Trading plan for EUR/USD on July 3. Simple tips for beginners

EUR/USD showed ridiculous movements on Tuesday. European Central Bank President Christine Lagarde and Federal Reserve Chairman Jerome Powell delivered speeches, while reports on Eurozone inflation and job openings in the US were published. The market responded to all these events with a volatility of around 40 pips. However, this is no longer surprising. The market has shown such volatility for over three months now. It's a small relief that the euro, although at a gradual pace, is still declining.

In recent weeks, the pair has been trading sideways. We don't even need to highlight the sideways movement. The Eurozone inflation data did not provoke any reaction, even though the indicator slowed down. The JOLTs report showed a higher-than-expected value, which didn't fuel market activity as well. When we say "no reaction," we mean "no significant reaction." Perhaps there was a reaction of 10 pips, but who cares about that?

The pair formed two signals on the 5-minute timeframe. Once again, beginners can see firsthand that regardless of trading signals, they can't gain much profit as the pair lacked movement. Yesterday, the pair initially consolidated below the area of 1.0726-1.0733 and then climbed above it. But in both cases the price couldn't even move 10 pips in the intended direction.

On the hourly chart, EUR/USD is forming a local downward trend, but the pair is currently going through a correction and trading within a horizontal channel. We still expect the pair to drop to levels like 1.0600, 1.0450, and even 1.0200. However, it's important to understand that the price will not reach these targets immediately; they are medium-term objectives. For instance, the pair could go through a corrective phase for another week, as the price has not breached the level of 1.0678 even after three attempts. Nonetheless, we don't see any reasons for the euro to rise in the medium-term.

On Wednesday, traders can expect the euro to fall to the 1.0678 level if the price breaks through the 1.0726-1.0733 area. However, it's important to remember that EUR/USD may show erratic sideways movements.

The key levels on the 5M chart 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, and 1.0971-1.0981. A secondary report on the euro area Services PMI will be released on Wednesday. The main item on today's agenda will be the US ISM services index. The US will also post the ADP private sector employment report, and the minutes of the latest FOMC meeting. The focus is on the ISM and ADP reports.

1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.

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

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.

4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.

5) On the 30-minute timeframe, 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 lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.

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, depicting the current market trend and indicating the preferable 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 signal source.

Significant 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 sound money management is the cornerstone of sustained trading success.