EUR/USD Trading Strategies: MACD Analysis, Long and Short Positions, and Risk Management

The test of 1.0912, coinciding with the significant rise of the MACD line from zero, limited the upward potential of the pair.

 

Pressure may return in the pair, following strong labor market data from the US. A decrease in the number of jobless claims will likely fuel dollar demand, along with revised data on 1st quarter GDP. A speech from FOMC member Raphael Bostic also lies ahead, and this will advocate aggressive rate hikes in the near future. After all, many Fed members believe that the US economy copes well with the current high cost of borrowing.

 

For long positions:

Buy when euro hits 1.0942 (green line on the chart) and take profit at the price of 1.0976. Growth will only be possible after weak labor market data from the US. However, before buying, traders should make sure that the MACD line lies above zero or rises from it. Euro can also be bought after two consecutive price tests of 1.0920, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0942 and 1.0976.

 

For short positions:

Sell when euro reaches 1.0920 (red line on the chart) and take profit at the price of 1.0887. Pressure will return in the case of hawkish comments from Fed representatives and strong labor market statistics. However, before selling, traders should make sure that the MACD line lies below zero or drops down from it. Euro can also be sold after two consecutive price tests of 1.0942, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0920 and 1.0887.

 

What's on the chart:

Thin green line - entry price at which you can buy EUR/USD Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely. Thin red line - entry price at which you can sell EUR/USD Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely. MACD line- it is important to be guided by overbought and oversold areas when entering the market

 

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.