EUR/USD is the most popular currency pair in the forex world and represents the highest trading volume on any given day. This makes it the most liquid currency pair for market participants. In this article, we are going to explore how to trade the EUR/USD pairs and make consistent profits on a regular basis.
Things to know before you start trading EUR/USD pair
You must have done enough practice on the demo account before putting the real money on the market. Making money in forex is very easy but you have to follow a certain set of rules. Always use a 1:2 or 1:3 or above risk-to-reward ratio. Exit the position immediately when the stop loss is hit. Close the trading terminal when two trades went wrong on any particular day.
Trading strategies using technical analysis
1 – Break out trading strategy
The major currency pairs often trade back and forth within the major psychological support and resistance zone. Whenever the price breaks the important resistant zone, the pair generally rally for more than 100 pips in the Upward direction. Similarly, if the price breaks any key support region, investors panic and this leads to a major correction.
one can use a 1:2 risk-to-reward ratio while taking the position using this strategy. Exit when the stop loss is hit or continue in the trade if you are right and trail the stop loss accordingly.
2 – Moving average crossover trading strategy
Many traders prefer to trade the moving average price instead of the spot price to avoid noise in the market. For example, we will consider the 21-period exponential moving average and 50-period exponential moving average. This trading strategy is particularly suitable on the 15-minute chart.
Open the EUR/USD 15-minute chart and put these exponential moving averages on the chart. If the 21-period exponential moving average crosses the 50-period exponential moving average and trades below it, this indicates the bearish sentiment in the market and the prices are likely to trade lower. Similarly, If the 21-period exponential moving average crosses the 50-period exponential moving average and trades above it, this suggests that bullish sentiment is strong and the prices are likely to trade higher.
The major economic events which affect the EUR/USD pair
Gross Domestic Product for every quarter
The Gross Domestic Product data measures the total goods and services produced by the eurozone over a period of time. Euro rises if the data exceeds the market expectation and vice versa.
Retail Sales Data Report
The periodic retail sales data reported by https://ec.europa.eu/eurostat provides insight into Sales of the eurozone. this is directly proportional to consumer spending. A higher reading is bullish for the euro and a comparatively lower reading is bearish for Euro. The next retail sales data will be published on Tuesday, November 8th, 2022.
Harmonized Index of Consumer Prices (YoY)
This is the calculation of consumer prices which is published by the statistical office of the European Union. This data is used by the governing council of the European Union to form monetary policies.
One can mix the technical analysis and economic events and take advantage of short-term or medium-term price movement to make money while trading the EUR/USD pair. Even small but regular profits coupled with a high win rate can generate a good return on investment.