FX.co ★ What to pay attention to on May 18? A breakdown of fundamental events

Analysis of macro data:

There will be little macro data again on Thursday, and none of them are considered important. No publications are planned in the European Union and the United Kingdom. Meanwhile, there will be a few minor reports in the United States, like unemployment benefit claims or sales of existing homes. These reports may provoke a very weak market reaction (up to 20 points). And the only way to see a noticeable reaction from the market is if the results significantly deviate from forecasts. In general, I expect the euro and the pound to resume falling under any macroeconomic background, but volatility may again be low.

Fundamental events:

There will be slightly more fundamental events on Thursday. In the European Union, European Central Bank President Christine Lagarde and ECB Vice President Luis de Guindos will speak. By "headline", this means that these events are very important, but both officials have spoken recently and their rhetoric of continuing to raise the key rate at a minimal pace is unlikely to change. The market has long worked off all possible ECB rate hikes. In the United States, several Federal Reserve officials will also speak, but their rhetoric is unlikely to be resonant either. After the ECB and Fed meetings, many representatives of these organizations gave their comments, but all of them were calm and neutral. Such events are more of a background nature, helping the market understand which direction the central banks are looking at. This information helps to identify the medium-term trend.

General conclusions:

On Thursday, the event calendar contains only one event that has real chances to be worked out by the market in a way that it is noticeable on the charts - Lagarde's speech. But even that has quite low chances of a market reaction. Nevertheless, neither macroeconomic nor fundamental events should be missed. We should be ready for any movements and reversals. However, if everything goes according to the most likely scenario, we will not see strong movements on Thursday.

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.