Analysis of macroeconomic reports:
There are quite a few macroeconomic events on Thursday, but all of them will be overshadowed by the Federal Reserve meeting (which took place yesterday evening) and the Bank of England's meeting (scheduled for today). These two events will receive about 80% of the market's attention. Nevertheless, Purchasing Managers Index (PMI) data for the euro area, Germany, the UK and the US will be released. Market players do not expect any significant changes in the indicators, but in the case of resonant values, any particular report could provoke a noticeable market reaction. In addition, the US will also publish reports on the Philadelphia Fed manufacturing survey and initial jobless claims. These reports have even less chance of affecting market sentiment.
Analysis of fundamental events:
There is only one fundamental event scheduled for Thursday - the BoE meeting. As we witnessed yesterday evening, there might be surprises, even if the central bank does not change the parameters of monetary policy. Since the latest UK inflation report showed a significant slowdown, today we can expect a softer stance from BoE Governor Andrew Bailey and the entire monetary committee. However, at the same time, the rhetoric may remain unchanged, as the inflation report was just released yesterday, and its value is still far from the target level. The reaction will depend on the situation.
General conclusion:
Today, there will be many events worldwide. Naturally, the market will focus on the BoE meeting, as its outcomes could even impact the EUR/USD pair. However, business activity indices, under certain circumstances, could also influence the movement of both currency pairs. Yesterday, the euro and the pound took a step towards a new upward trend, but we are not yet certain whether it's truly a trend or just a simple retracement.
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.
