Trade Analysis and Tips for the European Currency
The price test at 1.1533 occurred at a time when the MACD indicator had moved significantly above the zero mark, limiting the pair's upward potential. For this reason, I did not buy the euro.
Yesterday, the euro continued to rise against the dollar even amid reports that Iran had struck two U.S. bases in Iraq. The markets seemed somewhat confused, assessing the potential consequences of escalating geopolitical tension in the Middle East. On the one hand, in such moments, investors traditionally seek refuge in assets considered the least risky, such as the U.S. dollar. On the other hand, everyone is already accustomed to such skirmishes and is not particularly reacting to this news. The key point now is the central banks' response to inflation driven by the war in the Middle East.
In the first half of the day today, data on changes in industrial production in Germany—the locomotive of the European economy—are expected. These figures will provide important insight into the state of the manufacturing sector, which is often a leading indicator of overall economic activity. Concurrently, data on Germany's trade balance will be released. This indicator reflects the difference between exports and imports of goods, and its changes can significantly impact the euro's exchange rate.
Undoubtedly, the central event of the day will be the speech by European Central Bank President Christine Lagarde. Her words will be closely analyzed for signals regarding future monetary policy. Markets will be looking for hints of further interest rate moves, as well as assessments of inflation risks from the ECB president.
Regarding the intraday strategy, I will rely more on implementing Scenarios #1 and #2.
Buying Scenarios
Scenario #1: Today, I can buy euros when the price reaches around 1.1559 (green line on the chart), with a target to reach 1.1582. At point 1.1582, I plan to exit the market and sell euros in the opposite direction, anticipating a movement of 30-35 pips from the entry point. Expecting the euro to rise can only be justified after good data from the eurozone. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just starting to rise from there.
Scenario #2: I also intend to buy euros today in the case of two consecutive tests of the price 1.1539 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 to the opposite levels of 1.1559 and 1.1582.
Selling Scenarios
Scenario #1: I plan to sell euros once the price reaches 1.1539 (the red line on the chart). The target will be 1.1505, where I intend to exit the market and immediately buy in the opposite direction (anticipating a move of 20-25 pips in the opposite direction from the level). Pressure on the pair today will return only if reports are weak. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just beginning to decrease from it.
Scenario #2: I also plan to sell euros today in the case of two consecutive tests of the price 1.1559 when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reverse market turn downwards. A decline can be expected to the opposite levels of 1.1539 and 1.1505.
What's on the Chart:
Thin green line – entry price for buying the trading instrument;
Thick green line – presumed price level for placing Take Profit or manually securing profits, as further growth above this level is unlikely;
Thin red line – entry price for selling the trading instrument;
Thick red line – presumed price level for placing Take Profit or manually securing profits, as further decline below this level is unlikely;
MACD Indicator. When entering the market, it is important to consider the overbought and oversold zones.
Important: Beginner traders in the Forex market must be very cautious when making entry decisions. Before major fundamental reports are released, it is best to stay out of the market to avoid being caught in sharp fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you are not using money management and are trading large volumes.
And remember, for successful trading, you need a clear trading plan similar to the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.
