13.05.202606:34 Forex Analysis & Reviews: What to Watch for on May 13? Analysis of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

There are a few macroeconomic reports scheduled for Wednesday. In the Eurozone, reports on industrial production for March and the second estimate of GDP for the first quarter will be released. We do not consider this data significant, and the market has been ignoring nearly all macroeconomic factors for the past three months. A vivid example of this is the recent reports on inflation, the labor market, and unemployment in the US. Geopolitics remains the primary focus, and the market is no longer ready to respond with movements of hundreds of points to yet another unsubstantiated statement from Trump. However, it is precisely geopolitics that keeps the market in check. In the US, the Producer Price Index will be released today, but we already reviewed inflation yesterday. As expected, it is rising rapidly.

Analysis of Fundamental Events:

Among the fundamental events on Wednesday, we can highlight the speeches of Christine Lagarde and representatives from the European Central Bank (Lane, Buch), the Bank of England (Mann), and the Federal Reserve (Kashkari, Logan Collins). However, the positions of all central banks on monetary policy are well known to traders, and the market is currently ignoring fundamentals and macroeconomic factors. There is no expectation of a decrease or increase in the Fed's key interest rate in the coming months, while the ECB and the BoE 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 continue to say one thing while facts indicate another. In the past seven days, the ceasefire has been violated three times, and the latest round of negotiations has failed miserably. The parties have agreed to continue dialogue, but if there is no progress, the conflict will resume sooner or later.

General Conclusions:

During the third trading day of the week, both currency pairs may 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.