Forex analysis review
Forex analysis review |
- Forecast for GBP/USD on March 1, 2021
- Forecast for AUD/USD on March 1, 2021
- Forecast for USD/JPY on March 1, 2021
- Analytics and trading signals for beginners. How to trade GBP/USD on March 1? Analysis of Friday. Getting ready for Monday
- Analytics and trading signals for beginners. How to trade EUR/USD on March 1? Analysis of Friday. Getting ready for Monday
- $ 44,000 per coin – a critical level for bitcoin
- Mastercard: Bitcoin cannot be used as a means of payment.
- Bitcoin continues to lose value. Will Tesla shares go down on Monday?
- GBP/USD. Preview of the new week. NonFarm Payrolls, Joe Biden's "economic rescue plan", conflict in the Middle East.
- EUR/USD. Preview of the new week. Next week will be very important for the dollar. The number of factors affecting it has
- Trading plan for the GBP/USD pair for the week of March 1-5. New COT report (Commitments of Traders). The pound has moved
- Trading plan for the EUR/USD pair for the week of March 1-5. New COT report (Commitments of Traders). The Syrian attack and
| Forecast for GBP/USD on March 1, 2021 Posted: 28 Feb 2021 06:56 PM PST GBP/USD The pound's decline currently speaks for itself. After overcoming the 1.3950/65 target range, the first target at 1.3830 will open, then the target along the MACD line at 1.3702. This target is in the consolidation range of the last decade of January (gray area), from which a correction to 1.3830 is possible, after which a fall with renewed strength, where you can aim for 1.3565.
The price rose above the 1.3950/65 range on the four-hour chart, remaining below the indicator lines. The Marlin oscillator is in a downward trend zone. The correction may end at the MACD line in the area of 1.4050.
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| Forecast for AUD/USD on March 1, 2021 Posted: 28 Feb 2021 06:56 PM PST AUD/USD The Australian dollar fell by almost 170 points last Friday. The last time a similar trend was seen was back in the second half of March 2020, at the height of coronavirus fears. The price has almost reached the MACD indicator line on the daily chart, now a slight correction is possible, after which we are waiting for the target range 0.7625/41 to be reached, being able to settle below it and descending to 0.7415 - to the September 1, 2020 high.
Trading volumes on Friday were the highest in the last three months. This may indicate that the correction will not be high, although formally it can extend to the MACD line on the four-hour chart in the area of 0.7885. Therefore, we can only follow its development and open short positions upon the end of the correction. If the price moves below Friday's low of 0.7693, it will be a signal for another sale.
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| Forecast for USD/JPY on March 1, 2021 Posted: 28 Feb 2021 06:55 PM PST USD/JPY In its growth, the USD/JPY pair reached the target range of 106.50/65 and a double divergence formed with the Marlin oscillator. At first glance, a deep correction seems inevitable, but the oscillator readings are not limited to the standard divergence, it develops in its own downward channel and may be going up from it in the near future, that is, the double divergence will not be ready. The 107.35/50 range is the growth target. Here the pair is already outlining the price channel and, obviously, the acceleration of growth.
The price is settling in a narrow target range on the four-hour chart, but if it decides to decline in the correction, it will receive support from the MACD line in the 105.85 area. The February 5 high at 105.78 (ticked on the daily) is below this area, but there are no conditions for such a deep correction in such a strong bullish market sentiment.
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| Posted: 28 Feb 2021 01:26 PM PST Hourly chart of the GBP/USD pair
The GBP/USD pair also started a strong downward movement at the end of last week. After it had increased for five consecutive months with only occasional minor corrections, such a strong downward movement was expected, but unexpected at the same time. Unexpected - because hardly anyone could predict exactly when the collapse would happen. It happened in the final week of February. The price broke another upward trend line, which confused the whole technical picture again. At this time, the upward trend has been canceled, as the pair fell by more than 300 points in total, however, after such a strong decline, an upward correction is needed. There is neither a downward trend line nor a downward trend channel at this time. Thus, it is not recommended to trade bullish right now, but at the same time the price can move up on Monday. Trading for a fall has become relevant, but at the same time, the downward movement will hardly continue on Monday. Even the MACD indicator has not yet had time to discharge. Thus, despite the strong movement, it is extremely problematic to reject it. Novice traders should remember that a strong move is not only a good opportunity to make money, but also an excellent opportunity to lose. We advise you to trade according to the most understandable movement patterns. That is, a calm movement with corrections, on which trades should be opened following the trend. There is no such thing now. No important reports from the UK at the end of last week. However, even without this it is clear that the reasons for such a strong growth from the dollar (falling pair = growth of the dollar) lie in the United States. In the article on the euro currency, we have already noted that the reasons are associated with the escalation of the geopolitical conflict in the Middle East and strong US macroeconomic statistics, which traders have finally decided to work out. The question is what will happen next week. Over the weekend, the US Congress approved a new $2 trillion stimulus package and this event could also be reflected on the charts of all currency pairs that include the dollar... A report on business activity in the manufacturing sector will be released in the UK. A similar report will be published in the US, but both reports are unlikely to provoke a reaction from the market. First, both major pairs need to correct upward after falling late last week. Second, the reports are not the most important. Thirdly, the markets need to digest the information about the approval of the new stimulus package by the US Congress. Fourth, it is necessary to understand what degree of intensity the escalation of the conflict in the Middle East will reach this time. Possible scenarios on March 1: 1) Long positions have lost their relevance, but at the same time, an upward movement is more likely on Monday. It can even be strong, 100 points, novice traders can try to work it out at their own peril and risk. We would recommend waiting for the markets to calm down before you enter the market. 2) Short positions became relevant after breaking the upward trend line, however, on Monday, an upward movement is much more likely than a downward one. Thus, in order to be able to consider sell signals, the pair needs to correct upward. After that, you can track the sell signals from MACD. On the chart: Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels. Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now. Up/down arrows show where you should sell or buy after reaching or breaking through particular levels. The MACD indicator consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines). Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal. Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 28 Feb 2021 01:26 PM PST Hourly chart of the EUR/USD pair
The EUR/USD pair continued its downward movement on Friday, not paying much attention to technical factors. The collapse of the euro's quotes at the end of last week is more of a growth of the dollar. In our fundamental articles, we have already analyzed this point. Most likely, the dollar's appreciation was triggered on Thursday by strong US macroeconomic reports, and on Friday - by an increase in anti-risk sentiment in the market associated with an attack by American troops in Syria. Novice traders should understand this point. If geopolitical tensions arise in the world (for example, they regularly arise in the Middle East), this provokes a decrease in investors' appetite for risk. Simply put, traders tend to move their assets from risky to non-risky. Nobody knows what the next military conflict in the Middle East may turn out to be. New terrorist attacks, the threat of a full-scale war, losses on both sides. And despite the fact that the United States is involved in this conflict, the demand for the dollar, as the safest currency, is growing. Of course, no one can say for sure that the rise in the dollar was provoked by this very thing. However, we can only analyze information that is publicly available. And on the last two trading days of the past week, the factors could only be like that. Therefore, beginners could not work on Friday. We recommended looking for an opportunity to buy the pair, but no signals for such were generated. There was no rebound from either the first trend line or the second. There was an upward reversal of the MACD indicator, however, it happened at a time when the MACD indicator went very low and was preparing for uncorrelation with the price (the phenomenon when the price moves in one direction, and the indicator reverses in the other; it happens on strong movements without corrections). No important macroeconomic or fundamental event in the European Union last Friday, and several secondary reports were published in the United States. It is unlikely that such a firm strengthening of the dollar was associated with reports on changes in income levels or spending by Americans. Or the University of Michigan Consumer Sentiment Index. The US and the European Union will publish indexes of business activity in the manufacturing sectors, which do not cause any concern at this time. Traders did not react. Thus, the pair will most likely begin to roll back up on Monday. Possible scenarios on March 1: 1) Long positions have lost their relevance at the moment, but the situation is confusing and ambiguous. The pair is likely to rise on Monday, but both trend lines have been crossed. There is no new downward trend line. Thus, in such a situation, we advise you to wait for the markets to calm down and return to the usual trading mode. 2) Trading for a fall has become relevant, as both upward trend lines have been overcome. At the same time, the pair has already gone down about 180 points, which now requires an upward rollback. Thus, after an upward correction, you can track new sell signals from the MACD indicator. Maybe by then a downward trend line or channel will have formed. On the chart: Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels. Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now. Up/down arrows show where you should sell or buy after reaching or breaking through particular levels. The MACD indicator (14,22,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines). Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal. Beginners in the Forex market should remember that every trade cannot be profitable. Developing a clear strategy and money management are the keys to success in trading over a long period of time. The material has been provided by InstaForex Company - www.instaforex.com |
| $ 44,000 per coin – a critical level for bitcoin Posted: 28 Feb 2021 04:42 AM PST
After the strongest growth in the last five months, bitcoin has started a second serious wave of correction. In theory, if the current downward movement is a correction, then a new wave of upward movement will inevitably follow, which can bring the "digital gold" to the levels of about $ 70-80 thousand per coin. However, we draw the attention of traders to the fact that the market is not showing signs of readiness for new purchases. Perhaps traders are waiting for a new decline to buy at an even better price, and perhaps the markets are waiting for some kind of push that will tell them what to do next. The price hovered near the critical Kijun-sen line and most experts agree that the zone of $ 44-45 thousand per coin is the key for the "cue ball". If the price falls below this area, then, most likely, a new wave of sales of "digital gold" will follow. Therefore, we recommend that traders keep a very close eye on this area. It should be recalled that no matter what forecasts are given by experts, there is always a probability of a move in the other direction. Back in 2017, many people were talking about $ 50,000 per coin, but later the "cue ball" rate collapsed from $ 20,000 to $ 3,000. At the same time, large investment and management companies openly state that they could deal with bitcoin if its volatility was lower. Companies also want to see the liquidity in bitcoin and clearly understand the relationship between cryptocurrencies and regulators in the future. The question of the legality and control of transactions with bitcoin is really in the air. Representatives of the Federal Reserve and the ECB (as well as other central banks) have repeatedly stated their skepticism about tokens that are not controlled by anything and no one. Thus, it is easy to guess that regulators would like to establish control over "digital currencies" or depopularize them as much as possible. It is this uncertainty in the relationship between tokens and governments that makes many investment funds and investment banks cautious. Some of them admit that bitcoin can be part of the investment portfolio, but in the proportion of no more than 1%. Rebecca Patterson, the chief analyst at Bridgewater Associates, believes that the current bitcoin movements of 10% per day, which depend on a single tweet, are 10 times higher than the volatility of the US dollar. "More stringent oversight of cryptocurrencies on the part of the States will give more comfort to investors. This will provide liquidity and reduce volatility. Perhaps this is what needs to happen in the first place," said Patterson. Perhaps bitcoin has reached its maximum value at the current level of popularity? The material has been provided by InstaForex Company - www.instaforex.com |
| Mastercard: Bitcoin cannot be used as a means of payment. Posted: 28 Feb 2021 04:42 AM PST
Cryptocurrencies continue to take over the world, although this process is not fast. Every year, the public becomes more and more interested in cryptocurrencies. Of course, there is no denying the obvious. Janet Yellen, Christine Lagarde, and others are right when they say that bitcoin is often used for criminal purposes and money laundering. This is what makes bitcoin and other tokens stand out from ordinary money. With the development of the banking system, most of the payments go through banks, so it has become much easier for states to control the flow of money. But with the advent of anonymous digital currencies, which are not anything valuable, but at the same time the price for them is set by the market, the problem of anonymous, untraceable payments has been solved. Therefore, we continue to argue that bitcoin and its "brothers" are a great tool for investing or a great tool for hidden payments, but it is a weak tool for daily use and calculations. However, many companies and businessmen with investors continue to hold the same opinion. For example, Mastercard Executive Chairman Ann Cairns. He believes that bitcoin is an extremely volatile instrument, and the transaction takes too much time. "If you and I go for a coffee and I decide to pay with bitcoins, our drink may cost me, for example, 40% more from the moment of submission. And the actual completion of the transaction will take 10 minutes," says Cairns. According to Cairns, bitcoin is comparable to gold, but it cannot be used as a means of payment. At least when it comes to everyday transactions. Meanwhile, some analytical companies recorded quite large sales of bitcoins at the moment when the number one cryptocurrency began to fall in price. Many experts believe that in the coming weeks or months, bitcoin will stop its growth. This is attributed to an increase in the yield of US government bonds. As we said earlier, the sharp increase in demand for bitcoin in recent months could be caused not only by Elon Musk's tweets but also by a significant increase in the money supply in almost all developed countries of the world. Moreover, negative or minimal interest rates force investors to look for new ways to earn money. As a result, a new wave of cryptocurrency purchases began. Recently, the world has started vaccinating the population, which means that there is hope that in the next year or two, life will return to normal. Thus, the demand for bitcoin may begin to fall sharply, as economies will recover, and investors will find more attractive tools for investing. Therefore, the goal of $ 100,000 per coin may be unattainable. The material has been provided by InstaForex Company - www.instaforex.com |
| Bitcoin continues to lose value. Will Tesla shares go down on Monday? Posted: 28 Feb 2021 04:42 AM PST
Bitcoin continues to trade with a decline for a whole week. Recall that the cryptocurrency market continues to function at the weekend. And at this time, the crypto community continues to think about the question, will there be a new round of bitcoin growth? Or maybe far from one? Recall that bitcoin is not constantly growing. For example, three years have passed since its last strong strengthening. For three years, the cryptocurrency has been trading in a relatively narrow range and only in the last few months shows the strongest growth. Such cyclicity and frequency still suggest that the majority of bitcoin holders consider this cryptocurrency only as a means of earning money. Therefore, when most investors say "stop, that's enough", bitcoin will crash down. In fact, in the last week, it has already collapsed, losing almost a quarter of its value. Interestingly, just recently, Tesla, Microstrategy, as well as several other large companies with a global name, invested in Bitcoin. Many experts then believed that the investments of these companies would serve as an example for others and mass investment in bitcoin from large companies would begin. However, as practice shows, many people are still quite skeptical about bitcoin and do not want to get involved with an asset that can lose a quarter of its value in a week. Moreover, for example, the company Tesla is now associated not with the production of electric cars, but with bitcoin investments. As we wrote earlier, Tesla receives most of its profits not from the sale of electric cars, but other activities, for example, from the sale of environmental loans to other automakers. Now many investors associate the name of Elon Musk with bitcoin and draw patterns between the value of Tesla shares and the value of "digital gold". Since stock markets are closed over the weekend, it is easy to assume that Tesla shares may fall even more on Monday. The last jump in the stock market led to the fact that Tesla shares fell in price by 8%, and Elon Musk lost $ 15 billion thanks to this. Bitcoin continues to fall in price and many are waiting for a synchronous fall in Tesla shares. Thus, we once again draw attention to the realities of the 21st century, where the value of shares no longer depends on objective market realities. It depends on the exchange rate of an unsecured asset. And the rate of unsecured "digital gold" depends on the statements of the head of the company, whose share price depends on the rate of unsecured assets. A huge number of books on the stock market can be thrown out as unnecessary. Now you need to monitor not the monetary policy, the state of the economy, the economic condition of the company. Now you should follow the news on the Reddit forum and the tweets of Elon Musk. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 28 Feb 2021 02:08 AM PST The British pound also made an impressive downward rally at the end of last week. Unlike the European currency, we have been waiting for a decline in the British pound for a long time. We have repeatedly drawn attention to the fact that the British currency has been growing in recent months, if not completely unreasonably, then clearly stronger than the fundamental factors suggest. Simply put, the pound has grown too much, so its fall at the end of this week, from our point of view, is quite logical and reasonable. However, it did not happen out of the blue for technical reasons. That is, the main reason for it was not the banal desire of buyers to fix the profit. The downward movement was triggered by macroeconomic statistics from overseas and fundamental factors. Thus, at the moment, it is not entirely clear whether the markets will resume buying the British currency from the new week on the basis of the "speculative" factor or will the upward trend be completed around the level of 1.4240? We remind you that over the past 11 months, the pound has grown by almost the same amount as it fell in 4 "Brexit" years. Therefore, a strong drop in the British dollar's quotes is possible. However, first, traders can simply resume buying the pound sterling without paying attention to anything, just as they have not paid attention to anything for the past few months. Secondly, the US Congress approved a package of stimulus measures from Joe Biden in the amount of almost $ 2 trillion, so a new portion of dollars will soon flow into the economy, which can significantly affect the exchange rate of the US currency. Thus, the upward movement may resume in the coming weeks, however, the correction may continue for some time. As for the macroeconomic statistics for the next week, it will make a difference. In the first place will be the factor of the new stimulus package, which was approved by the lower house of Congress, and the factor of geopolitical tensions in the Middle East. We remind you that the approval of the new stimulus package by the Congress was announced yesterday, that is, on Saturday, when the foreign exchange market was already closed. Thus, traders could not yet play back this news, however, it is likely that they will do so on Monday. Therefore, we need to be ready for a strong movement on Monday. Returning to the macroeconomic statistics, on Monday in the UK and the US, business activity indices in the production sectors will be published. Both do not cause any concerns, as they are at high values and are unlikely to fall much by the end of February. On Wednesday, both countries that are interested in the pound sterling will publish indices of business activity in the services sector and there are no questions about the US again. But the British sphere of business activity raises questions. The previous value of the indicator was 49.7, despite the fact that a month earlier business activity was below the level of 40.0. That is, at the end of January, this indicator increased by more than 10 points, and if the growth continues in February, the service sector will begin to recover quickly after two winter "lockdowns". In contrast, for example, to the services sector of the European Union, where business activity is likely to remain below the level of 50.0. Also on Wednesday, America will release a report from ADP on changes in the number of people employed in the private sector. Recall that the latest ADP reports were ignored, as well as many others over the past year. However, last Thursday, the markets still worked out important statistics from overseas, so this time we can hope for a reaction. On Thursday, the UK will release a minor report on business activity in the construction sector, and in the States – several minor reports that are unlikely to be noted by traders. On Friday, the most important reports of the week will be published. The US unemployment rate, NonFarm Payrolls, and the change in the average hourly wage. And these publications, of course, have the highest probability that they will be worked out. However, they will be published on Friday, and before Friday, a lot of things can happen in the world. At the very least, a new escalation of the conflict in the Middle East. It is also unclear how traders will react on Monday to the approval by the US Congress of Joe Biden's "economic rescue plan". If there is a reaction, then on Friday the reports will pass through the prism of this reaction and the new reality for the US dollar. In general, we do not undertake to predict what will happen on Friday. It is better to focus on what will happen on Monday-Tuesday. From a technical point of view, the pound/dollar pair on the 24-hour timeframe just corrected a little. The previous movement was so strong and prolonged that a drop of 340 points is just a pullback. The price could not gain a foothold even below the critical line. Therefore, at the beginning of a new trading week, you should pay attention to this factor – the critical line factor. If it is followed by a rebound, then with a high degree of probability, the upward movement will be resumed. Trading recommendations for the GBP/USD pair: The pound/dollar pair on the 4-hour timeframe also started to move down and here it looks more impressive. However, on the 4-hour timeframe, the price hit the Senkou Span B line. That is, we now have a double barrier in the form of the lines Kijun-sen on the 24-hour and Senkou Span B on the 4-hour. The rebound or overcoming of these lines will determine the further fate of the pair in the coming days or weeks. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 28 Feb 2021 02:08 AM PST A new working week begins, and we need to figure out what to expect from it. The most important question is: was the downward movement at the end of last week an accident caused by several factors that coincided in time or is it the beginning of a new, long-term downward trend? We believe that there is a considerable amount of chance in the fall that occurred on Thursday and Friday. No one denies that the macroeconomic statistics from the US on Thursday were strong, but how many such strong statistics have been ignored by traders over the past year? Escalation of the military conflict in the Middle East? The tense state of war in this region has persisted for decades. And there were no other reasons for the growth of the US dollar. We can assume that a new round of technical correction is overdue, but in this case, it should end on Monday or Tuesday. In general, we remain at our initial opinion: in 2021, the US currency will continue to decline in the long term. We have already talked about the main factor that affects the movement of the pair in the last year several times. We continue to believe that the fall in the US dollar over the past 11 months was triggered by a sharp increase in the money supply in the United States. Accordingly, if this process continues (and it will continue almost guaranteed), then the US currency will continue to devalue. Of course, many other potentially important factors affect the movement of the pair. For example, in the European Union, economic stimulus programs may also be increased. We remind you that the notorious recovery fund for 750 billion euros has not even been formed yet, and certainly not distributed. Thus, formally, with the arrival of this money in the economy, the EU money supply can also grow. However, so far, it still seems that it is not as strong as the money supply in the United States. Since traders have already worked out the American statistics last Thursday, then we should pay more attention to the publication of reports next week. What can I pay attention to? On Monday, the European Union will publish an index of business activity in the manufacturing sector. However, this indicator last month was at a very high value and it is unlikely that it will collapse below the level of 50.0. On Tuesday, the European Union will publish a report on inflation for February, which may still accelerate and reach 1.0% in annual terms. On Thursday, the unemployment rate will be published, which in the European Union is at a fairly high level of 8.3%, but may increase even more. Also on this day, retail sales will be published, which by the end of January may decrease by 1.1%-1.4% compared to January. On Friday, in the European Union, the calendar of macroeconomic events will be empty. Thus, according to forecasts for the next week, statistics from the eurozone may be quite weak. This may lead to a new strengthening of the US currency. However, we believe that the factor of tension in the Middle East will be more important. In the event of new conflicts and new attacks, the anti-risk sentiment in the market may increase even more, which will provoke an increase in demand for the dollar. The approval of a new stimulus package for the US economy is also of great importance. On Saturday, February 27, it became known that the US House of Representatives approved this bill, so now it remains for a small matter - the approval of this project by the Senate, where the formal majority is also in the hands of Democrats. Thus, while a new batch of dollars has not yet poured into the economy, however, in the coming weeks, the dollar may begin to experience a new portion of pressure in connection with this event. In technical terms, everything looks very strange on a 24-hour timeframe. The fall in the pair's quotes on Thursday and Friday turned out to be too strong. It is unlikely that such a strong downward movement will continue next week. The price remains within the Ichimoku cloud and above the 50.0% Fibonacci level, from which we start our forecasts for the future of the pair. Thus, everything looks like a slightly stronger round of correction than the one that would be quite enough, but the fundamentally technical and fundamental picture for the euro/dollar pair has not changed. Therefore, from our point of view, it is still impractical to talk about changing the global trend to a downward one. The bears may even try to lead the pair to the 50.0% Fibonacci or 61.8% levels in the coming weeks, but even this will not break the 11-month upward trend. Trading recommendations for the EUR/USD pair: The technical picture of the EUR/USD pair on the 4-hour chart, of course, shows a change in the trend from ascending to descending. The price is fixed below all the important lines of the Ichimoku indicator. However, after a two-day drop in quotes, we expect to see at least an upward pullback of 50-70 points. After this pullback, the downward movement may resume in the short term. Thus, in the short term, it is recommended to trade down in the near future, but at the same time, it should be remembered that from a fundamental point of view, there are few grounds for further strengthening of the dollar. It should also be remembered that any fundamental hypothesis requires specific technical confirmation. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 26 Feb 2021 11:08 PM PST GBP/USD – 24H. The GBP/USD currency pair has continued its increasing upward movement in recent weeks. However, last Thursday and Friday, it began a collapse. We have long warned that the pound could collapse. It should be remembered that this currency has become more expensive for no obvious reason for more than five months. Even better to say this: this currency has become more expensive in the last five months when the fundamental background in the UK was negative. Earlier, we concluded that 60% of the increase in the money supply in America over the past year and 40% of the "speculative" factor played a role. However, on Thursday and Friday, the US dollar began to strengthen across the entire spectrum of the market. The reason for this movement, unfortunately, lies not in the desire of buyers to record a profit on the pound, but in strong macroeconomic statistics from overseas and the United States attack on Syria, which caused a surge in anti-risk sentiment. Thus, the upward trend may well resume. Moreover, if the $ 2 trillion stimulus package is approved by Congress, the US currency will almost certainly begin to depreciate again. The only question is when this process will begin since Congress is almost 100% likely to approve Joe Biden's initiative. From a technical point of view, the pound/dollar pair corrected to the critical line on the 24-hour timeframe. Therefore, a rebound from it can provoke the resumption of the upward movement. But overcoming the Kijun-sen line can lead to a new fall of the pair. So next week, everything will depend on this line. COT report. During the last reporting week (February 16-22), the GBP/USD pair increased by 150 points. The last two COT reports signaled an increase in bullish sentiment among the "Non-commercial" group of traders. Therefore, in general, the mood of the major players and what is happening in the market for the pound/dollar pair coincided. During the last reporting week, non-profit traders opened a minuscule number of new contracts. A total of 1 thousand buy contracts and 1.2 thousand sell contracts. Thus, the net position for this group of traders has not changed, as well as the total number of open contracts. Therefore, there should have been no major changes in the market. Nevertheless, the pound continued to grow strongly, so we again return to the hypothesis that the demand for the pound remains relatively high, but a large role in strengthening the British currency is played by the high supply of the US dollar, which is cheaper because of this. COT reports do not take into account the supply and demand for the dollar, so if they change greatly in volume, then a particular currency can move without correlating with COT reports on it. This is approximately the picture we see for the pound sterling. The first indicator for all the time that is placed in the illustration does not show an unambiguous "bullish" mood. The green and red lines constantly intersect and change the direction of movement, which indicates the lack of a clear strategy for professional traders. But the pound continued to grow steadily all this time. There have been some interesting events in the UK this week. In particular, the speech of the Chairman of the Bank of England, Andrew Bailey. However, until Thursday's events, the British pound continued to grow as if nothing had happened, ignoring all the macroeconomic data. Andrew Bailey's speech did not give any fundamentally new information to the markets, and on Thursday a package of strong macroeconomic statistics in the United States was released, which provoked the beginning of the growth of the US currency. Thus, the factors that led to the growth of the US currency at the end of this week are the same for the euro/dollar and pound/dollar pairs. The question is, what happens next? Will this two-day drop be the beginning of the end of the pound's rise? As we have already said, even taking into account the global fundamentals, the pound has grown very strongly. Therefore, the fall can also be very strong. Especially if the majority of traders start massively reducing long positions to fix a profit on the "bitcoin-like" pound. Therefore, next week you will need to track the news regarding the military operation in Syria. The stronger the new military conflict grows, the higher the probability of continued strengthening of the dollar. You should also carefully monitor the technical picture. Trading plan for the week of March 1-5: 1) The pound/dollar pair maintains an upward trend, despite even a 2-day drop. Thus, on the 24-hour timeframe, the target remains at the level of 1.4129, which has already been worked out. More important is the Kijun-sen line. If there is a rebound from it, the pound will resume its movement to the north. At the beginning of the next trading week, the most important thing is to understand whether traders are ready for further "speculative" growth of the pair? Or is it time for profit-taking? 2) Sellers are still extremely weak, and the initiative in the market continues to be in the hands of buyers. In recent months, the bears do not even have enough strength to form a correction. The bulls helped the bears in the last two trading days of this week, but will the sellers themselves want to enter the market? As we have already said, the pound has few reasons for growth, but the US dollar will not have them if the US Congress approves a new package of stimulus measures. Explanation of the illustrations: Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them. Ichimoku indicators, Bollinger Bands, MACD. Support and resistance areas – areas from which the price has repeatedly bounced before. Indicator 1 on the COT charts – the net position size of each category of traders. Indicator 2 on the COT charts – the net position size for the "Non-commercial" group. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 26 Feb 2021 10:36 PM PST EUR/USD – 24H. Another trading week on the forex market ended with a collapse of the euro/dollar pair quotes and the reasons for this collapse are not entirely clear. More precisely, you can think of as many reasons as you want, any fundamental event can be "tied" to any movement in the market if you want. But we would like to find the true cause of what happened on Friday. By the way, it should be noted that the fall in the pair's quotes began on Thursday and continued on Friday. So, the process of strengthening the US currency began on Thursday, February 25 in the afternoon. That is, in the US trading session. At the same time, the British pound sterling began its fall also around this time. So, the first conclusion is that the fall of both major pairs is connected with America. In the United States on Thursday, a package of important macroeconomic statistics was released (we will talk about it below), which could well provoke such a movement, although, in the last year, market participants very often ignore statistics. But why did the dollar continue to rise on Friday? On the one hand, everything can be explained by technical factors. The pair went only 170 points down in two days. Yes, the movement is strong, but not a collapse. For example, on the 16th-17th, the pair went down 130 points, but no one panicked about it. Therefore, from our point of view, several factors simply coincided in the market at the end of last week, which caused an unusually strong (over the past year) strengthening of the US currency. On the 24-hour timeframe, you can see that the price bounced from the 23.6% Fibonacci level and the upper border of the Ichimoku cloud. Unfortunately, the option with a long-term upward movement may be shelved or canceled altogether. If the pair is fixed below the 50.0% Fibonacci level on the 24-hour timeframe, this will significantly increase the probability of further growth of the US dollar. COT report. During the last reporting week (February 16-22), the EUR/USD pair increased by 30 points. In recent weeks, we have insisted on the option of continuing the long-term upward trend. This was partly supported by the latest COT reports. Over the past two weeks, the mood of large traders has not changed dramatically, and at the time of publication of the penultimate report, the number of open long positions for professional traders exceeded the number of open short positions by three times. Thus, a bullish mood is on the face. The latest COT report also didn't show any major changes. During the reporting week, a group of "Non-commercial" traders opened 6.5 thousand buy contracts and sell contracts. Thus, the net position of this group of traders has not changed in any way, and the mood has not become more bullish or more bearish. However, for the third week in a row, the first indicator in the illustration indicates that the mood of non-commercial traders is unchanged. The green and red lines did not rise or fall during these three weeks. Thus, the big players took a wait-and-see attitude. Well, the days with the collapse of the pair (Thursday and Friday of this week) were not included in the new COT report. Thus, since the beginning of September last year, major players have been aiming for a downward trend, however, global fundamental factors prevent them from starting it. We have talked about the global fundamental factors more than once, everything boils down to a huge increase in the US money supply in 2020. There were many important fundamental events this week. First, the macroeconomic statistics in the United States, which finally aroused the interest of traders and they worked it out. Second, two speeches of Jerome Powell to Congress. Third, the United States attack on Syria, which was the first military operation since Joe Biden took office. We have already talked about statistics. It turned out to be strong and could provoke a rise in the dollar. Jerome Powell's speeches did not affect the mood of traders. But the third factor could cause an additional strengthening of the US currency. The fact is that in recent years, it is the US dollar that has become the "reserve currency". Previously, these were the Japanese yen or the Swiss franc. Recall that the "reserve currency" is a currency that investors actively buy to preserve the value of their assets in various emergencies. Think back to March of last year. Before the prolonged fall of the US currency began, the dollar rose by 8 cents in ten days. This is the time when the "coronavirus" began to take over the whole world and was officially recognized as a pandemic. The same is true of the ongoing conflicts in the Middle East. As soon as there is another risk of a new conflict, traders begin to transfer their money from risky assets to less risky ones. The demand for the dollar at such a time increases, which leads to its strengthening. So, from our point of view, what happened at the end of this working week is just a coincidence of two strong factors. Trading plan for the week of March 1-5: 1) On the 24-hour timeframe, the whole technical picture is confused. The pair remains inside the Ichimoku cloud for the time being, and global fundamentals continue to support the pair's further growth. However, now you will need to observe how the sellers will behave. Above the 50.0% Fibonacci level, there is a high probability of resuming the upward trend, however, the pair's downward movement must stop as quickly as possible. 2) It is still very early to talk about the beginning of the formation of a new downward trend. The pair has gone down only 170 points so far. However, if the mood of traders abruptly changes to bearish, this may cause the pair's quotes to continue falling. We do not believe in this option yet, as we believe that the new package of stimulus measures in the US will lead to a new increase in the money supply and a new increase in the supply of the US currency on the market, which will provoke a new fall in the dollar. Explanation of the illustrations: Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them. Ichimoku indicators, Bollinger Bands, MACD. Support and resistance areas – areas from which the price has repeatedly bounced before. Indicator 1 on the COT charts – the net position size of each category of traders. Indicator 2 on the COT charts – the net position size for the "Non-commercial" group. The material has been provided by InstaForex Company - www.instaforex.com |
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