Analysis of macroeconomic reports:
Several macroeconomic events are scheduled for Thursday, and novice traders should pay attention to them. Half of the reports have already been published, so let's analyze them. The report on inflation in the European Union is straightforward. The consumer price index fell more than expected, reaching 2.4% in November. Thus, the ECB's target inflation level is about to be reached, and consequently, there is no reason for the regulator to raise the key rate. Therefore, the decline in the euro and the pound after this report is entirely justified. Also, today, the report on retail sales in Germany was released, which did not interest the market at all, although its value exceeded the forecast.
Now, American reports remain. Today, the Personal Consumption Expenditures Price Index, personal income and spending of Americans, and initial jobless claims will be published. None of the reports mentioned above will significantly impact the movement of both pairs, but a minimal reaction is still possible.
Analysis of fundamental events:
From Thursday's fundamental events, we can highlight the speech of Christine Lagarde, who has spoken at least three times in the last one and a half weeks and has not reported anything important. However, after today's inflation report, the tone of her rhetoric may begin to shift towards the "dovish" side. Thus, the euro may and should come under even greater pressure. Recall that we expect a stronger decline from the euro and the pound than now. Also, several ECB and Fed representatives will speak in the United States and the European Union. Still, significant and loud statements are not expected from them now. If anyone can surprise the market, it is Mrs. Lagarde.
General conclusions:
On Thursday, the most important event of the day has already passed. Inflation in the EU triggered a decline in the euro and the pound, but both currency pairs should continue their decline. Thus, regardless of the fundamental and macroeconomic background, we expect movement only to the south. In about an hour, the head of the ECB will begin her speech, but we cannot know in advance what she will report or not report. Therefore, beginners should be prepared for any developments.
Basic rules of the trading system:
- The strength of the signal is determined by the time it takes to form the signal (rebound or overcome the level). The less time it took, the stronger the signal.
- If two or more trades on false signals were opened around a particular level, all subsequent signals from that level should be ignored.
- In a flat, any pair can form many false signals or not form them at all. But in any case, stopping trading at the first signs of a flat is better.
- Trades are opened between the start of the European and mid-American sessions, and all trades must be closed manually by that time.
- On the 30-minute TF, you can trade based on MACD indicator signals only in the presence of good volatility and a trend confirmed by the trendline or channel.
- If two levels are located too close to each other (from 5 to 15 points), they should be considered as a support or resistance area.
What's on the charts:
Support and resistance levels are targets when opening buys or sells. Take Profit levels can be placed near them.
Red lines are channels or trendlines that reflect the current trend and show the preferable direction for trading now.
MACD indicator (14, 22, 3) – histogram and signal line – an auxiliary indicator that can also be used as a signal source.
Important speeches and reports (always present in the news calendar) can greatly affect the movement of a currency pair. Therefore, during their release, trading should be done with maximum caution or exit the market to avoid a sharp price reversal against the preceding movement.
Beginners trading in the forex market should remember that only some trades can be profitable. Developing a clear strategy and money management are the keys to success in trading over the long term.
