19.04.2024 07:00 AM
Key events on April 19: fundamental analysis for beginners

Analysis of macroeconomic reports:

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For Friday, the lineup of macroeconomic events is practically barren. We can only highlight the UK retail sales report, which will be released in a couple of hours. Although this report has a moderate level of significance, what reaction can it provoke in the current circumstances? Maybe perhaps 20-30 pips at most. The GBP/USD pair has been nearly flat all week. Overnight, there was a rebound from the presumed lower boundary of this flat - the level of 1.0618. Therefore, it is more likely that we will see a new upward movement, regardless of the nature of this particular report.

Analysis of fundamental events:

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There are several fundamental events scheduled for Friday, but all of them will take place in the evening, so they will not have any impact on the movements of both currency pairs during the day. Bank of England representative Dave Ramsden, and Federal Reserve official Lael Brainard will speak. Since we have already heard speeches from Jerome Powell and Andrew Bailey this week, which are objectively more important, but the market has generally ignored them, we do not believe that Ramsden and Brainard will be able to communicate anything that is so significant that it will elicit a strong market reaction.

General conclusion:

There will be few events on Friday. Volatility may be low; both currency pairs may attempt to form a new bullish correction as they have encountered important support levels on their way down.

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.

Paolo Greco,
Analytical expert of InstaForex
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