Fundamental analysis

Analysis and trading tips for EUR/USD on October 27

Analysis of transactions in the EUR / USD pair

The test of 1.0001 occurred at the time when the MACD line was far above zero, which should have limited the upside potential of the pair. Surprisingly, the quote continued to rise to 1.0041, where a sell signal was formed, which led to a price decrease of around 30 pips.

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Reports on the M3 aggregate of money supply in the eurozone and the volume of private sector lending were released yesterday, but they were of little interest. As such, all attention was focused on the volume of home sales in the US primary market, which dropped very much and led to a new sell-off of dollar.

Today, the decision of the ECB regarding interest rates is due, which will have a strong impact on volatility. It could lead to a fall or a further rise in euro, depending on what bank weekly representatives say. In the afternoon, there will be data on Q3 GDP in the US, as well as jobless claims. Less active growth in the former will weaken the position of dollar and increase risk appetite.

For long positions:

Buy euro when the quote reaches 1.0080 (green line on the chart) and take profit at the price of 1.0134. Growth will occur if the ECB continues to raise rates aggressively.

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 1.0048, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0080 and 1.0134.

For short positions:

Sell euro when the quote reaches 1.0048 (red line on the chart) and take profit at the price of 1.0001. Pressure will intensify if there are unexpected announcements from the ECB, and if the US reports a strong GDP data.

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 1.0080, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0048 and 1.0001.

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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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