FX.co ★ Key events on November 14: fundamental analysis for beginners

Analysis of macroeconomic reports:

Several macroeconomic events scheduled for Tuesday. Let's start with the United Kingdom. Two reports that are not crucial but are still secondary of importance. The unemployment rate may be at risk of being overlooked, but wage rates can affect the British pound since inflation, which directly impacts the monetary policy of the Bank of England, depends on them. Next, the ZEW Economic Sentiment Index will be published in Germany. It is also an interesting report, but we don't expect a strong market reaction.

The last report to be released is the Consumer Price Index (CPI) in the United States, and this is the main agenda for the day. According to forecasts, inflation may start to slow down again. If this is the case, the dollar may face some problems. However, we do not believe that the dollar will be unable to show growth in the coming weeks and months solely due to the decline in inflation. We still expect the greenback to strengthen.

Analysis of fundamental events:

From Tuesday's fundamental events, we can highlight the speeches by representatives of the European Central Bank and the Federal Reserve. ECB officials Enria, Lane, and Elderson will speak. In the United States, Fed officials Jefferson, Barr, Goolsbee, and Meister, are also scheduled to deliver speeches. It will be interesting to read their statements, but take note that at this time, they are only creating a background for their currencies. They do not directly affect intraday trading. Both central banks are currently adopting a wait-and-see position and prefer to keep their rates at the peak value for a long time rather than tighten monetary policy again.

General conclusion:

There are several interesting events on Tuesday. We would highlight the reports on inflation in the United States and wages in the United Kingdom. These reports can potentially trigger significant movements in both currency pairs during the day.

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.