FX.co ★ Analysis and trading tips for EUR/USD on February 1

Analysis of transactions in the EUR/USD pair:

The level of 1.1172 was first tested when the MACD indicator was just starting to rise from zero, which confirmed the correct entry point for buying the euro. However, the pair did not make a major upward movement due to weak statistics on the growth rate of the European economy in the Q4 of 2021. The data turned out to be worse than economists' forecasts. A more interesting buy signal was formed during the US session when the price tested the level of 1.1154. At that time, the MACD indicator was in the oversold area, which led to the implementation of another scenario for buying the euro. The pair's growth and the test of 1.1172 at the beginning of the MACD upward movement from zero allowed us to finish off the volume in long positions. As a result, the pair grew by more than 50 points.

As noted above, yesterday's data on changes in the volume of GDP in Italy and the Eurozone put pressure on the euro. The Chicago PMI's sharp growth to the area of 65 points did not help the dollar to compensate for the losses observed due to profit-taking on short positions at the end of last month – this may be one of the reasons for such a sharp rise in the euro yesterday afternoon. Today, the situation can quickly return to sellers' control.

Much will depend on the reports in the morning: the change in Germany's volume of retail trade, the PMI index for the manufacturing sector, and the unemployment rate will open a series of fundamental statistics. More attention will be drawn to the report on the Eurozone's PMI index for the manufacturing sector, as well as the unemployment rate in December this year. Good indicators will keep the chances of euro growth in the morning. There are no important statistics during the American session, so the focus will shift to the ISM manufacturing index and the level of vacancies and labor turnover from the US Bureau of Labor Statistics. It is unlikely that the data will change the balance of power in the market.

For long positions:

Buy the euro when the price reaches the level of 1.1247 (green line on the chart) with the goal of rising to the level of 1.1296, where it is suggested to leave the market with a profit and sell the euro immediately in the opposite direction (calculation for a movement of 10-15 points in the opposite direction from the level). Euro's growth will only be possible in the morning in case of very good data for Germany and the EU. Reports should exceed economists' forecasts. Before buying, be certain that the MACD indicator is above zero and is just starting to rise from it.

It is also possible to buy the euro if the price reaches the level of 1.1214, but the MACD indicator should be in the oversold area at this point, which will limit the pair's downward potential and lead to an upward reversal in the market. Growth can be expected to the opposite levels of 1.1247 and 1.1296.

For short positions:

Sell the euro when the price reaches the level of 1.1214 (red line on the chart). The target will be the level of 1.1157, where it is suggested to leave the market and buy the euro immediately in the opposite direction (calculation for a movement of 10-15 points in the opposite direction from the level). It is important to understand what led the euro to sharply increase yesterday and whether there are large buyers in the market. According to the reaction to the eurozone data, everything will become clear. Before selling, be certain that the MACD indicator is below zero and is just beginning its decline from it.

It is also possible to sell the euro if the price reaches the level of 1.1247, but the MACD indicator should be in the overbought area at this point, which will limit the pair's upward potential and lead to a downward reversal in the market. A decline can be expected to the opposite levels of 1.1214 and 1.1157.

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.

It is important to note that 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, your entire deposit can be lost immediately, especially if you do not use money management and trade large volumes.

Remember: a clear trading plan is necessary to succeed in trading. Spontaneous trading decisions based on the current market situation are an inherently losing strategy for an intraday trader.