Fundamental analysis

Analysis and trading tips for EUR/USD on October 28

Analysis of transactions in the EUR / USD pair

The test of 1.0080 occurred at the time when the MACD line was far above zero, which limited the upside potential of the pair. Some time later, there was a test of 1.0048, but the MACD line was still far from zero, so the downside potential was also limited. Only purchases on a rebound from 1.0001 brought about a movement of 15 to 20 pips. No other signals appeared for the rest of the day.

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The European Central Bank raised its key interest rate to the highest level in more than a decade. They reasoned that it was making progress against record inflation. However, members are afraid of recession, so they made it clear that they will not pursue an aggressive policy for a long time, which led to a slight fall of euro yesterday. Active growth of US GDP strengthened dollar in the afternoon, further discouraging the bets on the rise of risky assets.

A number of reports on Germany and France are coming out this morning, but the most important are the changes in GDP of France and Germany, as well as the consumer price index in Germany. Most likely, they will be the same as the forecasts, so there will be no serious market changes. The Eurozone’s consumer confidence indicator will also be part of today’s statistics. In the afternoon, the US will release reports on income and expenses, as well as the volume of pending transactions for home saled. If the data shows a decrease, expect a significant change in US GDP.

For long positions:

Buy euro when the quote reaches 0.9991 (green line on the chart) and take profit at the price of 1.0040. Growth will occur if data from the Euro area 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 0.9957, but the MACD line should be in the oversold area as only by that will the market reverse to 0.9991 and 1.0040.

For short positions:

Sell euro when the quote reaches 0.9957 (red line on the chart) and take profit at the price of 0.9911. Pressure will intensify if the US reports strong economic 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 0.9991, but the MACD line should be in the overbought area as only by that will the market reverse to 0.9957 and 0.9911.

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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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