Overview of macroeconomic reports
No economic events planned in the US, the European Union, Germany, or the UK. Therefore, we can assume that we are in for a low volatility, and corrective Monday. Recall that throughout all of last week, the euro fell more than it rose, and only managed to show impressive growth on Friday due to the contradictory NonFarm Payrolls report. At the moment, the euro doesn't have any more reasons to rise. Unlike the pound sterling, the euro trades more logically. However, we can expect the pound to trade higher even on Monday.
Overview of fundamental events
There are quite a few fundamental events on Monday. Let's start with the secondary ones. Federal Reserve officials Mary Daly, Loretta Mester, and Raphael Bostic will speak in the US. We believe that these events cannot be considered significant under the current circumstances. Over the past few weeks, we have witnessed numerous speeches and the market already has a clear picture of the Fed's future course of actions.
However, the situation is different with Bank of England Governor Andrew Bailey. He rarely speaks and hardly makes loud and important statements. Despite the fact that the BoE's rate has already risen to 5%, the market still does not understand the peak value it is calculating for. It does not understand and buys the pound just in case, as the UK tackles stubbornly high inflation. Therefore, the most important event of the day is Bailey's speech, and the pound may even show much stronger volatility.
Bottom line
No macroeconomic background, but there are fundamental events. We advise you to pay attention to Bailey's speech and to be careful with the pound at this time, as sharp reversals and increased volatility are possible.
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.
