Trade Analysis and Tips for Trading the European Currency
The price test of 1.1619 occurred when the MACD indicator was just beginning to move upward from the zero line, confirming the validity of the entry point for buying the euro. As a result, the pair rose by almost 15 points.
The euro rose on the back of a strong eurozone GDP report, which showed growth of 0.6% in the second quarter after zero growth in the first quarter. GDP reflects the pace of economic growth, and, on a headline basis, the bloc even outperformed the United States, where growth slowed, giving the single currency an upward impulse. The market interpreted the figure as confirmation of the economy's resilience, and in my view, this was the main reason for the euro's strengthening. Nevertheless, I believe it is too early to celebrate, as the entire increase was driven by net exports, while domestic demand contributed almost nothing. The recent sharp decline in retail sales also points to this, while Germany reported a decline in industrial production on the same day, suggesting that its industrial sector showed little evidence of an export boom. Nevertheless, for the ECB, which is meeting in Berlin on Thursday, the report remains an argument in favor of raising the interest rate to 2.5%, which continues to support the single currency.
No U.S. economic data are expected this afternoon, while the U.S. market is effectively out of the picture due to the Labor Day holiday. In my view, this gives euro bulls every opportunity to extend the morning's upward impulse, as there will simply be no major U.S. participants to put pressure on the single currency. Liquidity tends to thin out on such days, and an established move often continues to its logical conclusion due to momentum, which buyers may take advantage of. Nevertheless, it is important to understand that a thin market can easily reverse any unexpected development, so this impulse should be treated with caution. Still, if market conditions remain calm, in my view, buyers remain in control, and EUR/USD has a good chance of maintaining its upward bias through the end of the day.
As for the intraday strategy, I will focus more on the implementation of Scenarios #1 and #2.
Buy Signal
Scenario #1: Today, the euro can be bought when the price reaches the level around 1.1632 (the green line on the chart), with a target of 1.1653. At 1.1653, I plan to exit the market and also sell the euro in the opposite direction, targeting a move of 30–35 points from the entry point. The euro can be expected to rise today as the morning's upward impulse continues. Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.
Scenario #2: Today, I also plan to buy the euro if the price tests 1.1620 twice consecutively while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal of the market to the upside. A rise toward the opposite levels of 1.1632 and 1.1653 can be expected.
Sell Signal
Scenario #1: I plan to sell the euro after the price reaches 1.1620 (the red line on the chart). The target will be 1.1603, where I plan to exit the market and immediately buy in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Selling pressure on the pair will return if bullish activity is weak near the daily high. Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.
Scenario #2: Today, I also plan to sell the euro if the price tests 1.1632 twice consecutively while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal of the market to the downside. A decline toward the opposite levels of 1.1620 and 1.1603 can be expected.
What Is Shown on the Chart:
Thin green line – the entry price at which the trading instrument can be bought;Thick green line – the estimated price at which Take Profit can be placed or profits can be taken manually, as further growth above this level is unlikely;Thin red line – the entry price at which the trading instrument can be sold;Thick red line – the estimated price at which Take Profit can be placed or profits can be taken manually, as further decline below this level is unlikely;MACD indicator. When entering the market, it is important to take the overbought and oversold areas into account.Important. Beginner Forex traders should exercise great caution when making decisions about entering the market. Before the release of important fundamental reports, it is best to stay out of the market to avoid exposure to sharp exchange-rate fluctuations. If you decide to trade during the release of economic news, always place stop orders to minimize losses. Without stop orders, you can lose your entire trading account very quickly, especially if you do not use proper money management and trade large position sizes.
And remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.