11.07.202407:19 Forex Analysis & Reviews: Key events on July 11: fundamental analysis for beginners

Analysis of macroeconomic reports:

Several macroeconomic events are scheduled for Thursday. The key event of the day will be the US inflation report, but what kind of impact can this report possibly have on currency pairs? Both major pairs continue to rise, with the euro showing very minimal movements. Suppose US inflation slows within the forecast range or it shows a more significant value. In that case, we should expect the US dollar to drop and both currency pairs to rise. However, the pound sterling continues to rise even without the help of economic reports. It clearly doesn't need any support from news or reports right now. Furthermore, the US will release a secondary report on jobless claims.

In Germany, the second estimate of June inflation will be released today – also a secondary report. The UK docket will feature monthly reports on GDP and industrial production. These aren't crucial reports for the market.

Analysis of fundamental events:

Among the fundamental events, we can only highlight the speech of Federal Reserve representative Raphael Bostic. However, this week, several other Fed policymakers have already delivered speeches, which had no impact on the movement of both currency pairs and provided no new information to the market. Even Fed Chair Jerome Powell himself provided no new revelations and failed to deliver a dovish-enough stance in the US Congress.

General conclusions:

There is one significant event on Thursday – the US inflation report. However, we doubt that the market will show a logical reaction to this report. If inflation decreases by the end of June, the euro and the pound should rise again. However, the euro stands still, and the pound sterling rises without the inflation report. Thus, the currency pairs can move in any direction, and the inflation report will only serve as a trigger for the movement.

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.