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Fundamental analysis

01.04.202607:05 Forex Analysis & Reviews: What to Focus on April 1? Analysis of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

A substantial number of macroeconomic reports are scheduled for Wednesday, and yesterday showed that traders are starting to shift their focus back to the economy after a month and a half. One can hope that a new escalation in the Middle East conflict will not occur and that currency pairs will finally begin to move in response to factors beyond geopolitics alone. Today, the Eurozone will release the February unemployment report, but this indicator is unlikely to attract traders' attention. The most important reports are scheduled for the American trading session.

First, there is the ADP report on private-sector employment. Recall that this is far from the most accurate and important indicator of the labor market's condition, but the market might still respond to it. Second, there are the retail sales figures. This is not the most important indicator, but traders may still pay attention to it. Third, there is the ISM Manufacturing Index - a truly significant report.

Analysis of Fundamental Events:

Among the fundamental events on Tuesday, only a few speeches by Fed officials can be highlighted, but this week, Jerome Powell already delivered a statement indicating that the Fed is well-positioned to wait and observe. In other words, the Fed does not plan to lower or raise rates anytime soon. The Fed's position is straightforward: there is a pause in monetary easing, which puts the dollar at a considerable disadvantage compared to the euro and the pound, whose central banks are prepared to raise rates. If geopolitics takes a back seat, the dollar may start to lose its position.

General Conclusions:

On the third trading day of the week, both currency pairs may continue their upward movement, as a corrective phase appears to have arrived and the market has shifted its attention away from geopolitical events. The euro can be traded today in the range of 1.1584-1.1591, while the British pound can be traded in the range of 1.3259-1.3267. We still do not see any grounds for significant and sustained growth in the US currency (when considering all factors, not just geopolitics), but it is important not to dismiss geopolitics in the near term.

Key Principles 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 taken, the stronger the signal.
2. If two or more trades have been opened at a particular level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat market, any pair can form many false signals or none at all. In any case, at the first signs of a flat trend, it is best to stop trading.
4. Trading deals are to be opened during the period between the start of the European session and the mid-American session, after which all trades 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 confirmed by a trend line or trend channel.
6. If two levels are positioned too close together (5-20 pips apart), they should be considered a support or resistance area.
7. Upon moving 15 pips in the correct direction, a Stop Loss should be set to breakeven.

What to Look for on the Charts:

Price levels of support and resistance are levels that serve as targets when opening buys or sells. Take Profit levels can be placed around them.

Red lines represent channels or trend lines that show the current trend and indicate the direction in which it is preferable to trade now.

The MACD indicator (14,22,3) – the histogram and the signal line – is a supporting indicator that can also be used as a source of signals.

Important speeches and reports (always included in the news calendar) can significantly affect the movement of the currency pair. Therefore, during their release, trading should be done with utmost caution, or traders should exit the market to avoid sharp price reversals against the previous movement.

Beginning traders in the forex market 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.

*تعینات کیا مراد ہے مارکیٹ کے تجزیات یہاں ارسال کیے جاتے ہیں جس کا مقصد آپ کی بیداری بڑھانا ہے، لیکن تجارت کرنے کے لئے ہدایات دینا نہیں.

Paolo Greco,
Analytical expert of InstaSpot
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