Trading plan for EUR/USD on July 21. Analysis and simple tips for beginners
July 20, 2023 9:22 pm
Analysis of Thursday trades:
EUR/USD 30M chart
On the fourth trading day of the week, the EUR/USD pair finally experienced a noticeable decline. We had noted that on Monday and Tuesday, the European currency remained unaffected by any corrections despite the lack of fundamental and macroeconomic factors. However, a strong correction began today, even though there were only a few significant events. To be precise, only one report managed to capture the market participants’ interest. The number of jobless benefit claims in the US amounted to 228,000, slightly lower than the forecasted values. Consequently, the dollar’s rise seems justified when considering the macroeconomic background. Nevertheless, it has become a common occurrence for the currency pair to disregard reports and events.
From a technical standpoint, the pair’s downward movement is entirely consistent. The extent to which it previously rose now makes any decline appear logical. The euro remains overbought and is expected to drop by several hundred pips at the very least. This week, there isn’t likely to be anything particularly exciting, so the correction is very likely to continue.
EUR/USD 5M chart
On Thursday, there were only two trading signals on the 5-minute time frame. Unfortunately, the start of the downward trend was missed, but once the level of 1.1184 was breached, it was an opportunity to open a short position. Subsequently, the pair declined below the level of 1.1132 and has remained there up to the moment of writing. Therefore, the short trade should have been manually closed, resulting in a profit of about 40 pips. Though not significant compared to today’s volatility, it was still a decent gain.
Trading plan for Friday:
On the 30-minute time frame, the pair finally started declining. The expectation is that this downtrend will continue, regardless of any fundamental background or central bank decisions next week. Friday should also be a bearish day. The new descending trend line is currently supporting sellers. On the 5-minute time frame, the levels to watch tomorrow are 1.0901, 1.0932, 1.0971-1.0977, 1.1038, 1.1091, 1.1132, 1.1184, 1.1241, 1.1279-1.1292, 1.1330, and 1.1367. If the price moves 15 pips in the right direction, one can set a Stop Loss at breakeven. On Friday, there are no significant events or publications scheduled in either the United States or the eurozone. There will be nothing to react to and no need to react. Volatility may decrease, but the pair is expected to continue its downward movement.
Basic rules of a trading system:
1) The signal strength depends on the time period of its formation (a rebound or a break of a key level). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
How to read charts:
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines are channels or trend lines that display the current trend and show which direction is better to trade.
The MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginning traders should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
The material has been provided by InstaForex Company – www.instaforex.com
Analysis of Thursday trades:
EUR/USD 30M chart
On the fourth trading day of the week, the EUR/USD pair finally experienced a noticeable decline. We had noted that on Monday and Tuesday, the European currency remained unaffected by any corrections despite the lack of fundamental and macroeconomic factors. However, a strong correction began today, even though there were only a few significant events. To be precise, only one report managed to capture the market participants’ interest. The number of jobless benefit claims in the US amounted to 228,000, slightly lower than the forecasted values. Consequently, the dollar’s rise seems justified when considering the macroeconomic background. Nevertheless, it has become a common occurrence for the currency pair to disregard reports and events.
From a technical standpoint, the pair’s downward movement is entirely consistent. The extent to which it previously rose now makes any decline appear logical. The euro remains overbought and is expected to drop by several hundred pips at the very least. This week, there isn’t likely to be anything particularly exciting, so the correction is very likely to continue.
EUR/USD 5M chart
On Thursday, there were only two trading signals on the 5-minute time frame. Unfortunately, the start of the downward trend was missed, but once the level of 1.1184 was breached, it was an opportunity to open a short position. Subsequently, the pair declined below the level of 1.1132 and has remained there up to the moment of writing. Therefore, the short trade should have been manually closed, resulting in a profit of about 40 pips. Though not significant compared to today’s volatility, it was still a decent gain.
Trading plan for Friday:
On the 30-minute time frame, the pair finally started declining. The expectation is that this downtrend will continue, regardless of any fundamental background or central bank decisions next week. Friday should also be a bearish day. The new descending trend line is currently supporting sellers. On the 5-minute time frame, the levels to watch tomorrow are 1.0901, 1.0932, 1.0971-1.0977, 1.1038, 1.1091, 1.1132, 1.1184, 1.1241, 1.1279-1.1292, 1.1330, and 1.1367. If the price moves 15 pips in the right direction, one can set a Stop Loss at breakeven. On Friday, there are no significant events or publications scheduled in either the United States or the eurozone. There will be nothing to react to and no need to react. Volatility may decrease, but the pair is expected to continue its downward movement.
Basic rules of a trading system:
1) The signal strength depends on the time period of its formation (a rebound or a break of a key level). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
How to read charts:
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines are channels or trend lines that display the current trend and show which direction is better to trade.
The MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginning traders should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
The material has been provided by InstaForex Company – www.instaforex.com
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