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Analysis of transactions in the EUR / USD pair
Although nobody expected a decline last Friday, EUR / USD collapsed, which resulted in a strong signal to sell. It appeared at a time when the MACD line was moving above zero, so bears were able to take short positions and provoke a 30-pip decrease in the pair. Meanwhile, long positions brought losses to bullish traders.
The PPI data in Germany and current account balance of the ECB came out as expected, so traders put their attention to news on Eurozone countries instead. Apparently, the governments may implement lockdowns again in order to curb the spread of the coronavirus. This is detrimental to the economies and the European currency as well. The statements of Fed representatives exacerbated the situation and put more pressure on the euro. But today things may change as the monthly report of the Bundesbank and data on EU consumer confidence may bring demand back to the currency. In the afternoon, there are no economic reports expected, so everything will depend on how the situation with the coronavirus develops.
For long positions:
Buy euro when the quote reaches 1.1283 (green line on the chart) and take profit at the price of 1.1320. Demand will increase if the Euro area reports very strong economic statistics.
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 1.1255, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.1283 and 1.1320.
For short positions:
Sell euro when the quote reaches 1.1255 (red line on the chart) and take profit at the price of 1.1216. Demand will decline if the situation with COVID-19 escalates.
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 1.1283, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1255 and 1.1216.
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.
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