Details of the economic calendar for July 28
On July 28, Wednesday, the results of the two-day meeting of the Federal Open Market Committee (FOMC) were released, of which the regulator expectedly left the key rate unchanged at the level of 0-0.25%. At the same time, it was noted that the Fed will continue to buy back assets amounting to $120 billion per month, including US Treasuries for $80 billion and mortgage bonds for $40 billion.
In simple words, the monetary policy remained unchanged, which is good for the stock market, but not quite for the foreign exchange market, despite the fact that it was previously assumed that the start of the quantitative easing program could be announced in fall.
Throughout the meeting and press conference, there was high volatility, where the US dollar eventually weakened in value.
Analysis of trading charts from July 28
The Euro/Dollar currency pair showed high activity during the last trading day due to the scheduled meeting of the Federal Open Market Committee, where the price range of 1.1750/1.1830 was broken through on an upward trajectory.
Note that the 1.1750/1.1830 price range lasted more than six trading days in the market, signaling that market participants were not ready for a new downward trend cycle. As a result, the sideways channel was replaced by a corrective course.
The trading plan of July 28 considered the strategy of an outgoing impulse relative to a particular border, which indicated the subsequent price move in the market.
The Pound/Dollar currency pair managed to break through the resistance level of 1.3900 during high activity, keeping the quotes above it. This step led to the prolongation of the upward cycle of July 21, as a result, the pound sterling strengthened in value by more than 2% over 6 trading days.
The trading plan of July 28 considered the scenario of prolongation of the upward cycle, where the volume of long positions increased sharply after holding the price above the level of 1.3900.
We study and analyze
• Long positions, or Long (Long), means buy positions.
Economic calendar for July 29
Today, in terms of the economic calendar, we have preliminary data on the GDP of the United States for the second quarter, where the pace of growth of the American economy is expected to accelerate.
Based on the forecasts, we can see GDP growth from 6.4% to 8.6% in annual terms.
In simple words, if the US economy continues to grow, the consequences of the coronavirus crisis will be overcome by the end of this year. Such favorable expectations may give an impetus to the growth of the national currency (USD) in the future.
US GDP - 12:30 UTC
In sync with the GDP data, weekly figures on claims for unemployment benefits in the United States, which are forecast to decline, will be released.
Details of statistical data:
The volume of initial claims for benefits may be reduced from 419,000 to 380,000.
The volume of continuing claims may be reduced from 3.236 million to 3.193 million.
We study and analyze
• Claims for unemployment benefits reflect the number of citizens who are not currently 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. The reduction in claims for benefits has a positive effect on the labor market.
In simple terms, a decrease in the number of applications for benefits can lead to a strengthening of the national currency USD.
Trading plan - EURO/DOLLAR July 29
Analyzing the current Euro/Dollar trading chart, you can see signs of a corrective move from the support point of 1.1750, where the European currency has already strengthened in value by about 0.8%. In the way of buyers, there is a subsequent resistance level in the face of the price value of 1.1900, where price stagnation may occur, which will eventually lead to a reduction in the volume of long positions and a rebound in the price.
The upward development of the quotes considers the movement in the direction of the resistance level at 1.1900.
The downward development of the quotes will be considered by traders in two ways: the first is a slowdown and a rebound relative to the resistance level of 1.1900; the second option is relevant if stagnation occurs at the current level, which will lead to the price keeping below 1.1830.
Trading Plan - Pound/Dollar July 29
Analyzing the current Pound/Dollar trading chart, you can see an upward cycle, which is still relevant among many traders. If the current mood is maintained in the market and the price is kept higher than 1.3950, a movement in the direction of the psychological level of 1.4000 is not excluded.
The upward development of the quotes considers the movement in the direction of the resistance level of 1.4000.
The downward development of the quotes will be considered by traders in two ways: the first is a slowdown and a rebound relative to the level of 1.4000; the second option is relevant if market participants fail to stay above 1.3950.
We study and analyze
• Psychological levels are round values (1,2000,1,3000, 1,4000,1,5000, etc.) that serve as key coordinates in the market that traders pay special attention to. These levels are often used as support or resistance.
What is reflected in the trading charts?
A candlestick chart view is graphical rectangles of white and black light with sticks on top and bottom. In a detailed analysis of each individual candlestick, you will see its characteristics relative to a particular time period: open price, close price, maximum and minimum 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 quotes 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. That is why learning to trade is so important for a novice trader, and the market will exist tomorrow, next week, next year, and the next decade.