Analysis of macroeconomic reports:
The economic calendar is empty on Monday. After a fairly active week during which the euro and the pound significantly strengthened their positions, the market may take a break on Monday and both pairs may correct lower. At the same time, it is important to remember that the bullish bias persists, so traders may find a reason to buy on a "boring Monday."
Analysis of fundamental events:
No fundamental events for Monday either. It appears that the market has been ignoring the speeches of Christine Lagarde, Jerome Powell, and their colleagues. So no matter what the representatives of the European Central Bank and the Federal Reserve say, the dollar cannot rise. Therefore, even if Powell takes the stand and declares that the central bank has no plans to ease monetary policy at all in 2024, this information is unlikely to provide substantial support to the dollar.
General conclusion:
On Monday, we expect a downward correction for both instruments. Both pairs rose too quickly and, to an 80% extent, for no reason. Therefore, it would be logical for the pairs to start a bearish correction. At the same time, both currency pairs may continue to rise until they both break their bullish targets in the form of a trend line and an ascending channel. Thus, beginners will receive signals of an upcoming bearish correction.
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, after 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 trendline 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.
Beginners 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.
