EUR / USD could rise to 1.31 – Morgan Stanley

Trading 05 fév 2019 Commentaire »

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According to experts of the investment bank Morgan Stanley, despite the fact that the position of the US currency is still strong, its prospects in the medium and long term look far from optimistic.

"Markets today underestimate the potential for weakening the greenback, taking into account shifts in the course of the US Federal Reserve System (FRS), as well as in indicators of the country's economic growth," said representatives of the financial institute.

"We believe that the USD index has reached a peak. It is assumed that in the future, along with such factors as a slowdown in US GDP growth and a pause in the Fed's monetary tightening cycle, pressure on the dollar will have an outflow of capital from the US securities market, they added.

"The cost of hedging assets issued in the United States has never been so high. Thus, with its use, the yield on investments in 10-year treasuries for a European investor will be negative (-0.35%)," the experts noted.

"It's one thing when foreign investors are confident in the strength of the US currency. In this case, they may not insure risks. Another is when the prospects for the dollar appear to be bearish. If non-residents start to take money (and their investments in the US securities market significantly exceed the investments of Americans in foreign stocks and bonds), then the greenback will obviously not be easy." Morgan Stanley believes.

The bank expects that by the end of this year, the pair EUR / USD may rise to the level of 1.31, and USD / JPY will fall to 102.

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Brent drew the "bears" to flight

Trading 05 fév 2019 Commentaire »

Rumors of problems with global positions make it possible for the "bulls" on the North Sea oil to feel comfortable near the maximum levels for the last two months. The factor of US sanctions against Venezuela is, to a large extent, taken into account in futures quotes, but the fact that the European Union has recognized the opposition leader as the head of the South American country suggests that their expansion is not far off. Paired with the active reduction of production by OPEC and the reluctance of Italy and Greece to buy black gold from Iran, this allows Brent to gain a foothold above $ 62 a barrel.

Even though the US sanctions against Caracas look less ambitious than those against Tehran, their influence is already being felt. According to Commonwealth Bank of Australia, the restrictions imposed on the country can reduce global shipments by 0.5-1%. At the same time, the fall in oil production in Venezuela, Libya, and Iran, as well as the active fulfillment of contractual obligations by Saudi Arabia, suggest that OPEC's desire to balance the market is brought to life. In January, the cartel pumped 31.02 million b / d, reducing production by 930 thousand b / d for the month. Alas, but so far Moscow cannot do what it promised, for which Riyadh has been criticized. Instead of the planned cutting of 228 thousand b / d compared to the base October, in January, Russia reduced the figure by 47 thousand b / d. However, there are reserves, which allows the bulls of Brent and WTI to look to the future with optimism.

Rising oil prices are due to the throwing of a white towel "bears". As a result of the week by January 29, their short positions decreased by 27%. At the same time, buyers are not in a hurry to make serious decisions. Long-term financial managers have increased by a modest 4.5%. In my opinion, investors felt that the bottom has already been passed, but they doubt that the current bullish drivers are able to push the quotes of futures for the North Sea variety much higher. Last year's story with a sharp increase in the activity of American mining companies amid a Brent rally above $ 65 a barrel is still fresh in memory.

Dynamics of oil prices and speculative positions

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Positive emotions to fans of black gold are added by Iran's complaints to Greece and Italy, without explaining the reasons for not wanting to use the grace period set by the United States to buy oil from Tehran. Let me remind you that this factor at one time allowed the "bullish" effect of American sanctions against a Middle Eastern country to be smoothed over. If it does not work, then long-ranked financial managers receive additional whists.

The growth of quotations of Brent and WTI is constrained by a stronger dollar after the release of data on the US labor market in January. If the "bearish" forecasts of large banks on it begin, finally, to work, oil will receive a new impetus to continue the rally.

Technically, there is a correction in the direction of 38.2% and 50% of the CD wave as part of the transformation of the Shark pattern in 5-0. The rebound from resistances, as a rule, are used for sales.

Brent, the daily chart

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Intraday technical levels and trading recommendations for EUR/USD for February 5, 2019

Trading 05 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 pair 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.

A further bullish advance was expected towards the price level of 1.1550 where the upper limit of both depicted channels (RED & BLUE) was 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.

However, the EUR/USD pair has lost its bullish momentum since Thursday when a bearish engulfing candlestick was demonstrated around 1.1514. Thus, another descending high was established then.

Hence, 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.

Risky traders SELL the GBP/USD pair upon a bearish H4 candlestick closure below 1.1400. T/P to be located around 1.1350 and 1.1285.

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Control zones of EUR / USD pair 02/05/19

Trading 05 fév 2019 Commentaire »

The upward movement remains an impulse, therefore the important level of support is the a CZ 1.1422-1.1413. The test of the specified zone should be considered for the appearance of demand and the pattern for purchases. If this happens, the first goal will be the maximum of last week. Further targets will be measured from the weekly CZ of 1.1492-1.1474, hence, the ratio of risk to profit of a long position will be profitable.

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The last impulse movement started from the current levels, therefore, prices below 1.1433 are in the zone of limit orders. Until these orders are removed, the downward movement will stop.

To break the upward momentum, it is necessary to close today's American session below 1.1413. When this happens, the decline to the weekly CZ of 1.1330-1.1311 will come to the fore. This will allow you to look for favorable prices for sales in tomorrow's European session. It is important to understand that changing the direction of the trend will oblige to close all long positions opened last week.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which change several times a year.

Weekly fault - weekly control zone. The area formed by the important marks of the futures market, which change several times a year.

Monthly fault - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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February 5, 2019: GBP/USD is approaching the previous weekly high around 1.3000, shall it hold ?

Trading 05 fév 2019 Commentaire »

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On December 12, the previously-dominating bearish momentum came to an 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 been taking place until January 28 when 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 was recently established around 1.3155.

As expected, the recent bearish decline below 1.3150 brought the GBP/USD pair into a deeper bearish correction towards 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. Final T/P level around 1.3000 was already reached.

On the other hand, conservative traders should consider the current bearish pullback towards 1.3000-1.2970 (backside of the broken downtrend in RED) for a valid BUY entry.

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

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BITCOIN Analysis for February 5, 2019

Trading 05 fév 2019 Commentaire »

Bitcoin jumped higher into the Kumo Cloud resistance while being held by the dynamic levels like 20 EMA, Tenkan, and Kijun lines as support. The price is currently climbing higher off the dynamic level of support after 2 consecutive bearish bars. As the price is being held by the dynamic support levels, it is expected to advance higher towards the trend line resistance, from where after rejecting the buyers, BTC is expected to extend the upward bias in the coming days. On the contrary, a daily close above 200 EMA as well as $3,500 area is expected to lead to further bullish momentum. As a result, the price could rise higher towards $3,600 and later towards $4,000 area in the future.

SUPPORT: 3,000, 3,250

RESISTANCE: 3,500, 3,600, 4,000

BIAS: BEARISH

MOMENTUM: VOLATILE

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GBP / USD: plan for the American session on February 5. PMI composite index returned to 50 points

Trading 05 fév 2019 Commentaire »

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

The pound continued to decline against the background of weak data on PMI indices, which continue a series of weak statistics on the UK economy. Buyers today can only rely on the formation of a false breakdown in the support area of 1.2995, and otherwise, it is best to open long positions to rebound from a new low of 1.2947. The main task will be to return and consolidate above the resistance level of 1.3048, which will not be so easy without more compelling reasons, including the positive news on Brexit from British Prime Minister Theresa May.

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

The bears worked the scenario for sale from the level of 1.3048, to which I paid attention in my morning review. At the moment, the challenge is to re-test support of 1.2995, which may lead to a larger sale of GBP / USD to the area of minimum 1.2947 and 1.2894, where I recommend taking profits. In the case of an upward correction scenario in the second half of the day, short positions can be opened on the condition of a false breakdown in the area of the morning resistance at 1.3048 or for a rebound from 1.3099.

Indicator signals:

Moving Averages

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

Bollinger bands

In the case of GBP / USD growth, the upside potential may be limited by the upper limit of the Bollinger Bands indicator around 1.3053.

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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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Fundamental Analysis of GBP/USD for February 5, 2019

Trading 05 fév 2019 Commentaire »

GBP/USD has been quite impulsive amid the bearish momentum recently which is currently leading the price towards 1.30 price area. USD has been quite stronger than GBP in light of robust US nonfarm payrolls. On the other hand, USD growth is capped by dovish Fed's rhetoric on monetary policy and the recent government shutdown.

GBP has been struggling for gains due to downbeat economic reports and the unsettled Brexit deal ahead of March 29, 2019. Brexit developments have been the main driving force for GBP, whereas the downbeat economic data added to the drawdown even more. Negotiations are being held between the UK and the EU. There is a growing likelihood that the UK could leave the EU without any deal on tough conditions. In case of a hard Brexit, custom checks may be eased for at least three months in Britain for the goods arriving from Europe. A no deal BREXIT is expected to hamper not only the UK economy but also a large number of big companies in the world that might trigger extreme volatility in global financial markets. Recently, UK Construction PMI report was published with a decrease to 50.6 from the previous figure of 52.8 which was expected to be at 52.6 and today Services PMI report was published with a decrease to 50.1 from the previous figure of 51.2 which was expected to be at 51.1. The market-moving events this week are a BOE Inflation report, MPC Official Bank Rate Vote, Monetary Policy Summary, and an Official Bank Rate report which is expected to be unchanged at 0.75%.

On the USD side, the US Federal Reserve kept the official funds rate in December. The Labor Department released mixed employment data, being optimistic with the overall economic growth. As a result, USD is likely to extend strength this week. The Federal Reserve is currently quite patient with the interest rate decisions. Citing Cleveland FED President Mester, it is the best approach under the current situation. However, to boost the US sustainable economic growth, further rate hikes are needed. Today US ISM Non-Manufacturing PMI report is going to be published which is expected to decrease to 57.2 from the previous value of 57.6 and later President Donald Trump is also going to speak about the US-Mexico deal which is expected to contribute to USD gains.

Meanwhile, USD is expected to gain further momentum over GBP but certain spikes and volatility may be observed along the way which might lead to certain throwbacks along the way. Nevertheless, the long-term market sentiment is expected to be against GBP.

Now let us look at the technical view. The price is currently falling deeper towards 1.30 area which is expected to climb higher after retesting off the area with a daily close if any strong bullish momentum is observed with a daily close above the area. As the price remains above 1.30 area with a daily close, further bullish pressure is expected in this pair.

SUPPORT: 1.2930, 1.30

RESISTANCE: 1.3200, 1.3300

BIAS: BULLISH

MOMENTUM: VOLATILE

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EUR / USD: plan for the US session on February 5. Eurozone PMI indices pushed the euro down

Trading 05 fév 2019 Commentaire »

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

Buyers of the euro were in a losing situation after the release of weak PMI indices for the eurozone countries, which led to a further decrease in the euro along with the trend. At present, it is best to return to long positions after the formation of a false breakdown around the support level of 1.1412 or to rebound from a minimum of 1.1392, where major players will show themselves. The main task will be the recovery of EUR / USD and the resistance test of 1.1448, where I recommend fixing the profits. However, only a breakdown of this level will lead to a real change in the current downtrend.

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

In the second half of the day, sellers will try to break through the support of 1.1412 from the second time, which will lead to a further sale of the euro to the minimum area of 1.1392, where I recommend fixing the profits, especially if weak fundamental statistics on the American economy are released. In the case of a larger upward correction of the euro, short positions can be considered immediately to rebound from a maximum of 1.1448, above which buyers are unlikely to be able to get out today.

Indicator signals:

Moving Averages

Trade is conducted below 30-day and 50-day moving averages, which indicates that the pressure on the euro remains.

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 area of 1.1444.

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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

Bitcoin analysis for February 05, 2019

Trading 05 fév 2019 Commentaire »

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The Bitcoin is trading sideways at the price of $3.471 on a light volume.

White lines - bearish flag in creation

Most recently, I have found that a fake breakout of the resistance ($3.535) and hidden bearish divergence on the MACD oscillator, which is a sign of weakness in the background. Short-term resistance is set at the price of $3.545. For the downward continuation watch for a breakout of the short-term support at $3.440.

Trading recommendation: We will sell BTC on the breakout of support ($.3440). Profit target will be set at $3.388 and protective stop at $3.490.

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