Analysis of macroeconomic reports:
There are quite a few macroeconomic events slated for Friday, but only one or two are considered important. First and foremost, we will highlight the third estimate of the UK GDP report, but we should take note of the market's reaction to yesterday's US GDP data. It was very weak, if there was any at all. GDP reports do not always show unexpected, resonant values, and the market is not always ready to react to them.
Next, we will highlight the PCE index and the consumer confidence index in the US. The PCE index is the Personal Consumption Expenditures index, which influences core and headline inflation. Many experts consider it important, but we do not count ourselves among them. We believe that the University of Michigan's index has a much better chance of provoking a market reaction today. Reports on personal income and spending of the American population are considered secondary of importance. Overall, the market may react to all of the US data, but it is quite difficult to point out which report can certainly trigger a market reaction.
Analysis of fundamental events:
Among the fundamental events of Friday, only speeches by Federal Reserve officials Thomas Barkin and Michelle Bowman stand out. However, as we have already mentioned, at the moment, central bank officials cannot provide the market with new information. All they do is merely repeat what the market already knows, time and again. In order to receive new information from the Fed or the European Central Bank, officials need new economic reports that they can comment on.
General conclusions:
Today, we can expect somewhat stronger movements compared to the first three days of the week. The US will post several reports, the values of which could be significant. Accordingly, the market may react to these reports. In the UK, the British economy will release its GDP report
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.
