Analysis of macroeconomic reports:
There are quite a few macroeconomic events scheduled for Friday, but all of them are from the US. There won't be any significant reports in the European Union, the United Kingdom, or Germany. Therefore, currency pairs may exhibit sluggish movements during the European trading session. The US will release reports on Personal Income and Spending of American consumers, the PCE index, and the University of Michigan Consumer Sentiment Index. Personal Income and Spending reports aren't exactly significant. Many experts consider the PCE index to be the "Federal Reserve's inflation gauge of choice", but it usually has a weak impact on market sentiment. The Consumer Sentiment Index may provoke a reaction, but only in case of a significant deviation of the actual value from the forecast.
Analysis of fundamental events:
From Friday's fundamental events, only a speech by Luis de Guindos from the European Central Bank stands out. However, as we have already mentioned, the market isn't raising questions about the ECB's monetary policy at the moment, so we don't expect the ECB vice president to say anything new or significant. Both pairs continue their bullish correction, and that's the most important thing at the moment. The downtrend is not yet over. A series of weak reports from the US should not stop the dollar's rise.
General conclusion:
Today, novice traders should pay attention to the PCE and University of Michigan reports. Most likely, the market will show a weak reaction to these reports. Both currency pairs may go through low volatility during the European session due to the quiet news background. In regards to the euro, the technical picture is clear at the moment, as the ascending channel indicates the range and direction in which the pair can be traded. With the pound, things are more complicated, but the corrective phase is present here as well.
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.
