FX.co ★ Analysis and trading tips for EUR/USD on May 5

Analysis of transactions in the EUR / USD pair

EUR/USD reaching 1.0531 led to a sell signal in the market, but having the MACD line far from zero limited the downside potential of the pair. Its second test, however, led to a 10-pip decrease because by that time, the MACD line was in the overbought area. The third test, meanwhile, prompted a buy signal, which resulted in a more than 30-pip increase in the pair.

Pressure in EUR/USD eased on Wednesday morning because PMI data from Germany, Italy, France and the eurozone coincided with the forecasts. At the same time, ADP released a weak report on US employment, which the Fed is likely to take as a signal to slow down the tightening of monetary policy.

Today, markets will focus on the reports on industrial orders in Germany and Italy, followed by the speech of ECB board member Philip Lane. His statements may affect the currency market, especially the euro. In the afternoon, a weekly report on US jobless claims will be released, but that is unlikely to shake the market.

If euro does not increase in the morning, price will most likely decline again.

For long positions:

Buy euro when the quote reaches 1.0624 (green line on the chart) and take profit at the price of 1.0673 (thicker green line on the chart). A rally is possible if upcoming economic data on the eurozone exceeds expectations. But note that when buying, make sure that the MACD line is above zero or is starting to rise from it. It is also possible to buy at 1.0592, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0624 and 1.0673.

For short positions:

Sell euro when the quote reaches 1.0592 (red line on the chart) and take profit at the price of 1.0536. Pressure will return if data on the Euro area turns out weaker than expected and if buyers become inactive because of the results of the latest Fed meeting. In any case, when selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro can also be sold at 1.0624, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.0592 and 1.0536.

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.