Analysis of Macroeconomic Reports:

There are quite a few macroeconomic reports scheduled for Friday, but it remains unclear whether the market is currently willing to pay attention to economic reports. Recall that in recent weeks, traders have essentially ignored a plethora of macroeconomic data from across the ocean and beyond. The dollar is rising despite disappointing fourth-quarter GDP figures and even weaker reports on the labor market and unemployment. Thus, despite the amount of important data today, it is possible that the market will not pay any attention to them.

In the U.S., reports on the fourth-quarter GDP (second estimate), durable goods orders, personal consumption expenditures, consumer confidence, and the JOLTs report on job openings will be released today. In the Eurozone, only the industrial production report will be published. In the UK, monthly data on GDP and industrial production will be available. Some reports (especially those supporting the dollar) may influence the market.

Analysis of Fundamental Events:

There is practically nothing significant to highlight among the fundamental events for Friday. However, market attention remains primarily focused on the Middle East and on Donald Trump, rather than on central banks. In our view, only geopolitics can support the dollar at this time, and that is indeed what is happening. Without new, harsher escalations in the war in the Middle East, it will be difficult for the dollar to continue its rise, but without de-escalation, there is no reason for its decline.

General Conclusions:

On the last trading day of the week, the market may see any movements, as the vector of events in the Middle East could change direction at any moment. The euro can be traded today from the area of 1.1527-1.1531 or from the area of 1.1455-1.1474, while the British pound can be traded from the area of 1.3319-1.3331. We still see no grounds for strong, sustained growth in the American currency, but the war in the Middle East may still provide support for the dollar multiple times.

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 15-20 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.