04.09.202403:18 Forex Analysis & Reviews: Key Events on September 4: Fundamental Analysis for Beginners

Analysis of Macroeconomic Reports:

Again, very few macroeconomic events are scheduled for Wednesday. The UK, Germany, and the EU will release second estimates of their services sector activity indices for August, but these second estimates rarely differ from the first ones. Therefore, reactions to them are infrequent. The relatively important JOLTs report will be published, which might continue the trend of mediocre U.S. reports. Consequently, the dollar has very few chances of seeing strong growth today.

Analysis of Fundamental Events:

Among Wednesday's fundamental events, there will be a speech by European Central Bank representative Elderson and the release of the "Beige Book." Both events are of secondary importance. We've already learned everything necessary from ECB representatives, and the ECB will likely cut the rate for the second time in September. The Beige Book is merely a summary of economic reports from various regions of the U.S., containing no significant new information.

General Conclusions:

During the third trading day of the week, both currency pairs might continue to pull back, but only as part of a correction against the prevailing upward trend. The euro has broken below its ascending trendline, so it may continue moving south with greater probability than the pound, which is still reluctant to decline. Both currency pairs may exhibit relatively weak volatility on Wednesday due to the limited number of fundamental and macroeconomic events.

Basic Rules of the Trading System:

1) The strength of a signal is determined by the time it takes for the signal to form (bounce or level breakthrough). The less time it took, the stronger the signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be ignored.

3) In a flat market, any currency pair can form multiple false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.

4) Trades should be opened between the start of the European session and midway through the U.S. session. After this period, all trades must be closed manually.

5) In the hourly time frame, trades based on MACD signals are only advisable amidst substantial volatility and an established trend confirmed by a trendline or trend channel.

6) If two levels are too close to each other (5 to 20 pips), they should be considered support or resistance.

7) After moving 15-20 pips in the intended direction, the Stop Loss should be set to break even.

What's on the Charts:

Support and Resistance price levels: targets for opening long or short positions. You can place Take Profit levels near them.

Red lines: channels or trend lines that depict the current trend and indicate the preferred 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 source of signals.

Important speeches and reports (always noted in the news calendar) can profoundly influence the movement of a currency pair. 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. Developing a clear strategy and effective money management is key to success in trading over a long period.