Trade Analysis and Recommendations for the Euro

The test of the 1.0407 level occurred when the MACD indicator had already moved significantly below the zero mark, which limited the downward potential of the pair. For this reason, I did not sell the euro. However, a second test of 1.0407 shortly afterward, with the MACD in the oversold zone, allowed buy scenario #2 to materialize, resulting in a 40-point increase.

According to recent data, manufacturing activity in the eurozone continues to recover. However, despite positive signals, it is premature to speak about a full recovery of the region's industrial sector. Inflation remains persistently high, as do energy prices, which significantly slow down industrial production and the economy. The impact of geopolitical tensions should also not be underestimated. Uncertainty related to the conflict in Ukraine and the energy crisis continues to pressure the eurozone economy. Companies are experiencing supply chain disruptions and rising energy costs, making planning difficult and limiting manufacturing activity.

During the U.S. session, we are expecting data on the ISM Manufacturing Index for February and changes in construction sector spending. These indicators traditionally influence investor sentiment by reflecting the state of the real economy. An increase in the ISM index could signal rising business activity, which may positively impact stock markets. Similarly, higher construction spending suggests infrastructure and real estate investments, often seen as signs of economic growth. However, excessive growth in these indicators could also raise inflation concerns and prompt the Federal Reserve to maintain a cautious stance regarding the pace of future rate cuts.

For my intraday strategy, I will rely more on the implementation of Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the euro at 1.0471 (green line on the chart), aiming for an increase to 1.0515. At 1.0515, I will exit the market and sell the euro in the opposite direction, expecting a 30-35 point pullback. The euro's growth today is possible only if U.S. data is weak. Important! Before buying, make sure that the MACD indicator is above zero and just starting to rise.

Scenario #2: I also plan to buy EUR/USD if the price tests 1.0440 twice while the MACD is in the oversold zone. This setup will limit the pair's downward potential and trigger a bullish reversal, with targets at 1.0471 and 1.0515.

Sell Signal

Scenario #1: I plan to sell the euro after reaching 1.0440 (red line on the chart), aiming for a decline to 1.0396, where I will exit short positions and immediately buy in the opposite direction (expecting a 20-25 point pullback). Selling pressure may return if U.S. data is strong. Important! Before selling, ensure that the MACD indicator is below zero and just starting to decline.

Scenario #2: I will also consider selling EUR/USD if the price tests 1.0471 twice while the MACD is in the overbought zone. This will limit the pair's upward potential and trigger a bearish reversal, with downward targets at 1.0440 and 1.0396.

What's on the Chart?

• Thin green line represents the entry price for buying.
• Thick green line marks the presumed target level for taking profit since further growth beyond this level is unlikely.
• Thin red line represents the entry price for selling.
• Thick red line marks the presumed target level for taking profit since further decline beyond this level is unlikely.
• MACD indicator is essential for determining overbought and oversold zones before entering a trade.

Important Note for Beginner Traders

New traders should exercise caution when making market entry decisions. It is best to stay out of the market before major fundamental reports to avoid getting caught in sharp price swings. If you choose to trade during high-impact news releases, always use stop-loss orders to minimize potential losses. Without proper risk management, you could quickly lose your entire deposit, especially if trading large volumes.

For successful trading, it is crucial to follow a structured trading plan, such as the one outlined above. Making spontaneous trading decisions based on current market conditions is a losing strategy for intraday traders.