19.07.202402:56 Forex Analysis & Reviews: Key events on July 19: fundamental analysis for beginners

Analysis of macroeconomic reports:

There are very few macroeconomic events scheduled for Friday. However, this is quite irrelevant at the moment, as the euro and the pound continue to show illogical growth, and both currency pairs exhibit low volatility. Therefore, the macroeconomic background hardly influences market activity and direction of the pairs' movement. Nevertheless, the UK retail sales report will be published today, so the market may show a minor reaction to this report. However, a significant drop in the pound is unlikely, even if the report turns out to be disappointing.

Analysis of fundamental events:

Among the fundamental events, we can highlight the speeches of Federal Reserve officials John Williams and Michelle Bowman. Recently, the market has strengthened its expectations for a Fed rate cut in September, although we believe the likelihood is no more than 40%. However, the dollar needs firm hawkish statements from Fed officials in order to start a solid growth, which are unlikely at this time. In any case, the market is currently ignoring most factors that support the US currency. Therefore, we don't expect Bowman and Williams to provide support to the dollar.

General conclusions:

On Friday, we can only highlight the UK retail sales report, which has very little chance of having a significant impact on the GBP/USD pair's movement. Even more so, it will not affect the overall market sentiment, which remains firmly bullish. Thus, at best, the dollar can expect a minor bullish correction today.

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.