Analysis of macroeconomic reports:
There are few macroeconomic events on Friday, but almost all of them are quite important. The United States will release data on the NonFarm Payrolls, Unemployment, and Wages. The last one can be considered secondary of importance, but the first two will definitely be in the spotlight. These reports can trigger significant market response and this will depend on how much the actual values deviate from the forecasts. However, even in the absence of such deviations, these reports are still capable of fueling volatility during the US trading session. Last month, the unemployment rate rose to 3.8%, and the number of NonFarm Payrolls was 187,000, which was below the weighted average of 200,000. The market expects an even lower value for NonFarm Payrolls, but forecasts show an improvement in the unemployment rate by 0.1%.
Analysis of fundamental events:
There is absolutely nothing scheduled in the economic calendar. But even if there were any planned speeches or events, they would still be overshadowed by the US reports. In any case, we don't expect to receive any important information from the European Central Bank, Federal Reserve or the Bank of England at the moment.
General conclusion:
On Friday, market participants will keep an eye on the US reports. The reaction can be absolutely unpredictable, and it could go in any direction regardless of the actual data. It is impossible to predict this in advance. Therefore, it's advisable to react to the situation or, alternatively, avoid risking and exit the market before the release of such reports. Another option is to set a stop-loss to break-even if possible.
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, post 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 trend line 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.
Beginning traders 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.
