FX.co ★ Key events on April 16: fundamental analysis for beginners

Analysis of macroeconomic reports:

There are quite a few macro events scheduled for Tuesday, but there are hardly any important points. In the European Union, the economic sentiment indices from the ZEW Institute for the euro area and Germany may provide impetus to traders. While these reports are considered important, the market either shows a weak reaction or completely ignores them. In the UK, reports on unemployment, unemployment claims, and wages will be released. These are not crucial indicators and may only provoke a local market reaction. Lastly, the US will release data on building permits, new home sales, and industrial production. All three reports are also of secondary importance.

Since downtrends are currently forming for the euro and the pound, we believe that all of the aforementioned reports will not be able to change market sentiment. Both pairs may rise today based on macro data, but we expect further downward movement in the future.

Analysis of fundamental events:

There will be two fundamental events on Tuesday. A speech by Federal Reserve official Mary Daly, and Bank of England Governor Andrew Bailey. Both speeches can be considered important. Fed officials may comment on the latest inflation report this week. Since their statements are unlikely to be dovish, this will support the US dollar. Bailey rarely speaks, so it is always interesting to hear from the BoE chief. It is unlikely that he will be able to save the pound from falling, as his statements would need to be hawkish for that.

General conclusion:

Today, there will be many events, each of which may have a small impact on the pairs' movements. Therefore, throughout the day, we may see numerous reversals and pullbacks that are unlikely to affect the downtrend. The key event of the day is Bailey's speech, which is scheduled for the evening. In any case, we expect the euro and the pound to continue their medium-term decline.

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.