FX.co ★ What should we focus on for July 26th? An analysis of fundamental events for beginners

Analyzing macroeconomic reports:

On Wednesday, July 25, no significant reports are scheduled in the European Union or the United Kingdom. However, there will be notable events in America to take note of. Specifically, the Federal Reserve meeting results will be announced this evening, along with a press conference featuring Jerome Powell. Consequently, the American reports (although not the most critical ones) will likely be overshadowed. Nevertheless, in two hours, a report on new home sales will be released, which can trigger market reactions in the event of a substantial deviation from the forecast. Therefore, to avoid surprises, paying attention to this report is advisable.

Analyzing fundamental events:

Naturally, the main event on Wednesday will be the Federal Reserve meeting. The decision on the American regulator's interest rate hike by 0.25% is already known. However, the market is currently more interested in the future decisions of the U.S. central bank than the July decision. There is an 80% probability of the tightening cycle concluding in July. If Jerome Powell hints that the Federal Reserve is considering another rate increase in 2023 (as core inflation is still far from the target), the dollar may receive additional support this evening. Conversely, if Powell speaks of a "sufficiently restrictive rate level," the dollar may decline, leading both currency pairs to correct upward.

There is also a third scenario: Powell may have yet to discuss the plans of the Federal Reserve. Nevertheless, even in this case, a market reaction is almost guaranteed.

General conclusions:

On Wednesday, there were hardly any significant macroeconomic reports. The entire market's attention is focused on the Federal Reserve meeting and Powell's speech. Until evening, both currency pairs may move relatively calmly, but they are unlikely to remain stagnant. In the evening, prices may rapidly rise or fall, as is often observed after central bank meetings.

Main trading system rules:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or level breakthrough). The shorter the time required, the stronger the signal.
2. If two or more trades based on false signals were opened near a certain level, all subsequent signals from that level should be ignored.
3. In a flat market, any currency pair may generate many false signals or none at all. In any case, it is better to stop trading at the first signs of a flat market.
4. Trades are opened between the beginning of the European session and the middle of the American session, when all trades should be manually closed.
5. On the 30-minute timeframe, trades based on MACD indicator signals can be made only when there is good volatility and a confirmed trend supported by a trendline or a trend channel.
6. If two levels are located too close (5 to 15 pips apart), they should be considered a support or resistance zone.

Regarding the charts:

Price support and resistance levels are targets when opening buy or sell positions. Take Profit levels can be placed near them.

Red lines represent channels or trend lines that display the current trend and indicate the preferred trading direction.

The MACD indicator (14, 22, 3) consists of a histogram and a signal line. It is an auxiliary indicator that can also be used as a source of signals.

Important speeches and reports (always included in the news calendar) can significantly influence the movement of a currency pair. Therefore, trading during their release should be done cautiously, or one may exit the market to avoid abrupt price reversals against the preceding movement.

For novice forex traders, it is essential to remember that only some trades will be profitable. Developing a clear strategy and practicing proper money management are the keys to success in trading over the long term.