Details of the economic calendar of August 4
Europe was hit by negative statistics, where traders were upset by the PMI in the services sector for July, and then retail sales which fell from 4.1% to 1.5% in June.
The euro declined against the dollar during the publication of statistical data.
The United States upset investors with July employment data, where it recorded an increase of 330,000 instead of 695,000.
The market's reaction was immediate, with the US dollar falling sharply in value relative to its competitors.
At the time of the publication of data on US manufacturing PMI, the market situation changed slightly better than forecasts, but due to the local oversold of the dollar, we saw a change in trading interests. The US dollar has strengthened sharply in value.
Analysis of trading charts from August 4
The Euro/Dollar currency pair, after a long price movement in the range of 1.1850/1.1900, still managed to overcome its lower border, signaling the completion of the corrective course of 1.1750 ---> 1.1900.
The trading plan from August 2, 3, and 4 was a scenario of a breakout of one or another border of the range. Thus, traders could prepare trading orders for buying and selling outside the established borders in advance.
The Pound/Dollar currency pair on the path of a corrective move from the resistance level of 1.4000 reached the support of 1.3900, where there was a reduction in the volume of short positions and a pullback.
The level of 1.3900 is considered in the market as a variable value on the way of sellers, so many traders consider its breakdown in the future.
The trading plan of August 4 showed the possibility of a weakening of the pound sterling, but a sell signal should come after the price is kept below 1.3870.
We study and analyze
• The support level is the so-called price coordinates, from which the quote can slow down or stop the downward movement. The principle of building this level is based on plotting the pivot points on the chart history, where the price reversal in the market has already taken place.
• The resistance level is the so-called price coordinates, from which the quote can slow down or stop the upward movement. The principle of building this level is to draw on the history of the chart of the breakpoints of the price, where the price reversal in the market has already taken place.
Economic calendar for August 5
Today, in terms of the economic calendar, we have the results of the meeting of the Bank of England, where economists believe that the regulator will refrain from any changes in relation to the current parameters of monetary policy.
Perhaps we will hear adjustments from the Bank of England regarding short-term inflation expectations, but nothing more.
In this situation, traders are more interested in the comments of the Bank of England than the actual results.
During the US trading session, data on claims for unemployment benefits in the United States will be published, where they are predicted to decrease in volume.
Details of statistical data:
The volume of initial claims for benefits may be reduced from 400,000 to 384,000.
The volume of continuing claims for benefits may be reduced from 3.269 million to 3.143 million.
We study and analyze
• Claims for unemployment benefits reflect the number of citizens currently not working and receiving unemployment benefits. This indicator is considered the state of the labor market, where the growth of the indicator negatively affects the level of consumption and economic growth. Reducing claims for benefits has a positive effect.
Thus, a decrease in the number of applications for benefits may lead to a strengthening of the US dollar. If the forecast did not coincide with expectations, a backlash may occur.
Trading plan - EURO/DOLLAR (August 5)
Analyzing the current Euro/Dollar trading chart, one can see the downward interest on the part of market participants, which may lead to a full recovery of the price relative to the corrective move 1.1750 ---> 1.1900.
Thus, short positions are considered by market participants as the main ones, with the prospect of a move to the local minimum on July 21 - 1.1752.
An alternative scenario of the market development will be considered by traders if the price returns to the boundaries of the previously passed range.
Trading Plan - POUND/DOLLAR (August 5)
Analyzing the current Pound/Dollar trading chart, one can see price fluctuations within the pivot point from August 2, which signals a downward interest of market participants.
To confirm the sell signal, the price must hold below 1.3870, which will open the way in the direction of 1.3800.
An alternative scenario of the market development considers the level of 1.3900, which may lead to another upward rebound in the price.
What is reflected in the trading charts?
The candlestick chart view is represented by white and black graphic rectangles with lines at the top and bottom. With a detailed analysis of each candle, you can see its characteristics relative to a particular time period: open price, close price, high and low prices.
Horizontal levels are price coordinates, relative to which a stop or price reversal may occur. In the market, these levels are called support and resistance.
Circles and rectangles are highlighted examples where the price of history has reversed. This highlighting in color indicates horizontal lines that may put pressure on the quote in the future.
The up/down arrows are indications of the possible direction of the price in the future.
IMPORTANT TO REMEMBER
Golden rule: before you start trading with real money, you need to figure out what you are dealing with. Training to trade is important for novice traders because the market is constantly in dynamics and it is important to understand what is happening on it.