FX.co ★ Analysis and trading tips for EUR/USD on July 22

Analysis of transactions in the EUR / USD pair

EUR/USD tested 1.0210. At that time, the MACD line had just started to move below zero, which is a good signal to sell. Without a doubt, taking short positions was correct because the pair fell in price by about 35 pips. However, the target of 1.0160 was not reached, and after the release of the ECB's decision on monetary policy, there was a strong surge in market volatility.

Euro rose on Thursday after the ECB announced its decision to raise interest rates by 0.5%. However, the increase did not last long because sellers were present in the market, persistently ramping up short positions in an attempt to continue the medium-term bear market. The Philadelphia Fed manufacturing index and US jobless claims report, meanwhile, were ignored by traders.

Ahead are reports on business activity in the eurozone countries, which, if shows strong readings, will resume the rally in the pair. If the numbers are weak, pressure on euro will continue. In the afternoon, exactly the same reports will be released in the US, but this time, they will certainly boost dollar demand as their figures are likely to exceed forecasts.

For long positions:

Buy euro when the quote reaches 1.0212 (green line on the chart) and take profit at the price of 1.0263. There is a chance for a rally today, but only after good reports on eurozone countries.

Take note that when buying, the MACD line should be above zero or is starting to rise from it. Euro can also be bought at 1.0182, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0212 and 1.0263.

For short positions:

Sell euro when the quote reaches 1.0182 (red line on the chart) and take profit at the price of 1.0130. Pressure will return if reports on eurozone countries show weaker-than-expected numbers.

Take note that when selling, the MACD line should be below zero or is starting to move down from it. Euro can also be sold at 1.0212, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.0182 and 1.0130.

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 decision based on the current market situation is an inherently losing strategy for an intraday trader.