Analysis of macroeconomic reports:
There are hardly any macroeconomic reports on Friday. No secondary reports scheduled in the UK, Germany, and the EU. From the US docket, reports on the Producer Price Index and changes in personal income and spending of US consumers are set for release. To be honest, important reports and events couldn't even break the euro and the pound out of their sideways channels on Thursday. Therefore, there's a low chance that the flat will end on Friday.
However, it's worth remembering that flats usually end when no one expects it. So in any case, traders should be prepared for a breakout of the levels that mark the boundaries of the sideways channel for both currency pairs.
Analysis of fundamental events:
There are no fundamental events planned for Friday. Therefore, traders will only have secondary data from the US and no major fundamental events. There's a low chance of seeing strong trends on Friday.
General conclusion:
On Friday, we expect both currency pairs to exhibit weak movements. Most likely, the flat will persist in both cases. Significant movements may occur for the British pound, but they wouldn't be able to pull the pair out of the flat phase, as the sideways channel is quite wide. The euro has a slightly better chance of ending the flat phase, but for this to happen, the price needs to settle below the level of 1.0835.
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.
