EUR/USD: Simple Trading Tips for Beginner Traders on January 29. Analysis of Yesterday's Forex Trades

[Ben Graham]

Analysis of Trades and Trading Tips for the Euro

The test of the price at 1.1944 coincided with the moment when the MACD indicator was just starting to move down from the zero mark, confirming the correct entry point for selling the euro. As a result, the pair fell by more than 30 pips.

Yesterday, the US Central Bank decided to maintain the key interest rate at the previous level of 3.75%, indicating that it does not plan to revise the current monetary policy in the near future. This step, as predicted by most experts, did not provoke a strong reaction in the markets, though it did lead to a slight appreciation of the dollar against other major currencies. In the accompanying statement, Fed representatives emphasized that inflationary processes remain under observation, as does the labor market growth, which is characterized as moderate but stable. Future dynamics of interest rates will be determined by incoming economic data, including inflation, employment, and GDP growth data.

Today, in the first half of the day, data on private sector lending in the Eurozone and changes in the M3 money supply aggregate are expected. These indicators are typically considered leading indicators of regional economic activity. An increase in private sector lending indicates rising demand for financing from businesses and households, which can stimulate investment and consumer spending. In turn, growth in the M3 money supply, which includes cash in circulation, demand deposits, and other liquid assets, signals an expansion of the money supply and potential inflationary pressures. Good figures could lead to another rise in the euro against the US dollar.

Regarding the intraday strategy, I will rely more on implementing Scenarios #1 and #2.

Buying Scenarios

Scenario #1: Today, I will buy euros if the price reaches around 1.1999 (green line on the chart), with a target for growth to 1.2042. At point 1.2042, I plan to exit the market and sell euros back, expecting a move of 30-35 pips from the entry point. One can expect the euro to continue its bullish trend in the market. Important! Before buying, ensure the MACD indicator is above the zero mark and just beginning an upward move.

Scenario #2: I also intend to buy euros today in case of two consecutive tests of the price at 1.1974 when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal in the market. One can expect a rise to the opposite levels of 1.1999 and 1.2042.

Selling Scenarios

Scenario #1: I plan to sell euros once the level of 1.1974 (red line on the chart) is reached. The target will be 1.1933, where I plan to exit the market and buy immediately in the opposite direction (expecting a move of 20-25 pips back from that level). Strong pressure on the pair is unlikely to return today. Important! Before selling, make sure the MACD indicator is below the zero mark and just beginning its downward movement.

Scenario #2: I also plan to sell euros today if the price tests 1.1999 twice in a row while the MACD indicator is in the overbought area. This will limit the upward potential of the pair and lead to a reversal of the market downwards. One can expect a decrease to the opposite levels of 1.1974 and 1.1933.

What's on the Chart:

The thin green line represents the entry price at which one can buy the trading instrument;

The thick green line represents the approximate price where one can set Take Profit or secure profits, as further growth above this level is unlikely;

The thin red line represents the entry price at which one can sell the trading instrument;

The thick red line represents the approximate price where one can set Take Profit or secure profits, as further decline below this level is unlikely;

The MACD indicator: when entering the market, it is important to consider overbought and oversold zones.

Important: Beginner traders in the Forex market should be very careful when making entry decisions. It is best to stay out of the market before important fundamental reports are released to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember, for successful trading, it is essential to have a clear trading plan, like the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.

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