Fundamental analysis

Analysis and trading tips for EUR/USD on October 26

Analysis of transactions in the EUR / USD pair

The test of 0.9859 occurred at the time when the MACD line was far below zero, which limited the downside potential of the pair. Sometime later, another test took place, but this time the MACD line was exiting the oversold area, which was a good reason to buy. This led to a price increase of about 15 pips. Short positions at 0.9859 did not bring much profit.

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IFO’s data on business expectations, present situation and business climate coincided with forecasts, while the US consumer confidence index fell sharply. This led to a powerful sell-off of dollar and accordingly, a rise of EUR/USD.

Today, the report on the M3 aggregate of money supply in the eurozone and the volume of private sector lending are due, but they are of little interest to the market. As such, attention will be focused on the US data in the afternoon, particularly on the foreign trade balance and volume of home sales in the primary market, where a rather serious reduction is expected. That will be another sign of a recession in the US economy, which will lead to another sell-off in dollar and rise in risk appetite.

For long positions:

Buy euro when the quote reaches 1.0001 (green line on the chart) and take profit at the price of 1.0040. Growth will occur if statistics in the US are lower than forecasts.

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 0.9949, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0001 and 1.0041.

For short positions:

Sell euro when the quote reaches 0.9949 (red line on the chart) and take profit at the price of 0.9902. 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 1.0001, but the MACD line should be in the overbought area as only by that will the market reverse to 0.9949 and 0.9902

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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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