Analysis of Trades and Trading Tips for the Euro
The price test at 1.1116 occurred when the MACD indicator moved significantly above the zero line, limiting the pair's upside potential. For this reason, I did not buy the euro. The second test of 1.1116 coincided with the MACD being in the overbought zone, which confirmed a valid entry point for a sell trade according to Scenario #2 and resulted in an 80-pip drop in the pair.
Yesterday was marked by a significant strengthening of the euro, driven by broad weakness in the U.S. dollar. This was triggered by the Trump administration's introduction of trade tariffs, which caused concern among market participants. Traders and investors lowered their forecasts for the U.S. economy, which led to a weaker dollar. Another factor that added to worries about slowing economic growth in the U.S. was the disappointing performance of the services sector. The corresponding index barely slipped below the critical 50-point mark, which would indicate stagnation in that sector.
Several economic reports will be released this morning, including data on German factory orders, Italian industrial production, and retail sales. If these data are positive, the euro will likely continue strengthening against the U.S. dollar. However, it's important to remember that other factors can also impact the currency market's dynamics. For instance, political risks in Europe or unexpected comments from European Central Bank officials could interrupt the upward trend.
Strong economic indicators from Germany and Italy will support the euro, but let's not forget that the U.S. labor market reports are ahead and will be the main focus in the second half of the day.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the euro today if the price reaches around 1.1116 (green line on the chart) with a target of 1.1233. At 1.1233, I plan to exit the long position and open a sell trade in the opposite direction, aiming for a 30–35-pip move from the entry. A continuation of yesterday's upward trend can be expected in the first half of the day. Important! Before buying, ensure the MACD indicator is above the zero line and beginning to rise.
Scenario #2: I also plan to buy the euro today if there are two consecutive tests of the 1.1057 level when the MACD indicator is in the oversold zone. This would limit the downside potential and lead to an upward market reversal. A rise toward the opposite levels of 1.1116 and 1.1233 can be expected.
Sell Signal
Scenario #1: I plan to sell the euro after the price reaches 1.1057 (red line on the chart). The target will be 1.0955, where I plan to exit the short position and immediately buy in the opposite direction, aiming for a 20–25-pip move. Downward pressure on the pair is unlikely to return today. Important! Before selling, make sure the MACD indicator is below the zero line and beginning to decline.
Scenario #2: I also plan to sell the euro today in the case of two consecutive tests of the 1.1116 level when the MACD indicator is in the overbought zone. This would limit the pair's upside potential and lead to a reversal downward. A decline toward the opposite levels of 1.1057 and 1.0955 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.
