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Analysis of transactions in the EUR / USD pair
A signal to sell appeared in the market on Tuesday, but there was no decrease even though the MACD line was at the overbought area. EUR / USD continued to rise instead, dealing losses to bearish traders. But later on the pair collapsed by more than 100 pips amid a signal to sell at 1.1374.
Consumer spending and GDP data in France and Italy did not make an impression on traders, but inflation in the eurozone did. The reported growth provoked a rally in euro because the situation could force the European Central Bank to reconsider its attitude on stimulus measures. But in the afternoon, the speech of Fed Chairman Jerome Powell caused the currency to plummet as it expressed the plans of the US central bank to wind down bond purchases more quickly.
There may be another rally today as reports on manufacturing activity in France, Germany, Italy and the whole eurozone will be released. Strong performances will lead to an increase in euro and return to daily highs. But in the afternoon, the US will release a similar report, which could bring demand back to dollar. Good employment data from the ADP and hawkish statements from Fed chairman Jerome Powell and Treasury Secretary Janet Yellen will also raise USD up.
For long positions:
Buy euro when the quote reaches 1.1343 (green line on the chart) and take profit at the price of 1.1384. Demand will increase if statistics in France, Germany and Italy exceed expectations. But growth will be limited by possible problems with the new coronavirus strain
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 1.1320, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.1343 and 1.1384.
For short positions:
Sell euro when the quote reaches 1.1320 (red line on the chart) and take profit at the price of 1.1282. Weak data on the eurozone and hawkish statements from the Fed will provoke a decrease in EUR / USD.
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 1.1343, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1320 and 1.1282.
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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