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25.03.2022 11:50 AM
Analysis and trading tips for EUR/USD on March 25

Analysis of transactions in the EUR / USD pair

A signal to buy emerged after EUR/USD hit 1.0993. It coincided with the MACD line being in a good area, but surprisingly no increase happened, leading to losses. The second and third test of the level took place at the moment when the MACD line went far enough from zero, so sell-offs happened in the market. The third one even resulted in a 20-pip drop in price. Meanwhile, the fourth prompted another signal to buy, but the indicator being far from zero limited the upside potential of the pair.

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Thursday's economic bulletin from the European Central Bank was ignored, as well as the data on activity in the manufacturing and service sectors of the eurozone countries. This is because it is obvious that the indicators will diverge from preliminary estimates due to the very poor geopolitical situation in the world. The same thing happened with the US data released in the afternoon, even though the figures exceeded forecasts. Nothing happened in EUR/USD because demand for dollar did not return, and trade remained within the side channel.

Reports on business environment in Germany, assessment of current situation and economic expectations will be released today, and it is likely that those will lead to a decline in EUR/USD because all can collapse very seriously. Meanwhile, the volume of lending in the private sector and change in the M3 aggregate of the money supply are unlikely to have any impact on the market, as will the reports on the US real estate market. Most likely, attention will continue to be focused on the development of the geopolitical situation in the world, as well as statements by Fed representatives regarding the future of the US monetary policy.

For long positions:

Buy euro when the quote reaches 1.1039 (green line on the chart) and take profit at the price of 1.1075 (thicker green line on the chart). A rally to new weekly highs is possible if Germany publishes strong data on its economy. But before buying, make sure that the MACD line is above zero or is starting to rise from it. It is also possible to buy at 1.1015, but the MACD line should be in the oversold area as only by that will the market reverse to 1.1039 and 1.1075.

For short positions:

Sell euro when the quote reaches 1.1015 (red line on the chart) and take profit at the price of 1.0969. Pressure is likely to return at any moment because market participants prefer safe assets than risky ones at the moment, especially in anticipation of the Fed's aggressive policy and weak data on the German economy. But before selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro can also be sold at 1.1039, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.1015 and 1.0969.

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

Jakub Novak,
Analytical expert of InstaForex
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