Analysis of macroeconomic reports:
There are hardly any macroeconomic events on Wednesday, and none of them hold any importance. What can traders pay attention to? Perhaps the inflation data for Germany? This will be the second estimate of the report for October, which is unlikely to differ from the first... Retail sales in the European Union? This is, of course, an interesting report, but not to the extent that the market would focus and trade based on it throughout the day. There are no other significant reports... Therefore, most likely, we should brace ourselves for another low-volatility day. Both currency pairs may undergo a minor correction against the recent downward correction.
Analysis of fundamental events:
Among the fundamental events on Wednesday, we can highlight the speeches of the Federal Reserve officials. This includes Cook, Barr, Jefferson, and Williams. On Tuesday, Neel Kashkari made a series of interesting statements that could support the dollar. In particular, he stated a preference for raising rates slightly more than making a mistake by raising them too weakly. As a result, the Fed's stance is gradually shifting towards a more hawkish one. However, of course, market participants will keep an eye on Fed Chair Jerome Powell's speech in the latter half of the day. Powell may comment on the recent reports on labor market, unemployment, business activity, and provide insight into future steps regarding monetary policy.
General conclusion:
On Wednesday, Powell's speech is the only important event. We don't expect too much from this, but we acknowledge that the Fed chair may make several important statements. These statements can help us understand what to expect from the Fed at upcoming meetings and, consequently, influence the dollar's exchange rate.
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.
