Review of Macroeconomic Reports

No major macroeconomic releases are scheduled for Monday. Minor releases are currently of little interest to market participants. It is worth recalling that the United States published key labor market and unemployment reports on Friday. However, even these reports were not responsible for the US dollar's appreciation toward the end of the week. The EUR/USD and GBP/USD declines had already begun on Thursday and continued for most of the day before the US data was released. As a result, EUR/USD remains within its sideways range, while GBP/USD is showing signs of a downward trend.

Review of Fundamental Events

Among Monday's fundamental events, Bank of England Governor Andrew Bailey's speech is worth noting. Traders should remember that all three central banks of interest to us have begun tightening monetary policy. Therefore, the euro, pound, and US dollar are generally in similar positions relative to one another. Of course, geopolitical factors could support the dollar. However, there are currently no signs of a deterioration in the situation in the Middle East. Further speeches by representatives of the Federal Reserve, the European Central Bank, and the Bank of England are unlikely to provide traders with any new information in the near future. It is clear that inflation is rising and is expected to continue rising in the United States, the United Kingdom, and the European Union, requiring central banks to take hawkish measures.

The geopolitical situation remains unfavorable. The United States and Iran are not currently engaged in official negotiations, and following his party's crushing defeat in the elections, Donald Trump himself appears uncertain about what to do next regarding Iran. Democrats have stated that they will call for an end to the war in the Middle East. Trump, to put it mildly, does not share this position. Therefore, it is too early to celebrate the end of the military conflict, as Donald Trump could order new strikes against Iran at any time.

General Conclusions

Market volatility may be low during the first trading day of the week, as no major events are scheduled for Monday. The euro remains within a sideways channel and is likely to stay there throughout the day. The British pound is showing signs of a downward correction. The euro can be traded today from the 1.1104–1.1114 and 1.1198–1.1218 levels, while the pound can be traded from the 1.3380–1.3386 level.

Main Rules of the Trading System

1. The strength of a signal is determined by the time required for it to form (a rebound from a level or a breakout). The less time it takes, the stronger the signal.
2. If two or more trades have been opened near a particular level based on false signals, all subsequent signals from that level should be ignored.
3. In a sideways market, any currency pair may generate numerous false signals or none at all. Technical levels may be disregarded.
4. On the hourly timeframe, MACD signals should preferably be traded only when market volatility is sufficiently high and a trend is confirmed by a trendline or trend channel.
5. If two levels are located too close to each other (5 to 20 points apart), they should be treated as a support or resistance zone.
6. Once the price has moved 15 points in the right direction, the Stop Loss should be moved to breakeven.

What the Charts Show

Price support and resistance levels (zones) are levels that serve as targets for opening buy or sell trades, or as potential sources of trading signals.

Red lines indicate channels or trendlines that show the current trend and identify the preferred trading direction.

The MACD indicator (14, 22, 3), consisting of a histogram and a signal line, is an auxiliary indicator that can also be used to generate trading signals.

Important speeches and reports (listed in the economic calendar) can have a significant impact on currency pair movements. Therefore, traders should exercise extreme caution when these events are released or stay out of the market to avoid a sharp price reversal against the preceding movement.

Beginner Forex traders should remember that not every trade can be profitable. Developing a clear trading strategy and following sound money management principles are essential to achieving long-term trading success.