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22.05.2025 06:31 AM
What to Pay Attention to on May 22? A Breakdown of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

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There are several important macroeconomic reports scheduled for release on Thursday. Business activity indexes for May's services and manufacturing sectors will be released in Germany, the Eurozone, the United Kingdom, and the United States. It's easy to guess that business activity is unlikely to improve significantly amid the ongoing global trade war. In any case, these are not important enough indicators for the market to suddenly abandon its selling of the U.S. dollar. Other reports will carry even less weight for traders. It's unlikely that anyone is interested in Germany's business climate index or U.S. new home sales.

Analysis of Fundamental Events:

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Among Thursday's fundamental events, we can note speeches by Federal Reserve representative John Williams, European Central Bank officials Luis de Guindos and Frank Elderson, and Bank of England representatives Swati Dhingra and Huw Pill. However, what significance will these speeches have if the policies and positions of central banks are already 100% clear and the market continues to trade based on just one factor?

We believe that the only factor that still matters to the market is the global trade war, which, although slowly de-escalating, is still ongoing. Donald Trump continues to announce the signing of trade agreements, but this news provides only weak support to the dollar. The dollar's decline may continue if Trump introduces new tariffs, raises existing ones, or if most countries fail to sign trade agreements. The dollar may continue to decline without new tariffs, as market sentiment toward the U.S. president and his policies remains highly negative.

Conclusions:

On the second-to-last trading day of the week, both currency pairs may move in either direction. The macroeconomic background will be extensive but unimportant enough to shift market sentiment from bullish to bearish. This week, the market has shown a willingness to buy both pairs even without strong reasons or catalysts. The rally may well continue.

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,
Analytical expert of InstaForex
© 2007-2025
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