Macroeconomic Releases Review:

No macroeconomic publications are scheduled for Wednesday. The exception is the second estimate of Germany's October inflation, which will be released as a revision. We do not expect the second estimate to differ from the first, so we do not anticipate any market reaction to that report. Thus, movements in both currency pairs under review may be weak today, and the euro is unlikely to leave the sideways channel.

Fundamental Events Breakdown:

Among Wednesday's fundamental events, the only notable item is the speech by European Central Bank President Christine Lagarde. However, as we have already said, speeches by ECB, Federal Reserve, or Bank of England officials tend to have little impact right now. The market understands well what to expect from central banks at upcoming meetings. Rates will rise in any case, and all three central banks have even signaled a certain pace of tightening — roughly every second meeting. So what might Lagarde announce today? That inflation continues to rise, and more hawkish measures are required? The market already understands that — and ignores it, because the euro has failed to show growth for three months under any fundamental and macroeconomic backdrop.

The geopolitical background remains tense, but it has slightly improved in recent weeks. The US and Iran are not holding official talks at the moment, and after the Democrats' crushing election victory, Donald Trump himself is uncertain what to do next with Iran. The Democrats have stated they will demand an end to the war in the Middle East, a position with which Trump, to put it mildly, does not agree. Nevertheless, continuing a war without full Congressional support will be difficult for the US president, and Iran is also not opposed to returning to the negotiating track. There is some chance of a resolution to the conflict.

Overall Conclusions:

Market volatility may be low during the third trading day of the week, since no important events are scheduled for today. The euro remains in a sideways channel and is likely to stay there by the end of the day. The British pound is headed for a downward correction that could end at any moment. The euro can be traded today from the 1.1198–1.1218 area, and the pound sterling from the 1.3319–1.3331 area.

Main rules of the trading system:

1. Signal strength is judged by how long the signal took to form (a bounce or a breakout). The less time required, the stronger the signal.
2. If two or more false signals have been generated around a given level, all subsequent signals from that level should be ignored.
3. In a flat (range), any pair can produce many false signals or none at all. Technical levels can be ignored.
4. On the hourly timeframe, ideally trade MACD signals only when volatility is strong, and a trendline or trend channel confirms the trend.
5. If two levels are placed very close to each other (5–20 pips), treat them as a support/resistance area.
6. After a price moves 15 pips in the intended direction, move the Stop Loss to breakeven.

What is shown on the charts:

Price levels (areas) of support and resistance — levels that serve as targets when opening longs or shorts or as sources of signals.

Red lines — channels or trendlines that display the current trend and indicate the preferred trading direction.

MACD indicator (14,22,3) — histogram and signal line — an auxiliary indicator that can also be used as a source of signals.

Important speeches and reports (listed in the news calendar) can strongly affect a currency pair's movement. Therefore, when they are released, one should trade as cautiously as possible or step aside to avoid a sudden price reversal against the prior direction.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and money-management rules is the key to long-term success in trading.