Analysis of macroeconomic reports

Very few macroeconomic publications are scheduled for Wednesday. In fact, only Germany's business climate index and U.S. new home sales can be noted. However, traders likely understand well that much more important events and publications yesterday failed to provoke any market reaction. Thus, we consider both of today's reports secondary and do not expect trending movements or high volatility during the day.

Analysis of fundamental events

Among fundamental events on Wednesday, only the speech of Fed Monetary Committee member Mary Daly can be highlighted. However, once again we remind you that yesterday evening Jerome Powell gave a speech, and the market did not react in any way. We have already said that the meetings of all three central banks took place quite recently, so the market has already received all the necessary information. New speeches from Fed, ECB, and Bank of England representatives are unlikely to provide any new important information. For that to happen, new reports on labor markets, inflation, and GDP in Europe, the U.S., and the UK need to be published. Only after this will central bank officials be able to adjust their views on monetary policy and share this information with the markets.

General conclusions During the third trading day of the week, both currency pairs may resume a decline, but the downtrend exists only for the pound sterling. The euro had no grounds for a decline at all last week. For the euro, growth and decline have equal probability — especially with a complete absence of fundamentals and macroeconomics. For the pound, trading can be done from the 1.3529–1.3543 area, from which the price has already rebounded several times.

Basic rules of the trading system:

1. The strength of a signal is determined by the time it took to form (bounce or breakout of a level). The less time it takes, the stronger the signal.
2. If two or more false signals appear at the same level, all subsequent signals from that level should be ignored.
3. In flat conditions, any pair can generate many false signals or none at all. In any case, at the first signs of a flat, it is better to stop trading.
4. Trades are opened between the start of the European session and the middle of the U.S. session, after which all trades should be closed manually.
5. On the hourly timeframe, it is preferable to trade signals from the MACD indicator only when there is good volatility and a trend confirmed by a trendline or channel.
6. If two levels are too close together (5–20 points), they should be treated as a support or resistance zone.
7. When the price has moved 15–20 points in the right direction, set Stop Loss to breakeven.

What's on the charts:

• Support and resistance price levels – target levels for opening buy or sell positions. Take Profit levels can be placed near them.
• Red lines – channels or trendlines that reflect the current trend and show the preferred trading direction.
• MACD indicator (14, 22, 3) – histogram and signal line – an auxiliary indicator that can also be used as a source of signals.
• Important speeches and reports (always listed in the news calendar) can strongly affect the pair's movement. During their release, it is recommended to trade with maximum caution or exit the market to avoid a sharp reversal against the preceding movement.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are the keys to long-term success in trading.