Macroeconomic Reports Overview

A significant number of macroeconomic events are scheduled for Wednesday. The ISM Services PMI in the United States is a particularly important report. However, the actual reading must deviate from forecasts for the market to exhibit a strong reaction. The S&P Services PMIs will also be released in the UK, Eurozone, Germany, and the US, alongside the ADP Employment Report for the US private sector. While there will be plenty of macroeconomic data, only the US reports will likely have a significant market impact.

Fundamental Events Overview

Key fundamental events for Wednesday include speeches by the central bank heads of the U.S., Eurozone, and UK—Jerome Powell, Christine Lagarde, and Andrew Bailey. While it is unclear what topics the central banks will address or whether they will discuss monetary policy, these events cannot be ignored. Expect strong market movements, with the direction depending on the information revealed.

General Conclusions

On the third trading day of the week, the euro may remain within a horizontal channel, while the pound could see a mild upward correction. However, as noted earlier, significant fundamental and macroeconomic events are abundant today, which could cause substantial volatility in both currencies. Traders should be prepared for anything—from increased volatility and sharp reversals to subdued trading activity if the reports fail to impress and the central bank heads provide no new insights on monetary policy.

Key Rules for the Trading System:

1. Signal strength is determined by the time it takes for a signal to form (bounce or breakout of a level). The shorter the time, the stronger the signal.
2. If two or more false signals are generated near a level, subsequent signals from that level should be ignored.
3. In a flat market, any pair may produce numerous false signals or none at all. In such cases, it's better to stop trading at the first signs of consolidation.
4. Trades should be opened during the European session through the middle of the American session. All trades should be manually closed thereafter.
5. On the hourly timeframe, trades based on MACD signals should only be executed during periods of strong volatility and trends confirmed by trendlines or trend channels.
6. If two levels are very close (5–20 pips apart), they should be treated as a support or resistance zone.
7. After a 15–20 pip movement in the correct direction, set a Stop Loss at breakeven.

What's on the Charts:

Support and Resistance Levels: Targets for opening buy or sell orders. These are ideal points for setting Take Profit levels.

Red Lines: Trendlines or channels reflecting the current trend direction and indicating the preferred trading direction.

MACD Indicator (14,22,3): A histogram and signal line serving as auxiliary indicators and sources of signals.

Key News Events and Reports: Always listed in the economic calendar, these can significantly impact currency pair movements. Exercise caution or exit the market during such events to avoid sharp price reversals.

Every trade cannot be profitable. The key to long-term success in Forex trading lies in developing a clear strategy and effective money management.