Analysis of macroeconomic reports:
Relatively few macroeconomic events scheduled for Wednesday. One might pay attention to the IFO Business Climate Index in Germany. But today, market participants will focus on the US report on durable goods orders. The US dollar lost quite a bit of ground yesterday, so it is possible that bears will try to regain control today. The US report could help them in this regard. However, if the report turns out to be weaker than expected, it could mount pressure on the US currency.
Analysis of fundamental events:
From Wednesday’s fundamental events, we can highlight five speeches by members of the European Central Bank’s monetary committee. In our opinion, the ECB officials will likely limit themselves to information that has long been known to the market. Currently, the market is confident that the ECB will start to lower rates in June. It is unlikely that Nagel, Tuominen, Cipollone, McCaul, and Schnabel will voice theses that do not align with the market’s consensus. Therefore, we should not expect significant reactions to these speeches.
General conclusion:
Today, novice traders should pay attention to the US report on durable goods orders, as this could help the dollar recover. We believe that the dollar will not fall further until the US report is released. Volatility for both currency pairs may be low during the European session.
Basic rules of a trading system:
1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.
2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.
3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.
4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.
5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.
6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.
How to read charts:
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.
The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.
Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.
Beginners should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.
The material has been provided by InstaForex Company – www.instaforex.com
