Analysis of Trades and Trading Tips for the Euro
The price test at 1.1382 in the second half of the day coincided with the MACD indicator beginning a downward move from the zero line, confirming a correct entry point for selling the euro. As a result, the pair declined by 50 pips.
Yesterday's positive data on U.S. business activity indices and increased new home sales fueled demand for the dollar and led to a decline in the euro. The improvement in U.S. economic indicators inspired investors, who began actively shifting capital into dollar-denominated assets, intensifying pressure on the euro. However, the fundamental factors shaping long-term trends remain critical for market participants. Inflation levels in the eurozone, U.S. trade tariffs, and European Central Bank interest rates will continue to be key components of trading strategy.
Today, several important economic reports from Germany will be released, including the IFO Business Climate Index, Current Economic Assessment, and Economic Expectations indicators. These are forecast to decline, which could weigh on the euro as early as the first half of the trading session. Economists closely monitor these indicators as they serve as a barometer of sentiment in German business. A drop in the IFO Business Climate Index is often seen as a sign of an impending slowdown in Germany's economic growth—the largest economy in the eurozone. This, in turn, could negatively affect the entire European economy and, therefore, the euro.
The Current Economic Assessment reflects how business leaders view present-day conditions. A decline signals that companies are struggling now—whether due to falling demand, rising costs, or other issues. Meanwhile, the Economic Expectations Index shows how companies view the near future. A drop in this measure indicates pessimism and may lead to cutbacks in investment and hiring.
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 1.1361 (green line on the chart) with a target of 1.1409. At 1.1409, I plan to exit the long position and open a short in the opposite direction, expecting a 30–35-pip pullback from the entry. A euro rise in the first half of the day can only be expected after strong data.
Important: Before buying, ensure the MACD indicator is above the zero mark and beginning to rise.
Scenario #2: I also plan to buy the euro today if there are two consecutive tests of the 1.1331 level when the MACD indicator is in the oversold zone. This will limit the downside potential and trigger a reversal. A rise to the opposite levels of 1.1361 and 1.1409 can be expected.
Sell Signal
Scenario #1: I plan to sell the euro after it reaches 1.1331 (red line on the chart). The target is 1.1282, where I will exit the short position and open a long in the opposite direction (expecting a 20–25-pip rebound from the level). Selling pressure may return at any moment today.
Important: Before selling, ensure the MACD indicator is below the zero mark and just beginning to decline.
Scenario #2: I also plan to sell the euro today if there are two consecutive tests of the 1.1361 level when the MACD indicator is in the overbought zone. This will limit the upside potential and trigger a reversal. A decline to the opposite levels of 1.1331 and 1.1282 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.
