signal strength

The GBP/USD pair exhibited identical movements on Friday. It remained flat during the European trading session and experienced a decline during the American session. Therefore, there is no need to repeat the details. The strengthening of the US currency was naturally triggered by the Nonfarm Payrolls report, which significantly exceeded expectations.   However, the downward trendline (the second one) was previously breached, technically making the current trend upward. Nevertheless, we still don't see any reasons for the British currency to show growth in the medium-term perspective, so we expect a new decline in the pair. There were no important publications or events in the UK, and the pair demonstrated logically consistent movements on Friday.     On the 5-minute chart, the trading signals on Friday were not the best due to the flatness during the first half of the day. Only one signal was formed during that time, which was a buying signal near the level of 1.2520, and it should have been closed with the opening of the American trading session, as important data was expected to be released in the US, which could have caused the pair to move in any direction.   Immediately after the release of the data, a buying signal was formed in the range of 1.2507-1.2520, but it should have been ignored as the values of the US reports clearly favored the dollar. However, the next selling signal could and should have been traded. Eventually, the price dropped to the level of 1.2445, where short positions should have been closed. The profit amounted to approximately 40 pips.     Trading tips on Monday:   As seen on the 30M chart, the GBP/USD pair has ended its downward trend and started a new upward trend in the short-term perspective. We believe that the pound has not fallen enough to form a new strong uptrend, but the market may have a different opinion. There will be limited important statistics next week, so we recommend studying higher charts to understand the potential direction of the price. The key levels on the 5M chart are 1.2171-1.2179, 1.2245, 1.2307, 1.2386, 1.2445, 1.2507-1.2520, 1.2597-1.2616, 1.2659, 1.2697. When the price moves 20 pips in the right direction after opening a trade, a stop loss can be set at breakeven. On Monday, the UK has only scheduled the release of the Services PMI, which may provoke a reaction. In the US, there will also be business activity indices in the service sector, including the ISM index, which is considered important.   1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal. 2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored. 3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading. 4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually. 5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel. 6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.   How to read charts: Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them. Red lines are channels or trend lines that display the current trend and show which direction is better to trade. MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross.   This indicator is better to be used in combination with trend channels or trend lines. Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement. Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.  

No macro data scheduled for release on Tuesday. Only relatively unimportant reports on retail sales in the European Union and the Construction PMI in the UK can be highlighted.     However, it should be noted that the Construction PMI will be released in its second estimate, so there is practically no chance of a market reaction. Only if the actual value deviates significantly from the forecast, which rarely happens in second estimates. As for the retail sales report, it is not a particularly important one. If there is any reaction, it will be minimal.     There are no scheduled fundamental events for Tuesday, not even ones that are of secondary importance. Both currency pairs are currently in a suspended state as it is not entirely clear which direction they will move in this week. In the medium term, both pairs are expected to resume their decline, while in the short term, the downtrends have been broken, making a rise more likely. The fundamental and macroeconomic backdrop this week is very weak, so the movements can be weak and non-trending.     General conclusions: There will be hardly any important events on Tuesday, so we expect low volatility and weak intraday trend movements. There is a minimal probability that the market will react to the two reports mentioned earlier, but it is indeed very weak. It is unlikely that we will get an answer about the current trend in the market by Tuesday.   Basic trading rules: 1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal. 2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored. 3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading. 4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually. 5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel. 6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.   How to read charts: Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them. Red lines are channels or trend lines that display the current trend and show which direction is better to trade. MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines. Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement. Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.  

What events may affect market sentiment on June 7? Analysis of fundamental data for beginners. On Wednesday, there will be very few macroeconomic reports. We can mention the US balance of trade report, but I can't even remember the last time this report provoked any market reaction. Therefore, we should probably expect the market to go into a "half-holiday" state again today. Volatility could range from 50 to 70 pips for both instruments, which makes it challenging to trade.   But there's nothing we can do if there are no news and reports, the market has no reason to be active. Analysis of fundamental events: Among the fundamental events, the only notable one is the speech by European Central Bank Vice President Luis de Guindos. As we approach the June ECB meeting, his comments may help traders understand the central bank's plans for this month. However, traders are already aware of these things.   The probability of a new quarter point rate hike is 100%, and there are simply no other options. Therefore, even if de Guindos hints at further tightening, it will not support the euro or create pressure on it. It would be different if de Guindos outlines the future prospects for the ECB rate, as there has been recent information suggesting that the June hike may be the last in the tightening cycle. But for now, it's only rumors.     General conclusions: On Wednesday, there will be hardly any significant events, so we expect low volatility and weak intraday movements. Theoretically, de Guindos' speech could turn out to be interesting, but in reality, we have witnessed a large number of speeches by ECB committee members in the last two weeks. It is unlikely that de Guindos will reveal anything fundamentally new today.     Basic trading rules: 1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal. 2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored. 3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading. 4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually. 5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel. 6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.   How to read charts: Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them. Red lines are channels or trend lines that display the current trend and show which direction is better to trade. MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines. Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair.   Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement. Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.    

Monday was uneventful. There are no significant economic reports scheduled for Monday and Tuesday, and all the fundamental events are of secondary importance. Monday was a low volume trading day and both pairs had a slight inclination to correct after a strong rally last week.   The same situation will probably persist today. Among the economic events, the only one worth mentioning is the report on the number of building permits issued in the United States. Even with an empty events calendar, such a report can still provoke a market reaction. But what kind of reaction exactly?   For example, on Friday, when volatility was also quite low, the US Consumer Sentiment Index triggered a 30-point reaction (approximately). We might witness the same reaction today. The main point is that volatility is still low, which makes it difficult to trade, regardless of whether there are reports or not.   Analysis of fundamental events: Among today's fundamental events, the speeches by European Central Bank representatives Andrea Enria, Luis de Guindos, and Elizabeth McCaul stand out. De Guindos has already spoken earlier, and Enria and McCaul clearly carry less weight in the eyes of traders compared to Schnabel and Lane.   Therefore, if traders did not react to yesterday's speeches, it is even less likely that they would today. In the US, you can look forward to the speeches of Federal Reserve officials John Williams and James Bullard. However, Bullard does not have voting rights this year, so his hawkish stance (which is expected) is unlikely to affect morale. As for John Williams, the US central bank held a meeting just last week and we have already heard all the necessary information.   Furthermore, on Wednesday and Thursday, Fed Chairman Jerome Powell's speeches in Congress will attract much more attention. General conclusions: There are few important fundamental and economic events.   You can pay attention to the report on the number of building permits issued in the United States, as it is the only event that can truly provoke a reaction on a potentially low volume trading day. Basic trading rules: 1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal. 2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored. 3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading. 4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually. 5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.  

Monday was uneventful. There are no significant economic reports scheduled for Monday and Tuesday, and all the fundamental events are of secondary importance. Monday was a low volume trading day and both pairs had a slight inclination to correct after a strong rally last week.   The same situation will probably persist today. Among the economic events, the only one worth mentioning is the report on the number of building permits issued in the United States. Even with an empty events calendar, such a report can still provoke a market reaction. But what kind of reaction exactly? For example, on Friday, when volatility was also quite low, the US Consumer Sentiment Index triggered a 30-point reaction (approximately). We might witness the same reaction today.   The main point is that volatility is still low, which makes it difficult to trade, regardless of whether there are reports or not. Analysis of fundamental events: Among today's fundamental events, the speeches by European Central Bank representatives Andrea Enria, Luis de Guindos, and Elizabeth McCaul stand out. De Guindos has already spoken earlier, and Enria and McCaul clearly carry less weight in the eyes of traders compared to Schnabel and Lane. Therefore, if traders did not react to yesterday's speeches, it is even less likely that they would today. In the US, you can look forward to the speeches of Federal Reserve officials John Williams and James Bullard. However, Bullard does not have voting rights this year, so his hawkish stance (which is expected) is unlikely to affect morale.   As for John Williams, the US central bank held a meeting just last week and we have already heard all the necessary information. Furthermore, on Wednesday and Thursday, Fed Chairman Jerome Powell's speeches in Congress will attract much more attention. General conclusions: There are few important fundamental and economic events.   You can pay attention to the report on the number of building permits issued in the United States, as it is the only event that can truly provoke a reaction on a potentially low volume trading day. Basic trading rules: 1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal. 2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored. 3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading. 4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually. 5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel. 6) If two key levels are too close to each   

Overview of macroeconomic reports There are hardly any important reports on Friday. The euro area will release its final assessment of inflation for July, which is unlikely to differ from the preliminary assessment. Therefore, we do not expect any reaction to this data. The UK will publish a retail sales report, which is not that important. Therefore, we do not expect a strong market reaction to this report. Therefore, there will be no important events on Friday, and both pairs will likely continue their relatively weak movements. The pound is in a sideways channel, and the euro is in a weak downtrend.   Overview of fundamental events There is absolutely nothing to highlight among the fundamental events. No speeches by officials of the Federal Reserve, Bank of England, or the European Central Bank. Therefore, the market will focus on the macro data, but there are hardly any of those as well. It seems that we are in for another muted day.   Bottom line On Friday, we are expecting rather boring trades. We don't expect strong movements from either the pound or the euro, but that does not mean that they will not happen. Take note that the market can trade without reference to the fundamental and macroeconomic background. Main rules of the trading system: The strength of the signal is calculated by the time it took to form the signal (bounce/drop or overcoming the level). The less time it took, the stronger the signal. If two or more trades were opened near a certain level due to false signals, all subsequent signals from this level should be ignored. In a flat market, any currency pair can generate a lot of false signals or not generate them at all. But in any case, as soon as the first signs of a flat market are detected, it is better to stop trading. Trades are opened in the time interval between the beginning of the European session and the middle of the American one when all trades must be closed manually. On the 30-minute timeframe, you can trade based on MACD signals only on the condition of good volatility and provided that a trend is confirmed by the trend line or a trend channel. If two levels are located too close to each other (from 5 to 15 points), they should be considered as an area of support or resistance. Comments on charts Support and resistance levels are levels that serve as targets when opening long or short positions. Take Profit orders can be placed around them. Red lines are channels or trend lines that display the current trend and show which direction is preferable for trading now. The MACD (14,22,3) indicator, both histogram and signal line, is an auxiliary indicator that can also be used as a source of signals. Important speeches and reports (always found in the news calendar) can significantly influence the movement of a currency pair. Therefore, during their release, it is recommended to trade with utmost caution or to exit the market to avoid a sharp price reversal against the previous movement. Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and money management is the key to success in trading over a long period of time.  

Overview of macroeconomic reports   On Thursday, no significant reports lined up for the UK, the European Union, or Germany. The US will publish reports on initial jobless claims and durable-goods orders. Unemployment claims is a relatively weak indicator simply because it is published weekly, and deviations from forecasts are rare. Since there are no deviations, there is no market reaction. Durable goods orders are more important as it reflects the change in purchase volumes of expensive category goods, such as cars, real estate, or major appliances. But the same thing applies here, it is important for the values to deviate from forecasts. If there is none, there's also no reaction. If there is, then we can expect a strong market reaction.   Overview of fundamental events There is absolutely nothing to highlight among Thursday's fundamental events. There are no speeches from officials of the Federal Reserve, European Central Bank, and the Bank of England. However, the Jackson Hole Symposium is about to begin. Nonetheless, all the most important speeches are scheduled for Friday, and today, there's not much to focus on.     Bottom line On Thursday, beginners might only focus on the two US reports. We don't know if they will trigger a market reaction, but at the same time, there are no other events. The movement patterns of the two main currency pairs are unlikely to change. For the euro, it's a downtrend, and for the pound, it's a flat trend. Main rules of the trading system: The strength of the signal is calculated by the time it took to form the signal (bounce/drop or overcoming the level). The less time it took, the stronger the signal. If two or more trades were opened near a certain level due to false signals, all subsequent signals from this level should be ignored. In a flat market, any currency pair can generate a lot of false signals or not generate them at all. But in any case, as soon as the first signs of a flat market are detected, it is better to stop trading. Trades are opened in the time interval between the beginning of the European session and the middle of the American one when all trades must be closed manually. On the 30-minute timeframe, you can trade based on MACD signals only on the condition of good volatility and provided that a trend is confirmed by the trend line or a trend channel. If two levels are located too close to each other (from 5 to 15 points), they should be considered as an area of support or resistance. Comments on charts Support and resistance levels are levels that serve as targets when opening long or short positions. Take Profit orders can be placed around them. Red lines are channels or trend lines that display the current trend and show which direction is preferable for trading now. The MACD (14,22,3) indicator, both histogram and signal line, is an auxiliary indicator that can also be used as a source of signals. Important speeches and reports (always found in the news calendar) can significantly influence the movement of a currency pair. Therefore, during their release, it is recommended to trade with utmost caution or to exit the market to avoid a sharp price reversal against the previous movement. Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and money management is the key to success in trading over a long period of time.    

Yesterday, the pair formed several good signals to enter the market. Let's analyze what happened on the 5-minute chart. In my morning review, I mentioned the level of 1.2726 as a possible entry point. A breakout and subsequent retest of this range generated a great sell signal, resulting in a 35-pip drop. A similar scenario with 1.2689, following weak PMI reports, produced a sell signal and the pair fell by 40 pips. During the US session, protecting the monthly low around 1.2627 and weak US reports generated a great buy signal. As a result, the pair rose by 50 pips. Selling from 1.2679 turned out to be a failure, but a breakout and a downward retest of 1.2679 was another buy signal, making it possible to gain 40 more pips.     For long positions on GBP/USD: Today brings some mid-tier data from the Confederation of British Industry, which is unlikely to have a significant impact on market volatility, so I expect the pair to remain under pressure. For this reason, I am not in a hurry to open long positions: only after a false breakout near the new support level at 1.2706, formed at the end of yesterday, will generate buy signal in hopes of updating the nearest resistance at 1.2733, also formed at the end of yesterday's European session. A breakout and consolidation above this range will reinforce the pound sterling, allowing it to reach the 1.2761 high. The ultimate target remains the area of 1.2797 where I will be locking in profits. If GBP/USD declines and there is no buying activity at 1.2706, the pound will be under pressure, but will continue to trade within the sideways channel. In this case, only the defense of the 1.2679 area and its false breakout would give a signal for opening long positions. I will open long positions immediately on a rebound from the monthly low of 1.2646, keeping in mind a daily correction of 30-35 pips.   For short positions on GBP/USD: The sellers lost all their advantage yesterday and now they need to start from scratch. Only an unsuccessful consolidation at 1.2733 after UK data will produce a sell signal with a prospect of falling to the intermediate support level at 1.2706, which was formed yesterday. A breakout of this level and its upward retest would significantly dent the bulls' positions, offering a chance for a more substantial decline towards the low of 1.2679. The ultimate target is the low at 1.2646 where I will be locking in profits. In this case, buyers can try to build the lower band of the new ascending channel. If GBP/USD moves upward during the European session and lacks bearish activity at 1.2733, which is possible given how aggressive the buyers were even after such a large sell-off yesterday, only a false breakout near the next resistance at 1.2761 would provide an entry point for going short. If there is no downward movement there, I would sell the pound right on a rebound from 1.2797, keeping in mind an intraday correction of 30-35 pips.   COT report: The Commitments of Traders (COT) report for August 15 recorded an increase in both long and short positions. Traders built up positions after the UK GDP report, which was better than economists' expectations. US inflation cooling also had an impact on the balance of power, supporting the pound, as well as persistent core pressure in the UK. Federal Reserve officials will hold their annual Jackson Hole symposium later this week, which could lead to even more strengthening of the British Pound in the short term. The focus will be on Fed Chair Jerome Powell's speech about US monetary policy. As before, the optimal strategy is to buy the pound on dips, as the difference in the policies of the central banks will affect the prospects of the US dollar, putting pressure on it. The latest COT report indicates that long positions of the non-commercial group of traders rose by 7,302 to 90,541, while short positions jumped by 3,334 to 39,553. As a result, the spread between long and short positions narrowed by 607. The weekly closing price dropped to 1.2708 compared to the prior value of 1.2749.     Indicator signals: Moving Averages Trading is taking place around the 30-day and 50-day moving averages, indicating a sideways market trend. Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart. Bollinger Bands If GBP/USD falls, the indicator's lower border near 1.2646 will serve as support.   Description of indicators: • A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart; • A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart; • MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period; • Bollinger Bands: 20-day period; • Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements; • Long non-commercial positions represent the total number of long positions opened by non-commercial traders; • Short non-commercial positions represent the total number of short positions opened by non-commercial traders; • The non-commercial net position is the difference between short and long positions of non-commercial traders.    

Analysis of macroeconomic reports:   There are several macroeconomic events on Friday, with the most important ones in the United Kingdom. In the UK, reports on quarterly GDP and industrial production for September will be published. The industrial production report is not crucial, but in the case of a significant deviation of the actual value from the forecast, market reaction is possible. The same goes for the GDP report. If its value matches the forecast, no reaction is expected, despite the importance of this report. In the United States, the University of Michigan's consumer sentiment index will be published, which is also a secondary report. Analysis of fundamental events: From Friday's fundamental events, we can highlight the speeches by representatives of the Federal Reserve's monetary committee, Logan and Bostic. However, Fed Chair Jerome Powell has already spoken twice this week. If his first speech did not touch on monetary policy, in the second one, he noted that the key rate may rise again if the situation requires it. Therefore, we probably won't hear anything more important than these statements.     General conclusion: On Friday, there will be interesting events, but in general, they may not lead to significant price changes. On Thursday, Powell's speech supported the dollar, but the US currency should continue to rise in the coming weeks even without the help of the Fed chairman. On Friday, only the British reports have a real chance of influencing the movement of the GBP/USD pair. And the pound may pull the euro along with it. But this is only during the European session.   Basic rules of a trading system: 1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal. 2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded. 3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading. 4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, post which all open trades should be manually closed. 5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trend line or trend channel. 6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.   How to read charts: Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them. Red lines represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction. The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source. Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend. Beginning traders should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.