Key events on February 6: fundamental analysis for beginners

There will be very few macroeconomic events on Tuesday. The eurozone will release a retail sales report, and the UK will publish the Construction Purchasing Managers' Index. Both events are of secondary importance and are unlikely to trigger movements stronger than 20-30 pips. However, right now the macroeconomic background is taking a back seat. The euro maintains a downward trend, while the pound has just started one. Therefore, we can expect a downward movement in both the euro and the pound even if there is no news.

Of course, it's unlikely that we will see a steady downward movement every day, but at the same time, a trend is still much better than a flat market. Therefore, you can still consider short positions, and bounces from important levels can be used to identify pullbacks and corrections.

There will be several fundamental events on Tuesday. Representatives of the Federal Reserve's monetary committee will speak: Patrick Harker, Neel Kashkari, and Loretta Mester. Fed Chief Jerome Powell has already confirmed that a March rate cut is not likely, but Lael Brainard said it's better to start lowering rates slightly earlier than to be late with this decision. Therefore, it will be quite interesting to listen to other Fed officials who may take either a dovish or hawkish position. However, they are unlikely to overshadow Powell's statements, which are obviously much more significant.

Both currency pairs may continue to fall on Tuesday, although, of course, not with the same force. Bounces from important levels may trigger local corrections, which would also be logical. However, in the medium-term, we still expect downward movement from the euro and the pound.

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.

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.