Analysis of Macroeconomic Reports:
A significant number of macroeconomic events are scheduled for Thursday, but few are truly important. The main focus will be on the UK GDP data for Q4 and the industrial production report. Given the current state of the British economy, strong results are unlikely. However, even a modest improvement over minimal forecasts could allow the British pound to extend its gains.
In the Eurozone, the industrial production report is set to be published, although expectations for a positive outcome are extremely low. Additionally, Germany will release the second estimate of January's inflation, which is objectively less significant than the initial estimate—and the market largely overlooked the first one.
In the U.S., the weekly jobless claims report and the Producer Price Index (PPI) are due for release. However, both reports currently carry little weight in shaping market expectations.
Analysis of Fundamental Events:
On Thursday, important events include speeches from Bundesbank President Joachim Nagel and European Central Bank Governing Council member Cipollone. However, the ECB's sentiment is already well understood, leaving little uncertainty about future rate decisions in the Eurozone. For both EUR/USD and GBP/USD, the primary influencing factor remains the ongoing upward correction on the daily timeframe, which has been supporting their recent gains. Nevertheless, this correction is unlikely to lead to significant increases in the value of these currencies.
General Conclusions:
On Thursday, market movements may be highly unpredictable due to ongoing chaotic sentiment. For the past two days, the euro and pound have risen, but there is a possibility that they could reverse and decline today. Corrections in the market are often complex, featuring frequent pullbacks and internal adjustments. Therefore, traders should exercise caution and avoid expecting consistent, logical trends.
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.
