Analysis of Macroeconomic Reports:
A few macroeconomic events are scheduled for Thursday, and almost none are particularly significant. Germany will release the GfK Consumer Confidence Report in the Eurozone, which is considered entirely secondary. Apart from the Bank of England meeting in the UK, there are no notable events. The GDP report for Q3 (third estimate) and a few secondary reports, such as jobless claims, are due in the US. Out of all these, only the GDP report has the potential to influence market sentiment. However, it's important to note that the FOMC meeting held last night may continue to impact trading throughout the day. The BoE meeting today could also influence the EUR/USD pair.
Analysis of Fundamental Events:
The key fundamental event on Thursday is the BoE meeting. Although the market expects rates to remain unchanged, the reaction could still be significant. Last night, the market was prepared for the Federal Reserve's decision, but the dot-plot chart triggered a strong rally in the dollar. Today, a significant movement could arise depending on the results of the vote on the rate among members of the Monetary Policy Committee.
General Conclusions:
On the fourth trading day of the week, the British pound could continue its "flight" of volatility. The market may still be digesting the outcomes of the Fed meeting while simultaneously reacting to the results of the BoE meeting. In the medium term, we remain committed to the outlook of further declines in both the euro and the pound, but today, both European currencies could see some gains. Everything will hinge on the tone and decisions of the BoE.
Key Rules for the Trading System:
- Signal strength is determined by the time it takes for a signal to form (bounce or breakout of a level). The shorter the time, the stronger the signal.
- If two or more false signals are generated near a level, subsequent signals from that level should be ignored.
- In a flat market, any pair may produce numerous false signals or none at all. In such cases, it's better to stop trading at the first signs of consolidation.
- Trades should be opened during the European session through the middle of the American session. All trades should be manually closed thereafter.
- On the hourly timeframe, trades based on MACD signals should only be executed during periods of strong volatility and trends confirmed by trendlines or trend channels.
- If two levels are very close (5–20 pips apart), they should be treated as a support or resistance zone.
- After a 15–20 pip movement in the correct direction, set a Stop Loss at breakeven.
What's on the Charts:
Support and Resistance Levels: Targets for opening buy or sell orders. These are ideal points for setting Take Profit levels.
Red Lines: Trendlines or channels reflecting the current trend direction and indicating the preferred trading direction.
MACD Indicator (14,22,3): A histogram and signal line serving as auxiliary indicators and sources of signals.
Key News Events and Reports: Always listed in the economic calendar, these can significantly impact currency pair movements. Exercise caution or exit the market during such events to avoid sharp price reversals.
Every trade cannot be profitable. The key to long-term success in Forex trading lies in developing a clear strategy and effective money management.
The material has been provided by InstaForex Company - www.instaforex.com
