FX.co ★ Analysis and trading tips for EUR/USD on May 19

Analysis of transactions in the EUR / USD pair

EUR/USD reaching 1.0515 led to a sell signal in the market, but having the MACD line far from zero limited the downside potential of the pair. In the afternoon, another test of the level took place, but the price still did not decrease even though the MACD line was already moving below zero. It was only on the test third that the pair moved down strongly.

EUR/USD fell on Wednesday because demand decreased amid a slowdown in inflation in the Euro area for April. At the same time, data on issued building permits and new foundations in the US were ignored by the market, so the downward momentum in euro continued even during the US session.

Today, apart from the ECB report from the monetary policy meeting, there is nothing that could significantly affect the markets. As such, it is best to bet on a further fall in the pair, especially since the upcoming speech of ECB Vice President Luis de Guindos is likely to mention the need to increase rates. In the afternoon, data on US jobless claims and manufacturing activity will be released, but those will be of little interest to the market. Only a reaction to the volume of housing sales in the secondary market is possible, but that is also unlikely.

For long positions:

Buy euro when the quote reaches 1.0507 (green line on the chart) and take profit at the price of 1.0557 (thicker green line on the chart). There is a chance for a rally today, but it will be limited as there are no important EU statistics scheduled to be released. Nevertheless, make sure that when buying, the MACD line is above zero or is starting to rise from it. It is also possible to buy at 1.0478, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0507 and 1.0557.

For short positions:

Sell euro when the quote reaches 1.0478 (red line on the chart) and take profit at the price of 1.0435. Pressure will return if there is no bullish activity in the pair after the price hits a new daily high. But note that 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 1.0507, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.0478 and 1.0435.

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.