Analysis of macroeconomic reports:
A good number of macroeconomic reports are scheduled for release on Monday. In Germany, the EU, the UK, and the US, second estimates of standard Manufacturing PMIs for June will be released. These reports are unlikely to have a strong impact on the movement of both currency pairs. In addition, Germany will post its inflation report for June, which could be interesting. According to forecasts, the Consumer Price Index is expected to decrease from 2.4% to 2.3%, which could put pressure on the euro. Recall that the last Eurozone report showed that annual inflation went up 0.2%, but if inflation slows down again, this could bring the European Central Bank closer to a rate cut in September. These are bearish factors for the euro.
In the US, the ISM Manufacturing Index will also be published, and this is the most important report of the day. If the figure rises more than expected to 49 points, this report could boost the dollar.
Analysis of fundamental events:
Among the fundamental events of Monday, only a speech by ECB President Christine Lagarde stands out. In the past two weeks, no significant reports have been published in the Eurozone, so there is no new information to comment on. However, enough time has passed since the last ECB meeting, so Lagarde might share some new information with the market.
General conclusions:
Traders will receive quite a lot of interesting information, but we will highlight Lagarde's speech, the inflation report in Germany and the ISM report in the US. Thus, for the first time in a long while, we might have an "eventful Monday," but everything will depend on the actual values of these indicators.
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.
