Forex analysis review
Forex analysis review |
| Posted: 09 Apr 2022 07:50 AM PDT Long-term perspective.
The GBP/USD currency pair declined by another 80 points during the current week and again found itself near its 15-month lows. And even updated them. Few people now believe that this will be the end of the fall of the British currency. We have already said earlier that the pound has been famous for being more resistant to the dollar in the last year than the euro currency. Its fall was weaker, and the corrections were deeper. However, the last month has clearly shown that at the moment the bulls cannot even adjust the pairs in the same style. As part of the last round of correction, the price failed to reach even the critical line and resumed falling. Thus, most likely, a new round of downward movement awaits traders here too. There were practically no macroeconomic events in the UK this week. Therefore, all the attention of traders has focused again on geopolitics, sanctions, and statements by top officials of Britain. This week, British Foreign Minister Liz Truss, who said several times that sanctions pressure on Russia should be increased, blocked an emergency meeting of the UN Security Council initiated by Moscow and also called for Russia to be excluded from all international organizations like UNESCO, the UN, the WTO. This news does not have a strong value for the pound, since the UK itself has already used its most important weapon - announcing the rejection of Russian oil and gas by the end of the year. In addition, London plans to develop its oil fields in the North Sea, and the States will supply gas. Thus, the British can only exert pressure on the financial sector and block the property of Russian oligarchs on their territory. What London is actively doing. However, the pound/dollar pair was more influenced this week by the tightening of the rhetoric of the Fed representatives and the Fed protocol, which made it clear that the regulator will begin to reduce its balance sheet by $ 95 billion per month from May. COT analysis. The latest COT report on the British pound showed minimal changes in the mood of major players. For a whole week, the Non-commercial group opened 5.2 thousand buy contracts and 6.9 thousand sell contracts. Thus, the net position of non-commercial traders decreased by 1.7 thousand. Even for the pound, such changes are insignificant. In general, the "Non-commercial" group still has almost 2.5 times more contracts for sale than for purchase. This means that the mood of professional traders is now "pronounced bearish". Thus, this is another factor that speaks in favor of the continuation of the fall of the British currency. The situation with COT reports for the pound is completely different than for the euro. According to the pound, the mood of the major players changes every couple of months, and sometimes even more often. At this time, the net position of the "Non-commercial" group has already fallen to the levels where the last round of the pound's fall ended (the green line on the first indicator). Thus, we can even assume that in the coming weeks the pound will try to start a new ascent. However, the current fundamental and geopolitical background does not give good reasons to expect strong growth of the British currency. Even taking into account the rate increase by the Bank of England. Analysis of fundamental events. There were practically no fundamental events in the UK this week. Two business activity indices and a speech by BA Chairman Andrew Bailey, who, as usual, talked about anything but monetary policy and the economy. Naturally, these events did not provoke any market reaction. And if provoked, it was very difficult to identify it. Business activity indices were also published in the States. And in addition to speeches by representatives of the Fed and the Fed minutes, there were also speeches by Finance Minister Janet Yellen, who said that her country would not participate in any financial summits if a delegation from Russia was present there. Yellen pointed out that this is the position of President Biden and she fully supports it. There were no other important events during the week. But, as we can see, this was enough for the British currency to continue falling against the dollar. Trading plan for the week of April 11-15: 1) The pound/dollar pair completed a weak correction and resumed falling. Now the key level for the pair remains 1.2830 (50.0% Fibonacci), on overcoming or overcoming which the further long-term prospects of the pound depend. However, given the general mood of the market, COT reports, geopolitical and fundamental backgrounds, it is unlikely that the growth of the British currency should be expected now. Consequently, the pair's sales with a target of 1.2830 remain relevant. 2) The prospects for an upward movement continue to deteriorate and so far there is no reason to buy the pound. This is indicated by the technique since even during the last round of growth, the price failed to update its previous local peak or overcome the critical line. This is evidenced by geopolitics since the pound remains a riskier currency than the dollar. This is indicated by macroeconomics since the economy in the UK is in a worse state than the economy in the United States. There are no grounds for buying a pair on a strong downward trend. Explanations of the illustrations: Price levels of support and resistance (resistance /support), Fibonacci levels - target levels when opening purchases or sales. Take Profit levels can be placed near them. Ichimoku indicators (standard settings), Bollinger Bands (standard settings), MACD (5, 34, 5). 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: 09 Apr 2022 07:50 AM PDT Long-term perspective.
The EUR/USD currency pair resumed falling during the current week after it failed once again to overcome the important line of the Ichimoku indicator. Formally, the price was fixed for two days above this line, but it did not even reach the approach to the next important Senkou Span B line, which once again confirms the weakness of the European currency and the strength of the US dollar. In principle, we have already listed a million times the reasons why the euro is falling and, most likely, will continue to fall against the dollar. This week, the fundamental background has only gotten worse for the euro and better for the dollar. In the middle of the week, several representatives of the Fed's monetary committee made it clear that the regulator's intentions to tighten monetary policy and curb inflation were not just sound. Already in May, the key rate may be raised by 0.5% and the unloading of the Fed's balance sheet, which amounts to almost $ 9 trillion, will begin. What does this mean? Everything is clear with the rate, but the unloading of the Fed's balance sheet is an "anti-QE" program. That is, the reverse program to withdraw excess liquidity from the economy. If earlier the Fed's QE program stimulated the US economy, now there will be a reverse process, which is also, it turns out, a tightening of monetary policy. And since the ECB cannot afford to even raise the rate once, which, we recall, is negative, the gap between the approaches of the Fed and the ECB is only increasing. And, of course, this gap will increase the pressure on the European currency. In addition, the European economy is on the verge of recession and stagflation, which, of course, does not add reasons for optimism to euro buyers and investors. At this time, the pair is already near its 15-month lows and there is no reason to expect that the fall will end there. COT analysis. The latest COT report turned out to be more interesting than the previous ones. Even paradoxical, because the big players were building up long positions. During the reporting week, the number of longs increased by 10.8 thousand, and the number of shorts in the "Non-commercial" group - by 4.8 thousand. Thus, the net position increased by 6 thousand contracts. This means that the bullish mood has intensified. It is "bullish" since the total number of buy contracts now exceeds the total number of sell contracts with non-commercial traders by almost 30 thousand. Accordingly, the paradox lies in the fact that the mood of traders is "bullish", but the euro currency is falling almost non-stop. We have already explained in previous articles that this effect is achieved by even higher demand for the US dollar. It turns out that the demand for the dollar is higher than the demand for the euro, which is why the dollar is growing in pairs with the euro currency. Based on this conclusion, these COT reports on the euro currency now do not make it possible to predict the further movement of the pair. They are, one might say, meaningless. However, if the demand for the euro currency starts to fall among professional players, this may lead to an even greater fall in the euro, since the demand for the dollar is likely to remain high due to geopolitics and macroeconomics. Analysis of fundamental events. During the current week, there were practically no important reports and events in the European Union. All the key news related to geopolitics or just politics. So the European Union introduced a new package of sanctions against Russia, which did not contain any bans on energy imports, for which the whole package was immediately criticized even within the EU itself. Even the ban on the import of coal from the Russian Federation will take effect only in August. The question is, what is the point of such sanctions if they begin to take effect when the hostilities themselves may have already stopped? Also yesterday, the head of the European Commission, Ursula von der Leyen, personally visited Kyiv, Bucha, and met with President Zelensky. It is not yet known whether there will be any new decisions regarding Russian aggression in Ukraine, but the delegation of Europeans has already stated that after what they saw, it is necessary to increase sanctions pressure on Russia. Sanctions pressure, from which Europe itself will suffer very much in economic terms. Thus, this news only gives new reasons to assume the fall of the European currency. We are confidently moving towards price parity with the dollar. Trading plan for the week of April 11-15: 1) On the 24-hour timeframe, the pair briefly exceeded the Kijun-sen line, but after a couple of days, it collapsed again. Almost all factors still speak in favor of the growth of the US dollar, and not vice versa. The price is below the Ichimoku cloud, so there is still little chance of euro growth. Rather, the euro's decline will continue with targets of 1.0636 and 1.0608. So far, sales remain the most relevant. 2) As for purchases of the euro/dollar pair, they are not relevant now. First, there is not a single technical signal or sign that an upward trend may begin. Second, the "foundation" and "macroeconomics" continue to exert strong pressure on the euro. Third, "geopolitics" may continue to put pressure on traders and investors who still believe that in any incomprehensible situation it is necessary to buy the dollar. Only overcoming the Senkou Span B line we would consider a strong basis for a new upward trend. Explanations of the illustrations: Price levels of support and resistance (resistance /support), Fibonacci levels - target levels when opening purchases or sales. Take Profit levels can be placed near them. Ichimoku indicators (standard settings), Bollinger Bands (standard settings), MACD (5, 34, 5). 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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