Analysis of Macroeconomic Reports:
A number of important macroeconomic events are scheduled for Friday, including several key reports. The main focus will be on U.S. unemployment data and Nonfarm Payrolls. These figures can significantly impact the dollar's exchange rate and help inform the Federal Reserve's future actions. It's important to note that the Fed considers these reports when adjusting monetary policy. Weak data would not only suggest a temporary slowdown but also increase the likelihood of a Fed rate cut in upcoming meetings. In addition, reports on Germany's industrial production, U.S. wage growth, and the University of Michigan's Consumer Sentiment Index will also be released today.
Analysis of Fundamental Events:
On Friday, there are several key speeches scheduled, including those by Huw Pill (Chief Economist of the Bank of England), Luis de Guindos (Vice President of the European Central Bank), and Michelle Bowman (Fed). However, since all three central bank meetings have already occurred, it is unlikely that these officials will provide any significant new insights. Nonetheless, reviewing their speeches afterward may still be worthwhile.
General Conclusions:
As the week wraps up, market movements could be highly unpredictable, especially in the latter half of the trading day. The U.S. macroeconomic environment is expected to be strong, necessitating swift market reactions. If you have an open position when U.S. data is released, it's advisable to either set a stop loss at breakeven or close the position altogether to manage risk effectively.
Key Rules for the Trading System:
- Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
- False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
- Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
- Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
- MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
- Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
- Stop Loss: Set a Stop Loss to breakeven after the price moves 15–20 pips in the desired direction.
Key Chart Elements:
Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.
Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.
MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.
Important speeches and reports, which are consistently featured in the news calendar, can significantly influence the movement of a currency pair. Therefore, during their release, it is advisable to trade with caution or consider exiting the market to avoid potential sharp price reversals against the prior trend.
Beginners in the Forex market should understand that not every transaction will be profitable. Developing a clear trading strategy and practicing effective money management are crucial for achieving long-term success in trading.
