Analysis of Macroeconomic Reports:
No macroeconomic events are scheduled for Tuesday. The home sales report could be noted in the United States, but it is such a secondary indicator that expecting any market reaction to it would be very naive. The first two days of the week have shown us that the market is willing to continue selling the euro and the pound even without macroeconomic reports. There are still no signs of the beginning of an upward correction.
Analysis of Fundamental Events:
On Wednesday, the key fundamental events include speeches from Federal Reserve representatives Michelle Bowman and Patrick Harker, European Central Bank President Christine Lagarde, and ECB Chief Economist Philip Lane. Theoretically, any of these officials could provide new information to the market that could impact the euro and dollar exchange rates. In reality, the chances of this are small. Fed representatives speak almost every day, and their rhetoric varies significantly. Lagarde spoke twice yesterday and stated that the ECB does not rule out the possibility of a 0.5% rate cut and will generally continue easing monetary policy. The euro may continue to decline without any new data.
General Conclusions:
During the third trading day of the new week, the euro and the pound have every chance to continue declining. Both currency pairs have rebounded from their trend lines, so the downward movement may continue steadily. However, volatility might remain low once again. Lagarde's speech could affect the euro, but there are doubts that she can provide the market with fundamentally new information regarding monetary policy, considering that no significant reports have been published in the Eurozone since last Thursday.
Basic Rules of the Trading System:
- The strength of a signal is determined by the time it takes to form (bounce or break through a level). The less time it takes, the stronger the signal.
- If two or more trades were opened with false signals around a certain level, all subsequent signals from that level should be ignored.
- In a flat market, any pair can generate many false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.
- Trading should be done between the start of the European session and the middle of the American session, after which all trades should be closed manually.
- On the hourly time frame, trade signals from the MACD indicator are best used when there is good volatility and a trend confirmed by a trendline or channel.
- If two levels are too close to each other (5 to 20 pips apart), consider them as a support or resistance zone.
- When the price moves 15-20 pips in the intended direction, set a Stop Loss to break even.
What's on the Charts:
Support and Resistance Price Levels: These levels serve as targets when opening buy or sell positions. They can also be used as points to set Take Profit levels.
Red Lines: These represent channels or trend lines that display the current trend and indicate the preferred trading direction.
MACD Indicator (14,22,3): The histogram and signal line serve as a supplementary indicator that can also be used as a source of trading signals.
Important Speeches and Reports (always found in the news calendar) can significantly impact the movement of a currency pair. Therefore, trading should be done with maximum caution during their release, or you may choose to exit the market to avoid a sharp price reversal against the preceding movement.
For Beginners Trading on the Forex Market: It's essential to remember that not every trade will be profitable. Developing a clear strategy and practicing money management is key to achieving long-term success in trading.
