04.05.202107:30 Forex Analysis & Reviews: Analysis and trading recommendations for the EUR/USD and GBP/USD pairs on May 4

Analysis of transactions in the EUR / USD pair

The rally in the euro stopped this morning, giving off the idea that the bearish correction, which started last Friday, is not over yet. If this is true, then the quote will decline again and drop to new local lows today.

Exchange Rates 04.05.2021 analysis

Trading recommendations for May 4

Do not be surprised if the euro loses ground as the upcoming data from France is unlikely to lead to any serious changes in the market. At the same time, the US will release reports on foreign trade balance and volume of manufacturing orders, where strong figures will certainly raise demand for the dollar and lead to another decline in the euro.

A speech from the Federal Reserve may also cause slight volatility in the market.

For long positions:

Enter a long position when the quote reaches 1.2055 (green line on the chart), and then take profit around the level of 1.2119. The euro will turn up if there are good macroeconomic reports from France.

When buying, make sure that the MACD line is above zero, or is starting to rise from it.

For short positions:

Enter a short position when the quote reaches 1.2028 (red line on the chart), and then take profit at the level of 1.1980. Many assume that the correction is not over yet, so the euro should continue moving downwards.

But before selling, make sure that the MACD line is below zero or is starting to move down from it.

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 decisions based on the current market situation is an inherently losing strategy for an intraday trader.

Analysis of transactions in the GBP / USD pair

Pound rose very sharply yesterday during the Asian and European sessions. In fact, it is now trading near last week's highs. However, a downturn may occur if the quote moves below 1.3864.

Exchange Rates 04.05.2021 analysis

Trading recommendations for May 4

Pay attention to the upcoming macroeconomic reports today as those will certainly affect the market. For example, a good data on UK PMI will result in a sharp increase in the pound, while a weak data will lead to another decline in the currency. The same situation will happen with regards to the reports on US foreign trade balance and volume of manufacturing orders. Strong figures will bring back demand for the dollar, while weaker numbers will lead to another decline in the currency.

A speech from the Federal Reserve will also take place. And even if it may cause slight volatility in the market, it is unlikely to produce movements as strong as yesterday's.

For long positions:

Enter a long position when the quote reaches 1.3896 (green line on the chart), and then take profit at the level of 1.3962 (thicker green line on the chart). Pound has a high chance of trading upwards because all indicators are pointing to a very strong economic recovery.

But before buying, make sure that the MACD line is above zero or is starting to rise from it.

For short positions:

Enter a short position when the quote reaches 1.3864 (red line on the chart), and then take profit at the level of 1.3808. Pound will trade downwards if the UK releases weak economic reports. Pushing the quote below 1.3864 will also result in a much stronger decline in the market.

When selling, make sure that the MACD line is below zero or is starting to move down from it.

What's on the chart:

The thin green line is the key level at which you can place long positions in the GBP/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 GBP/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 decisions based on the current market situation is an inherently losing strategy for an intraday trader.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Jakub Novak,
Analytical expert
InstaForex Group © 2007-2021
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