Fundamental analysis

Analysis and trading tips for EUR/USD on October 25

Analysis of transactions in the EUR / USD pair

The test of 0.9832 occurred at the time when the MACD line was just starting to move below zero, which was a good reason to sell. However, there was no large price decrease, even if activity in the Euro area was weaker than expected. The downward movement was only as much as 15 pips. No other signals appeared for the rest of the day.

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Weak PMI data from France, Germany, Italy and the Eurozone put pressure on euro, but it did not come to a big sell-off as everyone already expected a decrease due to high inflation and the economy sliding into recession. Then, similar data for the US brought back demand for risky assets, after the reports turned out to be worse than expected.

Important reports are due out today, namely the IFO’s data on business expectations, present situation and business climate. A decline in these indicators will harm risk appetite. In the afternoon, there will be the S&P / CS Composite-20 housing cost index, as well as the US consumer confidence index. A slowdown or decrease in the figures will indicate that the US economy is sliding into recession. The speeches of Finance Minister Janet Yellen and Fed member Christopher Waller will be of little interest.

For long positions:

Buy euro when the quote reaches 0.9891 (green line on the chart) and take profit at the price of 0.9944. Growth will occur if statistics in the Eurozone exceed expectations.

Take note that when buying, the MACD line should be above zero or is starting to rise from it. Euro can also be bought at 0.9859, but the MACD line should be in the oversold area as only by that will the market reverse to 0.9891 and 0.9944.

For short positions:

Sell euro when the quote reaches 0.9859 (red line on the chart) and take profit at the price of 0.9816. Pressure will intensify if economic statistics in the Euro area are weaker than expected.

Take note that when selling, the MACD line should be below zero or is starting to move down from it. Euro can also be sold at 0.9891, but the MACD line should be in the overbought area as only by that will the market reverse to 0.9859 and 0.9816.

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What’s on the chart:

The thin green line is the key level at which you can place long positions in the EUR/USD pair.

The thick green line is the target price, since the quote is unlikely to move above this level.

The thin red line is the level at which you can place short positions in the EUR/USD pair.

The thick red line is the target price, since the quote is unlikely to move below this level.

MACD line – when entering the market, it is important to be guided by the overbought and oversold zones.

Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decision based on the current market situation is an inherently losing strategy for an intraday trader.

The material has been provided by InstaForex Company – www.instaforex.com


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