Key events on February 7: fundamental analysis for beginners

There will be very few macroeconomic events on Wednesday. We can only highlight the German industrial production data, which cannot be considered important or strong under any circumstances. Therefore, most likely, we will witness a sluggish corrective movement. Both currency pairs may rise. However, it is important to remember that both have formed a downward trend, so short positions are more preferable.

There will be several fundamental events on Wednesday. Representatives of the Federal Reserve's monetary committee will speak: Kugler, Bowman, Barkin, and Collins. On Monday, Fed Chief Jerome Powell 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. While the opinions of other Fed officials are always interesting to hear, they are unlikely to overshadow Powell's statements, which are obviously much more significant. Moreover, they are unlikely to affect market sentiment, which has already abandoned the idea of rate cuts in March.

On Wednesday, both currency pairs may continue to correct higher, which would be logical. However, it is important to remember that we currently have downtrends for the euro and the pound, meaning that the decline may resume. You should be guided based on levels, as the macroeconomic and fundamental background will have no impact on the pair's movement.

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.