FX.co ★ Key events on March 8: fundamental analysis for beginners

Analysis of macroeconomic reports:

There's a full plate of macroeconomic events slated for Friday, and some of them are highly important. However, given the current market sentiment, we aren't sure if the market even needs any of today's information. The euro and the pound have been rising almost every day. Volatility remains low, but both pairs have almost been rising without any retracements. Moreover, the macroeconomic and fundamental events from the last two days did not support either the euro or the pound. Before Wednesday, there were no events at all. Thus, the current macroeconomic background has a somewhat formal nature.

The German Industrial Production report will be released today, and the revision of the Eurozone GDP Growth Rate will be due later in the day. We don't expect any strong market reactions if the actual values do not deviate significantly from the forecast. Investors will closely watch the U.S. February labor market report, including US Nonfarm-Payrolls and Unemployment Rate, but even with strong figures, this does not guarantee that the dollar will show solid gains.

Analysis of fundamental events:

No fundamental events for today. This week, Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde delivered speeches. To be honest, it would have been better if they hadn't happened at all. In general, Powell and Lagarde did not provide the market with any new information, but for some reason, the market interpreted their speeches as bearish signals for the dollar and so they suddenly got rid of it. There was no logic behind the movements. Therefore, new speeches do not carry as much significance now – the market is simply buying the euro and the pound.

General conclusion:

On Friday, you should focus on the Nonfarm-Payrolls and unemployment reports in the United States. However, we will say it again: even if these reports turn out to be stronger than market expectations, we cannot guarantee that the dollar will rise. Maybe this could push both pairs to retreat, but this doesn't mean that a downtrend will start. The market sentiment is firmly bullish at the moment.

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, after 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 trendline 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.

Beginners 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.