Analysis of Trades and Trading Tips for the Euro
A test of the 1.0395 level in the second half of the day coincided with the MACD indicator beginning to move downward from the zero line. This confirmed the validity of the entry point for selling the euro, resulting in a 15-pip drop. However, the pair did not manage to achieve a larger decline.
The U.S. dollar fell to its lowest level in a week as traders reassessed their expectations regarding Trump's economic policies. Speculation arose that his plans for tariffs might be implemented on a smaller scale than initially expected. This reduced demand for the dollar as a safe-haven asset, especially given the strengthening of the euro and other currencies. Last year, concerns over potential trade wars and import restrictions led to significant gains for the dollar. However, the hope that Trump will focus only on certain sectors has tempered inflationary expectations. As a result, the Federal Reserve might accelerate the pace of rate cuts, putting further pressure on the dollar.
Today, the inflation data from the eurozone could play a crucial role in shaping the European Central Bank's (ECB) monetary policy. If there's an increase in the consumer price index—especially the core index that excludes volatile components like energy and food—it may raise concerns about persistent inflationary pressures. This could lead the ECB to adopt a more hawkish stance, despite the slowing economic growth in the region. Meanwhile, the unemployment report is likely to take a backseat, as markets are already accustomed to consistently low unemployment levels in the eurozone. However, even minor deviations from expectations could affect investor sentiment, particularly if the data disappoints.
Today, I will focus primarily on executing Scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the euro if the price reaches around 1.0432 (green line on the chart), aiming for growth toward the level of 1.0493. At 1.0493, I plan to exit the market and open sell positions in the opposite direction, anticipating a price movement of 30–35 pips from the entry point. Expecting a strong euro rally in the first half of the day is possible as a continuation of yesterday's trend. Important! Before buying, ensure that the MACD indicator is above the zero line and starting to rise.
Scenario #2: I also plan to buy the euro today if the price tests 1.0395 twice in succession, with the MACD indicator in the oversold zone. This will limit the pair's downward potential and prompt an upward market reversal. Growth toward the opposing levels of 1.0432 and 1.0493 can be expected.
Sell Signal
Scenario #1: I plan to sell the euro after the price reaches 1.0395 (red line on the chart). The target will be 1.0345, where I plan to exit the market and immediately buy in the opposite direction, anticipating a movement of 20–25 pips in the opposite direction from this level. Pressure on the pair could return at any moment. Important! Before selling, ensure that the MACD indicator is below the zero line and starting to decline.
Scenario #2: I also plan to sell the euro today if the price tests 1.0432 twice, with the MACD indicator in the overbought zone. This will limit the pair's upward potential and prompt a market reversal downward. A decline toward the opposing levels of 1.0395 and 1.0345 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.
