FX.co ★ Key events on December 4: fundamental analysis for beginners

Analysis of macroeconomic reports:

For Monday, there are no scheduled macroeconomic events in the United States, the United Kingdom, the European Union, or Germany. Therefore, traders will have little to analyze today. This does not necessarily mean that the pair will remain stagnant throughout the day, but it is quite likely during the European session.

Analysis of fundamental events:

Among the fundamental events on Monday, we can highlight European Central Bank President Christine Lagarde's speech. We want to remind you that Lagarde has spoken about five times in the last two weeks, if not more. Yet, she has not provided the market with any significant information. The ECB was not eager to raise the key interest rate before, and last week, we found out that the eurozone inflation rate dropped to 2.4%. Therefore, it makes no sense for the ECB and its officials to discuss a rate hike, which could support the euro. Therefore, at best, Lagarde will not touch on the topic of monetary policy. At worst, she may soften her tone, which could exert pressure on the euro and the pound.

ECB Vice President Luis de Guindos will also speak today, and he may change his rhetoric to a more dovish one. Therefore, we shouldn't expect his remarks to boost the euro either.

General conclusion:

On Monday, everything comes down to the speeches of Lagarde and de Guindos. We cannot be certain that these two will discuss monetary policy or the latest inflation report. If they don't, both currency pairs may stand still all day in the absence of economic reports. We believe that traders will be more active during the U.S. session, and a flat market is possible during the European session. Both the euro and the pound are likely to move downward today.

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.