Analysis of macroeconomic reports:
On Monday, there will be almost no macroeconomic events in the world. At least, the calendars of Germany, the European Union, the United States, and the United Kingdom do not contain any significant reports. Not even any secondary ones. Therefore, on Monday, there is a high probability of weak, non-trending movements. At the same time, it's not a good idea to treat this day as a holiday. On Friday, volatility was high, even though the fundamental and macroeconomic backgrounds were not strong. If the market is finally done with its unjustified purchases, two of the main pairs might finally start a full-fledged downtrend. This decline could be quite sharp, fast, and strong, considering the overbought status of the euro and the pound.
Fundamental events:
Among the fundamental events on Monday, we can highlight the speech of European Central Bank President Christine Lagarde. Lately, there have been active debates about how much the ECB rate will be raised in May. It increased by 0.5% in March. So some experts expect a new increase by 0.5%, as inflation remains too high. Others believe that the ECB will follow the example of the Federal Reserve and the Bank of England and reduce the tightening pace to a minimum, as well as wait until all previous rate hikes are fully reflected in the economy and inflation. Recall that the effect of rate hikes can be observed from 3 to 18 months, according to various sources. Therefore, it is possible that the ECB rate was raised with a specific goal in mind, not just considering inflation. In other words, the ECB calculated the necessary rate level to reduce the consumer price index to 2% within 2-3 years. If so, we will see an increase of 0.25% in May, which is not very good for the euro. Lagarde may give a few hints about the central bank's decision in May.
General conclusions:
Monday promises to be a rather boring day since there are no events. We don't even know if Lagarde will discuss monetary policy and rates. If not, the market will have nothing to react to. This, of course, does not mean that the pair will stand still all day, but there's a high probability of weak volatility and non-trending movements.
Basic rules of the trading system:
1) The strength of the signal is determined by the time it took the signal to form (a rebound or a breakout of the level). The quicker it is formed, the stronger the signal is.
2) If two or more positions were opened near a certain level based on a false signal (which did not trigger a Take Profit or test the nearest target level), then all subsequent signals at this level should be ignored.
3) When trading flat, a pair can form multiple false signals or not form them at all. In any case, it is better to stop trading at the first sign of a flat movement.
4) Trades should be opened in the period between the start of the European session and the middle of the US trading hours when all positions must be closed manually.
5) You can trade using signals from the MACD indicator on the 30-minute time frame only amid strong volatility and a clear trend that should be confirmed by a trendline or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered support and resistance levels.
On the chart:
Support and Resistance levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are channels or trend lines that display the current trend and show in which direction it is better to trade now.
The MACD indicator (14, 22, and 3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend patterns (channels and trendlines).
Important announcements and economic reports that can be found on the economic calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommend trading as carefully as possible or exiting the market in order to avoid sharp price fluctuations.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.
