Forex analysis review
Forex analysis review |
- Updated bullish targets for XRP if bulls manage to break above $1.05
- Update on our expected short-term bounce in Ethereum.
- GBP/USD. Preview of the new week. Traders are waiting for NonFarm Payrolls and Andrew Bailey's speeches.
- EUR/USD. Preview of the new week. Two speeches by Christine Lagarde and a report on inflation in the European Union.
| Updated bullish targets for XRP if bulls manage to break above $1.05 Posted: 30 May 2021 01:09 AM PDT XRP/USD is trapped inside a short-term bearish channel since the recent high of $1.05. Price is making lower lows and lower highs and has already retraced 61.8% of the last upward wave from the May 23rd lows.
Red lines- bearish short-term channel Blue lines - Fibonacci retracements XRP/USD has the potential to reach $1.20-$1.45. For this to happen we need to get some bullish signals. The first signal will come with a break out of the bearish short-term channel. The channel resistance is at $0.89. A daily close above this level would be a good first signal. The most important signal will come if and when price breaks above $1.05. Assuming that the recent low at $0.79 is not violated, our first target is at $1.21 and our second target at $1.45. Failure to hold above $0.79 could lead to another sell off towards $0.65 and why not lower. The material has been provided by InstaForex Company - www.instaforex.com |
| Update on our expected short-term bounce in Ethereum. Posted: 30 May 2021 01:02 AM PDT In our last analysis on Ethereum we took for granted that the next upward wave has already started and price was heading towards $3,200-$3,300 area. Price action that followed did not confirm our view that the pull back was over. Prices pulled back towards $2,170 and are now moving higher again.
The upward bounce from $1,748 to the 38% Fibonacci retracement was the first bounce wave. The second wave pull back reached the 61.8% retracement of the first wave and I'm very confident that we are now starting the third and most probably final upward wave towards the red rectangle area where I expect to see a major lower high. Price is expected to move towards the 50%-61.8% retracement area. This is our target. My most probable scenario is that we make a lower high in that area and then reverse in order to make another corrective pull back that will eventually push price below $1,748. It is still too early to talk about this scenario. We focus on the short-term bounce targeting the red rectangle area. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 30 May 2021 12:12 AM PDT
What to say about the pound ahead of the new trading week? The pound/dollar pair has been standing in one place for two weeks. Thus, we believe that the upward movement will continue almost in any case. The bears are now extremely weak, and their efforts will not be enough to block the actions of the Fed and the US government, which continue to pump their economy with money. No matter what purchases of the US currency or sales of the British currency, the pound will still grow if the money supply for the US dollar inflates before our eyes. Dollars in the world are becoming more. Thus, it is not surprising that the exchange rate of the US currency continues to decline. Therefore, in general, the situation for the pound/dollar over the past week has not changed at all. All of the major global factors are also looking north. Still, the American economy feels much better than the British one. However, it doesn't matter. There are also a huge number of geopolitical problems in the UK. However, this does not matter in the current circumstances. Therefore, we do not yet see any reason why the euro and the pound may end their ascent in the near future. Of course, this is not an argument. You should always keep track of the technical picture. It is for determining the trend that the Kijun-sen line and the Bollinger Bands indicator exist. As long as the price remains above the critical line on the 24-hour timeframe, it makes no sense to talk about a possible hike to the south. As for macroeconomics, it has the same effect on the pound/dollar pair as it does on the euro/dollar pair. That is, almost none. There are local market reactions, such as this week after Gertjan Vliege's speech. There was not a single macroeconomic report in the UK during the entire current week, and all American statistics were ignored. Nevertheless, macroeconomics is almost the only thing that traders can rely on in their trading every day. For example, if the news calendar is empty, there is a higher probability that there will be no sudden movements during the day. On the other hand, if the calendar is empty, then the probability of a flat is higher. We rely on the calendar of events when preparing for the new working day. Well, if the market did not react to this or that event, then it's okay. There will be several macroeconomic publications in the UK over the next week. However, almost all of them are frankly secondary. For example, on Tuesday, the business activity index for the manufacturing sector will be released on Thursday - the business activity index for the services sector. On Friday, the business activity index for the construction sector. Perhaps the price will react to these reports by 20 points. However, it is unlikely to be more than that. Bank of England Governor Andrew Bailey is also scheduled to speak on Tuesday and Thursday, which will receive increased attention after the words of Gertjan Vliege. Everyone will be waiting to see if Bailey confirms that BA is ready to raise the rate next year. They were especially considering the fact that six months ago, the Bank of England was thinking hard about lowering the rate. In the United States, on Tuesday, the potentially very important ISM index for the manufacturing sector will be released, on Thursday - the ADP report on changes in the number of employees in the private sector and business activity indices for services and manufacturing, and Friday - NonFarm, the unemployment rate and changes in average wages. From all this abundance of information, we can only single out the Nonfarm Payrolls report. The report from ADP, which is considered the second most important report after Nonfarm, which shows the labor market state, is expected to have a strong reaction every time market participants ignore it. Business activity indices are likely to remain at very high values. Thus, it is unlikely that traders will be interested in them. The level of unemployment and the level of average wages are the same. Therefore, only NonFarm remains. According to forecasts, the number of new jobs created outside the agricultural sector will be 650 thousand in May. Recall that last month, a high Nonfarm value was also expected – almost 1 million, but instead, the figure turned out to be only 266 thousand. Thus, the main intrigue of the week is whether the second consecutive report on NonFarm Payrolls will fail. Recall that on May 7, when the previous failed Nonfarm report was released, both the euro and the pound began a new round of ascent. Then the euro rose by 100 points in the end, and the pound – by 220. Thus, NonFarm is the actual most interesting event of the week.
Trading recommendations for the EUR/USD pair: The pound/dollar pair on the 4-hour timeframe is stuck in one place, and it seems that it needs a strong fundamental background now to move from its place. We believe that the pair will continue to move up in any case. However, a few interesting events may help it to do so next week. Of course, if the NonFarm Payrolls report turns out to be strong on Friday, then we should expect a rise in the US dollar. But until Friday, the pound will have at least four trading days. The price over the past week failed to gain a foothold below the Ichimoku cloud, so the upward trend, despite the flat of recent weeks, remains. We remind you that now the factors that support the pound are much more, and they are very strong. Thus, with a probability of 80%, the growth of the British currency will continue with the targets of the resistance levels of 1.4309 and 1.4385. Explanation of 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. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 30 May 2021 12:12 AM PDT
The European currency paired with the US dollar is mostly in one place in the last two weeks. However, this does not prevent it from also updating its local maximum. The last time such a high was updated was on May 25, when the price stopped near 1.2266. Recall that the three-year high is at 1.2350. Although the upward movement is very weak, it remains very confident. At this time, there is no classic confrontation of bulls and bears in the market. Buyers are just gradually pulling the pair up, and sellers are watching on the sidelines. According to COT reports, buyers continue to increase their positions, which leads to an overall increase in the net position. Thus, the mood in the market is now "bullish," and the United States continues to pump its economy with money (and is going to continue to do so), and a new global upward trend has begun. From our point of view, the three most important factors that affect the pair's movement at this time remain on the side of the European currency. At the same time, all the most important macroeconomic indicators, such as inflation or GDP, the rhetoric and actions of central banks, the expectations and fears of traders do not matter much now. Moreover, many macroeconomic reports can be interpreted in different ways. For example, in the United States, inflation rose to 4.2% y/y. That's a lot. However, the report for April has a very low base (weak inflation in April 2020). The price increase is associated with rising energy prices and pouring trillions of dollars into the economy. What else could we expect? Thus, the acceleration of inflation can be considered a positive factor (the Fed will move faster to curtail the QE program and raise the rate) and as a negative factor (depreciation of money). The same applies to the rhetoric of the representatives of the ECB and the Fed. By and large, it now has no special impact on the movement of the euro/dollar pair. Christine Lagarde and Jerome Powell speak very often. However, one speech out of ten gives real new information to traders. The essence of the latest statement by Christine Lagarde is that we should not expect any steps from the European regulator in the near future to tighten monetary policy and curtail incentives. The essence of Jerome Powell's latest statement is a cautious hint that if the US economy continues to grow at a high rate, then perhaps the QE program will begin to wind down. The representatives of the Federal Reserve did not name the terms in clear text, nor did they name clear conditions. It is impossible to understand what kind of growth the Fed wants to achieve so that this is enough to complete the QE program. In the first quarter of 2020, the US economy accelerated by 6.4%, and in the second – it can add 9% (judging by forecasts). That's a lot. For example, the Bank of England already openly says that it will be ready to raise the rate next year, although there was no economic growth in the first quarter (-1.5% y/y). Thus, the comments of the Fed representatives, although they are "minimally hawkish," do not clarify in any way what and when to expect from the Fed in terms of monetary policy. Accordingly, the fundamental background has not changed at all recently, and along with it, the euro/dollar pair itself stands still. The good news is that not everything depends on the fundamental background. Market participants, especially large players, can make trades without relying on any fundamental background. However, we can not predict what actions will be performed by a particular large bank or corporation. Thus, we can only follow the trend that we are tracking with the help of technical analysis and pay attention to technical analysis that visualizes what is happening. You should also pay attention to macroeconomic statistics. However, keep in mind that most of the reports are ignored. A striking example of this is the report on orders for long-term goods in the United States, which no one has paid attention to for more than a year, although it was previously considered very significant. Next week, the European Union will publish a report on inflation for May, the unemployment rate, the index of business activity in the manufacturing sector, the index of business activity in the service sector, and retail sales. In addition, there will be two speeches by the head of the ECB, Christine Lagarde. What should you pay attention to? From our point of view, only on the inflation report. The consumer price index may rise to 2% y/y in May. It is difficult to say how the markets will react to this report. However, there should be a reaction. The speeches of Christine Lagarde will depend solely on whether she touches on the topic of monetary policy and how new the information will be. Given that Christine Lagarde is not a Reuters news agency, it is unlikely that she should be expected to change her rhetoric every week. Reports on business activity and retail sales are unlikely to interest traders unless the values of these reports are very different from the forecasts. The unemployment rate has not bothered market participants for a long time.
Trading recommendations for the EUR/USD pair: The technical picture of the EUR/USD pair on the 4-hour chart is unambiguous. The upward trend continues. However, the upward movement itself is very weak and uncertain. On Friday, the pair tried to start a round of downward movement but almost immediately bounced back up. In general, we see that the movement is not too strong now, with frequent and rather deep corrections. It is a "swing" with a slight upward slope. Therefore, it is recommended to trade for purchase on a 4-hour timeframe, but only if you clearly understand the specifics of the current movement. Recall that the pair is already very close to its local and 3-year highs. Most likely, they will be overcome. Explanation of 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. The material has been provided by InstaForex Company - www.instaforex.com |
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