Overview of macroeconomic reports
On Tuesday, a good number of reports are lined up in the EU, the US, and the UK. Germany and the EU will release the ZEW Economic Sentiment indices. These aren't that important, but in case the latest figures significantly deviate from forecasts, they can trigger a 30-point reaction. The UK is set to publish important reports on unemployment benefit claims, unemployment itself, and wages. This "trio" together might cause a substantial movement of the British pound sterling. The US will release its retail sales data, which is a secondary report. In general, each of the aforementioned reports can be ignored, but we still believe that the UK data might have the chance to move the market.
Overview of fundamental events
Among today's fundamental events, the only noteworthy aspect is the speech by Federal Reserve Monetary Committee representative Neel Kashkari. Since we haven't heard opinions from FOMC officials after the inflation report, this might be interesting, even though we don't expect an immediate market reaction. Nonetheless, the more hints there are at further tightening of monetary policy, the more likely it is that the dollar will continue to appreciate in the medium term. However, from our perspective, it should do so without the need for macroeconomics and fundamentals.
Bottom line
On Tuesday, we can look forward to important and interesting events. However, both currency pairs moved quite actively on Monday, when the event calendar was empty. Moreover, they tried to revive the downtrend, which means that traders currently don't need the help of fundamentals and macroeconomics to determine the pairs' direction.
Main rules of the trading system:
- The strength of the signal is calculated by the time it took to form the signal (bounce/drop or overcoming the level). The less time it took, the stronger the signal.
- If two or more trades were opened near a certain level due to false signals, all subsequent signals from this level should be ignored.
- In a flat market, any currency pair can generate a lot of false signals or not generate them at all. But in any case, as soon as the first signs of a flat market are detected, it is better to stop trading.
- Trades are opened in the time interval between the beginning of the European session and the middle of the American one when all trades must be closed manually.
- On the 30-minute timeframe, you can trade based on MACD signals only on the condition of good volatility and provided that a trend is confirmed by the trend line or a trend channel.
- If two levels are located too close to each other (from 5 to 15 points), they should be considered as an area of support or resistance.
Comments on charts
Support and resistance levels are levels that serve as targets when opening long or short positions. Take Profit orders can be placed around them.
Red lines are channels or trend lines that display the current trend and show which direction is preferable for trading now.
The MACD (14,22,3) indicator, both histogram and signal line, is an auxiliary indicator that can also be used as a source of signals.
Important speeches and reports (always found in the news calendar) can significantly influence the movement of a currency pair. Therefore, during their release, it is recommended to trade with utmost caution or to exit the market to avoid a sharp price reversal against the previous movement.
Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and money management is the key to success in trading over a long period of time.
