FX.co ★ EUR/USD: Trading Tips for Beginner Traders – August 20 (U.S. Session)

Trade Review and Trading Tips for the Euro

The 1.1684 price test occurred when the MACD indicator was just beginning to move upward from the zero line, confirming that it was an appropriate entry point for buying the euro. As a result, the pair rose by more than 20 points.

The single currency continued to strengthen amid an acceleration in German producer prices, which rose by 3.0% y/y and by 1.1% month-on-month. Producer prices show how much the cost of goods increases before they reach consumers and are therefore considered a leading indicator of inflation. However, the key aspect of the report was the source of the pressure, as almost the entire monthly increase was driven by the energy sector. Excluding energy, the indicator barely changed, rising by only 0.1% from June. For the ECB, this mixed picture makes the data more difficult to interpret: the annual figure remains moderate, but the monthly increase indicates that tensions surrounding the Strait of Hormuz continue to feed through into prices across the production chain. The persistence of this pressure supported the euro and allowed EUR/USD to continue rising.

In the second half of the day, the pair will await U.S. economic data, which will determine whether the dollar can regain support. Weekly initial jobless claims, the Philadelphia Fed Manufacturing Index, and the Leading Economic Index will be released. Initial jobless claims provide a new snapshot of the labor market, the Philadelphia Fed Manufacturing Index reflects conditions in the manufacturing sector, and leading indicators point to the likely direction of the economy. All three indicators can influence expectations for Fed policy. The outlook for the single currency is favorable, as only very strong data will support the dollar. If the results are weak or neutral, the U.S. currency will have no clear reason to strengthen, and EUR/USD should remain supported.

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 around 1.1705 (the green line on the chart), with a target of 1.1739. At 1.1739, 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's rise today can be expected only after weak U.S. economic data. 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 1.1680 twice consecutively while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to a reversal higher. A rise toward the opposite levels of 1.1705 and 1.1739 can be expected.

Sell Signal

Scenario #1: I plan to sell the euro after the price reaches 1.1680 (the red line on the chart). The target will be 1.1647, where I plan to exit the market and immediately buy in the opposite direction, targeting a 20–25-point move in the opposite direction from the level. Downward pressure on the pair will return following strong economic data. 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 1.1705 twice consecutively while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a reversal lower. A decline toward the opposite levels of 1.1680 and 1.1647 can be expected.

What the Chart Shows

• Thin green line — the entry price at which the trading instrument can be bought.
• Thick green line — the expected price level at which Take Profit can be set 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 expected price level at which Take Profit can be set or profits can be taken manually, as further decline below this level is unlikely.
• MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.

Important. Beginner Forex traders should be extremely cautious 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 being caught in sharp price fluctuations. If you decide to trade during the release of economic data, always place stop orders to minimize losses. Without stop orders, you can lose your entire account balance very quickly, especially if you do not use proper money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Making trading decisions spontaneously based on the current market situation is fundamentally a losing strategy for an intraday trader.