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18.01.2023 09:23 AM
Analysis and trading tips for EUR/USD on January 18

Analysis of transactions and tips for trading EUR/USD

Euro tested 1.0839 when the MACD line was far from zero, so the upside potential was limited. Sometime later, it tested 1.0807; however, the MACD line was still far from zero, so there was also no downside potential. No other signals appeared for the rest of the day.

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Germany's inflation data for December was in line with forecasts, while the ZEW business sentiment indices for both Germany and the Eurozone exceeded expectations. However, markets did not react at all, which was surprising. Euro's fall in the afternoon was very decisive.

Today, the Eurozone consumer price index report for December will come out, which is expected to remain at a high level and will probably coincide with the forecasts. If that happens, the ECB will be forced to take hawkish tones in their statements, which could support euro. An equally important retail trade report is also due in the afternoon in which if it shows a sharp rise, dollar will rise, thus prompting a decline in EUR/USD. PPI and industrial output in the US may also help USD advance, as will the speeches of some FOMC members.

For long positions:

Buy euro when the quote reaches 1.0815 (green line on the chart) and take profit at the price of 1.0861. Growth will occur if Eurozone statistics exceed expectations. However, before buying, make sure that the MACD line is above zero or is starting to rise from it. Euro can also be bought at 1.0781, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0815 and 1.0861.

For short positions:

Sell euro when the quote reaches 1.0781 (red line on the chart) and take profit at the price of 1.0730. Pressure will return if the upcoming reports are weaker than expected and if the attempt to consolidate above 1.0815 fails. But 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 1.0815, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.0781 and 1.0730.

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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.

Jakub Novak,
Especialista em análise na InstaForex
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