Analysis of macroeconomic reports:
Several macroeconomic events are scheduled for Tuesday, all of which will be released in the United Kingdom. Traders now look to the release of the data on unemployment, unemployment claims, and average wages. We believe that the wages report is the most important out of the three, as changes in wages directly affect the country's inflation rate, as repeatedly mentioned by Bank of England officials. Therefore, if wages turn out to be stronger than expected by the market or by the BoE, then this is a reason for the British currency to rise, as the central bank may hold the interest rate at its peak for longer. However, the unemployment rate and unemployment claims should not be disregarded either.
Analysis of fundamental events:
Among the fundamental events on Tuesday, we can highlight the speeches of European Central Bank representatives Buch, Elderson, and Lane. Of course, the speech of the ECB's chief economist, Philip Lane, may be the most interesting, but it is worth noting that the ECB meeting took place just last week, so the market has already received all the necessary information. Moreover, speeches were already given yesterday by Kazimir, de Guindos, and several other officials who clearly indicated that the next easing of monetary policy should not be expected before September.
General conclusion:
Today, all the most important events are scheduled in the United Kingdom. Therefore, the British pound may trade more actively than the euro. The problem is that the pound has been trading in a sideways channel for three weeks now. Therefore, if the UK reports do not disappoint, we can expect the price to rise towards the upper boundary of the sideways channel. In the euro's case, we expect sluggish movements close to a flat today.
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.
