Key events on April 17: fundamental analysis for beginners
April 17, 2024 6:24 am
Analysis of macroeconomic reports:
There are fewer macroeconomic events on Wednesday, but one of them is crucial. There won’t be any interesting events in the European Union and the US. However, in the United Kingdom, the inflation report for March will be published. Why is it so important? Inflation in the UK may fall to 3.1%. If this happens, then UK inflation will be lower than that of the US. Thus, the Bank of England may start discussing monetary policy easing in the near future. Recall that earlier the market expected the Federal Reserve to be the first central bank to lower rates. However, objective reality shows that the BoE may act first. Therefore, a drop in inflation to 3.1% or lower could trigger a serious collapse of the British currency.
Analysis of fundamental events:
There will be quite a few fundamental events on Wednesday. Firstly, BoE Governor Andrew Bailey will speak. Yesterday he did not reveal anything important, but the situation may change today. Secondly, in Europe, Isabelle Schnabel will speak, who may confirm that the European Central Bank is ready to start easing monetary policy in June. Thirdly, there will be speeches by representatives of the Federal Reserve, Loretta Mester and Michelle Bowman, who may comment on the latest US inflation report. However, the key event today is the UK inflation report.
General conclusion:
Today, one key event is expected. Almost all the speeches are scheduled for the evening, so they will not have any impact on the pair’s movement during the day. However, the inflation report in Britain could significantly affect the movement of the GBP/USD pair. We expect the pound to fall.
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.
The material has been provided by InstaForex Company – www.instaforex.com
Analysis of macroeconomic reports:
There are fewer macroeconomic events on Wednesday, but one of them is crucial. There won’t be any interesting events in the European Union and the US. However, in the United Kingdom, the inflation report for March will be published. Why is it so important? Inflation in the UK may fall to 3.1%. If this happens, then UK inflation will be lower than that of the US. Thus, the Bank of England may start discussing monetary policy easing in the near future. Recall that earlier the market expected the Federal Reserve to be the first central bank to lower rates. However, objective reality shows that the BoE may act first. Therefore, a drop in inflation to 3.1% or lower could trigger a serious collapse of the British currency.
Analysis of fundamental events:
There will be quite a few fundamental events on Wednesday. Firstly, BoE Governor Andrew Bailey will speak. Yesterday he did not reveal anything important, but the situation may change today. Secondly, in Europe, Isabelle Schnabel will speak, who may confirm that the European Central Bank is ready to start easing monetary policy in June. Thirdly, there will be speeches by representatives of the Federal Reserve, Loretta Mester and Michelle Bowman, who may comment on the latest US inflation report. However, the key event today is the UK inflation report.
General conclusion:
Today, one key event is expected. Almost all the speeches are scheduled for the evening, so they will not have any impact on the pair’s movement during the day. However, the inflation report in Britain could significantly affect the movement of the GBP/USD pair. We expect the pound to fall.
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.
The material has been provided by InstaForex Company – www.instaforex.com
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