Analysis of Macroeconomic Reports:

Many macroeconomic publications are scheduled for Monday, with some overlapping. Second estimates of S&P services-sector business activity indices for September will be published in Germany, the Eurozone, the UK and the US. However, these releases are not considered important and are unlikely to differ much from the first estimates. The ISM services activity index will also be published in the United States; it is always released as a single reading and is considered an important indicator. But will the market react to this report after Friday's events? We strongly doubt it. If the report is strong, the market will get a new reason to buy the dollar. If the report is weak, most likely nothing will happen.

Analysis of Fundamental Events:

Monday's key events include speeches by European Central Bank Chief Economist Philip Lane and Isabel Schnabel. After the September inflation report, ECB officials' hawkish bias should become firmer; however, the market still does not react to the ECB's rate hikes. Thus hawkish tones inside the ECB may harden, but this is unlikely to deliver any dividends to the euro.

The geopolitical backdrop still leaves much to be desired and is not getting better. The US and Iran are not conducting official negotiations at the moment, although Donald Trump said his team had a very good meeting with Iranian representatives at the UN General Assembly and that a deal could be signed after the US Congressional elections. However, the market does not believe such a rosy development. Over the weekend, it became known that Yemen began a military operation against the Houthis, and the Houthis continue to strike oil and gas facilities and tankers belonging to Saudi Arabia. Thus tensions in the Middle East are heating up again.

General Conclusions:

On the first trading day of the week, currency pairs can continue to decline calmly, since the move now does not depend on fundamentals, geopolitics, or macroeconomics. The euro can be traded today from the 1.1198–1.1218 and 1.1267–1.1275 areas, and the pound sterling from the 1.3259–1.3267 area. Volatility today may be low.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.
5. If two levels are too close together (within 5-20 pips), treat them as a support or resistance area.
6. After moving 15 pips in the right direction, a stop-loss should be set to break even.

What to Look for on the Charts:

Price levels (areas) of support and resistance serve as targets for opening buy or sell trades or as sources of signals.

Red lines indicate channels or trend lines that show the current trend and the preferred trading direction.

The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also provide signals.

Important speeches and reports (listed in the news calendar) can significantly influence currency pair movements. Therefore, during their release, traders should approach trading with utmost caution, or exit the market to avoid sudden reversals against the preceding move.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.