Analysis of Macroeconomic Reports:
There are only a few macroeconomic events scheduled for Friday. There will be no significant reports in the Eurozone and the UK, and in Germany, only relatively minor reports on the unemployment rate and changes in the number of unemployed. More important reports will be released in the US. The Personal Consumption Expenditures (PCE) price index, which many consider the "Federal Reserve's favorite inflation indicator," will be published, along with the slightly less significant Consumer Sentiment Index from the University of Michigan. These two reports could trigger a market reaction, but yesterday already showed us once again that even strong data from overseas cannot strengthen the dollar.
Analysis of Fundamental Events:
Among Friday's fundamental events, the speech of European Central Bank Chief Economist Philip Lane stands out. Over the past week, discussions have emerged about the possibility of the ECB cutting rates at the next meeting, so Lane's comments will be timely. Remember that inflation in the Eurozone has almost reached the target level while the economy faces serious problems. Business activity indices are falling again, and the manufacturing sector has long been below the "waterline" of 50.0. Therefore, we believe a rate cut by the ECB at the next meeting is highly likely.
General Conclusions:
During the last trading day of the week, the euro may remain within a limited price range between 1.1091 and 1.1191. Since it reached the upper boundary of this horizontal channel yesterday, some decline can be expected today. The British pound faces no obstacles and grows much more frequently than the euro and more than the fundamental and macroeconomic backdrop would suggest. In any case, trading should be based on technical analysis levels, as the macroeconomic background does not cause any logical market reaction.
Basic Rules of the Trading System:
1) Signal Strength: The strength of a signal is determined by the time it takes to form (bounce or break through a level). The less time it takes, the stronger the signal.
2) False Signals: If two or more trades are opened near a certain level based on false signals, all subsequent signals from that level should be ignored.
3) Flat Market: In a flat market, any pair can generate numerous false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.
4) Trading Timeframe: Trades should be opened between the start of the European session and the middle of the American session, after which they should be closed manually.
5) MACD Indicator Signals: In the hourly time frame, it is preferable to trade based on MACD signals only when there is good volatility and a trend confirmed by a trendline or trend channel.
6) Close Levels: If two levels are located too close to each other (between 5 and 20 pips), they should be considered as a single support or resistance area.
7) Stop Loss: Once the price moves 15 pips in the intended direction, a Stop Loss should be set at the breakeven point.
What's on the Charts:
Support and Resistance Price Levels: These levels serve as targets when opening buy or sell positions. They can also be used as points to set Take Profit levels.
Red Lines: These represent channels or trend lines that display the current trend and indicate the preferred trading direction.
MACD Indicator (14,22,3): The histogram and signal line serve as an auxiliary indicator that can also be used as a source of trading signals.
Important Speeches and Reports (always found in the news calendar) can significantly impact the movement of a currency pair. Therefore, trading should be done with maximum caution during their release, or you may choose to exit the market to avoid a sharp price reversal against the preceding movement.
For Beginners Trading on the Forex Market: It's essential to remember that not every trade will be profitable. Developing a clear strategy and practicing money management is key to achieving long-term success in trading.
