FX.co ★ What to pay attention to on May 4? A breakdown of fundamental events

Analysis of macro data:

There will be few macro data on Thursday. In the UK, an early morning more or less significant services PMI will be published. Similar reports will be published in the European Union and Germany. This is all traders can expect on Thursday morning. However, we are confident that the market will remain impressed by the results of the Federal Reserve meeting. And even if it isn't, the results of the European Central Bank meeting, which we will discuss later, will be known just a few hours after the PMIs are published. Therefore, we are likely to see a highly volatile day.

In the United States on Thursday, the only notable report will be on unemployment benefit claims, which traders will probably ignore. They will be fully focused on the outcomes of the FOMC and ECB meetings.

Fundamental events:

The results of the ECB meeting can be considered as fundamental events, which means that it is quite important and might even form a trend. It is still unclear to what extent the ECB rate will be raised: by 0.25% or 0.5%? The future of the euro will depend on the answer to this question, as in the first case it may fall significantly, and in the second case, it may grow noticeably. The press conference with ECB President Christine Lagarde will also be significant, as she will likely discuss the central bank's further plans, monetary policy, and the economy. All this information is unknown to market participants at the moment and cannot be anticipated in advance. Although the ECB meeting is not related to the pound, it may follow the euro throughout the day. Recall that the euro and the pound are heavily overbought at the moment, but the market is still exclusively bullish.

General conclusions:

On Thursday, there will be several macro data and one important fundamental event. Plus, don't forget that European markets will not have the opportunity to process the results of the FOMC meeting, so they will get down to business on Thursday morning. Thus, the market will probably focus on the two meetings throughout the day. Volatility can be very high. It is impossible to predict the direction of movement in advance.

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.