11.05.202606:20 Forex Analysis & Reviews: What to Watch for on May 11? Analysis of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

There are very few macroeconomic reports scheduled for Monday. In the Eurozone, Germany, and the UK, the event calendars are completely empty, and in the US, there will only be a minor report on new home sales. Thus, traders will have nothing to react to throughout the day. As the week opens, the US dollar has strengthened its position. It has just been reported that Donald Trump rejected yet another Iranian proposal for a peaceful resolution to the conflict, calling it absolutely unacceptable. This is why the dollar rose overnight.

Analysis of Fundamental Events:

There is also nothing significant to highlight among fundamental events on Monday. It is worth reminding that the positions of all central banks regarding monetary policy are well known to traders, and the market is currently ignoring fundamentals and macroeconomics. There is no expectation of a change in the Federal Reserve's key rate in the coming months, while the European Central Bank and the Bank of England may tighten policy if the situation in the Middle East does not improve and inflation continues to accelerate.

The geopolitical backdrop has begun to change, but unfortunately, words still suggest one thing while facts indicate another. In words, Iran and the US are on the verge of signing a preliminary agreement that would allow for the complete cessation of hostilities, begin the process of unlocking the Strait of Hormuz, and agree on the terms of a long-term peace in the Middle East. However, in action on Monday and Tuesday, Iran bombed the UAE, struck American destroyers, and the US Navy destroyed several Iranian boats in the Persian Gulf. Reports of new ceasefire violations in the Persian Gulf came in on Thursday evening. On Monday morning, Trump announced that he was dissatisfied with Iran's new peace proposal.

General Conclusions:

During the first trading day of the week, both currency pairs may trade rather sluggishly, as no significant events are planned for today. In fact, both the euro and the pound have been trading in a range for several weeks. The euro can be traded today from the range of 1.1745-1.1754, while the British pound can be traded from the range of 1.3587-1.3598; however, volatility may once again be low. We await new developments related to the conflict between Iran and the US.

Main Rules of the Trading System:

1. The strength of the signal is determined by the time it took to form the signal (bounce or breakout of the level). The less time it took, the stronger the signal.
2. If two or more trades were opened near any level based on false signals, all subsequent signals from this level should be ignored.
3. In a flat market, any pair can generate many false signals or none at all. Technical levels may be ignored.
4. On the hourly timeframe, it is preferable to trade signals from the MACD indicator only in the presence of good volatility and a trend that is confirmed by a trend line or trend channel.
5. If two levels are too close together (5-20 pips apart), treat them as a support or resistance zone.
6. After a move of 15 pips in the right direction, a Stop Loss should be set to breakeven.

What is on the Charts:

Price levels (areas) of support and resistance – levels that are targets when opening purchases or sales, or sources of signals.

Red lines – channels or trend lines that display the current trend and indicate which direction is preferable to trade now.

MACD indicator (14, 22, 3) – histogram and signal line – a supporting indicator that can also be used as a source of signals.

Important speeches and reports (contained in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be done as cautiously as possible, or one should exit the market to avoid a sharp price reversal against the preceding movement.

Beginners trading in the Forex market should remember that not every trade can be profitable. Developing a clear strategy and sound money management are key to long-term trading success.