Forex analysis review
Forex analysis review |
- Overview of the GBP/USD pair. June 7. China and the United States are once again in conflict.
- Overview of the EUR/USD pair. June 7. The ECB and the Fed will begin to wind down their stimulus programs no earlier than
- Analytics and trading signals for beginners. How to trade EUR/USD on June 7. Analysis of Friday. Getting ready for Monday
- Bitcoin vulnerable to a move towards $23,000-$16,000.
- GBP/USD. Preview of the new week. US inflation may push the pair to new heights.
- EUR/USD. Preview of the new week. The markets started paying attention to the statistics. China and the US resume trade talks.
| Overview of the GBP/USD pair. June 7. China and the United States are once again in conflict. Posted: 06 Jun 2021 06:35 PM PDT 4-hour timeframe
Technical details: Higher linear regression channel: direction - upward. Lower linear regression channel: direction - upward. Moving average (20; smoothed) - sideways. CCI: -12.2902 The British pound paired with the US dollar continues the "swing" on which it has been riding for more than three weeks. Last Thursday, the pound/dollar pair and the euro/dollar pair significantly declined. However, on Friday, it recovered almost all the losses of the previous day. Thus, nothing has changed. It can be seen that the pair is within a minimal price range. Therefore, there is no technical reason to expect a change in the overall picture of things at this time. It is still very difficult for the American currency to rise in price. We have listed the reasons a million times already, and they have not changed recently. Some hope that when central banks begin to scale back their quantitative easing programs and raise rates, something will change. But when will it be? The markets are now clinging to the topic of possible tightening of monetary policy by the Fed, the ECB, and the Bank of England. However, the ECB did not give any signals about such a step at all. However, traders need something to build on when building long-term strategies. Therefore, inflation indicators, the timing of the possible completion of QE programs, and so on are now being used. However, all this will happen someday. Therefore, these factors do not influence the overall trend. Such topics and news on these topics can only have a local impact on a particular currency. For example, if Andrew Bailey says tomorrow that BA is ready to raise the rate by the end of the year, this will certainly support the British pound. But what will change for the pound/dollar pair in this regard? It's been growing for 15 months already. Let's say Jerome Powell openly announces a rate increase (although various surveys of Fed officials say that in America, they expect an increase no earlier than 2023), and then what? The dollar will strengthen by 100-150 points, but will the global upward trend end? From our point of view, no. The global factors that continue to influence the US currency are too strong. Therefore, before the end of 2021, it does not even make sense to expect strong growth of the dollar. By the way, traders are now strenuously ignoring many different topics. And they ignore them quite logically. Even the topic of the trade war between the United States and China, which began a few years ago, had only a background effect on the dollar. After all, the most important thing is the macroeconomic indicators. What is the difference between the trade relations between Washington and Beijing? The main thing is how their economies develop, whether the gap between their GDP decreases or increases. Another thing is the UK, which continues to receive "punches" from fate. After Brexit ended, many thought that the worst was finally behind them. However, at the beginning of 2021, riots began on the island of Ireland, which threatened to break out with a new force at any moment. The "Scottish" question will be a nightmare for Boris Johnson for a long time to come. After all, we all know that if someone wants to separate, then it is unlikely that someone will give up their idea if the opposing side is against it. There are a lot of examples in the last ten years. At least the same Catalonia. Thus, the second question is whether Boris Johnson is in favor or not of the new independence referendum in Scotland. The first question is the desire of the Scots themselves. Nothing prevents them from holding a referendum and separating from England. London does not recognize this branch. The courts and all sorts of proceedings will begin. Perhaps some Malays will refuse to recognize the legitimacy of the referendum. But again, how many such examples have there been in recent years alone? Many world leaders also declined to identify Lukashenko as a legitimate president, so what? He remains in power in Belarus. Economic ties between Belarus and the rest of the world are practically intact because money and the economy are much more important than who the president is in the country and how the internal elections were held in it. Thus, Scotland may present more than one surprise to London in the next couple of years. Plus, do not forget that the European Union supports the return of Scotland to its composition. Therefore, it will provide full support to Edinburgh and its leader Nicola Sturgeon. In general, the fundamental background for the British pound remains weak. But it will only be reflected on the charts of currency pairs when global factors, such as the infusion of trillions of dollars into the American economy, cease to operate. When the "crisis" factors stop working, then they will begin to influence the usual factors that everyone was used to before the pandemic and the global crisis. But again, this is not the prospect of the next couple of months. From a purely technical point of view, at this time, it is not even possible to build a clear side channel to trade from its borders. Moreover, the movement is so "swing-like" that overcoming any channel boundary does not guarantee the beginning of a new trend. Therefore, we recommend at this time to pay more attention to the lower timeframes, where trading is still a little more convenient.
The average volatility of the GBP/USD pair is currently 93 points per day. For the pound/dollar pair, this value is "average." On Monday, June 7, we expect movement within the channel, limited by the levels of 1.4064 and 1.4250. A reversal of the Heiken Ashi indicator back down will signal a new round of downward movement within the "swing." Nearest support levels: S1 – 1.4160 S2 – 1.4130 S3 – 1.4099 Nearest resistance levels: R1 – 1.4191 R2 – 1.4221 R3 – 1.4252 Trading recommendations: The GBP/USD pair has started a new round of upward movement on the 4-hour timeframe. Thus, today it is recommended to stay in buy orders with targets of 1.4221 and 1.4252 until the Heiken Ashi indicator turns down. Sell orders should be opened in the event of a reversal of the Heiken Ashi indicator downwards with targets of 1.4130 and 1.4099. The pound now continues to move flat. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 06 Jun 2021 06:35 PM PDT 4-hour timeframe
Technical details: Higher linear regression channel: direction - upward. Lower linear regression channel: direction - upward. Moving average (20; smoothed) - downward. CCI: -54.5590 On Friday, June 4, the EUR/USD currency pair quickly began a new round of upward movement. And although this does not yet affect the formally formed downward trend (the price is fixed below the moving average line), the pair continues to trade where it spent the last few weeks. Only 100 points below the local highs, which are located only 70 points below the 3-year highs. Thus, we believe that the volatile trading at the end of last week did not affect the current technical picture in any way. All that happened was that the dollar rose by 90 points after the publication of a very strong report from ADP on the number of employees in the private sector. However, on Friday, the dollar lost about the same amount due to the Nonfarm Payrolls report, which turned out to be worse than expected. Thus, despite the consolidation of the price below the moving average, the upward trend continues. In principle, this is perfectly visible on any illustration of the 4-hour timeframe. Moreover, the dollar's rise last Thursday looks somewhat like an accident in the current circumstances. Let's explain what we mean. The fact that the statistics in the US are much better than in the EU does not even cause anyone to doubt. It can be seen at least from the GDP figures, which are now three times higher in the United States. Accordingly, the rest of the macroeconomic indicators are mostly better than in the EU. And what dividends did the dollar get from this? Strengthening by 90 points? The upward trend is still being maintained. The global factors that drove the US currency so low remain relevant. And traders used to ignore statistics. However, at the end of last week, they made an exception to the rules and worked out several reports at once. Thus, it turned out that the US currency seems to have quite logically risen in price. And then what? Then everything will continue in the same direction as in recent months and even a year. We still believe that the US currency will become cheaper. It doesn't matter what statistics come from overseas. In principle, there are no global topics that you can look back on every day. All the talk in the foreign exchange market boils down to when central banks will begin to scale back their quantitative easing programs and raise rates. There are still rumors that rising inflation in the United States will force the Fed and Jerome Powell to cut off the QE program. It may happen, but will it provide strong support for the US currency? From our point of view, no. The problem is that the EU and the US have different attitudes to stimulating their economies with money. If the EU is forced to think about common debts, and the richer and more affluent countries do not want to take on the extra debts of countries that do not know how to save and live within their means, then there are no such problems in the United States. The dollar is the number one currency globally, so dollars can be printed in trillions indeed, without worrying that they will cause hyperinflation. The US currency is quietly scattered around the world because the demand for it is everywhere. Most of the gold and foreign exchange reserves of almost all banks in the world consist of dollars. The demand for the US currency is even at the level of the central banks of other countries because there are few currencies in the world that can be called stable. What can we say about commercial banks or ordinary citizens of almost any country? Does anyone know a person who keeps their savings in Chinese yuan? But China's economy is among the top three world leaders, and the yuan itself is also a fairly stable currency. But no one needs the yuan when there is a dollar. That's why they don't worry about anything in the States. Economists wonder if the dollar has a future as the world's reserve currency. China or Russia have long threatened to reduce demand for the dollar in favor of their national currencies. Still, the dollar remains the number one currency. Therefore, the EU's economic stimulus program is much smaller than in the US. And it should be completed in March 2022. Hardly anyone seriously believes that the United States will begin to wind down its stimulus program before the beginning of 2022. Jerome Powell has said many times (as have other monetary committee members) that the economy is recovering unevenly. The labor market is still struggling and is well below pre-crisis levels. And inflation is a problem, but something needs to be sacrificed for the sake of economic recovery. Thus, it is likely that the ECB and the Fed will begin to wind down their programs simultaneously, give or take a few months. Thus, the mere fact of curtailing QE programs is unlikely to support the dollar. However, when this happens, it will mean that the US economy will no longer receive a much larger cash injection than the EU economy. The gap in the EU volume and the US money supply will cease to increase, which can play into the hands of the US currency. This factor is unlikely to be enough for the dollar to show long-term growth. But this factor may be enough for the dollar to stop getting cheaper. However, in any case, nothing like this is expected in the coming months, which means that the euro can continue to aim for updating its 3-year highs.
The volatility of the euro/dollar currency pair as of June 7 is 68 points and is characterized as "average." Thus, we expect the pair to move today between the levels of 1.2098 and 1.2234. A reversal of the Heiken Ashi indicator back down signals a possible round of downward movement. Nearest support levels: S1 – 1.2146 S2 – 1.2085 S3 – 1.2024 Nearest resistance levels: R1 – 1.2207 R2 – 1.2268 R3 – 1.2329 Trading recommendations: The EUR/USD pair has already started a new round of upward movement. Thus, today it is recommended to open new short positions with targets of 1.2098 and 1.2085 if the Heiken Ashi indicator turns down. It is recommended to consider buy orders not earlier than fixing the price above the moving average line with the targets of 1.2234 and 1.2268. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 06 Jun 2021 02:50 PM PDT Analysis of previous deals: 30M chart of the EUR/USD pair
The EUR/USD pair moved very actively on Friday. This was due to the US reports. Yes, for the second day in a row the EUR / USD pair moved solely on the basis of US macroeconomic reports. This is clearly seen on the 5-minute timeframe, where in the first half of the day (when reports were also published in the EU) the market simply stood in one place. However, that all changed in the afternoon when data on the US labor market and unemployment rate were released. I would like to note right away that the unemployment rate, although it dropped from 6.1% to 5.8%, which is very good for the economy, did not provide any support to the dollar. Traders paid attention to the NonFarm Payrolls report, which was not even a failure. Its value was only slightly below the predicted value, but it was enough for the markets to rush back to sell the dollar, which they had been actively buying days earlier. Thus, at the end of Thursday and Friday, everything remained in place. As for trading on the 30-minute timeframe, it was necessary to trade down, according to the new descending channel. However, the MACD indicator did not form a single standing sell signal during Friday. 5M chart of the EUR/USD pair
It is very expressive on the 5-minute timeframe. It is perfectly clear that the euro/dollar pair stood in one place throughout the European trading session, although, for example, the retail sales report for April was published (the first tick). However, the movement began in the US trading session, when the NonFarm Payrolls report was published (the third tick). It was this report that provoked a strong upward movement, which was not possible for novice traders to work out. No signals were generated during the European session. On the US side - three, but they were all formed after the reports were published, that is, to predict where the pair will move and with what force was not possible. We do not advise you to trade during such important publications, so all three signals should be ignored. And in any case, it was very difficult to manage to enter the market on one of these signals. Therefore, trades on Friday, despite the strong movement, should not have been opened. Trading tips for Monday: A new downward trend persists on the 30-minute timeframe, so it is recommended to track the sell signals from the MACD indicator. At the moment, this indicator is very high, so you should wait for it to discharge to zero before looking for new signals. Also, the price is located near the upper line of the descending channel, so theoretically you could try to sell the pair on a rebound from this line. But we think it's too risky in the current circumstances. On the 5-minute timeframe, it is recommended to trade from the levels of 1.2092, 1.2104, 1.2133, 1.2159, 1.2181 and 1.2215. Take Profit, as before, is set at a distance of 30-40 points. Stop Loss - to break even when the price passes in the right direction 15-20 points. The target at the 5M TF can be the nearest level, as long as it is not too close or too far away. If it is located - then you should act on the situation. No major publications or major events scheduled in America and the European Union for Monday. Therefore, the pair's movement may be sluggish, and volatility may be weak. 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 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 |
| Bitcoin vulnerable to a move towards $23,000-$16,000. Posted: 06 Jun 2021 04:06 AM PDT As we mentioned in previous posts, Bitcoin price had formed a triangle pattern. Price mostly moves sideways after the strong decline from $65,000. Such a triangle pattern is usually a continuation pattern and usually find near the end of the trend. What this means is that although the most probable scenario is for price to break the triangle to the downside, this will most probably be the final leg down before a major bounce or counter trend move.
Black line - support Blue line - expected size of decline of triangle break down Yellow rectangle -target area Bitcoin will most probably break towards the downside as long as price is trading below $39,000-$40,000. My target area is between $23,000 and $16,000. Support by the triangle is found at $34,500-$35,000. Breaking below this support we should see downward pressures on price. However as we mentioned above, I expect this sell off to be the last one and then price to start a major bounce or new upward move that will at least push price towards $45,000. Trend remains bearish as price continues making lower lows and lower highs. There is no reversal signal yet. The material has been provided by InstaForex Company - www.instaforex.com |
| GBP/USD. Preview of the new week. US inflation may push the pair to new heights. Posted: 06 Jun 2021 12:56 AM PDT
What to say about the pound ahead of the new trading week? The pound/dollar pair has been in one place for three weeks. At the same time, it continues to be located near its 3-year highs, which preserves excellent chances for continuing the upward movement. As in the case of the euro/dollar pair, the bears show their exceptional weakness and even unwillingness to sell off the pound (the "speculative" factor). The British currency is still suffering from the disease of inability to adjust. Recall that during the entire upward trend, which began 15 months ago, the pound/dollar pair could adjust by a maximum of 500-600 points, although the entire trend already exceeds 2,700. So at this time, the quotes are unable to move away from their highs and start a downward correction. From our point of view, this means that the pound will continue to grow. The reasons for this conclusion remain the same. It may not even be about the traders themselves (although it is also about them). The US government and the Federal Reserve continue to stimulate their economy by trillions of dollars while increasing the money supply. Dollars are becoming more and more, and this process does not stop. Therefore, the US currency is falling almost without stopping. And until the first process ends, the second process will not end. Last week's macroeconomic statistics finally had an impact on the pair's movement. The quotes fell by a hundred points on Thursday when a strong report from ADP was released. They rose by about the same amount on Friday when a weak report from NonFarm Payrolls was released. But what have these reports changed for the pound? By and large, nothing. Thus, next week, we continue to recommend paying attention to "macroeconomics." However, it should be remembered that it is unlikely that it will change anything globally for the pair. What to look out for next week? In the UK, the statistics will only be published on Friday. On this day, it is planned to publish industrial production, GDP for the last three months, annual GDP, and trade balance. The forecast figures are very impressive. However, it should be remembered that they will be compared mainly with the disastrous spring months of last year when the UK economy was quarantined. For example, industrial production is projected to grow at an annual rate of 29-30%. But in monthly terms, the increase compared to March may be 1.2-1.5%. The numbers are completely different. The same applies to the annual GDP indicator. Compared to April last year, GDP may grow by 27-28%. But the three-month indicator indicates a possible increase of 1.2-1.6%. In general, we do not expect anything really impressive from the British statistics. But in the States, next week will be frankly boring. For the whole week, only inflation for May will be released from the important reports, which will continue to accelerate and amount to 4.7%. Core inflation is also forecast to rise to 3.2-3.4%. Another report on applications for unemployment benefits will be published. However, it has not caused any reaction recently. Thus, all the most interesting things will happen on Thursday and Friday. It does not mean that the pair will stand in one place with minimal volatility. However, a drop in market activity is certainly very likely. There are no global fundamental topics either in the United States or in the United Kingdom. The markets are not interested in politics right now, so all those semi-scandals that Boris Johnson got into again do not interest traders too much. Vaccination continues at a good pace both in Britain and overseas. The economy is recovering both ways. The Bank of England and the Federal Reserve have not yet given specific terms and signals about their readiness to curtail the economy's program or raise the key rate. Yes, several representatives of the Bank of England said that with a high rate of recovery, the rate could be raised as early as next year. Andrew Bailey did not confirm this information in any way. Recall that the BA Monetary Committee has nine members. At least five people should vote "for" the rate increase. But five votes are unlikely to be collected in the near future. And in any case, the British economy is just beginning to recover from the crisis and all the quarantines. Thus, it makes no sense to think about tightening monetary policy earlier than next year. It is unlikely that the markets will now react to the Bank of England's actions in at least 7-8 months. And the British pound does not need any support right now. It's growing by leaps and bounds without it. We can only wait for when the markets will start repurchasing the pound or when the Fed will pour several new tranches into its economy.
Recommendations for the GBP/USD pair: The pound/dollar pair on the 4-hour timeframe is stuck in one place, and it seems that it needs a powerful push now to move from its place. We believe that the pair will continue to move up in any case, and next week several interesting events may help it do this. It is especially true of the US inflation report. If it turns out that it continues to accelerate, then the markets are likely to perceive this information as a signal for new dollar sales. On the lower timeframes, we have an almost perfectly flat, so you should trade following it. 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: 05 Jun 2021 11:59 PM PDT
The European currency paired with the US dollar is mostly in one place in the last three weeks. It is despite the impressive drop this Thursday. It can not be called a classic flat. However, the quotes are in a minimal range. At the same time, the pair corrected slightly against the last round of the upward movement. However, this correction is very weak. At the end of this week, we realized once again that the bears are very weak, and the dollar is looking for any reason to continue falling. In principle, it would drop even without macroeconomic statistics. However, the macroeconomic data, which traders interpret mainly against the US currency, also help the dollar to refrain from strengthening. A vivid example of this was this Friday. Nonfarm payrolls were weaker than traders' expectations. However, the unemployment rate fell, and wages rose. Thus, the dollar hardly deserved such a severe fall. In addition, I would like to note that the markets are susceptible to forecasts. According to NonFarm Payrolls, the forecast was 645K, and the actual value was 559K. What if the forecast was 400K? Would the dollar then continue to rise? In general, the statistics are now very ambiguous. Despite such "weak" data as on Friday, the US economy is still recovering much faster and stronger than the European one. Thus, how can we say that the dollar is falling because of statistics if these statistics are better than in Europe? In general, we continue to believe that statistics directly impact the euro/dollar exchange rate. On Thursday and Friday, the markets did react to the publications. Thus, we continue to believe that the key influence on the pair's movement is provided by global factors, which we have already discussed a million times. However, what can you do if they have the most significant impact? What is the point of trying to write off the fall in the dollar on the yield of 10-year treasuries or other temporary factors that do not affect the dollar? Based on all of the above, we can conclude that the US currency is likely to continue to fall in price in 2021. Of course, any fundamental hypothesis must be confirmed by technical signals. If the pair is fixed below the critical line next week, the upward scenario will be temporarily irrelevant. It would be best if you always had a backup option in your pocket. It is worth remembering that on a pure "technique," the pair can also trade calmly. As for the statistics and important events next week, there will be very few of them. In the European Union on Tuesday, the index of business sentiment from the ZEW institute will be released and the volume of GDP for the first quarter in the second estimate. No more important macroeconomic reports are scheduled for the week. On Thursday, the results of the ECB meeting will be summed up. However, no changes in monetary policy or even the rhetoric of the European regulator are expected. In light of this, the most attention will be paid to the press conference with Christine Lagarde. However, all her recent speeches and statements clarify that no special changes are planned in the near future. Inflation may continue to accelerate. At the moment, the consumer price index is growing. However, the base of the latest indicators was very low (the months of last year, with which the comparison is being made), and it is growing after several years of being much below the ECB's target levels. Moreover, the growth of European inflation is not comparable to the growth of American inflation. 2% is the normal rate of inflation, so there is no panic about it in Europe at all. As for the PEPP emergency economic assistance program, it clearly will not be curtailed earlier than planned in March 2022. And its volume of 1.85 trillion euros is also unlikely to change, given that the European economy has just begun to recover. Of course, there can always be surprises, and you should not take Lagarde's speech lightly, as Boris Johnson did with the virus at the beginning of the pandemic. But at the moment, everything looks as if there will be no surprises. Separately, I would like to note that trade negotiations between China and the United States have resumed. Last week, US Treasury Secretary Janet Yellen and Chinese Vice Premier Liu He held fruitful talks. However, it is only about "discussing important issues." We can hardly expect significant progress in the negotiations and the conclusion of new trade deals in the near future. Thus, the trade confrontation between China and the West persists, as do most of the trade duties introduced a few years ago. This topic is unlikely to have a severe impact on the dollar in the near future.
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, despite the semblance of a correction that began in recent days. The price has not managed to gain a foothold below the critical line (yet), which means that the bullish mood persists. The same conclusion can be drawn from the COT reports, which show that the big players either increase their longs or get rid of their shorts. Therefore, we are waiting for the resumption of the upward movement with targets near the level of 1.2350. Therefore, trading for an increase remains a priority. On the lower timeframes, downward trends can also form, but as the practice of recent weeks has shown, there is more and more like a flat. 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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