What to pay attention to on January 16? Breakdown of fundamental events for beginners

[Ben Graham]

Review of macroeconomic reports:

There are very few macroeconomic releases scheduled for Friday. The only ones to note are Germany's second-estimate inflation for December and US industrial production. Obviously, the second estimate of inflation has little chance of influencing market sentiment, given that over the past two weeks, the market has already ignored a host of far more important events, reports, and news. US industrial production may have a modest impact on the dollar if the actual figure deviates from the forecast.

Analysis of fundamental events:

Several fundamental events are scheduled for Friday, but we still see no point in focusing attention on them. At the moment, the market does not react to even important macroeconomic reports that normally shape central banks' stances in the UK, the eurozone, and the US. There is practically no reaction to fundamental events. Otherwise, Donald Trump's actions would already have led to a total collapse of the US dollar, which has been looming for several months.

Recall that the dollar can still be considered a safe-haven currency for investors, but can a currency be considered safe if its country's president openly talks about annexing Greenland or the need to intervene in a coup in Iran? Trump apparently renounced an air strike on Iran after receiving a message from Tehran that killings of protesting civilians had stopped. But the "clouds" over Greenland continue to gather. The US Supreme Court may soon rule on the tariffs. A criminal investigation has been opened against Jerome Powell... In our view, the news already available is more than enough for the market to move more actively and logically.

General conclusions:

On the final trading day of the week, both currency pairs may continue trading completely randomly and with minimal volatility. The euro can be traded today from the 1.1584–1.1591 area, and the pound sterling from the 1.3437–1.3446 and 1.3319–1.3331 areas.

Main rules of the trading system:

1. Signal strength is judged by the time required to form the signal (rebound or breakout). The less time required, the stronger the signal.
2. If two or more trades were opened on false signals near a level, then all subsequent signals from that level should be ignored.
3. In a flat, any pair can generate a mass of false signals or none at all. In any case, at the first signs of a flat, it is better to stop trading.
4. Trades are opened during the period between the start of the European session and the middle of the American session; after that, all trades must be closed manually.
5. On the hourly timeframe, MACD-based signals should ideally be traded only when there is good volatility and a trend confirmed by a trendline or trend channel.
6. If two levels are located too close to each other (5–20 pips), they should be considered a support or resistance area.
7. After a move of 15–20 pips in the correct direction, set the Stop Loss to breakeven.

What is shown on the charts:

Support and resistance price levels — levels that serve as targets when opening buys or sells. Take Profit can be placed near them.

Red lines — channels or trendlines that reflect the current tendency and show which direction is preferable to trade now.

MACD indicator (14,22,3) — histogram and signal line — an auxiliary indicator that can also be used as a source of signals.

Important speeches and reports (always listed in the news calendar) can strongly affect a currency pair's movement. Therefore, during their release, trading should be done with maximum caution, or positions should be closed, to avoid a sharp price reversal against the preceding move.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and effective money management are the keys to long-term trading success.

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