EUR/USD: Tips for Beginner Traders on January 12th (US Session)

[Ben Graham]

Trade review and tips for trading the European currency

The test of the 1.1677 price level occurred at a moment when the MACD indicator had already moved significantly above the zero line, which limited the pair's further upward potential. For this reason, I did not buy the euro.

Amid reports of the US Department of Justice launching criminal proceedings against Federal Reserve Chairman Jerome Powell, market participants intensified selling of the US dollar. The sharp increase in US dollar selling provided substantial support to the euro. Economists are expressing serious concerns about the possible consequences of the unfolding crisis. Not only the reputation of the Federal Reserve is under threat, but also confidence in the US financial system as a whole. There is an opinion that criminal prosecution of the central bank head could call into question the principles of democratic economic governance and trigger a wave of instability in global markets. At the same time, there is no need to draw hasty conclusions: a similar situation involving Powell occurred last year and ended without consequences.

Since no macroeconomic data releases are expected in the second half of the day, traders' attention will remain focused on the news already published. The situation may change slightly after a speech by FOMC member Thomas Barkin, but no significant shifts are expected.

As for the intraday strategy, I will focus primarily on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, buying the euro is possible if the price reaches the 1.1696 level (green line on the chart), with a growth target at 1.1729. At the 1.1729 level, I plan to exit the market and also sell the euro in the opposite direction, aiming for a move of 30–35 points from the entry point. A strong rise in the euro can be expected after dovish comments from Fed representatives.Important: Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the euro today in the case of two consecutive tests of the 1.1674 level at a time when the MACD indicator is in oversold territory. This will limit the pair's downward potential and lead to a reversal upward. Growth toward the opposite levels of 1.1696 and 1.1729 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the euro after the price reaches the 1.1674 level (red line on the chart). The target will be the 1.1641 level, where I intend to exit the market and immediately buy in the opposite direction (aiming for a move of 20–25 points in the opposite direction from that level). Pressure on the pair is unlikely to return today.Important: Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell the euro today in the case of two consecutive tests of the 1.1696 level at a time when the MACD indicator is in overbought territory. This will limit the pair's upward potential and lead to a reversal downward. A decline toward the opposite levels of 1.1674 and 1.1641 can be expected.

What's on the chart:

• Thin green line – entry price at which the trading instrument can be bought;
• Thick green line – estimated price at which Take Profit can be set or profits can be taken manually, as further growth above this level is unlikely;
• Thin red line – entry price at which the trading instrument can be sold;
• Thick red line – estimated price at which Take Profit can be set or profits can be taken manually, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to be guided by overbought and oversold zones.

Important. Beginner Forex traders should be extremely cautious when making market entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop-loss orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Spontaneous trading decisions based on the current market situation are an inherently losing strategy for an intraday trader.

The material has been provided by InstaForex Company - www.instaforex.com