18.08.202606:21 Forex-elemzések és áttekintések: What to Watch on August 18? Analysis of Fundamental Events for Beginners

Review of Macroeconomic Reports:

There are quite a few macroeconomic publications scheduled for Tuesday. In the UK, today will see the release of the unemployment rate, wage growth for June, and the number of unemployed for July. In Germany and the Eurozone, the ZEW Economic Sentiment Index will be released. In the U.S., reports on new home construction, building permits, and the weekly ADP employment report will be published. However, among these reports, we can highlight only the UK unemployment rate. This report could provoke a market reaction only in the event of a deviation from the forecast, while the other data is, frankly, secondary.

Review of Fundamental Events:

One notable event on Tuesday is a speech by the European Central Bank's Chief Economist, Philip Lane. It's worth recalling that the ECB is the only G7 central bank to have already tightened monetary policy in response to rising inflation amid the geopolitical conflict in the Middle East and the energy crisis. However, the ECB is not planning to stop there, and if consumer price growth continues, it is ready to implement one or two more rate hikes. Thus, the Chief Economist's comments could provide traders with clues about whether to expect another rate increase in September. In our view, the conflict in the Middle East will persist, leaving little chance for the full reopening of the Strait of Hormuz. This means that oil prices are unlikely to fall in the near future.

The geopolitical backdrop remains quite troubling. The U.S. and Iran continue to exchange strikes regularly; negotiations are currently non-existent; the Strait of Hormuz remains closed or partially closed; Yemeni Houthis maintain a blockade of Saudi Arabia, and Tehran threatens to fully close the Bab-el-Mandeb Strait if Washington attempts to exert pressure again. Tehran has also presented a list of demands to Washington necessary for the reopening of the Strait of Hormuz. Donald Trump has put forth his own demands. Neither side intends to meet them. On Monday, Tehran also warned Washington that if the blockade is not lifted, it will commence a "clearance" by its own means. The rhetoric is clearly escalating, and oil prices are rising again.

General Conclusions:

During the second trading day of the week, currency pairs may trade fairly sluggishly, as there will be few important news items today. The euro can be traded today from the area of 1.1584-1.1594, while the British pound can be traded from the area of 1.3587-1.3598. Overall, we expect further strengthening of both the euro and the pound against the U.S. dollar, and only the most important reports this week or geopolitical developments can hinder this.

Main Rules of the Trading System:

1. The strength of the signal is assessed by the time it took to form the signal (bounce or level breakthrough). The less time required, the stronger the signal.
2. If two or more trades are opened around a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can form a multitude of false signals or none at all. Technical levels may be disregarded.
4. When trading based on MACD signals on the hourly timeframe, it is advisable to do so only when volatility is high and a trend line or channel supports the trend.
5. If two levels are too close to each other (from 5 to 20 pips), they should be regarded as a support or resistance area.
6. After a 15-pip move in the correct direction, a Stop Loss should be set to break even.

What the Charts Show:

Support and resistance price levels (areas) are the targets when opening buy or sell orders or sources of signals.

Red lines denote channels or trend lines that reflect the current trend and indicate in which direction trading is currently favored.

The MACD indicator (14,22,3) – histogram and signal line – is a supporting indicator that can also be used as a source of signals.

Important speeches and reports (as listed in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be approached with utmost caution, or one should exit the market to avoid sharp price reversals against the preceding movement.

Beginners in Forex trading should remember that not every trade can be profitable. Developing a clear strategy and proper money management are essential for long-term trading success.