What to Pay Attention to on February 17? Analysis of Fundamental Events for Beginners

Ben Graham · February 17

Analysis of Macroeconomic Reports:

There are a few macroeconomic reports scheduled for Tuesday, but among them, some are important and interesting. We should start with the UK reports, as they are most noteworthy. Today, data on unemployment, unemployment claims, and wages will be released in the UK. In our view, these reports are unlikely to provoke a strong market reaction. However, the other reports of the day (in the Eurozone and the U.S.) have even less chance of eliciting a market response. For example, Germany's inflation data will be published, but it is a secondary estimate that is typically not taken seriously by traders. In Europe, the ZEW Institute's economic sentiment indices are more interesting indicators than crucial data. In the U.S., there will be a weekly ADP report, but traders generally place more importance on monthly data and Non-Farm Payrolls.

Analysis of Fundamental Events:

Among the fundamental events on Tuesday, several speeches from representatives of the European Central Bank and the Federal Reserve can be highlighted. Following the release of U.S. labor market, unemployment, and inflation data, changes in the rhetoric of FOMC members can be anticipated. We believe that the Fed's stance may shift to a more "dovish" position as U.S. inflation approaches 2%. A change in rhetoric towards a more "soft" stance would provide another reason for the market to sell the American currency. As for the ECB, the latest inflation report showed a slowdown to 1.7%. If this figure continues to decline, the ECB will be forced to resort to new monetary easing measures, although Christine Lagarde is resisting such a scenario at the moment.

General Conclusions:

On the second trading day of the week, both currency pairs may trade very calmly, as there are few significant events today. The euro can be traded from the area of 1.1830-1.1831, while the British pound can be traded from the area of 1.3643-1.3652 (a sell signal was formed yesterday). We still do not see any grounds for an increase in the value of the American currency. Volatility today may again be low.

Main Rules of the Trading System:

The strength of the signal is determined by the time it takes to form (rebound or breaking through the level). The shorter the time, the stronger the signal.
If two or more trades were opened around a particular level based on false signals, all subsequent signals from that level should be ignored.
In a flat market, any pair can generate numerous false signals or no signals at all. In any case, it is best to stop trading at the first signs of a flat.
Trades are opened during the time period between the start of the European session and until the middle of the American session, after which all trades should be manually closed.
On the hourly timeframe, signals from the MACD indicator should ideally be traded only when there is good volatility and a trend confirmed by a trend line or channel.
If two levels are too close to each other (ranging from 5 to 20 pips), they should be considered as a support or resistance area.
After moving 15-20 pips in the correct direction, it is advisable to set the Stop Loss to break-even.

What's on the Charts:

Support and resistance levels are targets for opening buy or sell trades. Take Profit levels can be placed around them.
Red lines indicate channels or trend lines that reflect the current trend and indicate the preferred direction for trading now.
The MACD indicator (14,22,3) – the histogram and signal line – serves as a supplementary indicator that can also be used as a source of signals.
Important speeches and reports (always found in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or it is advised to exit the market to avoid a sharp price reversal against the preceding movement.
Beginners trading in the Forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing sound money management are the keys to long-term trading success.

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