Analysis of macroeconomic reports:
There are few macroeconomic events on Monday. We will only highlight the report on new home sales in the United States. This is a minor indicator that has extremely low chances of provoking a market reaction of more than 15-20 pips. Therefore, we believe that there is no macroeconomic backdrop on Monday. The euro and the pound may continue to move downwards, as indicated by both technical and fundamental factors. However, there is a higher chance of seeing a flat market and we're probably in for another "boring Monday."
Analysis of fundamental events:
From Monday's fundamental events, only a speech by European Central Bank President Christine Lagarde stands out. However, we don't expect any significant remarks from Lagarde at this time. The ECB meeting took place earlier this month, and the market has already received all the necessary information. There's an 80-90% probability that the ECB rate will be lowered for the first time in June. Since we haven't received any important data in the past week and a half, there's no reason to expect Lagarde's opinion or rhetoric to change.
General conclusion:
On Monday, there will be virtually no macroeconomic or fundamental events. Volatility will significantly fall compared to the last three trading days, but both pairs may continue to move downwards, as the fundamentals and macroeconomics continue to support the dollar to a much greater extent than the euro or pound. You may consider short positions, but it's worth remembering that we often observe very weak movements bordering on "flat" conditions on Mondays.
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.
