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22.07.202400:41 Forex Analysis & Reviews: Trading plan for EUR/USD on July 22. Simple tips for beginners

Analyzing Friday's trades:

EUR/USD on 1H chart

Exchange Rates 22.07.2024 analysis

EUR/USD maintained a bearish bias on Friday, but volatility was only 25 pips. There is nothing to analyze because price movements were absent on the last trading day of the week. There were no significant events or reports in the Eurozone or the United States that day. Thus, the market had nothing to react to. However, the main reason for low volatility is not the absence of a fundamental or macroeconomic background. In the past three weeks alone, many important reports have been published in America, and the European Central Bank meeting took place on Thursday, yet volatility still averages 40-45 pips. Therefore, the market is not inclined to trade actively at this time. Any signal, even in the 5-minute timeframe, may take 2-3 days to materialize. From a technical perspective, the pair has settled below the ascending channel, but a drop to the 1.0804 level could take another week or two. We still expect the euro to decline, but again, the pair has shown very weak movements in recent months.

EUR/USD on 5M chart

Exchange Rates 22.07.2024 analysis

On the 5-minute timeframe, it is visible how the pair traded on Friday. It moved along the 1.0888-1.0896 area almost the entire day, indicating a low-volatility flat. How can one trade with such movements? Twice, the price barely managed to move away from this area, but by then, it was already clear that we would not see any interesting movements.

Trading tips on Monday:

On the hourly timeframe, EUR/USD settled below the ascending channel, allowing it to start a new local downward trend. The euro has again fully factored in all the bullish factors, so a significant correction is needed. However, the nature of the movements is best seen in the 24-hour timeframe. It is the same flat range between 1.0650 and 1.1000.

On Monday, novice traders can again try trading from the 1.0888-1.0896 area. There will be no significant events in the US or the Eurozone, so strong movements are not expected.

The key levels to consider on the 5M timeframe are 1.0483, 1.0526, 1.0568, 1.0611, 1.0678, 1.0726-1.0733, 1.0797-1.0804, 1.0838-1.0856, 1.0888-1.0896, 1.0940, 1.0971-1.0981. No significant events or reports are scheduled for Monday in the Eurozone or the US. Therefore, we will likely see sluggish movements and low volatility again.

Basic rules of a trading system:

1) The strength of a signal is determined by the time it took for the signal to form (bounce or level breakthrough). The shorter the time required, the stronger the signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be ignored.

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.

4) Trades should be opened between the start of the European session and mid-way through the U.S. session. All trades must be closed manually after this period.

5) In the hourly time frame, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.

6) If two levels are too close to each other (from 5 to 20 pips), they should be considered as a support or resistance zone.

7) After moving 15 pips in the intended direction, the Stop Loss should be set to break-even.

What the charts show:

Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.

Red lines represent channels or trend lines that depict the current trend and indicate the preferred trading direction.

The MACD (14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a source of signals.

Important speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.

Beginners should always remember that not every trade will yield profit. Establishing a clear strategy, coupled with effective money management, is key to long-term success in trading.

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

Paolo Greco,
Analytical expert of InstaSpot
© 2007-2024
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