In forex exchange, EURUSD is the most traded currency pair in the eurozone and in the global market. The relation between the US Dollar and the Euro is considered to be the most liquid currency pair in the forex market. The broad price movement and tight spread of the EUR USD rate provide a continuous source of profitable opportunities.
There are many ways this currency pair can be traded. These are used by beginners and experts both at all skill level. The beginners in forex trading use small position size to balance the risk, whereas the experience forex traders use large position size to exploit the opportunity of currency rate at its high level.
Before indulging into these strategies to trade EUR USD let’s have a look on currency pair.
Being the currency of one of the powerful country and most exchanged currency in import and export the US dollar is the largest revenue and most traded currency in the world.
It is used by all most of the countries. Some are adopted it officially and some use it unofficially.
Euro is the currency for the eurozone or European union adapted by 19 countries. After the US dollar, it is the second most traded and reserve currency in the world.
As the euro and US dollar both are the most powerful currency pair, the money smart forex traders know it is a treasure mine in the forex market.
There are basically three major strategies followed by forex traders to trade in EURUSD exchange.
Below are the best strategies to trade EURUSD in forex
Narrow range Breakout/Breakdown
For any currency trade, the narrow range of forex trading gives the accurate trading signal. It has the main price action trading that is the center of the current session; i.e. high and low which is narrower than last 3 sessions.
The currency pair rise or fall into a notable barrier then it becomes dizzy cause narrow range price bars with less volatility. This narrow phase of quiet time interface gives the entry signal for a breakout and breakdown.
Narrow range trading strategy is considered to be one of the effective strategies for forex trading.
The Pullback- Buy or Sell
A pullback is a moderate stop or a pause in the stock/commodities/currency pricing chart after the continuous uptrend. The pullback is a buying opportunity. They are usually profit-making opportunities.
The EUR/USD currency pair moves in both directions and can carry the price fro mone level to another that generate the momentum. This momentum slows down when the equation of supply and demand changes.
The pullback strategy is the advantages of the countertrend momentum. When latecomers forex trader makes position expecting for losses, the currency pair reverses and moves to the opposite direction.
In the pullback strategy, the trader identifies the major support and resistance levels that end the price oscillation and redeem the starting trend direction. These levels are identified by moving averages and Fibonacci retracement.
The Breakout and The Breakdown
A breakout happens when the price of a security moves below a support area or above a resistance area. Breakout often indicates the chance for the price for a new trend. The downside breakout is known as the breakdown.
The breakout gives the signal to buy and breakdown gives the signal to sell. The currency pair frequently moves back and forth within these breakout and breakdown range. A forex trader should be patience in these phases which brings the low-risk trade entry when support level and resistance level fell into breakdowns.
On Final Note
In EUR USD exchange trading it is suggested to use three moving averages crossover for the prize analysis 8,20 and 90 days. These crossovers give the major price trend and change in price trend in the chart. It helps forex traders to make wise entry/stop decision in making a trade.
There are many strategies for the EUR USD rate and to be a successful forex trader. You can use the above strategies for trading EURUSD with proper knowledge and practice.