10.01.202403:38 Forex Analysis & Reviews: Key events on January 10: fundamental analysis for beginners

Analysis of macroeconomic reports:

There are no macroeconomic events scheduled for Wednesday. Throughout the day, there won't be much to pay attention to. Since the euro is clearly in a flat, there's a high probability that the price will stay between the levels of 1.0904 and 1.0971. The pound's situation is more complicated since we're dealing with a much wider flat range here. Everything will depend on the short-term ascending trendline. If the price breaks above it, expect a decline. If it bounces, anticipate further growth.

Analysis of fundamental events:

Among the fundamental events of Wednesday, we can highlight the speeches of European Central Bank Vice President Luis de Guindos in the morning and Bank of England Governor Andrew Bailey in the afternoon. Both officials could share important information with the market, but traders will probably focus on Bailey. The BoE head doesn't speak very often, and during his last speech in December, he mentioned that the central bank could raise rates again. If his rhetoric shifts to a more dovish tone on Wednesday, the pound might finally head lower, at least in the short term.

General conclusion:

There are hardly any significant events on Wednesday. In general, traders will only focus on Bailey's speech. Although, he may not touch on monetary policy, inflation, or rates. If that's the case, both currency pairs will continue to trade with low volatility and rely on technical analysis.

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.