Analysis of Macroeconomic Reports:

There are numerous macroeconomic events scheduled for Friday. In Germany, the UK, the Eurozone, and the US, the PMI indices for the services and manufacturing sectors for January will be released. These indices are leading indicators of economic conditions. In other words, an increase in these indices signals potential positive changes in the economy. Unfortunately, European PMIs have rarely shown positive values recently. Nevertheless, the market will react to any deviations of the actual values from forecasts. Additionally, the University of Michigan Consumer Sentiment Index will be published in the US, which has a comparable impact on market sentiment as the PMIs.

Analysis of Fundamental Events:

One significant event on Friday is the speech by European Central Bank President Christine Lagarde. However, she already addressed the market on Wednesday and did not provide any fundamentally new insights. Next week, the ECB will hold its first meeting of the year, and the market is confident that interest rates will be cut by another 0.25%. In contrast, the Federal Reserve will conclude its meeting a day earlier and is expected to keep rates unchanged. As a result, the euro remains fundamentally weaker compared to the dollar. The current upward movement in the euro is merely a technical correction.

General Conclusions:

On the last trading day of the week, market movements will depend on the macroeconomic backdrop. Both currency pairs—EUR/USD and GBP/USD—are experiencing corrections, although these are not particularly strong. Overall, until the euro and pound consolidate firmly below their respective trend lines, it makes little sense to expect a resumption of the four-month downward trend. It may take a considerable amount of time for both pairs to correct before beginning a new phase in the main trend.

Key Rules for the Trading System:

1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
7. Stop Loss: Set a Stop Loss to breakeven after the price moves 15–20 pips in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important speeches and reports, which are consistently featured in the news calendar, can significantly influence the movement of a currency pair. Therefore, during their release, it is advisable to trade with caution or consider exiting the market to avoid potential sharp price reversals against the prior trend.

Beginners in the Forex market should understand that not every transaction will be profitable. Developing a clear trading strategy and practicing effective money management are crucial for achieving long-term success in trading.