Analysis of macroeconomic reports:
A few macroeconomic events are scheduled for Monday, but some activity will still occur. In Germany, the Eurozone, the United Kingdom, and the US, the final estimates of the business activity indexes in the services sector for July will be published. We do not consider these data important, and deviations from the first estimates are extremely rare. However, a more significant ISM business activity index in the service sector will also be released in the US. Recall that the ISM manufacturing sector index was disappointing last week, as were almost all the most important data from the US. The ISM index may also fail to support the US dollar.
Analysis of fundamental events:
From Monday's fundamental events, we can only highlight the speech by Federal Reserve representative Mary Daly. We believe Daly will not be able to report anything new after Fed Chair Jerome Powell's speech. At the same time, the next US central bank meeting is still a month and a half away. During this time, we will be able to familiarize ourselves with the opinions of all the representatives of the monetary committee and understand what Powell meant: could the rate be lowered in September just as it could be in October or December? Or is the Fed preparing for a rate cut in September? The answer to this question is very important.
General conclusions:
The US dollar may fall even lower on Monday as the US macroeconomic component is not improving. The ISM index might also fail, especially since experts expect it to rise to 51 pips. Therefore, the actual value will likely be below the forecast. Over the next two weeks, we expect the US dollar to resume its rise.
Basic rules of a trading system:
1) The strength of a signal is determined by the time it took for the signal to form (bounce or level breakthrough). The shorter the time required, the stronger the signal.
2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be ignored.
3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.
4) Trades should be opened between the start of the European session and mid-way through the U.S. session. All trades must be closed manually after this period.
5) In the hourly time frame, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.
6) If two levels are too close to each other (from 5 to 20 pips), they should be considered as a support or resistance zone.
7) After moving 15 pips in the intended direction, the Stop Loss should be set to break-even.
What the charts show:
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines represent channels or trend lines that depict the current trend and indicate the preferred trading direction.
The MACD (14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a source of signals.
Important speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.
Beginners should always remember that not every trade will yield profit. Establishing a clear strategy, coupled with effective money management, is key to long-term success in trading.
