Here are the details of the economic calendar from August 11:
Yesterday, the US inflation data was released. The CPI remained at 5.4%, which negatively affected the dollar positions when the data was published.
* The consumer price index is prepared by the US Bureau of Labor Statistics, which determines the change in prices of the selected basket of goods and services for a given period. This indicator is considered a key indicator for assessing inflation. From the point of view of fundamental analysis, an increase in inflation is a positive signal for the national currency, but when consumer prices rise faster than forecasts, this is not the best signal on the market.
Analysis of trading charts from August 11:
Following a downward course, the EUR/USD pair reached the base of 2021. The level of 1.1704 acted as a support, reducing the volume of short positions. This led to stagnation, and then to a price rebound along an already ascending trajectory.
Thus, traders could not break through the support level of 1.1704 on their first try.
The trading plan on August 11 considered the scenario of the price rebound from the support level, recommending traders to reduce the volume of short positions and consider local buy trades.
The GBP/USD pair failed to stay below the level of 1.3800, instead, it rebounded in the direction of 1.3900.
Let's take note of how actively the pound sterling rose as the price approached the 1.3800 level. This signals increased interest from speculators, which in turn, leads to a quick overbought in the market.
The trading plan on August 11 considered the scenario of the price rebound from the level of 1.3800, indicating the prospect of strengthening towards the level of 1.3865. The recommendation coincided 100%.
Short positions or Short means sell positions.* The support level is the so-called price level, from which the quote can slow down or stop the downward course. The principle of constructing this level is to reduce the points of support on the history of the chart, where the price reversal in the market has already occurred earlier.
It is worth considering that the support level cannot be eternal and constantly leads to a price reversal. Therefore, traders always have an alternative scenario for the development of the market, which considers the breakdown of this level.
August 12 economic calendar:
The United Kingdom released its preliminary GDP data for the second quarter, where it showed growth from -6.1% to 22.2% in annual terms. An outstanding result in terms of GDP is associated with a low base effect – this is when the growth rate of an economic indicator is explained by its extremely low starting indicator.
Along with the GDP data, the UK industrial production figures were also released. Its June volume rose by 0.7%.
The market did not react to the UK statistics at the time of publication. After a while, the quote of the pound fell.
As for Europe, its June industrial production data will be published at 9:00 Universal time, where it is expected to decline by -0.2%.
Lastly, the United States will release its data on applications for unemployment benefits, where they predict a reduction in their volume.
The volume of initial applications for benefits may fall from 385 thousand to 375 thousand.The volume of repeated applications for benefits may fall from 2,930 thousand to 2,880 thousand.* Applications for unemployment benefits reflect the number of currently unemployed citizens and those receiving unemployment benefits. This indicator is considered to be the state of the labor market, where the growth of the indicator negatively affects the level of consumption and economic growth. The reduction in applications for benefits has a positive effect on the labor market.
Therefore, a reduction in the number of applications for benefits may lead to a strengthening of the national currency: USD. But if the forecast did not match the expectations, then a backlash may occur.
Trading plan for EUR/USD on August 12:
The price rebound from the local low of 2021 did not change the general downward mood of market participants in any way. Traders will most likely return to the area of 1.1704 soon and test the strength of the support level.
The subsequent price decline will be considered after the quote is kept below 1.1680/1.1700.
Traders view the upward movement as a transition from a pullback stage to a correction. In this case, the quote must hold above the level of 1.1770, which will open the way towards the range of 1.1800-1.1830.
Trading plan for GBP/USD on August 12:
The downward trend is still relevant among market participants, where the level of 1.3900 can act as the resistance, increasing the volume of short positions.
Market participants will consider the downward movement if the price is kept below the coordinate 1.3845, opening the way towards the level of 1.3800.
In turn, an upward movement will be relevant if the price is kept above the level of 1.3900, which may lead to the pound's further strengthening towards 1.3940.
What is reflected in the trading charts?
A candlestick chart view is graphical rectangles of white and black light, with sticks on top and bottom. When analyzing each individual candle in detail, you will see its characteristics of a relative time period: the opening price, the closing price, the maximum and minimum prices.
Horizontal levels are price coordinates, relative to which a stop or a price reversal may occur. These levels are called support and resistance in the market.
Circles and rectangles are highlighted examples where the price of the story unfolded. This color selection indicates horizontal lines that may put pressure on the quote in the future.
The up/down arrows are the reference points of the possible price direction in the future.
Golden Rule: It is necessary to figure out what you are dealing with before starting to trade with real money. Learning to trade is so important for a novice trader because the market is constantly dynamics and it is important to understand what is happening on it.