22.05.202304:19 Forex Analysis & Reviews: What to pay attention to on May 22? A breakdown of fundamental events

Analysis of macro data:

There will be no macro data on Monday. It will likely be another "boring" day. The market can only react to Federal Reserve Chairman Jerome Powell's statements from Friday, but basically, there was enough time to fully process them on that day. Therefore, I expect both pairs to trade with low volatility and with a slight upward bias (a continuation of the correction).

Fundamental events:

A few more fundamental events are expected on Monday. James Bullard, Thomas Barkin, and Raphael Bostic are scheduled to speak at different times. The last two speeches will start closer to the evening, so novice traders may choose to leave the market early. But we don't anticipate any major announcements from Barkin and Bostic anyway. The fact is that the Fed has very likely concluded its tightening cycle. Some of its members still support a key rate hike (like Bullard), but they are in the minority. And Bullard himself, who is considered the most aggressive hawk, has no voting rights this year. Therefore, his comments are unlikely to affect the market sentiment. Three members of the Monetary Committee may provide interesting information, but it will likely be pushed into the background.

The European Central Bank is also nearing the end of its tightening cycle, and the market is expecting at most two more rate hikes of 0.25%. It has already had plenty of time to adjust in advance for these remaining rate hikes. Therefore, neither the Federal Reserve rate, nor the ECB rate, can have a strong influence on the dollar or the euro.

General conclusions:

There is no overtly important data on today's calendar of events. Bullard may repeat his stance that rates need to keep rising to keep inflation in check, and his two colleagues may be more modest in their statements. If Bostic or Barkin support Bullard's initiative to raise rates, the dollar could resume its uptrend. But I think a corrective movement is more likely on Monday.

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.