Analysis of Macroeconomic Reports:

No macroeconomic reports are scheduled for Monday, May 18. Therefore, novice traders can only monitor geopolitical events throughout the day. Just this morning, it became known that an unidentified drone attacked a nuclear power plant in the UAE. It is evident that this drone belongs to Iran, as the UAE is a US ally. Thus, the conflict in the Middle East is much closer to escalation than de-escalation, and Donald Trump is exploring options for resuming military action against Iran.

Analysis of Fundamental Events:

There is absolutely nothing noteworthy among the fundamental events on Monday. Last week, it was announced that the European Central Bank may raise the key interest rate at the next meeting, while the Federal Reserve will wait until the fourth quarter to assess inflation and make a decision. However, the hawkish expectations for the Bank of England sharply declined last week after the market saw forecasts for April inflation in the UK. It is expected that inflation may drop to 3%, which would make Britain perhaps the only country without accelerating inflation amid the war in the Middle East and the blockade of the Strait of Hormuz. In this case, there would be no grounds for the British central bank to increase the key interest rate.

Unfortunately, the geopolitical backdrop is again moving toward conflict rather than peace and long-term agreements. Over the past few weeks, the conflicting parties have regularly violated the ceasefire, and the last round of negotiations has collapsed dramatically. Currently, the negotiations are on pause, and Donald Trump plans to resume attacks on Iran. Therefore, there is no chance of unblocking the Strait of Hormuz or resolving the conflict anytime soon.

General Conclusions:

During the first trading day of the week, both currency pairs may trade rather sluggishly, but any geopolitical news could provoke a new storm in the market. Oil prices are rising again, reacting to new attacks in the Middle East and the high likelihood of the resumption of war. The euro can be traded today from the areas of 1.1584-1.1591 and 1.1655-1.1666, while the British pound can be traded from the area of 1.3319-1.3331. Geopolitics remains the key influencing factor in the currency market.

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.