Analysis of Macroeconomic Reports:
No macroeconomic reports are scheduled for Monday. Therefore, it can be immediately assumed that high volatility and trending movement are unlikely to be expected today. Overall, the market continues to ignore much of the macroeconomic and fundamental information. We believe that traders are still trading purely based on technical analysis. Both the euro and the pound have been correcting for several months against the global upward trend. It may be time to resume that trend now.
Analysis of Fundamental Events:
Several fundamental events are scheduled for Monday. The European Central Bank will hear speeches from Vice President Luis de Guindos and Chief Economist Philip Lane. These may seem like important events, but there are currently no questions from the market regarding the ECB's monetary policy. The ECB continues to maintain the key interest rate from meeting to meeting, as there is no need for any changes.
Regarding the Federal Reserve, John Williams, Philip Jefferson, Neel Kashkari, and Christopher Waller will speak today. It is worth remembering that last week several members of the Monetary Committee expressed strong opposition to a rate cut in December. The more members of the Committee shift to the proverbial "hawkish" side, the lower the likelihood of new easing at the next meeting will be. This factor could support the dollar, but last week it had no impact on market sentiment.
General Conclusions:
During the first trading day of the week, both currency pairs may continue to move sideways. The euro has a great trading area at 1.1571–1.1584. For the British pound, two relevant trading areas for Monday are 1.3096–1.3107 and 1.3203–1.3211.
Key Principles of My Trading System:
- The strength of the signal is considered based on the time taken to form the signal (bounce or breach of a level). The less time taken, the stronger the signal.
- If two or more trades have been opened around a certain level based on false signals, all subsequent signals from that level should be ignored.
- In a flat market, any pair can create numerous false signals or may not form them at all. In any case, it's best to stop trading at the first signs of a flat.
- Trading deals are opened during the period between the start of the European session and the middle of the American session, after which all deals should be closed manually.
- On the hourly timeframe, it is preferable to trade based on signals from the MACD indicator only when there is good volatility and a trend that is confirmed by a trend line or trend channel.
- If two levels are too close to each other (between 5 and 20 pips), they should be treated as an area of support or resistance.
- After a 15-20-pip move in the right direction, a Stop Loss should be set to breakeven.
What the Charts Show:
- Support and resistance price levels are targets for opening buy or sell positions. Take Profit levels can be placed around them.
- Red lines indicate trend channels or trend lines, reflecting the current trend and indicating the preferred trading direction.
- The MACD indicator (14,22,3) — histogram and signal line — is a supplementary indicator that can also be used as a source of signals.
Important announcements and reports (always available in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, it is recommended to trade with maximum caution or to exit the market to avoid sharp reversals against the preceding movement.
Beginners trading on the Forex market should remember that not every trade can be profitable. Developing a clear strategy and money management is key to long-term success in trading.
