Trade review and tips for trading the European currency

The price test at 1.1143 occurred as the MACD indicator began moving down from the zero line, confirming a valid entry point to sell the euro. As a result, the pair fell about 20 pips.

The euro took a hit from the dollar yesterday, and the cause was not in Europe. The U.S. Conference Board consumer-confidence index for October jumped to 91.7 versus an 80.5 forecast and 84.2 in September — one of the biggest surprises in recent times. The current-situation subindex rose 8.6 points to 120.4, meaning Americans became noticeably more positive about the jobs market and the economy.

Today the euro again lacks support from European data. In the first half of the day, the only release is Germany's GfK consumer-confidence index, which looks one month ahead. Consensus is -30.1 after -30.6, and that small change is unlikely to alter the picture. By comparison, German household sentiment remains very weak, a view reinforced by high energy prices and 3.3% inflation in September.

With the week's main events looming, the euro is unlikely to rally strongly this morning. The Federal Reserve decision and Kevin Warsh's remarks tonight could set the dollar's direction, and tomorrow the European Central Bank meeting — expected to pause while stressing high inflation — will matter for the euro. With such major events ahead, I believe traders will avoid opening large euro positions.

For intraday strategy, I will mainly rely on Scenarios No. 1 and No. 2.

Scenarios for Buying

Scenario No. 1: Today, it is possible to buy the euro around 1.1125 (green line on the chart), targeting a rise to 1.1142. At 1.1142, I plan to exit the market and sell the euro in the opposite direction, expecting a 30–35-pip move from the entry point. You can count on the euro rising today, but only as part of a small correction. Important! Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also intend to buy the euro today if 1.1113 is tested twice in a row while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise to the opposite levels of 1.1125 and 1.1142.

Scenarios for Selling

Scenario No. 1: I plan to sell the euro after it reaches 1.1113 (red line on the chart). The target is 1.1089, where I plan to exit the market and immediately buy in the opposite direction (expecting a 20–25-pip move from that level). Pressure on the pair will return if data is weak. Important! Before selling, make sure the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also intend to sell the euro today in the event of two consecutive tests of 1.1125 when the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a downward reversal. One can expect a decline to the opposite levels of 1.1113 and 1.1089.

What's on the chart:

Thin green line — entry price where you can buy the instrument.

Thick green line — approximate price where you can place Take Profit or manually lock in profits, because further upside above this level is unlikely.

Thin red line — entry price where you can sell the instrument.

Thick red line — approximate price where you can place Take Profit or manually lock in profits, because further downside below this level is unlikely.

MACD indicator. When entering the market, it's important to consider overbought and oversold zones.

Important. Novice Forex traders must be very cautious when deciding to enter the market. It is best to stay out before major fundamental reports to avoid getting caught in sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes.

Remember: successful trading requires a clear trading plan, like the example above. Spontaneous trade decisions based solely on the immediate market situation are, by definition, a losing strategy for an intraday trader.