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The price test at 1.1358 coincided with the moment when the MACD indicator was just starting to move upwards from the zero mark, confirming the correct entry point for buying euros. As a result, the pair rose by 30 pips.
The rapid rise in inflation recorded in May has become a concerning signal for the Federal Reserve, which has been battling rising prices for quite some time. Although the core personal consumption expenditures price index, a key inflation indicator for the Fed, matched analysts' forecasts, its 4.1 percent year-on-year rate remains a multi-year peak. This prolonged inflation spiral raises concerns about the sustainability of economic growth and the potential measures the central bank may take to stabilize prices.
The GDP data for the first quarter, showing stronger-than-expected growth of 2.1 percent, creates a mixed picture. On the one hand, it indicates a healthy state of the U.S. economy, its ability to withstand external shocks, and its ability to sustain consumer demand. On the other hand, sustained economic growth could fuel inflationary pressure, prompting the Fed to raise rates in the second half of the year.
Today, only Bundesbank President Joachim Nagel's speech is expected in the first half of the day. His comments could significantly influence the euro's exchange rate, as they often contain signals regarding the future monetary policy of the European Central Bank. Traders will be closely analyzing every statement for hints of further tightening or possibly more stringent monetary policy.
Regarding the intraday strategy, I will focus more on implementing scenarios #1 and #2.
Scenario #1: Today, the euro can be bought when the price reaches around 1.1391 (green line on the chart), with the aim of rising to 1.1416. At point 1.1416, I plan to exit the market and also sell euros back, anticipating a move of 30-35 pips from the entry point. Expectations of a euro rise can only be based on strong comments from Nagel. Important! Before buying, make sure the MACD indicator is above the zero mark and is just starting to rise from it.
Scenario #2: I also plan to buy euros today if there are two consecutive tests of 1.1364 while the MACD indicator is in the oversold territory. This will limit the pair's downward potential and lead to an upward market reversal. A rise to the opposite levels of 1.1391 and 1.1416 can be expected.
Scenario #1: I plan to sell euros once the price reaches 1.1364 (the red line on the chart). The target will be 1.1335, where I intend to exit the market and immediately buy back (anticipating a move of 20-25 pips in the opposite direction from that level). Pressure on the pair today will return only if the ECB representative adopts a dovish stance. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just starting to decline from it.
Scenario #2: I also plan to sell euros today if there are two consecutive tests of 1.1391 while the MACD indicator is in the overbought region. This will limit the pair's upward potential and lead to a downward market reversal. A decrease to the opposite levels of 1.1364 and 1.1335 can be anticipated.
Thin green line – entry price for buying the trading instrument;
Thick green line – presumed price level for placing Take Profit or manually securing profits, as further growth above this level is unlikely;
Thin red line – entry price for selling the trading instrument;
Thick red line – presumed price level for placing Take Profit or manually securing profits, as further decline below this level is unlikely;
MACD Indicator. When entering the market, it is important to consider the overbought and oversold zones.
Important: Beginner traders in the Forex market must be very cautious when making entry decisions. Before major fundamental reports are released, it is best to stay out of the market to avoid being caught in sharp 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 are not using money management and are trading large volumes.
And remember, for successful trading, you need a clear trading plan similar to the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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