GBP / USD. May is preparing to "go to Brussels"

Trading 04 fév 2019 Commentaire »

The pound against the dollar gradually slips from the level of the annual maximum (1.3216) to the base of the 30th figure. And although the southern dynamics is cautious in nature, the tension among traders is increasing day by day, given the rhetoric of top European countries regarding the prospects for Brexit. It is noteworthy that the market is cautious about both long GBP / USD positions and short ones, especially against the background of Theresa May's upcoming speech, which is due tomorrow.

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In general, the situation is still uncertain. The leaders of the European countries express in turn a joint position, the essence of which boils down to the fact that the EU will not reconsider the already agreed deal "in favor of the British Parliament." German Chancellor Angela Merkel reiterated this today, exerting background pressure on the pound. However, the British currency is declining reluctantly. Firstly, the negative reaction of Brussels was predictable, and secondly, representatives of the European Union still leave loopholes for the resumption of negotiations. Although at the moment such intentions are read "between the lines."

Even the German Chancellor, rejecting the possibility of a review of the deal, added that the question of backstop could still be considered, albeit in the context of the future relationship between London and Brussels. In other words, Europe, on the one hand, does not want to change the text of the agreement, but at the same time admits the possibility of concluding additional agreements. The sluggish pound decline suggests that the majority of traders still do not believe in the implementation of the "hard" scenario (otherwise a pair of GBP / USD would be in the area of 26-26 figures) but at the same time they are afraid that, overestimated her strength, going "on the offensive" on Brussels.

Meanwhile, the British prime minister is filled with optimism. At the weekend, in an interview with one of the British publications, she announced that she plans to obtain guarantees from the European Union about the absence of the border between Ireland and Northern Ireland. To this end, it will soon go to Berlin, and then to Brussels, to change the already approved EU deal. She is really quite militantly tuned: "I will fight for Britain and Northern Ireland, I will be armed with a new mandate, new ideas, and determination," May told reporters.

Apparently, tomorrow's speech of the prime minister will be devoted to the upcoming "crusade", the outcome of which will depend on the outcome of the deal. Today, a spokeswoman for Theresa May, announcing this event, recalled that the prime minister strongly opposes the holding of early elections and the cancellation of Brexit (as well as his transfer). It is obvious that in the course of her speech she will repeat these theses, making a double impression on traders. On the one hand, such a position increases the risk of a chaotic scenario - if Brussels does not show flexibility, the House of Commons will not approve the agreement accordingly (and the deputies refused to renew the 50th article of the Treaty of Lisbon). But the flip side of the coin is that there is still a version of a compromise with Brussels, in one form or another.

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After all, everyone understands that the European Union, a priori, could not respond positively to the decision of the British parliament, adopting Theresa May "with open arms." Now, there is again a political game, in fact, a game of nerves, at stake which are the conditions for future relations between the Alliance and Britain. There are many unknowns in this complex equation, although the desired result of each of the parties is known in advance. In my opinion, Brussels ultimately agrees to make cosmetic changes to the agreement by concluding additional memorandums but this will be done at the last moment so that British deputies do not wake up their appetite in the context of additional requirements.

Thus, the GBP / USD pair is unlikely to keep the 30th figure. Amid difficult negotiations, the "Briton" will drop in price at least to 1.2960 (the average line of the Bollinger Bands indicator on the daily chart). If the bears break through this support level, a larger rollback will follow: in this case, the price will drop to 1.2825 (the upper limit of the Kumo cloud on D1). But the resistance level is the price of 1.3216, this is the annual maximum, which coincides with the upper line of the Bollinger Bands on the same timeframe.

In general, talking about any priority of the south or north on a pair of GBP / USD is impossible. During the negotiation process, the mood of the traders will change rapidly. In just a few hours, the situation with the pair can change radically. Therefore, traders of the pair should carefully and carefully monitor the news flow on Brexit. All other fundamental factors traditionally fade into the background.

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US unemployment rose to 4% in January, which turned out worse than forecast

Trading 04 fév 2019 Commentaire »

According to the US Department of Labor, unemployment in the country increased from 3.9% in December to 4% in January. At the same time, the number of new jobs in non-agricultural sectors of the economy increased by 304 thousand, which exceeded analysts' forecasts by almost 2 times.

Experts expected the first indicator to remain at the level of 3.9% and the growth of the second by 165 thousand people.

The agency also reported that the level of hourly wages in the United States in January rose by 3.2% to $27.56 in annual terms but in monthly terms, the figure fell by 0.1% compared with December data.

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The year of 2019 may pass under the sign of gold

Trading 04 fév 2019 Commentaire »

According to a number of experts, investment in gold will remain relevant in 2019 due to increased volatility and uncertainty in global financial markets.

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"We believe that the current year should be favorable for gold, as investors are still interested in defensive assets," said Standard Chartered Bank specialists.

"We expect that during the year the precious metal rate will show steady growth. Already this year, quotes may reach $ 1,400 for 1 ounce. At the same time, a short-term correction on the background of an uptrend cannot be ruled out, "they added.

A similar point of view is held by specialists of Saxo Bank.

"At the moment there are enough reasons to buy gold to save your own savings," said representatives of the financial institute.

According to them, the supporting factors for the cost of the precious metal will be a slowdown or complete cessation of interest rate increases by the US Federal Reserve System (FRS). It also includes the escalation of the trade conflict between Washington and Beijing, as well as increased political tension around Venezuela.

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Oil becomes cheaper, American companies reduce production

Trading 04 fév 2019 Commentaire »

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According to the report of the oil service company Baker Hughes, for the period from January 28 to February 1, US energy companies reduced the number of oil drilling rigs by 15 units, to 847 wells, the minimum in the last eight months.

Oil companies began to cut costs due to forecasts of a decrease in oil prices in comparison with 2018.

Today, the cost of futures for American oil WTI as of 17:00 Moscow time decreased by 1.21% to $ 54.59 a barrel.

The number of active rigs is an early indicator of the volume of future oil production. Currently, the indicator (847) is significantly higher than last year's (765), as the company in 2018 significantly increased production against the backdrop of an increase in the price of oil on the world market.

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The Fed paused to allow the US economy to grow.

Trading 04 fév 2019 Commentaire »

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The head of the Federal Reserve Bank of Minneapolis, Neel Kashkari, believes that the pause of the American regulator in the process of raising interest rates will allow the country's economy to continue to grow.

The official stressed that the US economy has the potential for growth, and a premature tightening of monetary policy can have a negative impact on it against the background of the crisis in Europe and the slowdown in China's economic growth.

Following the meeting last week, the US Federal Reserve System abandoned its plan for raising rates, noting that it will patiently approach changes in monetary policy in the future.

The soft rhetoric of the regulator, on the one hand, reassured investors, but, on the other, was perceived as a sign of a possible weakening of the economy.

N. Kashkari highlighted the main risks to the economy at the moment: a slowdown in the economic growth of the PRC and the uncertainty surrounding Brexit. He also added that the positive effect of tax reform is fading away because of growing concerns about the trade confrontation between the US and China, which has led to a decrease in investment activity.

In this case, the official appreciates the current state of the US economy. In his opinion, there are no signs of overheating at the moment, but the Fed does not need to take risks in the process of raising short-term interest rates.

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Pound takes profits

Trading 04 fév 2019 Commentaire »

The British pound realized that it went too high on incomprehensible optimism and therefore, the risks of profit taking on weak statistics in Britain are growing by leaps and bounds. The proof is the drop in the GBP/USD pair in response to disappointing data on business activity in the manufacturing sector. The figure fell to a three-month low, and companies were increasing their stocks at the fastest pace since the 1990s. They are obviously afraid of something. Is it a messy Brexit?

Strengthening of the sterling in response to Theresa May's plan, which was rejected by the Parliament, twice in various variations, looks like an anomaly. It would seem that we need to prepare for the withdrawal of Foggy Albion from the EU without a deal, especially since the lawmakers voted against the amendment to extend Article 50 of the Lisbon Treaty. In fact, investors believe that parliament will not allow Brexit to indiscriminate and extending the transition period is a matter of time. As a result, the two-month volatility of the pound fell to its lowest level in two years but after a couple of months waiting for us on March 29, the date of the official divorce.

However, until mid-February when the legislature holds another vote, the political landscape is unlikely to change radically, which allows investors to shift their attention to the events of the economic calendar. Many of them are not averse to taking profits after 2.5% of the GBP/USD rally since the beginning of the year, and weak statistics will enable them to do so. In this regard, the release of data on business activity in the services sector and the meeting of the Bank of England put forward the sterling for the role of the most interesting currency of the week.

The Central Bank will not envy. He bases his predictions on an orderly Brexit, and if something goes wrong, he will have to make corrections in an emergency. Bloomberg experts do not expect a repo rate increase at the February MPC meeting, but the presence of a split on this issue may support the bulls in GBP/USD. The derivatives market is gradually shifting the timing of the expected tightening of monetary policy to a later period than originally anticipated. Nevertheless, in conditions when competing for central banks decided to take a pause, rumors of a continuation of the BoE normalization cycle stretch a pound a helping hand.

Dynamics of the probability of increasing the repo rate

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Everything is relative. The divergence serving faithfully and in 2018, the US dollars now plays on the side of its opponents. In this regard, it is doubtful that the correction of the GBP/USD pair to the upward short-term trend was delayed for a long time. Profit taking is a technical factor, a fundamental improvement in the political background and expectations of a repo rate increase act as important trumps of the bulls in the analyzed pair.

Technically, despite the pullback, pound fans leave no hope of reaching the target of 113% using the Shark pattern. In this scenario, the likelihood of the implementation of targets according to the "Wolfe Waves" model will increase. In this regard, a correction with a subsequent rebound from the supports for $ 1.302 and $ 1.2895 makes sense to use for purchases.

GBP / USD daily graph

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GBP / USD pair: plan for the American session on February 4. The pair remains in the region of a large support level

Trading 04 fév 2019 Commentaire »

To open long positions on the GBP / USD pair, you need:

The situation in the GBP / USD pair has not changed compared with the morning forecast. Buyers of the British pound may resume an uptrend but this will require a breakdown of the middle of the channel in the area of 1.3104 with a fixation above the resistance of 1.3159. Only after this will the prospect of updating the highs in the region of 1.3214 and 1.3260 open, where I recommend taking profits. However, a larger upward movement will depend on negotiations between British Prime Minister Theresa May and EU representatives. In the case of a downward correction of the purchase for the pound, I recommend to do it only on the condition of a false breakdown around 1.3043 or for a rebound from 1.2971.

To open short positions on the GBP / USD pair, you need:

The bears did not wait for testing the resistance of 1.3104 in the morning and started selling the pound as they approached this range. However, the sellers target will be a breakthrough of support at 1.3043, which may lead to a further fall in GBP / USD with a rise to the lows of 1.2971 and 1.2894, where I recommend taking profits. In the case of a pound rising above 1.3104, it's best to take a closer look at short positions after updating the maximum in the area of 1.3159 or at a rebound from the level of 1.3214. Any news of the failure of negotiations between May and EU representatives could lead to a rapid fall in the pound.

More in the video forecast for February 4

Indicator signals:

Moving averages

Trade is conducted below the 30- and 50-day moving, which indicates a possible drop in the pound in the short term.

Bollinger bands

Bollinger Bands indicator volatility has decreased, which does not give signals on the market entry.

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Description of indicators

MA (moving average) 50 days - yellow

MA (moving average) 30 days - green

MACD: fast EMA 12, slow EMA 26, SMA 9

Bollinger Bands 20

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BITCOIN Analysis for February 4, 2019

Trading 04 fév 2019 Commentaire »

Bitcoin has been correcting itself between $3,400-3,500 for a few days in a row. The price is expected to sink much lower in the coming days. The price recently broke below the trend line support which has been also retested today as resistance while also being held by the dynamic levels like 20 EMA, Tenkan, and Kijun line, acting as resistance. Meanwhile, the price is expected to retest the trend line again where the Kumo cloud resistance is holding. As the price remains below $3,500, it is expected to fall deeper towards $3,000 in the coming days. On the contrary, a daily close above $3,500 will cancel the bearish bias and may lead to further upward movement.

SUPPORT: 3,000, 3,250

RESISTANCE: 3,500, 4,000

BIAS: BEARISH

MOMENTUM: VOLATILE

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EUR / USD pair: plan for the US session on February 4. Eurozone statistics is pessimistic again, Producer prices came out

Trading 04 fév 2019 Commentaire »

To open long positions on EUR / USD pair, you need:

Weak data on producer prices in the eurozone has once again led to continued pressure on the euro in the morning. Today, buyers once again need to keep the pair above the support level of 1.1436, which will be the first signal to buy in order to break through and consolidate above the resistance of 1.1460. Only after such will it be possible to count on continued growth with the building of a new ascending channel and with updating the highs in the region of 1.1487 and 1.1514, where I recommend taking profits. In the case of EUR/USD decline below the support of 1.1436, it is best to take a closer look at long positions at a test of 1.1408 or rebound from 1.1378.

To open short positions on EUR / USD pair, you need:

Sellers are keeping the pair below the level of 1.1460, which will keep the pressure on the euro. An unsuccessful consolidation above 1.1460 will be the first signal to sell the euro with the main goal of a breakthrough and consolidation below support for 1.1436, which will lead to a large sale of EUR/USD to the area of the minimum at 1.1408 and 1.1378, where I recommend taking profits. If the euro rises in the second half of the day above resistance 1.1460, it is possible to return to sales immediately to rebound from the maximum of 1.1487.

More in the video forecast for February 4

Indicator signals:

Moving averages

Trade is conducted below the 30- and 50-medium moving, which indicates the continued pressure on the euro.

Bollinger bands

In the case of EUR / USD growth, the upside potential may be limited by the upper limit of the Bollinger Bands indicator in the 1.1470 area.

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Description of indicators

MA (moving average) 50 days - yellow

MA (moving average) 30 days - green

MACD: fast EMA 12, slow EMA 26, SMA 9

Bollinger Bands 20

The material has been provided by InstaForex Company - www.instaforex.com

EUR and GBP: Eurozone producer prices were worse than expected. The pound is ready to break past week lows

Trading 04 fév 2019 Commentaire »

Another weak fundamental statistics on the eurozone led to a decline in the European currency in the first half of the day, but the bears have not yet managed to form a larger downward movement in the EUR / USD pair. Many will depend on whether sellers manage to cope with the support level of 1.1435 or not, but more on that below.

Inflation in Italy remains near zero. According to the statistics agency, the preliminary CPI of Italy in January rose by only 0.1% compared with December 2018. On an annualized basis, inflation rose by 0.9%. Economists had expected a preliminary CPI of Italy for January at 0.2% and 0.9%, respectively.

Eurozone producer prices put particular pressure on the euro in the first half of the day, as the economists had fallen more than forecast, which is a bad sign for the European Central Bank.

According to the report, PPI eurozone producer price index in December 2018 fell by 0.8% and grew by 3.0% year on year. Eurozone producer price index for December was projected at -0.7% and + 3.1%, respectively.

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The main fall in prices is associated with a decrease in energy carriers, which in the 4th quarter of 2018 showed a rapid decline. Thus, the basic index of producer prices in the eurozone, which does not take into account the volatile categories, including energy prices, declined only by 0.1% in December and showed an increase of 1.3% on an annualized basis.

As for the technical picture of the EUR / USD currency pair, it remained unchanged compared with the morning forecast. Only a breakthrough of the support level of 1.1430 can lead to a new wave of sales and reduce risky assets in the region of the lower boundary of the downward channel, as well as to the support level of 1.1405 and 1.1378. In the case of an upward correction, the upper limit in the area of 1.1475 will be a good level for the return of new major sellers of the European currency to the market.

The British pound returned to weekly support levels after it became known that the PMI Purchasing Managers Index for the UK construction sector fell to a new 10-month low in January.

According to IHS Markit, PMI for the construction sector in January fell to a critical level of 50.6 points against 52.8 points in December of the past year. The fall is mainly due to a slowdown in employment growth and very low growth in new orders.

Also, negative pressure on the pound has market forecasts associated with the revision of GDP growth in 2019. It is expected that at its next meeting, the Bank of England will leave interest rates unchanged, but will revise the forecast of growth in the UK economy for the worse. The continuing uncertainty around Brexit also affects the British pound rate, which has been in a narrow side channel for quite a while.

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