How to trade the EURUSD pair?

Overview

Out of all currencies in the planet, the EUR/USD pair is probably the most famous currency pair known by traders and non-traders. Given that both currencies are two of the economic world's most powerful currencies and represent the largest trading blocs in the world, they tend to be iconic in some ways. Also, the pair is a highly liquid currency pair and traders also love this pair due to its low spread level. (Bid + Ask/2).

There are some quite some different patterns which are connected to the EUR/USD. On the off chance that brokers are fruitful in getting an exhaustive grip on different business sector situations and get their essentials cleared in regards to propensity of this pair in different situations; they will have the capacity to comprehend and break down the business sector with much better exactness.

For instance, one can relate EUR/USD with one characteristic which is more than evident such a large number of times. That, the pair remains by Support Level & Resistance Level and also having the capacity to discover some great market entries and exits. At the point when these levels are obsolete or broken, the broker and the business can expect new ideal roads for some great trading to support them.

 

Chart Monitoring

Another technique might be the constant monitoring of the pair on various charts, be it spread or other types of calculations. A currency trader should often watch his chart and spot overbuying and overselling. This is one of the most effective ways on finding buying and selling opportunities. While reaching the pivot point or the reversal, the trader will then be able to see if the market is worth trading. One effective and easy indicator to find that is the Parabolic SAR, which is explained on our website.

 

Cross related assets

Moreover, another technique might be that of the Asset Correlation technique, which is widely used across the globe by many professional traders. It is a way of assessing the value of an asset, by monitoring the value of another one. For instance recently, the value of the EUR/USD pair has been positively linked to U.S Indices such as the NASDAQ and the Dow Jones Industrial Average. This means that, whenever U.S Indices rise, the EUR/USD pair will tend to follow the bullish trend. However, this will not last forever and might change over time. On the other side, some currencies are directly linked to commodities; a perfect example might be that of Gold and its inverse correlation with the dollar. This means that whenever the dollar rises, the value of Gold on the NYMEX will fall and vice versa. Read more USD correlations in our Trader's Corner.

Following the correlation technique, it would be good to note that EUR/USD pair is really one currency against another one. The first currency in this pair is the EUR, which can also be called the "Base Currency" and the dollar in this case will be the "Quoted Currency". That is, if the Euro increase in value and given it is the base currency, it will eventually push the pair up the chart. On the other hand however, if the Euro is weak and the greenback is strong on the chart, it will push the pair down. Following this logic, there might be several combinations to forecast the market.

Trading on fundamentals

Finally, the most important and easiest way to trade this pair is fundamentals. This is the basic and evergreen method of trading any currency pairs on the market. Trading on strong fundamentals might really bring you in the money on a binary options platform. Fundamentals are the data published by various countries across the globe, which determines their specific currencies. For instance, to trade the EUR/USD pair, you would have to constantly monitor fundamentals. For example, if the Eurozone publishes a highly positive Consumer Price Index (CPI) data, the Euro's value will tend to go up and therefore push the EUR/USD pair to the bulls on the chart. However, if data such as the Non-Farm Payrolls released in the United States proves to be high, the dollar might easily overpower the EUR, this pushing the chart to the bulls.

To know more about fundamentals, check out our Daily Market Review on our platform and also our trader's corner for our economic forecasts about the market.

Warren Tancredi By: Warren Tancredi
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