Why should you not trust the dollar or too high bar?

Trading 04 fév 2019 Commentaire »

The growth of the dollar contributes to several factors. The first is the report on employment in the United States and the high activity of the manufacturing sector. The growth of the dollar contributes to several factors. The first is a report on employment in the United States and the high activity of the manufacturing sector. Judging from the published data, the temporary suspension of the government's work did not have a particular impact on the labor market and the economy as a whole. However, there are several points that can spoil the overall picture. The wage growth rates have declined despite the strong labor market. If we add here the Fed's more cautious attitude about the monetary policy outlook, the dollar outlook does not look very convincing.

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The Fed does not manifest caution for nothing. Issues on Brexit, the slowdown in the economy, the problem of financing the work of the US government and the trade conflict between the US and China are serious arguments in favor of not tightening monetary policy. But, on the other hand, all these problems can be solved in the next few months. Let's say Congress will approve the constant increase in costs, the UK will make a deal with the EU under Brexit and Trump will refuse new tariffs for Chinese imports, then two rate increases this year can be justified. At the same time, negative developments will lead to market chaos. Hence, the dollar in all these turmoil has every chance to move to a decline.

All economic releases of the coming week, ranging from producer price inflation in the Eurozone and ending with retail sales and GDP, may unpleasantly surprise the markets. The weakness of the US dollar is the only reason why the EUR/USD pair rose last week and the lack of economic data for the US this week makes the mark of 1.15 a strong resistance level. Also, the recovery of the US dollar has limited the growth of AUD and NZD, despite the strong indicator of business activity in the manufacturing sector of Australia.

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The EUR/USD is still trapped within the previous consolidation zone, waiting for a breakout. for February 4, 2019

Trading 04 fév 2019 Commentaire »

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Since June 2018, the EUR/USD pair has been moving sideways with slight bearish tendency within the depicted bearish Channel (In RED).

On November 13, the EUR/USD demonstrated recent bullish recovery around 1.1220-1.1250 where the current bullish movement above the depicted short-term bullish channel (In BLUE) was initiated.

Bullish fixation above 1.1420 was needed to enhance further bullish movement towards 1.1520.

However, the market has been demonstrating obvious bearish rejection around 1.1420 few times until January 28 when the daily candlestick achieved a bullish closure above 1.1420.

Further bullish advancement should be expected towards the price level of 1.1550 where the upper limit of both depicted channels (RED & BLUE) is located.

Around 1.1550-1.1570, there's a confluence of supply levels (upper limit of channels & previous historical bottoms) where bearish rejection as well as a valid SELL entry would be expected.

On the other hand, any bearish closure below 1.1420 terminates the current bullish movement (initiated on January 25) allowing another bearish visit towards 1.1350 and 1.1300.

Trade Recommendations:

Conservative traders should wait for the current bullish pullback to pursue towards the price level of 1.1550-1.1570 for a valid SELL entry.

T/P levels to be located around 1.1420 and 1.1300. S/L to be located above 1.1600.

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Dollar significantly strengthened after the publication of optimistic data on US employment

Trading 04 fév 2019 Commentaire »

The dollar strengthened against the yen after the publication of strong data on employment and production in the United States. However, one should not lose sight of the cautious attitude of the Fed regarding future monetary policy and a noticeable decline in activity in Asian markets during the Lunar New Year celebrations. Both factors will restrain further growth of the American currency.

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In addition, the optimism of Wall Street, caused by a sharp increase in jobs in the United States, was suppressed by weaker than expected forecasts from Amazon.com. In general, the key points for the markets this week will be the remaining reports on the profits of American corporations and how they will correspond to the latest optimistic data. Also, we should not forget about political events, especially the confrontation between the US and China, which are still potential risk factors.

After reviving the market against the backdrop of growing risk appetite, there will be important data and statements by the speakers saying that it is necessary to find a delicate balance between data improvement and the neutral tone of central banks. The Federal Reserve promises to be cautious about further raising interest rates, which signals a possible completion of a tightening policy cycle. Meanwhile, the dollar holds the title of leader and there is no compelling reason to worry about a possible recession.

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Technical levels and trading recommendations for GBP/USD for February 4, 2019

Trading 04 fév 2019 Commentaire »

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On December 12, the previously-dominating bearish momentum came to its end when the GBP/USD pair visited the price levels of 1.2500 where the backside of the broken daily uptrend was located.

Since then, the current bullish swing has taken place until January 28, while the GBP/USD pair was almost approaching the supply level of 1.3240.

That's when the current bearish pullback was initiated around slightly lower price levels near 1.3215 (around the depicted supply levels in RED).

This was followed by a bearish engulfing daily candlestick on January 29. Thus, the GBP/USD pair lost its bullish breakout above 1.3155. Hence, an intraday supply level has been recently established around 1.3155.

The current bearish decline below 1.3150 will probably bring the GBP/USD pair into a deeper bearish correction that extends down to 1.3000 where bullish recovery should be anticipated.

On the other hand, for the bullish scenario to regain its validity, bullish persistence above the price level of 1.3150 (Recent Supply Level) should be re-established on a daily basis. This would enhance another bullish visit towards 1.3240.

Trade Recommendations:

Risky traders have been suggested a counter-trend short trade around 1.3150. It's already running in profits. Final T/P level should be located around 1.3000. S/L should be located at the entry level to offset the associated risk.

On the other hand, conservative traders should wait for a bearish pullback towards 1.3000 (backside of the broken downtrend in RED) for a valid BUY entry.

T/P levels should be located around 1.3055, 1.3155, and 1.3200. Any bearish closure on H4 below 1.2950 invalidates this scenario.

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Forecast for AUD / USD pair on February 4, 2019

Trading 04 fév 2019 Commentaire »

AUD / USD pair

On Thursday last week, the "Australian" expanded the range of the price channel and is currently dropping for the second day from Friday, which is under pressure from the general strengthening of the US dollar. The Marlin indicator on the daily and four-hour charts vigorously turned down. In order to reduce to the nearest significant support of 0.7043, which was the nested line of the price channel and coincided with the minimum of October 5 of last year, the price needs to fix below the MACD daily scale line at 0.7185. But first, it should be under the same line of 0.7208 on H4.

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Dollar has taken heart

Trading 04 fév 2019 Commentaire »

A positive macroeconomic data was published on Friday and returned to the market the idea that the Fed could raise rates twice this year.

The report on the labor market came out unexpectedly strong with the data of 340 thousand number new jobs in January, which turned out to be much better than the average market forecast of 164 thousand. The growth of average wages remained high, which gives chances to see the growth of inflation.

The final index of consumer sentiment from the University of Michigan turned out to be slightly higher than the preliminary one. Similarly, the ISM index in the manufacturing sector rose to 56.6p in January against the forecast of 54.2 p., indicating the economy is still expanding despite the slowdown in growth is still expanding.

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Also on Friday, two Fed members commented on the current economic situation and both were brightly dovish. Head of the Federal Reserve Bank of St. Louis, James Bullard, rated the report on the labor market as "very strong" but at the same time urged to pay attention to other data. His colleague from Dallas, Robert Kaplan, has once again insisted on a pause in the rate increase cycle, explaining that nonfarm is not an indicator due to shut down.

In general, market expectations are changing to more positive. The gold growth was replaced by a fall and oil rose again above $ 63 per barrel, which indicates a decrease in risks.

Eurozone

The EUR/USD pair is trading in a narrow range, which is no reason to leave. Borders range from 1.1403 to 1.1515 and the euro will wait for new data.

Great Britain

The development of the situation on Brexit remains the main driver for the pound in the coming weeks. Plan B, proposed by May, does not find support anywhere except in her own party. The question of the border with Ireland remains open; it requires finding a compromise among the main political movements.

In the coming days, Britain will be visited by Tusk and Juncker, and the search for a compromise will continue. If he is not found, then the prospects for voting in parliament on February 13 will remain bad, which would lead to the removal of May in the process and the question passed to parliament. In this case, the pound is likely to be able to resume growth.

As for macroeconomic data, they continue to remain moderately negative. The PMI in the industrial sector fell to a 3-month low and amounted to 52.8 p. Moreover, the slowdown in 2018 is not in doubt.

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In the construction sector, the PMI from 52.8p to 50.6p. The result is noticeably worse than forecast, despite the fact that the market does not expect any active actions from the Bank of England at least until the end of the year.

On Monday, the GBP/USD looks neutral but until the situation with the Brexit is cleared, you should not wait for movements. Probably, the recent low of 1.3040 is updated and an attempt to go below 1.30, the support can be found at 1.2960 / 70 in case of success.

Oil

Oil grows significantly after Friday's data provoked sales of defensive assets, but then additional reasons for growth emerged. According to Baker Hughes, the number of active oil installations has decreased by 15 in the last week as it dropped to a total of 847 units, which is a minimum of 8 months. In turn, OPEC set a two-year record, reducing production in January by 80% of the agreements reached under the OPEC + transaction.

In the absence of system data on futures due to the shutdown, the holistic picture is not yet visible but one thing is clear - there is no threat of the collapse of the oil market. The breakdown of resistance at 63.63 will open the way to the 65/70 zone, which coincides with the consolidated market estimate for Brent in the second quarter.

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OPEC reduces oil production to the maximum

Trading 04 fév 2019 Commentaire »

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According to experts, last month the largest decline in oil production in the past two years was recorded by OPEC. According to the calculations of experts, the cartel executed a new deal by almost 80%.

On the part of Saudi Arabia, the leading exporter of black gold in the world, much stronger reductions in oil production were made than previously planned. The United Arab Emirates (UAE) and Kuwait can also boast a significant decrease in production.

According to an analytical survey, the production level of 14 OPEC countries decreased by 930 thousand barrels per day, to 31.02 million. Recall that the countries of the cartel and independent oil producers resumed their agreement to reduce production in December after a 40% drop in oil prices. In the end, OPEC + agreed to remove 1.2 million barrels per day from the market in order to achieve a balance of supply and demand.

A significant part of the cuts in the countries of the cartel is 800 thousand barrels per day, while the lion's share of them is unplanned. In this new deal should take part 11 members of OPEC, except Iran, Libya, and Venezuela. According to the survey, these 11 countries made 79% of the promised reductions in January 2019. However, they need to reduce production by another 170 thousand barrels per day in order to fully implement the agreement.

The authorities of Saudi Arabia have reduced the level of oil production by 450 thousand barrels per day, to 10.2 million, which is almost a third more than the terms of the transaction. Experts believe this reduction is impressive compared with a record production level of 11.1 million barrels per day, recorded in November 2018. As for Iran, in January of this year, the volume of black gold in the country reached 4.69 million barrels per day, which exceeded the planned amount of oil production. Against the background of anti-American sanctions, production in Iran fell by 150 thousand barrels per day, to 2.74 million.

In Libya, suffering from unrest after the fall of the regime of the former leader Muammar Gaddafi, in January of this year, 900 thousand barrels were produced, which is 100 thousand barrels less than the July figure. Export of black gold and other goods is difficult due to the closure of a number of oil terminals. Last month, a slight increase in production was recorded in Venezuela by 50 thousand barrels per day, to 1.27 million barrels. Earlier, the United States imposed large-scale sanctions against the state oil company of the country. Experts believe that this could be an actual oil embargo.

A meeting of OPEC + representatives in Baku is scheduled for March this year. On the agenda will be the question of the possible extension of the agreement on oil production in the autumn of 2019.

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Bitcoin analysis for February 04, 2019

Trading 04 fév 2019 Commentaire »

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Bitcoin has been trading sideways at around $3,389. The overall short-mid-long term trend is bearish and you should watch for selling opportunities. Using the multi – time frame analysis I found the key resistance to be at $3.460.

Daily time frame: On the daily time-frame we found that the swing low at $3.460 in the background, now became key resistance and the price doesn't have power to break it.

H4 time - frame: I found a successful test of the high at $3.455 (red rectangle), which confirmed resistance.

H1 time – frame: Strong pin-bar in the background just after the test of the resistance (red rectangle), which is a sign that aggressive sellers are present.

R1: $3.462

R2: $3.509

R3: $3.546

Pivot: $3.424

S1: $3.377

S2: $3.339

S3: $3.293

Trading recommendation: We are short BTC/USD from $3,392 and with the target at $3,110. Protective stop is moved at $3.470.

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Technical analysis of EUR/USD for February 04, 2019

Trading 04 fév 2019 Commentaire »

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Overview: The EUR/USD pair above around the weekly pivot point (1.1393). It continued to move downwards from the level of 1.1393 to the bottom around 1.1335. Today, the first resistance level is seen at 1.1393 followed by 1.1426, while daily support 1 is seen at 1.1335. Furthermore, the moving average (100) starts signaling a downward trend; therefore, the market is indicating a bearish opportunity below 1.1393. So it will be good to sell at 1.1393 with the first target of 1.1335. It will also call for a downtrend in order to continue towards 1.1294. The strong daily support is seen at the 1.1254 level. According to the previous events, we expect the EUR/USD pair to trade between 1.1393 and 1.1254 in coming hours. The price area of 1.1393 remains a significant resistance zone. Thus, the trend is still bearish as long as the level of 1.1393 is not broken. On the contrary, in case a reversal takes place and the EUR/USD pair breaks through the resistance level of 1.1393, then a stop loss should be placed at 1.1453.The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of USD/CHF for February 04, 2019

Trading 04 fév 2019 Commentaire »

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Overview:

The USD/CHF pair faced resistance at the level of 1.0031, while minor resistance is seen at 0.9987. Support is found at the levels of 0.9884 and 0.9819. Also, it should be noted that a daily pivot point has already set at the level of 0.9939. Equally important, the USD/CHF pair is still moving around the key level at 0.9939, which represents a daily pivot in the H1 time frame at the moment. Yesterday, the USD/CHF pair continued to move upwards from the level of 0.9939. The pair rose from the level of 0.9939(this level of 0.9939 coincides with the double bottom) to the top around 0.9987. In consequence, the USD/CHF pair broke resistance, which turned strong support at the level of 0.9884. The level of 0.9884 is expected to act as major support today. From this point, we expect the USD/CHF pair to continue moving in the bullish trend from the support level of 0.9884 towards the target level of 0.9987. If the pair succeeds in passing through the level of 0.9987, the market will indicate the bullish opportunity above the level of 0.9987 in order to reach the second target at 1.0031. On other hand, if a breakout happens at the support level of 0.9819, then this scenario may be invalidated.

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