What to Watch for on December 5? Analysis of Fundamental Events for Beginners

[Ben Graham]

Analysis of Macroeconomic Reports:

A few macroeconomic reports are scheduled for Friday. At first glance, today's reports may seem high-status; however, this week has seen the release of much more significant data. Virtually all of them had no impact on the overall market picture. Both currency pairs continue to move higher in line with local trends, with quite low volatility. Therefore, it is unlikely that anything will change in the market today. In the Eurozone, the third-quarter GDP will be released in its third estimate. This estimate is unlikely to differ significantly from the first two, nor is it expected to provide much assistance to the euro. The Eurozone economy continues to grow very weakly. In the US, the core PCE index, the University of Michigan consumer sentiment index, and data on American consumers' personal income and expenditures will be published. The first two indices can be considered conditionally significant, as they may provoke some market reaction. The UK calendar of events is empty today.

Analysis of Fundamental Events:

There are a few fundamental events scheduled for Friday, but none are important. In the Eurozone, another speech by the European Central Bank's Chief Economist, Philip Lane, will take place, but it is worth noting that there are currently no market questions for the ECB on monetary policy. The ECB has completed the process of easing monetary policy, and even the rise in inflation in the Eurozone is unlikely to force the ECB to consider changing the key interest rate. As for the Federal Reserve, the silence mode is in effect. The Fed meeting is scheduled for next week, so representatives of the Monetary Committee are not allowed to comment on monetary policy at this time.

General Conclusions:

During the last trading day of the week, both currency pairs are likely to trend upward, as an upward trend continues to form in both cases. The euro has an excellent trading area of 1.1655-1.1666. The British pound is trading in the 1.3329-1.3331 range. Volatility on Friday may again be low, as no important events are scheduled for today.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (bounce or breakout). The less time it takes, the stronger the signal.
2. If two or more trades were opened near a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can form a multitude of false signals or none at all. At the first signs of a flat, it is better to stop trading.
4. Trades are opened during the time between the start of the European session and mid-American session, after which all trades should be closed manually.
5. On the hourly timeframe, using signals from the MACD indicator, it is preferable to trade only when good volatility exists, and a trend is confirmed by a trend line or channel.
6. If two levels are too close to each other (5 to 20 pips), they should be viewed as an area of support or resistance.
7. After moving 15-20 pips in the right direction, a Stop Loss should be set to breakeven.

Chart Explanations:

• Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed near them.
• Red Lines: Channels or trend lines that reflect the current trend and indicate the preferred direction to trade.
• MACD Indicator (14, 22, 3): A histogram and signal line, a supplementary indicator that can also be used as a source of signals.

Important Note: Significant speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their release, it is advisable to trade cautiously or exit the market to avoid sharp reversals against the preceding movement.

Remember: For beginners trading in the Forex market, it is crucial to understand that not every trade can be profitable. Developing a clear strategy and implementing sound money management are keys to successful long-term trading.

The material has been provided by InstaForex Company - www.instaforex.com