18.01.202405:47 Forex Analysis & Reviews: Key events on January 18: Fundamental analysis for beginners

Analysis of Macroeconomic Reports

On Thursday, there will be few macroeconomic events, and none of them will be of significant importance. In the United Kingdom, the calendar of macroeconomic and fundamental events is empty. There will be no publications in the European Union on Thursday. Therefore, traders will only be able to pay attention to three secondary reports in the USA: unemployment claims, the number of building permits, and new homes sales. These reports may provoke some reaction, but it is unlikely to be strong.

Analysis of Fundamental Events

There will also be few fundamental events on Thursday. Of course, the key event of the day will be the speech of European Central Bank President Christine Lagarde, who has already stated this week that closer to the summer, the central bank may begin to ease monetary policy. If so, the euro continues to lose fundamental support, as the market was counting on a later start to the cycle of lowering the key rate.

In the U.S., Atlanta Federal Reserve President Raphael Bostic will give a speech. Bostic often makes important statements, but it is very difficult to expect specifics from him at the moment.

General Conclusion

The key event of the day will be Lagarde's speech. There is a possibility that she will repeat the phrase about the possible start of the easing cycle earlier than the beginning of summer, which could put additional pressure on the European currency. As for the British pound, the fundamentals and macroeconomics are absolutely unimportant as long as it remains within the sideways channel of 1.2611-1.2787.

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.

Important speeches and reports (always noted in the news calendar) can significantly 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.