Trade Analysis and Euro Trading Tips
The test of the 1.1335 price level occurred when the MACD indicator had already risen significantly above the zero mark, which limited the pair's upward potential. For this reason, I didn't buy the euro.
The PMI data for the eurozone services sector was revised upward, leading to a strengthening of the euro against the dollar, although the growth was short-lived. The improvement in PMI data in the services sector was undoubtedly a breath of fresh air for the euro, which had been under pressure in recent days. The upward revision indicates more resilience and dynamism in the European economy than previously thought. This, in turn, prompted investors to reassess the euro's prospects, resulting in its strengthening against the dollar. However, it's important to note that PMI data alone does not change the broader picture. Given the dovish stance and monetary policy of the European Central Bank, the euro will likely remain under pressure.
During the U.S. trading session today, attention will shift to the U.S. trade balance data and the RCM/TIPP Economic Optimism Index. These indicators are traditionally in the spotlight for analysts and investors, as they provide insights into the current state of the U.S. economy and possible future trends. A negative trade balance (more imports than exports) may indicate unfavorable economic dynamics, while a positive one suggests strength.
The RCM/TIPP Economic Optimism Index reflects consumer and investor sentiment about economic prospects. A high reading typically correlates with rising consumer spending and investment, which supports economic growth and strengthens the dollar. Therefore, market participants will closely monitor these publications and assess their impact on investment decisions.
As for intraday strategy, I'll focus on executing Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the euro today at the 1.1339 price area (green line on the chart) with a target of rising to 1.1375. At 1.1375, I plan to exit the market and open a short position in the opposite direction, expecting a 30–35 point move from the entry level. You can count on euro growth following the trend and after weak U.S. data. Important! Before buying, make sure the MACD indicator is above the zero mark and just beginning to rise from it.
Scenario #2: I also plan to buy the euro today in case of two consecutive tests of the 1.1312 level, when the MACD indicator is in the oversold zone. This will limit the downward potential of the pair and trigger a reversal to the upside. Growth to the opposite levels of 1.1339 and 1.1375 can be expected.
Sell Signal
Scenario #1: I plan to sell the euro after reaching the 1.1312 level (red line on the chart). The target will be 1.1277, where I plan to exit the market and immediately buy in the opposite direction (expecting a 20–25 point rebound from the level). Pressure on the pair will return in case of very strong U.S. data. Important! Before selling, make sure the MACD indicator is below the zero mark and just starting to decline from it.
Scenario #2: I also plan to sell the euro today in case of two consecutive tests of the 1.1339 level, when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and trigger a reversal downward. A drop toward 1.1312 and 1.1277 can be expected.
What's on the chart:
- Thin green line – entry price to buy the trading instrument;
- Thick green line – estimated price for placing Take Profit or locking in profit manually, as further growth beyond this level is unlikely;
- Thin red line – entry price to sell the trading instrument;
- Thick red line – estimated price for placing Take Profit or locking in profit manually, as further decline beyond this level is unlikely;
- MACD Indicator – When entering the market, it's important to rely on overbought and oversold zones.
Important: Beginner Forex traders must be very cautious when entering the market. It's best to stay out of the market before the release of important fundamental reports to avoid being caught in sharp price swings. If you choose to trade during news events, always place stop-loss orders to minimize losses. Without stop-losses, you can lose your entire deposit very quickly, especially if you don't use money management and trade large volumes.
And remember, successful trading requires a clear trading plan like the one presented above. Spontaneous trading decisions based on current market conditions are an inherently losing strategy for intraday traders.
