. This was a strong bullish signal for buyers since it is clear that the central bank is looking towards more aggressive policies. But in the afternoon, demand for dollar increased, thanks to the reports on US jobless claims and industrial production. Both posted good performance, provoking a rise in USD.

There is a high chance that EUR/USD will decline today because German PPI is likely to be worse than the forecast. A decline in this indicator, as well as in the business environment, current situation and economic expectations indices, could push euro lower. But a jump to 5.0% in EU PPI will bring demand back to the pair.

There are no important statistics this afternoon, so traders will focus on the statements of FOMC member Christopher Waller. The effects, however, will be very little since it is already clear what policy the Federal Reserve will pursue.

For long positions:

Buy euro when the quote reaches 1.1351 (green line on the chart) and take profit at the price of 1.1400. Growth will be observed if data on Germany and inflation in the Euro area exceed expectations.

Before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.1319, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.1351 and 1.1400.

For short positions:

Sell euro when the quote reaches 1.1319 (red line on the chart) and take profit at the price of 1.1271. Weak data on the eurozone economy will provoke a decline in EUR / USD, but it will not last long because the bullish trend will persist.

Before selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro could also be sold at 1.1351, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.1319 and 1.1271.

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.