FX.co ★ Analysis and trading tips for EUR/USD on December 20

Analysis of transactions in the EUR / USD pair

The pair tested 1.0615 at the moment when the MACD line was just starting to move above zero, which was a good signal to buy. Accordingly, it led to a price increase of over 40 pips, however, 1.0661 was missed by just several points, so traders could not sell on the rebound. No other signals appeared for the rest of the day.

Euro rose on Monday, thanks to strong business expectations index, present situation index and business climate index from the IFO. But this gave way to equally strong selling pressure today, especially since Germany's PPI, which is due out today, is expected to show a decline. There will also be a speech from ECB representatives who are most likely dovish on interest rates.

In the afternoon, much more interesting reports will be released from the US such as the number of issued building permits and the volume of new home constructions. A decline in the figures will signal the onset of recession, which many expect in 2023. This will put pressure in dollar and lead to an upward spurt in EUR/USD.

For long positions:

Buy euro when the quote reaches 1.0617 (green line on the chart) and take profit at the price of 1.0661. Growth could occur after a strong inflation report in Germany. But remember that when buying, the MACD line should be above zero or is starting to rise from it. Euro can also be bought at 1.0582, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.0617 and 1.0661.

For short positions:

Sell euro when the quote reaches 1.0582 (red line on the chart) and take profit at the price of 1.0545. Pressure will increase if Germany reports weak economic statistics. But 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 1.0617, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.0582 and 1.0545.

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.