Analysis of macroeconomic reports:
There are quite a few macroeconomic events planned for Tuesday. Most of them are secondary of importance, but overall, they may garner investor interest. The day will begin with the final assessment of the German inflation report for February. We do not expect a strong market reaction to this report, as the second assessment rarely differs from the first. In addition, this report only concerns one country in the European Union, and everyone is already aware of the general slowdown. A decrease in inflation suggests that the European Central Bank may soon lower interest rates, which should put pressure on the euro. However, we don't see anything like that at the moment.
The UK will release reports on unemployment, unemployment claims, and wages. We will highlight the last report. If wages show sharp growth, it will be difficult for inflation to ease. The main event in today's agenda is the US inflation report for February, and according to forecasts, a slowdown is not expected. This could support the dollar, but the US currency is currently facing challenges in terms of growth.
Analysis of fundamental events:
There are hardly any fundamental events planned for Tuesday. The Federal Reserve has entered the "blackout period" as the second meeting of 2024 is scheduled for March 20. A representative from the European Central Bank and the Bank of England will speak, but these are usually lower-ranking officials, and the market hardly pays attention to their speeches. In any case, the ECB already made it clear what to expect in the coming months. As for the BoE, it does not provide any information at the moment. In fact, the pound doesn't even need any information from the BoE since it doesn't need any particular reason to rise at the moment.
General conclusion:
We expect both instruments to continue their respective downward movements, and only the US inflation report can interfere with this. We already have a bearish signal for the pound, and for the euro, we might see this signal today. Despite expecting declines for both the euro and the pound, it is important to remember that the market is still in a bullish phase, so the pairs could still rise under any macroeconomic backdrop.
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.
