FX.co ★ Key events on October 27: fundamental analysis for beginners

Analysis of macroeconomic reports:

For Friday, the lineup of macroeconomic events is practically barren, and none of them are considered important. However, it's worth noting that the importance of events doesn't seem to matter at the moment. For instance, on Monday and Tuesday, there were no crucial events, and yet both currency pairs showed high volatility. On the other hand, on Thursday, there were at least four significant events but volatility was low. Therefore, the fact that only minor reports are scheduled for Friday doesn't necessarily mean that volatility will be low.

There are no reports scheduled for release in the EU and the UK. In the United States, traders may look at reports on personal income and spending, the University of Michigan consumer sentiment index, and the personal consumption expenditure price index. Given that the market ignored Thursday's reports on quarterly GDP and durable goods orders, at this point it's difficult to predict which reports, if any, might trigger significant movements. Moreover, the values of these reports were far from neutral; they were quite impactful. Therefore, anything is possible for both currency pairs on Friday.

Analysis of fundamental events:

No significant fundamental events on Friday. However, they may not be necessary at the moment. The most important events of the week, the speeches by Powell and Lagarde, did not provide any new information and failed to provoke any significant reactions. Instead, both currency pairs exhibited the highest volatility when the fundamental background was relatively weak.

General conclusion:

Friday sees no important events. Only minor reports are scheduled for release, and they are unlikely to have a major impact on market sentiment. Nevertheless, strong movements in the currency pairs are possible, as it was illogical to witness such weak volatility on Thursday.

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.