FX.co ★ Key events on September 22: fundamental analysis for beginners

Analysis of macroeconomic reports:

There will be a relatively large number of macroeconomic events on Friday. Not all of them will have the potential to influence the pair's movement, but there are quite a lot, so some may have resonant values. The UK will start with its retail sales report for August. This isn't necessarily a crucial report, but it could provoke some market reaction. Next, traders can look to the Services and Manufacturing PMIs for Germany, the European Union, and the UK. The reports can only trigger a strong reaction if its figures significantly deviate from forecasts. Moreover, in the context of ongoing monetary policy tightening over the past year, we can probably expect a downtrend in business activity. The US will also release PMI reports, however, in this case, the ISM indices are more important, which will be released later. In the end, there are several reports, but few of them are particularly significant.

Analysis of fundamental events:

From Friday's fundamental events, only a speech by European Central Bank Vice President Luis de Guindos stands out. However, he has already spoken earlier this week and has expressed support for keeping the key interest rate at its maximum level for an extended period, rather than further raising it. Therefore, the market is already familiar with his position, and it's unlikely for him to announce anything new today. The ECB has been more dovish recently, so the euro can continue its downward movement without much disruption.

General conclusion:

On Friday, the main focus should be on the business activity indices in the European Union and the UK, although all of the reports are roughly equal in importance, and the market's reaction will depend solely on deviations from actual values. Both pairs are in a downtrend, and are showing signs of a bullish correction.

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.