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There's a full plate of macroeconomic events slated for Wednesday, and it should be taken seriously. The EU is set to release reports on the second estimate of GDP for the first quarter, and industrial production. The second estimate is objectively the least important out of all three, so we don't expect any market reaction to this particular report. Industrial production has a slightly higher chance of influencing movement if its latest value deviates from the forecast.
The main item on this week's agenda is the US inflation report. Forecasts do not suggest strong changes in April, but this report is so important that it could provoke market reactions regardless of the actual figures. Overall, both currency pairs are currently leaning towards growth, albeit corrective. Therefore, it's important to be prepared for the possibility that the reports may not boost the US dollar.
Among today's fundamental events, we can highlight speeches by Federal Reserve representatives Michelle Bowman and Neel Kashkari. Although we hardly hear truly significant comments from Fed officials these days, it's always interesting to hear what Kashkari and Bowman have to say. They typically make insightful and specific remarks.
Today, the focus is on the US inflation report. There could be sharp movements at the beginning of the US trading session, possibly in different directions (similar to yesterday's Producer Price Index). All other events of the day have extremely low chances of triggering a strong reaction. We expect the main volatility to take place at the start of the US session.
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.
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.
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