Forex analysis review
Forex analysis review |
- Bitcoin breakout, first target $42,000.
- EUR/USD. Weekly preview: markets await EU inflation data after digesting data from US
- Trading plan for the GBP/USD pair for the week of June 14-18. New COT (Commitments of Traders) report.
- Trading plan for the EUR/USD pair for the week of June 14-18. New COT (Commitments of Traders) report.
| Bitcoin breakout, first target $42,000. Posted: 13 Jun 2021 02:37 PM PDT Bitcoin has managed to break above the key resistance trend line and is now trading above $39,000. Price is now making higher highs and higher lows. Short-term trend is changing to bullish again and with the new break out, we are now expecting a move higher towards $42,000.
Black line -resistance Bitcoin has managed to break above the resistance trend line that provided three price rejections so far. Bulls now need to keep price above the black trend line which is now support. Bitcoin is expected to move towards $42,000 and then pull back for a possible back test of the break out. Second target is at $47,000-$50,000. Support is key at recent low of $34,500 and bulls do not want to see price fall below this level. The material has been provided by InstaForex Company - www.instaforex.com |
| EUR/USD. Weekly preview: markets await EU inflation data after digesting data from US Posted: 13 Jun 2021 07:40 AM PDT
In the last four weeks, the European currency has stayed mostly unchanged against the US dollar. Of course, there is a slight turn to the downside. Yet, this turn is so small that it can hardly be called a correction. Over the past three weeks, the price has moved only 150 pips away from its local highs, which is a very slow movement. In general, the volatility leaves much to be desired in recent weeks. There was almost no volatility in the first three days of the last week. The important economic data came out on Thursday. However, despite sharp reversals during the day and rapid price movements, the volatility was only within 50 pips. On the contrary, on Friday, the pair showed the most volatile movement of the week, dropping by nearly 80 pips although there were no reports released in the EU or the US. So, the expression "by fits and starts" is the best description of what is happening to the euro/dollar pair since the greenback's movement is unstable. Of course, market players can increase the number of short positions on the European currency at any time. For example, this is exactly what the latest COT report has signaled. However, the increase in short positions must be considerable in order to change the uptrend to a downtrend. In addition, we would like to remind you that a new global uptrend has just begun. It presumably continues for 4 years. Therefore, it is still far from being completed. That is why traders may still count on a new strengthening of the euro. Of course, we should not forget about the main fundamental factor that continues to put pressure on the American currency. That is, the injection of trillions of dollars into the US economy. We mention this factor quite often because it has a big influence on the pair. From our point of view, the US dollar will see no improvements as long as the Fed and the US Treasury continue to saturate their economy with trillions of dollars. Notably, the greenback is depreciating not only in the international currency market but also within its own country. We are talking about 5% inflation that was recorded in May. As for the macroeconomic statistics, market participants tend to downplay some of the data. A week ago, there was a really strong market reaction to the ADP and NonFarm Payrolls reports. However, this week, the inflation report did not cause such an active response. So, the macroeconomic data seems to have a local effect and then not in all the cases. Only a few macroeconomic events are planned in the European Union next week. These are reports on industrial production and inflation. The data on industrial production has not had a significant impact on traders' sentiment for a long time. On the other hand, inflation can affect the euro's trajectory. This report will be published on Thursday. Christine Lagarde may also make a statement during the week although it is not in the economic calendar yet. However, this data may appear within a week. All macroeconomic statistics from overseas will be discussed in the article on the pound/dollar pair. So, what will be in focus next week? First of all, it is worth considering the lowest time frames. We publish our analysis and give trading recommendations every day. Lower time frames seem more useful at the moment as price movements are generally weak and there is simply no trend. Therefore, it is best to track changes on higher time frames but open short-term positions on lower ones. From the fundamental point of view, there is nothing to focus on at the moment. It is true that the world is actively discussing the topic of raising taxes in the United States for the rich and corporations as well as the introduction of a global minimum corporate tax. Also, the European Union is expected to start distributing the 750 billion Recovery Fund this summer which may help the EU economy to recover faster. However, all these topics will be reflected later in specific macroeconomic indicators. These topics are not shocking or critical and cannot agitate the markets and throw them into panic like it happened a year ago with the coronavirus pandemic. These are just the economic topics to discuss. Therefore, we largely expect the resumption of an uptrend. Do not forget that any fundamental hypothesis requires confirmation by particular technical signals. We also remind you that on the 4-hour time frame and above, the pair has been trading within a narrow range with a slight downward turn for already a month.
Trading tips for EUR/USD: On the 4-hour chart, the technical picture for EUR/USD is quite clear. The movement is mostly weak with a slight downward turn. This downward movement is clearly seen as each subsequent low is located lower than the previous one, and each subsequent high is also lower than the previous one. However, this is not a trend movement. Now the price has dropped to the support level of 1.2095 which almost coincides with the previous local low. At the same time, it nearly coincides with the estimated lower boundary of the range in which the price has been holding for a month (1.2110 - 1.2260). Thus, next week there is a high probability of a new upward reversal. So, a movement of 100-150 pips is expected on Monday, Tuesday, and Wednesday. On the chart: Support and resistance levels serve as targets when opening buy or sell positons. You can place a Take Profit near them. Indicators: Ichimoku Cloud, Bollinger Bands, MACD. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 13 Jun 2021 03:13 AM PDT GBP/USD - 24H.
The GBP/USD currency pair continues to move in an exceptionally characteristic manner. If the euro/dollar is slightly adjusted from time to time, the pound/dollar only pretends to be changed. The quotes have been in a frankly sideways channel for almost a month, clearly visible even on the 24-hour timeframe. Thus, the US dollar paired with the pound can not even form a small pullback so far. The GBP/USD pair is also near its 3-year highs, and a couple of weeks ago, it even updated them (by a few points). However, this did not lead to new upward momentum. Markets are currently finding no new reasons to buy the British pound. And judging by the COT reports, the major players have completely stopped looking in the direction of purchasing the pound. At least in the last few weeks, the net position of non-profit traders has not been growing at all. It partly coincides with what is happening on the charts of the pair. At the same time, the price still cannot start a significant downward correction. The fundamental background from the UK remains very unconvincing. We definitely cannot conclude that it supports the British pound. Of course, there is some positive news. However, they are overlaid by the negative. Thus, most of the global factors remain in favor of the pound, and even Friday's decline in its quotes does not change the overall picture of the situation. COT report.
During the last reporting week (June 1-7), the GBP/USD pair fell by 25 points. However, in general, no one doubts the direction of the global trend - upward, and the movement of recent weeks - an absolute flat. The latest COT report showed that professional players closed about the same number of buy and sell contracts. It is this moment that very clearly indicates what is happening now with the pound/dollar pair. However, in general, the pound continues to grow and can not even really adjust. At the same time, the size of the net position of large players practically does not change. Since the beginning of March, changes in the net position are insignificant, as shown by both the first and second indicators. Moreover, the pound continues to show growth, simply not commensurate with the" bullish " mood of non-profit traders. Thus, we continue to talk about such a global factor as the infusion of trillions of dollars into the American economy, which is the main reason for strengthening the British currency. Look at the previous section of the trend between October 2020 and March 2021. The pound rose by 1,400 points, while the net positions of commercial and non-commercial groups of traders remained virtually unchanged. The major players did not increase purchases at this time. At the same time, the pound showed an increase of 1,400 points, almost without a single pullback. There have been very few macroeconomic developments in the UK this week. All week, the calendar in the UK was empty. On Friday, Andrew Bailey spoke. However, none of them told the markets anything new and exciting. But traders have long been waiting for new hints about the curtailment of the monetary stimulus program and an increase in the key rate next year. Recall that earlier, several BA members also hinted that such a scenario is very likely if the British economy continues to grow at a high rate. However, they concluded about "high rates" only in the second quarter, when quarantine restrictions began to be lifted in the UK. No official GDP data for this period has yet been released. And the first quarter, on the contrary, showed a contraction of the British economy. GDP data for April showed that the economy is not recovering as fast as experts expected. The increase was only 2.3% on a monthly basis, with a forecast of + 2.4%. The same applies to industrial production, which in April fell by 1.3% on a monthly basis, although forecasts predicted an increase of 1.2%. Thus, the latest reports have shown just that the British economy is not growing at exactly the expected pace. Therefore, from our perspective, even talking about the weakening of monetary stimulus now does not make much sense. Consequently, from this source, the British pound is unlikely to receive support in the near future. Trading plan for the week of June 14-18: 1) The pound/dollar pair continues to be in an upward trend. Thus, buy orders on the 24-hour timeframe remain relevant, despite the current flat, and the nearest targets are the previous local high of 1.4240 and the resistance level of 1.4361. Given that global factors are now supporting the pound sterling, it is unlikely to expect a strong fall in the pair in the near future. If the pair's quotes consolidate below the critical line, we can discuss a possible decline in the pair to the Senkou Span B line. However, the flat of recent weeks significantly weakens the significance of the Ichimoku indicator lines. A more accurate picture is now shown by the Bollinger Bands indicator, which has narrowed to its minimum. 2) Sellers still do not have enough strength to start forming a downtrend. They do not have enough strength even for a tangible correction. Thus, if the price is fixed below the critical line, only then will it be possible to talk about downward movement. But not before. 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. 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: 13 Jun 2021 03:13 AM PDT EUR/USD - 24H.
The EUR/USD currency pair continued to trade in an ultra-narrow range for most of the past week. So, except Friday, the pair just stood in one place. On Friday, the quotes fell by 70 points. Thus, at this time, we can again talk about a minor correction. In general, the picture for the euro/dollar pair does not change at all. The quotes continue to be located just 150 points from their local highs reached a few weeks ago and at a distance of 250 points from their 3-year highs. Thus, the markets continue to look mainly towards the European currency. In principle, in terms of the global factors that led the currency so high, nothing changes. The US authorities continue to pump the economy with trillions of dollars, which leads to a strong inflating of the money supply and inflation. Last week, we were just able to see how much American inflation has accelerated in recent months. Fed officials continue to argue that this is a temporary phenomenon, and the consumer price index will begin to slow down in a few months. However, such statements do not have a positive impact on the US dollar. As before, the US currency may show growth from time to time. But this growth is so weak that even a correction against the main trend is hard to pull. Thus, the dollar will continue to try to strengthen in the foreign exchange market. However, it clearly does not show strong growth. The high rate of recovery in the US economy continues to be ignored by the markets in the long run. COT report.
During the last reporting week (June 1-7), the EUR/USD pair fell by 40 points. All the last weeks have ended with small changes, given that the pair has been in a limited range for several weeks now. During the reporting week, professional traders closed about 5,500 contracts for buying and about 400 contracts for selling. Thus, the net position for the "Non-commercial" group decreased by 5,000 contracts. These are small changes for the European currency, which remains the most popular among all their players in the world after the dollar itself. However, in recent years, non-commercial traders have primarily increased longs, so the data from the last reporting week can be considered an exception in some ways. So far, the main lines of the first indicator continue to move away from each other, which indicates the preservation of the "bullish" mood in the market. Therefore, we can count on a new strengthening of the European currency, especially since the global increase in the money supply in the United States continues to work in favor of the European currency. The current trading week was quite boring in macroeconomic terms. In principle, in the European Union, we can only note the ECB meeting, during which it became known that all the main parameters of monetary policy remained unchanged. However, the regulator raised its forecasts for the next few years for GDP and said that the PEPP program's pace would be increased in the coming months. These data are not unambiguously positive or negative. The overall size of the PEPP program remains unchanged, as does its timeline. And the fact that the ECB will make purchases in large volumes for several months is not an important message for the euro. At the beginning of the year, to stop the rise in European bond yields, the ECB also reported an increase in the pace of purchases. But the most important report for the EU (on GDP for the first quarter) was completely ignored by traders. However, its third estimate was much better than the previous two and showed that the EU economy in the first quarter shrank less than previously expected. However, the euro did not feel any support. In the United States, we can only note the report on inflation, which rose to 5% in May. It is a negative moment for the dollar. However, on Thursday, when the ECB meeting was summed up, and the US inflation was published, the pair's volatility was only 50 points, and the pair generally remained at the end of the working day where it started. On Friday, there was a small collapse in the quotes of the euro currency, although there were no important publications and events on this day. Thus, we can conclude that Friday's movements were "technical" since there were no other good reasons for the dollar's growth. Trading plan for the week of June 14-18: 1) On the 24-hour timeframe, the trend continues upward, although the price is fixed below the critical line. However, in the flat, all the lines of the Ichimoku indicator have a much lower value than in the trend. The main thing is different. The price continues to remain close to its highs for several years. The minimum downward slope was minimal. Thus, formally, longs are not relevant now, so we recommend waiting for the price to consolidate back above the Kijun-sen line and then open longs with a target of 1.2332. 2) The downward trend is still not relevant. The US currency has support in the form of macroeconomic factors. Despite the high rate of recovery of the US economy, this factor still has no beneficial effect on the dollar exchange rate. Thus, it is possible to talk about possible stronger growth of the US dollar, for example, with the aim of the Senkou Span B line. However, from our point of view, this scenario is still very unlikely. 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. 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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