Analysis of Trades and Trading Tips for the Euro
The price test at 1.0899 occurred when the MACD indicator had already moved significantly below the zero mark, which, in my opinion, limited the pair's downside potential. For this reason, I chose not to sell the euro. Shortly after, another test at 1.0899 occurred while the MACD was in the oversold area. This facilitated the realization of scenario #2 for a purchase, resulting in the pair increasing by more than 25 pips.
The euro's reaction to U.S. inflation data was muted, raising doubts about the near-term growth prospects for the EUR/USD pair. February's consumer prices in the U.S. showed the smallest increase in four months, offering some relief to Americans concerned about the potential effects of Trump's trade policies. However, inflation remains above the Federal Reserve's 2% target, preventing the central bank from quickly easing its hawkish stance.
At the same time, the European Central Bank continues its more dovish monetary policy, which limits the growth of the euro. The differing approaches between the Fed and the ECB create conditions for the dollar to strengthen against the euro.
Today, in the first half of the day, data on changes in eurozone industrial production and Italy's quarterly unemployment rate are expected. The impact of these factors could be heightened by overall uncertainty in global markets, driven by geopolitical tensions and concerns about slowing global economic growth. Only a significantly stronger-than-expected result could help the euro resume its growth. Otherwise, the best strategy would be to anticipate a downward correction.
For intraday strategy, I will primarily rely on Scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the euro if the price reaches around 1.0898 (green line on the chart), aiming for an increase to 1.0939. At 1.0939, I plan to exit the market and sell the euro in the opposite direction, targeting a move of 30-35 pips from the entry point. A euro rise in the first half of the day can be expected as part of the ongoing upward trend. Important! Before buying, ensure that the MACD indicator is above the zero mark and starting to rise.
Scenario #2: I also plan to buy the euro today if the price tests 1.0875 twice a row while the MACD is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. A rise to the opposite levels of 1.0898 and 1.0939 can be expected.
Sell Signal
Scenario #1: I plan to sell the euro after it reaches the 1.0875 level (red line on the chart). The target will be 1.0839, where I will exit the market and immediately buy in the opposite direction, expecting a move of 20-25 pips back from this level. Selling pressure on the pair will return today if eurozone data is weak. Important! Before selling, ensure that the MACD indicator is below the zero mark and starting to decline.
Scenario #2: I also plan to sell the euro today if the price tests 1.0898 twice in a row while the MACD is in the overbought area. This will limit the pair's upside potential and lead to a market reversal downward. A decline to the opposite levels of 1.0875 and 1.0839 can be expected.
What's on the Chart:
- The thin green line represents the entry price where the trading instrument can be bought.
- The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
- The thin red line represents the entry price where the trading instrument can be sold.
- The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
- The MACD indicator should be used to assess overbought and oversold zones when entering the market.
Important Notes:
- Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
- Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.
