Analysis of Trades and Trading Tips for the Euro
The price test at 1.1359 in the second half of the day coincided with the MACD indicator just beginning to move upward from the zero line, confirming a correct entry point for buying the euro. As a result, the pair rose by only 15 pips before selling pressure returned to the market.
Impressive U.S. consumer confidence figures for May caused the dollar to strengthen noticeably and, consequently, the euro to decline. The Conference Board Consumer Confidence Index showed significant growth, exceeding expert forecasts. This became a catalyst for revising expectations regarding future actions by the Federal Reserve in monetary policy, supporting proponents of more decisive anti-inflationary measures.
The euro's weakness was also linked to lingering uncertainty about the outlook for the European economy. Despite some recovery, Europe still faces U.S. trade tariffs. No resolution is in sight, and one is unlikely in the near term.
Today, data is expected on changes in France's consumer spending, GDP, unemployment numbers, and the unemployment rate. Weak figures will lead to a decline in the euro. However, the extent of that decline will depend on the context. It's important to assess how unexpected the figures are and how they compare to market expectations. A slight deviation from the forecast may trigger only short-term volatility, while a significant discrepancy could lead to a broader sell-off in the euro. Moreover, the market's reaction will not be based solely on absolute values but also on their interpretation. Investors will assess whether weak data results from temporary factors or points to deeper structural issues. If they conclude the latter, pressure on the euro will intensify.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Scenario
Scenario No. 1: Today, I plan to buy the euro upon reaching the entry point near 1.1327 (green line on the chart), with a target of rising to 1.1400. At 1.1400, I plan to exit the market and open a sell position in the opposite direction, targeting a move of 30–35 pips from the entry. Expect euro growth only after strong data. Important! Before buying, ensure the MACD indicator is above the zero line and starting to rise.
Scenario No. 2: I also plan to buy the euro today in the case of two consecutive tests of the 1.1290 level when the MACD indicator is in the oversold area. This will limit the downside potential of the pair and lead to an upward market reversal. A rise to the opposite levels of 1.1327 and 1.1400 can be expected.
Sell Scenario
Scenario No. 1: I plan to sell the euro after reaching the 1.1290 level (red line on the chart). The target will be 1.1233, where I plan to exit the market and immediately buy in the opposite direction (expecting a 20–25 pip rebound from the level). Strong pressure on the pair will return following weak data. Important! Before selling, make sure the MACD indicator is below the zero line and beginning to decline.
Scenario No. 2: I also plan to sell the euro today if the price tests the 1.1327 level twice in a row when the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a reversal downward. A decline to the opposite levels of 1.1290 and 1.1233 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.
