FX.co ★ EUR/USD: Trading Tips for Beginners Traders – October 26

Trade Analysis and Tips for Trading the Euro

The test of the 1.1214 price level occurred just as the MACD indicator was beginning to move down from the zero line, confirming the validity of the entry point for a short position on the euro. As a result, the pair declined by 15 points.

The rise in the Ifo index did not benefit the euro, providing a good example of how a report's headline figure can contradict its underlying details. Germany's Ifo Business Climate Index stood at 90.2 in October, compared with a forecast of 89.8 and September's reading of 89.9, which appeared positive at first glance. However, the market immediately examined the details. The assessment of current conditions fell to 88.8, below the expected 89.4, while expectations for the next six months jumped to 91.6, compared with a forecast of 89.9. These expectations were the main factor lifting the overall index.

For currency traders, this combination sent a worrying signal. Businesses are hoping for an improvement, but actual conditions are worse than they believed a month ago. As a result, EUR/USD resumed its decline and gave back almost all of its early gains. A sustained recovery in the euro will likely require confirmation from actual economic data rather than surveys of business expectations. Until such evidence emerges, any recovery attempt is likely to encounter resistance from the weak assessment of current conditions in the German economy.

The second half of the day brings no US economic data releases or scheduled speeches by Fed officials. As a result, attention will shift to the Middle East, where the US war with Iran continues to put pressure on oil prices and support the dollar. For the eurozone, higher oil prices primarily mean rising costs and inflation, creating a challenge for the ECB ahead of its October 29 meeting, at which interest rates are expected to remain unchanged. As long as oil prices remain elevated, EUR/USD is likely to remain under pressure.

As for the intraday trading strategy, the focus will be on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, the euro can be bought if the price reaches the 1.1211 level (the green line on the chart), with a target of 1.1240. At 1.1240, the position can be closed, and a short position can also be opened in the opposite direction, targeting a move of 30–35 points from the entry point. The euro's upward potential today is limited to the current trading channel. Important: Before buying, make sure that the MACD indicator is above the zero line and has just begun to rise from it.

Scenario No. 2: The euro can also be bought today if the price tests 1.1195 twice consecutively while the MACD indicator is in oversold territory. This would limit the pair's downward potential and trigger an upward market reversal. A rise toward the opposite levels of 1.1211 and 1.1240 can then be expected.

Sell Signal

Scenario No. 1: The euro can be sold after the price reaches 1.1195 (the red line on the chart). The target is 1.1172, where the position can be closed and a long position opened immediately in the opposite direction, targeting a 20–25-point move away from that level. Selling pressure on the pair could return at any time. Important: Before selling, make sure that the MACD indicator is below the zero line and has just begun to decline from it.

Scenario No. 2: The euro can also be sold today if the price tests 1.1211 twice consecutively while the MACD indicator is in overbought territory. This would limit the pair's upward potential and trigger a downward market reversal. A decline toward the opposite levels of 1.1195 and 1.1172 can then be expected.

What the Chart Shows

• Thin green line — the entry price at which the trading instrument can be bought.
• Thick green line — the estimated price level at which a Take Profit order can be placed or profits can be taken manually, as further gains above this level are considered unlikely.
• Thin red line — the entry price at which the trading instrument can be sold.
• Thick red line — the estimated price level at which a Take Profit order can be placed or profits can be taken manually, as further declines below this level are considered unlikely.
• MACD indicator — when entering the market, it is important to consider overbought and oversold conditions.

Important: Beginner Forex traders should exercise extreme caution when making entry decisions. Before major fundamental data releases, it is generally best to stay out of the market to avoid sudden exchange-rate fluctuations. If trading during news releases, always use stop-loss orders to minimize losses. Without stop-loss orders, the entire trading account can be depleted very quickly, especially when large position sizes are used without proper money management.

Remember that successful trading requires a clear trading plan, such as the one outlined above. Making spontaneous trading decisions based on current market conditions is an inherently losing strategy for intraday traders.