Analysis of Trades and Trading Tips for the Euro
The test of the 1.0495 level occurred when the MACD indicator had already moved significantly above the zero mark, which limited the pair's upward potential. For this reason, I did not buy the euro. No other market entry points appeared.
Today, all trader attention is focused on the Eurozone Consumer Price Index data, including core and volatile components. These indicators are crucial in determining the European Central Bank's monetary policy direction. If inflation aligns with economists' expectations, it may create an impression of stability and serve as grounds for maintaining the current dovish monetary policy stance. Only in the event of a sharp increase in inflation might the balance of power in the market shift even before the FOMC meeting.
Speeches by ECB Executive Board Members Philip Lane and Joachim Nagel will also be significant. Their comments could provide additional context to the current economic data and help traders better understand the central bank's intentions. They may emphasize the need to continue a soft monetary policy if inflation risks are deemed manageable. If the market interprets the inflation data as confirmation of a strong trend, this could lead to euro appreciation.
As for the intraday strategy, I will primarily rely on implementing Scenario #1 and Scenario #2.
Buy Signal
Scenario #1: Today, buying the euro is possible upon reaching the 1.0516 level (green line on the chart) with a target of 1.0549. At 1.0549, I plan to exit the market and sell the euro in the opposite direction, expecting a movement of 30-35 pips from the entry point. A euro rise in the first half of the day is likely only if strong Eurozone data is released. Important! Before buying, ensure that the MACD indicator is above the zero mark and just starting to rise.
Scenario #2: I also plan to buy the euro today if the 1.0495 level is tested twice in a row when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. Growth can be expected toward the opposing levels of 1.0516 and 1.0549.
Sell Signal
Scenario #1: I plan to sell the euro after reaching the 1.0495 level (red line on the chart). The target will be 1.0466, at which point I plan to exit the market and immediately buy in the opposite direction (expecting a movement of 20-25 pips from the level). Pressure on the pair may return if Eurozone inflation declines. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to decline.
Scenario #2: I also plan to sell the euro today if the 1.0516 level is tested twice in a row when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downward. A decline can be expected toward the opposing levels of 1.0495 and 1.0466.
Chart Notes
- Thin green line: Entry price for buying the trading instrument.
- Thick green line: A suggested target for Take Profit or manually locking in profits, as further growth above this level is unlikely.
- Thin red line: Entry price for selling the trading instrument.
- Thick red line: A suggested target for Take Profit or manually locking in profits, as further decline below this level is unlikely.
- MACD Indicator: Critical for identifying overbought and oversold zones to guide market entry decisions.
Important Note for Beginner Traders
- Always approach market entry decisions cautiously.
- Avoid trading during major news releases to sidestep volatile price swings.
- If trading during news releases, always set stop-loss orders to minimize losses.
- Trading without stop-loss orders or money management practices can quickly deplete your deposit, especially when using large volumes.
- A clear trading plan, like the one outlined above, is essential for successful trading. Spontaneous trading decisions based on current market conditions are inherently disadvantageous for intraday traders.
