11.01.202403:55 Forex Analysis & Reviews: Key events on January 11: fundamental analysis for beginners

Analysis of macroeconomic reports:

There are only two macroeconomic events scheduled for Thursday. The US will release reports on inflation for December and jobless claims. The second report is of secondary importance, while the first one is quite crucial. According to forecasts, inflation in December is expected to accelerate to 3.2%. From our perspective, if it does accelerate, this might push the first Federal Reserve rate cut to a later date. In turn, this would provide support for the US dollar.

However, in reality, things could turn out differently. If inflation remains at the 3.1% level, the market may perceive it as a new reason to sell the US currency. If inflation falls below 3.1%, even more so. Therefore, for now, it appears that the dollar is likely to weaken once again.

Analysis of fundamental events:

Among the fundamental events of Thursday, we can highlight the speech of Federal Reserve representative Thomas Barkin. However, four members of the monetary committee have already spoken this week, each of whom has in some way cautioned the market against early expectations of a first rate hike. This has not helped the dollar as the market still shows little favor towards the US currency. Therefore, Barkin's speech is unlikely to support the dollar, and the US currency may continue to weaken even without significant fundamental events.

General conclusion:

Few important events scheduled for Thursday. In general, traders will focus on the US inflation report. It is a noteworthy report, but it would need to show a significant value for the market to react strongly. From our perspective, unless inflation rises to 3.3% or higher, it will be difficult for the dollar to strengthen significantly during the day.

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.