05.10.202111:50 Forex Analysis & Reviews: Analysis and trading recommendations for EUR/USD and GBP/USD on October 5

Analysis of transactions in the EUR / USD pair

There was a signal to sell at 1.1606 and it coincided with the time that the MACD line was in the overbought area. Sadly, EUR / USD increased instead of declining. Shortly after that though a similar signal emerged, and this time euro dropped by as much as 25 pips.

Data released yesterday did not shake the market even though the figures were worse than expected. Investor confidence in the Euro area reportedly declined amid the risk of inflationary pressures and another outbreak of coronavirus.

Data on US manufacturing orders was also ignored by the market.

Today is a day filled with a variety of statistics. In the morning, there will be PMI reports from the Euro area, followed by PPI data and index on investor sentiment. Then, in the afternoon, ECB President Christine Lagarde will deliver a speech, and the US will publish PMI and foreign trade balance reports.

For long positions:

Open a long position when euro reaches 1.1606 (green line on the chart) and take profit at 1.1638. The pair will climb higher if political pressure in the US, which contributed to the growth of dollar last week, weakens. Strong data from the Euro area may also influence the ECB to change its policy by the end of this year.

Before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.1586, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.1606 and 1.1638.

For short positions:

Open a short position when euro reaches 1.1586 (red line on the chart) and take profit at 1.1564. Pressure will continue in the event of weak data from the Euro area and strong statistics from the US.

But before selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro could also be sold at 1.1606, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1586 and 1.1564.

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.

Analysis of transactions in the GBP / USD pair

Pound buyers actively traded at 1.3556, resulting in several signals to buy in the market. However, the first two had to be ignored because they appeared when the MACD line was far from zero. Only the third one coincided with the time that the MACD line was climbing upward, which provoked a 50-pip increase in the pair. Meanwhile, selling led to losses because GBP / USD continued to grow after a brief downward correction

Talking about statistics, data on UK service PMI is scheduled to be released today, which, if posts a decline, can seriously affect the upside potential of the pair. Overall composite PMI index will also be important.

In the afternoon, a similar report from the US will be published, followed by data on the foreign trade balance. Growth in these indicators will lead to a decline in GBP / USD.

For long positions:

Open a long position when pound reaches 1.3614 (green line on the chart) and take profit at 1.3676 (thicker green line on the chart). But there is little chance that the currency will increase, especially amid the political situation in the US.

Before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.3569, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.3614 and 1.3676.

For short positions:

Open a short position when pound reaches 1.3569 (red line on the chart) and take profit at 1.3514. Pressure will return if buyers remain inactive around 1.3569.

But before selling, make sure that the MACD line is below zero, or is starting to move down from it. The pair could also be sold at 1.3614, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.3569 and 1.3514.

What's on the chart:

The thin green line is the key level at which you can place long positions in the GBP/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 GBP/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.