Analysis of Trades and Trading Tips for the Euro
The test of the 1.0401 price level coincided with the MACD indicator starting to move upward from the zero mark. This confirmed a valid entry point for buying the euro, resulting in a 35-pip rise.
The sharp decline in November's U.S. Personal Consumption Expenditures (PCE) index influenced currency markets and trader sentiment. The data fell short of economists' expectations, leading to a weakening of the dollar. As a result, riskier assets, including the euro, found an opportunity for growth.
Today, traders have limited economic data to rely on. The German Import Price Index, set to be released in the first half of the day, is expected to have minimal impact on the euro. Traders accustomed to responding to significant economic indicators will likely remain in a holding pattern, waiting for more impactful news that could shift the current trading direction. While the import price index may provide some insight into Germany's economy, market participants may continue trading within a horizontal channel, given the prevailing uncertainty and expectations surrounding the European Central Bank's interest rate adjustments.
For intraday trading, I will primarily rely on executing Scenario #2.
Buy Signal
Scenario #1: Today, I plan to buy the euro when the price reaches around 1.0447 (green line on the chart), aiming for a rise to 1.0477. At 1.0477, I plan to exit the market and sell the euro in the opposite direction, anticipating a movement of 30-35 pips from the entry point. Expecting euro growth today in the first half of the day is only feasible as a continuation of Friday's correction. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise.
Scenario #2: I also plan to buy the euro today if there are two consecutive tests of the 1.0427 price level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upwards. Growth to the opposite levels of 1.0447 and 1.0477 can be expected.
Sell Signal
Scenario #1: I plan to sell the euro after it reaches the level of 1.0427 (red line on the chart). The target will be 1.0396, where I intend to exit the market and immediately buy in the opposite direction, anticipating a movement of 20-25 pips in the opposite direction from the level. Downward pressure on the pair could return at any moment. Important! Before selling, ensure the MACD indicator is below the zero mark and just starting to decline.
Scenario #2: I also plan to sell the euro today if there are two consecutive tests of the 1.0447 price level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. A decline to the opposite levels of 1.0427 and 1.0396 can be expected.
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.
