Analysis of macroeconomic reports:
Several macroeconomic events are scheduled for Thursday, and they are all quite similar. Germany, the UK, the EU, and the US will release indices of business activity in the services and manufacturing sectors for August. These data rarely provoke a strong market reaction, and currently, the market is focused on buying the euro and the pound while selling the dollar. Therefore, it is unlikely that these reports will trigger a sharp downward movement. US business activity indices will have a low impact on the market since more important ISM reports are due in America. In addition, a report on unemployment claims will be released in the US. Significant reactions to today's reports can only be expected if their results are notably surprising.
Analysis of fundamental events:
There is nothing of particular note among Thursday's fundamental events. The Jackson Hole symposium will begin late evening, and Jerome Powell and Andrew Bailey will speak tomorrow. On Saturday, Philip Lane (European Central Bank) will also speak. We do not doubt that the market has already factored in Powell's speech, but his dovish rhetoric could still provoke a new decline in the US dollar.
General conclusions:
On Thursday, both currency pairs may experience a slight downward correction. However, a few factors will influence price movement. Nonetheless, the market continues to show a strong inclination to sell the US dollar regardless of other factors. If the nearest resistance levels for the euro and the pound are broken or if the pair rebounds from the nearest support levels, further growth can be expected.
Basic rules of the trading system:
1) The strength of a signal is determined by the time it takes for the signal to form (bounce or level breakthrough). The less time it took, the stronger the signal.
2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be ignored.
3) In a flat market, any currency pair can form multiple false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.
4) Trades should be opened between the start of the European session and midway through the U.S. session. After this period, all trades must be closed manually.
5) In the hourly time frame, trades based on MACD signals are only advisable amidst substantial volatility and an established trend confirmed by a trendline or trend channel.
6) If two levels are too close to each other (5 to 20 pips), they should be considered support or resistance.
7) After moving 20 pips in the intended direction, the Stop Loss should be set to break even.
What's on the charts:
Support and Resistance price levels: targets for opening long or short positions. You can place Take Profit levels near them.
Red lines: channels or trend lines that depict the current trend and indicate the preferred 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 source of signals.
Important speeches and reports (always noted in the news calendar) can profoundly influence the movement of a currency pair. 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. Developing a clear strategy and effective money management is key to success in trading over a long period.
