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20.03.2023 08:50 AM
Analysis and trading tips for EUR/USD on March 20

Analysis of transactions and tips for trading EUR/USD

When the pair tested 1.0624, the MACD line was already far from zero, so the downside potential was limited. Sometime later, there was another test, but this time the market signal was to buy, which resulted in a price increase of over 25 pips. No other signals appeared for the rest of the day.

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CPI data in the Euro area strengthened investor confidence that the ECB will continue raising rates, not abandoning its hawkish stance. As such, many expect that after the release of Germany's producer price index and eurozone trade balance reports, ECB President Christine Lagarde will give a speech, in which she will reiterate the need to further fight inflation. That will prompt another rise in euro. In the afternoon, there are no important statistics scheduled to be released, so a reversal could occur.

For long positions:

Buy euro when the quote reaches 1.0681 (green line on the chart) and take profit at the price of 1.0736. Further growth will continue the bull market; however, make sure that when buying, the MACD line is above zero or is starting to rise from it. Euro can also be bought at 1.0636, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0681 and 1.0736.

For short positions:

Sell euro when the quote reaches 1.0636 (red line on the chart) and take profit at the price of 1.0580. Pressure will return if ECB chief Christine Lagarde withdraws from her tough stance on monetary policy. However, when selling, make sure that the MACD line is under zero or is starting to move down from it. Euro can also be sold at 1.0681, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0636 and 1.0580.

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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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