Key events on October 18: fundamental analysis for beginners
October 17, 2023 10:23 pm
Analysis of macroeconomic reports:
There’s a full plate of macroeconomic events slated for Wednesday. The UK is set to release the most critical report of both the day and week: September’s inflation figures. Although the Consumer Price Index (CPI) no longer exerts the same level of influence over the central bank’s monetary policy and, by extension, the currency pair’s movement and prospects, it remains a pivotal report that could elicit a strong market reaction. This is especially true if the actual figure diverges from expectations. Meanwhile, the Eurozone will also release its inflation data, but this will be the second estimate, which rarely deviates from the initial one. Thus, we don’t anticipate any significant surprises from European inflation. In the US, a secondary report on building permit issuances will be unveiled, likely triggering a muted reaction. Nevertheless, with three reports on the table, we might witness multiple directional shifts in the pair throughout the day.
Analysis of fundamental events:
The day will be packed with fundamental developments. In the Eurozone, Christine Lagarde will take the podium, while in the US, we’ll hear from Waller, Bowman, Williams, and Cook. From the American officials, we can anticipate dovish-leaning statements, which might further propel both currency pairs in their upward correction. However, as previously noted, speeches from ECB and Fed representatives currently play a more ambient role in influencing their respective currencies. The technical landscape remains largely unchanged in their wake. We continue to expect corrections from both.
General conclusion:
On Wednesday, only one key event is expected, which is the inflation report from the UK. At the same time, there will be a lot of reports of minor importance, so both pairs may demonstrate rollercoaster movements again. This would be bad for traders, so during publications they should be prepared for possible trend reversals.
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, post 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 trend line 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.
Beginning traders 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’s a full plate of macroeconomic events slated for Wednesday. The UK is set to release the most critical report of both the day and week: September’s inflation figures. Although the Consumer Price Index (CPI) no longer exerts the same level of influence over the central bank’s monetary policy and, by extension, the currency pair’s movement and prospects, it remains a pivotal report that could elicit a strong market reaction. This is especially true if the actual figure diverges from expectations. Meanwhile, the Eurozone will also release its inflation data, but this will be the second estimate, which rarely deviates from the initial one. Thus, we don’t anticipate any significant surprises from European inflation. In the US, a secondary report on building permit issuances will be unveiled, likely triggering a muted reaction. Nevertheless, with three reports on the table, we might witness multiple directional shifts in the pair throughout the day.
Analysis of fundamental events:
The day will be packed with fundamental developments. In the Eurozone, Christine Lagarde will take the podium, while in the US, we’ll hear from Waller, Bowman, Williams, and Cook. From the American officials, we can anticipate dovish-leaning statements, which might further propel both currency pairs in their upward correction. However, as previously noted, speeches from ECB and Fed representatives currently play a more ambient role in influencing their respective currencies. The technical landscape remains largely unchanged in their wake. We continue to expect corrections from both.
General conclusion:
On Wednesday, only one key event is expected, which is the inflation report from the UK. At the same time, there will be a lot of reports of minor importance, so both pairs may demonstrate rollercoaster movements again. This would be bad for traders, so during publications they should be prepared for possible trend reversals.
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, post 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 trend line 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.
Beginning traders 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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