Analysis of Macroeconomic Reports:
There are very few macroeconomic events scheduled for Tuesday. In the Eurozone and Germany, the second estimate of April's services PMI will be published, but these are unlikely to attract much attention. It's worth reiterating that last week, the market functioned just fine while ignoring an entire batch of macroeconomic data from the U.S. Therefore, these revised services indices in Europe are unlikely to generate any interest. The same applies to the equivalent index in the United Kingdom. As for the U.S., no significant events are on the calendar today.
Analysis of Fundamental Events:
There is still little sense in discussing fundamental events other than Trump's trade war, even though its escalation is paused. If Trump decides to impose new tariffs or increase existing ones, a renewed decline in the dollar could occur. Any escalation may trigger further dollar depreciation, while any de-escalation could support the currency. The U.S. president has recently softened his rhetoric toward China, but this is not yet a genuine de-escalation. Knowing Trump, it would not be surprising if he hikes tariffs again.
Trump understands that further tariff increases could harm the American economy, so we will likely not see any new aggressive actions from him soon. At the same time, there are still no trade negotiations with China underway, meaning the punitive 145%-125% tariffs remain in force. Last Wednesday, we saw how the U.S. economy responded to Trump's trade policies.
General Conclusions:
On the second trading day of the week, both currency pairs may move in either direction. EUR/USD may continue to trade sideways, and a bounce from the 1.1275 level could trigger a new upward swing. The British pound still strongly desires to rise but has declined for four consecutive days. The macroeconomic backdrop is expected to have no real influence on trader sentiment. Trading decisions can rely only on technical levels, which, unfortunately, often fail to deliver as expected.
Key Rules for the Trading System:
- Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
- False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
- Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
- Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
- MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
- Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
- Stop Loss: Set a Stop Loss to breakeven after the price moves 15–20 pips in the desired direction.
Key Chart Elements:
Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.
Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.
MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.
Important speeches and reports, which are consistently featured in the news calendar, can significantly influence the movement of a currency pair. Therefore, during their release, it is advisable to trade with caution or consider exiting the market to avoid potential sharp price reversals against the prior trend.
Beginners in the Forex market should understand that not every transaction will be profitable. Developing a clear trading strategy and practicing effective money management are crucial for achieving long-term success in trading.
