What to Watch for on November 6? Analysis of Fundamental Events for Beginners

[Ben Graham]

Analysis of Macroeconomic Reports:

Several macroeconomic reports are scheduled for Thursday. Germany will release its industrial production report for September, while the Eurozone will publish retail sales data for September. It is important to remind novice traders that on Monday and Wednesday, the market ignored much more significant ISM activity indices for the services and manufacturing sectors from the U.S., as well as the only labor market report currently published—the ADP report. Market movements remain purely technical.

Analysis of Fundamental Events:

Many fundamental events are scheduled for Thursday, but only one is truly significant. The Bank of England's meeting, like any central bank's, is always considered an important event. Currently, the market is uncertain about whether the key interest rate will be maintained and is also unsure about the voting results from the Monetary Policy Committee. Predictions suggest that three out of nine committee members will vote in favor of a softening. If there are more, the British currency may resume its decline. If there are fewer, it may continue to rise. However, in any case, the British pound has been declining over the last month purely on technical grounds. The fundamental and macroeconomic background remains sharply negative for the U.S. dollar.

Overall Conclusions:

On the penultimate trading day of the week, the fundamental background may influence the movements of both currency pairs. The euro formed a buying signal around 1.1474 yesterday, so upward movement can be expected today, targeting 1.1527 and possibly 1.1571. As for the British pound, during the night, it broke above the level of 1.3043, so it may continue to rise toward a target of 1.3102–1.3107, unless the results of the Bank of England's meeting turn out to be dovish.

Key Principles of My Trading System:

1. The strength of the signal is considered based on the time taken to form the signal (bounce or breach of a level). The less time taken, the stronger the signal.
2. If two or more trades have been opened around a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat market, any pair can create numerous false signals or may not form them at all. In any case, it's best to stop trading at the first signs of a flat.
4. Trading deals are opened during the period between the start of the European session and the middle of the American session, after which all deals should be closed manually.
5. On the hourly timeframe, it is preferable to trade based on signals from the MACD indicator only when there is good volatility and a trend that is confirmed by a trend line or trend channel.
6. If two levels are too close to each other (between 5 and 20 pips), they should be treated as an area of support or resistance.
7. After a 15-20-pip move in the right direction, a Stop Loss should be set to breakeven.

What the Charts Show:

• Support and resistance price levels are targets for opening buy or sell positions. Take Profit levels can be placed around them.
• Red lines indicate trend channels or trend lines, reflecting the current trend and indicating the preferred trading direction.
• The MACD indicator (14,22,3) — histogram and signal line — is a supplementary indicator that can also be used as a source of signals.

Important announcements and reports (always available in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, it is recommended to trade with maximum caution or to exit the market to avoid sharp reversals against the preceding movement.

Beginners trading on the Forex market should remember that not every trade can be profitable. Developing a clear strategy and money management is key to long-term success in trading.

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