14.05.202606:05 Forex Analyse & Reviews: What to Watch for on May 14? Analysis of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

Several macroeconomic reports are scheduled for Thursday, but it is important to note that the market has essentially ignored the entire macroeconomic backdrop for the past three months. This week, reports on US inflation and producer prices, as well as on Eurozone GDP and industrial production, were disregarded. Therefore, today's data also has a very low probability of provoking market movements. In the UK, reports on GDP and industrial production will be published, while in the US, retail sales and jobless claims data will be released. The Eurozone calendar contains nothing of interest.

Analysis of Fundamental Events:

Among the fundamental events scheduled for Thursday, another speech by Christine Lagarde and remarks from Federal Reserve representatives (Harker, Williams, Barr) stand out. However, the positions of all central banks on monetary policy are well known to traders, and the market is currently ignoring fundamentals and macroeconomics. There is no expectation of a decrease or increase in the Fed's key interest 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. Given that the situation is unlikely to improve over the remaining two weeks of May, the ECB is already preparing for a rate hike, and the BoE is likely to follow the ECB's lead.

The geopolitical backdrop has begun to change, but unfortunately, words still suggest one thing, while facts indicate another. In the past week and a half, the parties have violated the ceasefire three times, and another round of negotiations has failed miserably. The parties have agreed to continue dialogue, but if there is no progress, the conflict will inevitably resume.

General Conclusions:

During the penultimate trading day of the week, both currency pairs may again trade rather sluggishly. In fact, both the euro and the pound have been trading in a flat or near-flat movement for several weeks. The euro can be traded today in the range of 1.1745-1.1754, while the British pound can be traded in the ranges of 1.3587-1.3598 and 1.3456-1.3476; however, volatility may 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.