Trade Analysis and Tips for Trading the Euro
The price test at 1.1520 coincided with the moment when the MACD indicator was beginning to move downward from the zero mark, confirming the correct entry point for selling the euro. As a result, the pair dropped by 15 pips.
While the euro held on in the first half of the day thanks to the PMI report for the Eurozone manufacturing sector, the unexpectedly strong ISM report from the U.S. set the tone for trading yesterday and gave the dollar a boost. U.S. manufacturing activity accelerated in July to the highest pace in over four years, with the index rising to 55.6 percent from June’s 53.3, exceeding the forecast of around 54 percent. This indicator is important because it is one of the first to signal the state of the economy, and its sharp rise convinced the market of resilient growth, which worked in favor of the American currency. Against this backdrop, the euro lost ground. Strong data bolstered expectations of a hawkish Federal Reserve stance, raised U.S. bond yields, and increased demand for the dollar, pushing the EUR/USD pair lower.
Today, the euro enters the first half of the day without substantial support, as there is no significant data on the calendar, and attention will shift only to Italy’s retail sales and the change in Spain’s unemployment. Retail sales data help assess consumers’ willingness to spend, while unemployment figures reflect the state of the labor market in one of the bloc’s major countries; however, the market impact of these releases is small. It is unlikely that they will give the single currency a noticeable impulse. With such a weak agenda, the dynamics of the euro will primarily be determined by external factors. As long as there are no substantial drivers of the single currency, the EUR/USD pair will remain dependent on sentiment surrounding the dollar and overall risk appetite. Only significant movements in the U.S. dollar will significantly change the landscape. At the same time, secondary local reports are unlikely to give the euro its own direction until the end of the European session.
Regarding intraday strategy, I will rely mainly on the implementation of scenarios No. 1 and No. 2.
Buy Scenarios
Scenario #1: Today, the euro can be bought upon reaching a price in the area of 1.1517 (green line on the chart) with a target increase to 1.1548. At 1.1548, I plan to exit the market and sell the euro in the opposite direction, expecting a move of 30-35 pips from the entry point. Growth in the euro can only be anticipated after positive data. 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 plan to buy the euro today in the event of two consecutive tests of 1.1502 when the MACD indicator is in the oversold area. This will limit the pair’s downside potential and lead to an upward market reversal. Growth can be expected toward the opposite levels of 1.1517 and 1.1548.
Sell Scenarios
Scenario #1: I plan to sell the euro once the price reaches 1.1502 (the red line on the chart). The target will be 1.1470, where I plan to exit the market and immediately buy in the opposite direction (expecting a move of 20-25 pips in the opposite direction from the level). Pressure on the pair will return today in case of poor data. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just starting to decline from it.
Scenario #2: I also plan to sell the euro today in the event of two consecutive tests of 1.1517, with the MACD indicator 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 opposite levels of 1.1502 and 1.1470.
What the Chart Shows:
- Thin green line – entry price for buying the trading instrument;
- Thick green line – estimated price where take profit can be set, or profit can be realized, as further growth above this level is unlikely;
- Thin red line – entry price for selling the trading instrument;
- Thick red line – estimated price where take profit can be set, or profit can be realized, as further decline below this level is unlikely;
- MACD Indicator. When entering the market, it is important to be guided by overbought and oversold zones.
Important: Beginner forex traders need to make entry decisions very cautiously. Before key fundamental reports are released, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not practice money management and trade large volumes.
And remember, successful trading requires a clear trading plan, as outlined above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.
