Analysis and trading recommendations for the EUR/USD and GBP/USD pairs on February 3

Analysis of transactions in the EUR / USD pair

Two signals appeared in EUR / USD yesterday. The first one is to sell at 1.2072, however, it had to be ignored because during that time, the MACD line was in the oversold zone.

Then, near the US session, EUR / USD tested 1.2072 again. By this time, the MACD line was in the negative zone already, so short positions resulted in more than 40 pips downward movement.

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Trading recommendations for February 3

Although EU's 4th quarter GDP turned out much better than expected, the market still behaved the opposite and continued the decline that started last Monday.

Today, quite a number of economic reports both from Europe and the US will be published, and they will certainly influence market dynamics and sentiment. In particular, these will be data on EU's services sectors, US non-manufacturing index and labor market.

For long positions:

Buy the euro when the quote reaches 1.2055 (green line on the chart), and then take profit around the level of 1.2120. EUR / USD will rally if there is good economic data from the EU.

But keep in mind that before buying, the MACD line should be above zero and is starting to rise from it.

For short positions:

Sell the euro after the quote reaches 1.2026 (red line on the chart), and then take profit at the level of 1.1966. EUR / USD will trade downwards if there is bad economic data from the EU.

Of course, before selling, it is important to make sure that the MACD line is below zero and is starting to move down from it.

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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.

Analysis of transactions in the GBP / USD pair

Three signals appeared in GBP / USD yesterday. The first one is to sell at 1.3678, but it had to be ignored since during that time, the MACD line has been in the negative zone for quite some time already and has not pulled back even once, which limited the pair's downward potential.

Meanwhile, the second signal was to buy at 1.3703. However, it also had to be ignored because by that time, the MACD line was in the overbought area.

The only correct signal was to sell at 1.3678, during which the MACD line has just moved into the negative zone, thereby resulting in a sharp drop, by about 50 pips.

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Trading recommendations for February 3

Reports on UK services sector and composite PMI may help pound bulls bring GBP / USD back to yearly highs, provided that the data turns out very good or at least better than expected. But if the figures are worse than the forecasts, another wave of decline is possible, especially in the context of tough lockdown in the UK.

For long positions:

Buy the pound when the quote reaches 1.3682 (green line on the chart), and then take profit at the level of 1.3741 (thicker green line on the chart). The bull market will resume if the data on PMI turns out very good.

Keep in mind that before buying, make sure that the MACD line is above zero and is starting to rise from it.

For short positions:

Sell the pound after the quote reaches 1.3654 (red line on the chart), and then take profit at the level of 1.3596. GBP / USD will collapse even lower if the quote consolidates below the lower border of the sideways channel. Bad economic reports will help achieve this scenario.

But keep in mind that before selling, make sure that the MACD line is below zero and is starting to move down from it.

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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 GBP/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 GBP/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.

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

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