Analysis of Macroeconomic Reports:
Several macroeconomic reports are scheduled for Wednesday, specifically two. Reports on October inflation will be published in the UK and the Eurozone, but while the British report is significant, the European one is not. European inflation is published in two estimates, and markets generally pay little attention to the second estimate, which rarely differs from the first. In contrast, British inflation is published in a single variation, has a strong influence (currently) on the Bank of England's monetary policy, and may slow down for the first time in five months by 0.1-0.2% year-on-year. A decline in October inflation could lead to a December cut in the BoE's key rate, creating additional challenges for the pound if the market shifts to focusing on fundamentals and macroeconomic factors.
Analysis of Fundamental Events:
A few fundamental events are scheduled for Wednesday. The only noteworthy event is the minutes from the last Federal Reserve meeting, but this is a rather formal document. The document typically contains information that has already been available to the market for three weeks. It is important to remember that immediately after the central bank meeting, the results are announced, and all the most crucial information is made available to the market right away. The minutes usually discuss the sentiment of individual FOMC members, their views on inflation, the economy, and the labor market. Therefore, we do not expect any reaction to this event, and the future of the Fed's monetary policy in December will depend on the next reports on the labor market, unemployment, and inflation.
General Conclusions:
During the third trading day of the week, both currency pairs may continue to move sideways. The euro has a great trading area at 1.1571-1.1584. The British pound has two relevant trading areas: 1.3096-1.3107 and 1.3203-1.3211. The British pound may show some semblance of trending movement today, while the euro is unlikely to do so.
Key Principles of My Trading System:
- The strength of the signal is considered based on the time taken to form the signal (bounce or breach of a level). The less time taken, the stronger the signal.
- If two or more trades have been opened around a certain level based on false signals, all subsequent signals from that level should be ignored.
- In a flat market, any pair can create numerous false signals or may not form them at all. In any case, it's best to stop trading at the first signs of a flat.
- Trading deals are opened during the period between the start of the European session and the middle of the American session, after which all deals should be closed manually.
- On the hourly timeframe, it is preferable to trade based on signals from the MACD indicator only when there is good volatility and a trend that is confirmed by a trend line or trend channel.
- If two levels are too close to each other (between 5 and 20 pips), they should be treated as an area of support or resistance.
- After a 15-20-pip move in the right direction, a Stop Loss should be set to breakeven.
What the Charts Show:
- Support and resistance price levels are targets for opening buy or sell positions. Take Profit levels can be placed around them.
- Red lines indicate trend channels or trend lines, reflecting the current trend and indicating the preferred trading direction.
- The MACD indicator (14,22,3) — histogram and signal line — is a supplementary indicator that can also be used as a source of signals.
Important announcements and reports (always available in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, it is recommended to trade with maximum caution or to exit the market to avoid sharp reversals against the preceding movement.
Beginners trading on the Forex market should remember that not every trade can be profitable. Developing a clear strategy and money management is key to long-term success in trading.
