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16.05.2025 06:17 AM
What to Pay Attention to on May 16? A Breakdown of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

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Few macroeconomic events are scheduled for Friday, and they are not more significant than the reports released on Thursday, which did not provoke any market reaction. In essence, the only noteworthy event is the U.S. University of Michigan Consumer Sentiment Index, which will be published in the evening. During the day, no macroeconomic backdrop—no matter how it unfolds—will be able to influence the movement of either currency pair.

Analysis of Fundamental Events:

Among the fundamental events, we can mention speeches by European Central Bank members Lane and Cipollone, but the monetary stance of the ECB is already 100% clear. We believe that the trade war and U.S. news affecting the market are the only factors that matter in allowing the market to sell the dollar. The escalation of the trade war has been put on hold, and Trump continues to announce the signing of trade agreements, but this information is only marginally helping the dollar. A renewed dollar decline may occur if Trump starts imposing new tariffs, raising existing ones, or fails to sign agreements with most countries. However, the de-escalation of the conflict, which has already begun, should at least occasionally support the U.S. currency. Nevertheless, it is important to recognize that the market's overall sentiment towards the dollar is significantly negative, making it challenging to anticipate a strong and lasting rally in the U.S. currency.

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Conclusions:

On the week's final trading day, both currency pairs could move in any direction. The macroeconomic background is weak, making it difficult to predict when Trump might make another headline-grabbing announcement. We expect only minor movements, with trading likely to remain close to flat throughout the day. Trading should only be considered if there are strong technical signals present.

Key Rules for the Trading System:

  1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
  2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
  3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
  4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
  5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
  6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
  7. Stop Loss: Set a Stop Loss to breakeven after the price moves 15–20 pips in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important speeches and reports, which are consistently featured in the news calendar, can significantly influence the movement of a currency pair. Therefore, during their release, it is advisable to trade with caution or consider exiting the market to avoid potential sharp price reversals against the prior trend.

Beginners in the Forex market should understand that not every transaction will be profitable. Developing a clear trading strategy and practicing effective money management are crucial for achieving long-term success in trading.

Paolo Greco,
Especialista em análise na InstaForex
© 2007-2025
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