Analysis of macroeconomic reports:
There are fewer macroeconomic events on Friday. We will only highlight the U.S. reports on the Producer Price Index and the Consumer Sentiment Index from the University of Michigan. In any case, as practice has shown this week, the market ignores most of the European and British data, but remains biased on U.S. reports. For instance, the market responds to reports that do not support the dollar with double diligence, while it almost ignores certain reports that could potentially lift the dollar. Therefore, today's reports may easily trigger the dollar's decline if their values turn out to be below forecasts. If the values are neutral or better than forecasts, we will expect a bearish correction from both currency pairs.
Analysis of fundamental events:
There is absolutely nothing to highlight from the fundamental events. This week, there were various speeches from representatives of the European Central Bank, the Federal Reserve, and the Bank of England. However, we can't say that any of them significantly influenced the fate of the dollar, euro, or pound. The market ignored Fed Chief Jerome Powell's speeches in Congress, so we don't think it will be impressed by the speeches of Huw Pill or Michelle Bowman.
General conclusions:
No influential events on Friday, but the U.S. reports could provoke a small market reaction. Since the dollar doesn't need much to fall right now, slightly weaker values (than forecasted) could push both currency pairs to rise. The trading instruments may experience low volatility. Yesterday, market participants were focused on the U.S. inflation report, but no events of such scale are scheduled for today.
Basic rules of a trading system:
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.
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 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.
