Analytics and trading signals for beginners. How to trade EUR/USD on September 7? Getting ready for Monday session

Trading 06 sept 2020 Commentaire »

Hourly chart of the EUR/USD pair

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The EUR/USD currency pair spent the whole day inside a75-point corrective side channel on Friday, September 4. This is not small for an intraday channel, but then again it can also be considered as somewhat small. The main thing is that there was no trend movement on Friday. In general, the trend remained downward, so novice traders could open short positions, as the MACD indicator moved down twice during the day. Unfortunately, the first sell signal turned out to be false, as the indicator swiftly moved back up, and the second one was not false, but sharp, the price simply started falling too quickly and it turned out to be too short-lived. In the first case, traders could limit themselves to minimal losses, since the price could not continue to move up after a false signal. In the second case, traders had to open trades after the quotes fell by 50 points near the first target for the day – 1.1805. However, we warned in Friday's morning review that sharp price reversals are possible once important US macroeconomic data are released, and we recommended that you conduct the most cautious trading at this time, do not forget about Stop Loss orders or leave the market altogether. Therefore, in general, Friday should not have brought big losses to traders.

As for fundamental events, all the most interesting things happened again in the United States. Economic factors are considered the most important in terms of the degree of influence on any currency's movement. However, they have clearly faded into the background in recent months (during the coronavirus pandemic). Thus, the macroeconomic reports from the US were very important, but at the same time they caused a rather weak and not entirely logical reaction from the market. For example, the US unemployment rate fell by almost 2% in August, which is a lot. The hidden unemployment rate fell by 2.3%, while the average wages rose by 0.4% m/m. All these are positive aspects for both the American economy and the dollar. However, we only saw a short-term rise in the dollar, and then it immediately fell. The Nonfarm Payrolls report turned out to be slightly worse than forecasted, but not at all critical. We would even say that it was in line with forecasts, therefore, it could not cause disappointment among market participants. Thus, the entire package of data was positive, but did not result in a significant rise from the dollar.

Macroeconomic data from the EU or the US will not be published on Monday, September 7. Thus, the macroeconomic background does not have any influence on this day, so the pair can be traded in a very narrow range with low volatility. Friday's movement may extend until Monday. We recommend novice traders to wait for the price to leave the side channel and only then should you resume trading.

Possible scenarios for September 7:

1) Novice traders are advised to not consider buy positions at this time, since the pair has settled below the upward trend line, so the trend has now changed to a downward trend. There are currently no signals or technical patterns that support the upward trend. Therefore, buyers need to wait for trend lines or channels that would show an upward trend.

2) Sell positions continue to look more relevant, but the pair spent the last two days in a side channel. Therefore, novice traders are advised to wait until this correction is completed and also wait for the price to leave the channel (shown in the illustration) through its lower line. This may not happen on Monday, since market movements are usually weak on this day. However, we recommend trading lower after the price settles below 1.1789.

On the chart:

Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.

Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.

The MACD indicator consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).

Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.

Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

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

GBP/USD. Brexit-2. "ScExit". The collapse of the European Union can be supplemented by the collapse of the United Kingdom?

Trading 06 sept 2020 Commentaire »

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The Scots are actively thinking about leaving the United Kingdom in the past few years. In 2014, an independence referendum was already held in Scotland with the permission of London, the results of which showed that the majority of Scots want to remain part of the United Kingdom. However, at that time, no one in the UK knew about Brexit (perhaps other than the highest political forces). Thus, two years later, when the UK decided to leave the EU with "as much as" 52% of the vote, Scotland immediately opposed this option, and then wanted to hold a new referendum, "because the conditions have changed". There is no doubt that if a new referendum were held now, its results would no longer be in favor of London and Scotland would start its Brexit. However, as Boris Johnson correctly pointed out, Edinburgh cannot hold referendums on independence every 5 years. Thus, London is not going to grant Edinburgh a new right to hold a referendum in the coming years for sure. In fact, for Edinburgh and Minister of Scotland, Nicola Sturgeon, there is only one option left – an unauthorized referendum. And will Sturgeon take this step of direct conflict with London?

It should be noted immediately that the number of Scots who do not support the UK is about the same as the number of Britons who do not support the EU. In other words, the British did not have a clear general opinion in 2016, and the Scots do not have it now. Various opinion polls show that approximately 55-56% of Scots support leaving the European Union, which means that 44% of the country's population will oppose it. This means that even in this case, almost half of the citizens will end up with the option that they do not support. And if the "losers" do not lose much in the elections to Parliament or Prime Minister, since the country's policy cannot be changed dramatically in a few years, then in a situation with a possible "Brexit" almost half of the country will be forced to live differently from what it lived before for three centuries. Scotland will come out of Britain and immediately there will be borders with Wales, England, and Northern Ireland. And the countries that are part of the United Kingdom are about the same as the countries that are part of the former USSR. A huge number of Scots live in England and vice versa, a huge number of relatives of Scots live in the rest of the UK. In times between countries, there will be borders, customs, and checks. The same applies to businesses that have worked for 300 years within the framework of a single economic system with England, Wales, and Northern Ireland, and they will have to adapt to new realities, customs, duties, and restrictions, just as British businesses now need to adapt to the new realities of trade with European companies. 44% of the Scottish population does not support this option. Thus, if Scotland initiates an exit from the UK in any way, it may turn out to be the same long-standing "Brexit".

Nicola Sturgeon, who has repeatedly asked Boris Johnson to allow Edinburgh to hold a referendum, however, is not going to rush things on this issue. The First Minister of Scotland wants to wait for the parliamentary elections, where the position of her party can be further strengthened. After that, the Scottish leader may start putting pressure on London again.

In general, the UK may soon face not only new economic problems but also geopolitical problems that will lead to a lot of new economic and social problems. Unfortunately, the EU continues to fall apart. It's just that it's not fast. How many years has the European Union been created and acquired its present form? So far, the case has been limited to the UK alone, but in the future, other countries will want to leave the European Union and, as we can see, some countries also want to leave the jurisdiction of others. Thus, the very long-term prospects of the pound, from our point of view, remain quite unattractive. The United States of America is unlikely to break up into separate states. Thus, they only need to solve their internal problems, which were actively created by Donald Trump in the last few years. Economic power cannot be lost in a short period. So whatever it is now, the United States remains the country with the strongest economy in the world. Thus, if Trump does not become the next president of the country, then we can expect that the situation will improve in the coming years. In the case of the UK, everything is more complicated. We believe that the situation will only get worse, and the Kingdom may also face a political crisis in the coming years, as we still believe that Boris Johnson gave the UK nothing but the completion of the "divorce" process with the European Union.

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Recommendations for the GBP/USD pair:

The pound/dollar pair continues its more pronounced upward movement on the 24-hour timeframe. Thus, unlike the euro, the British pound continues to get more expensive in pair with the dollar, which raises more and more questions every day. However, the technical picture is the same now, and there is nothing you can do about this discrepancy with the fundamental background. At the moment, the pair has corrected the critical Kijun-sen line. A price rebound from this line may trigger a resumption of the upward trend.

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

EUR/USD. Brexit-2: "ItExit" and "NExit". Italy and the Netherlands can still follow the example of the UK.

Trading 06 sept 2020 Commentaire »

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In recent months, most of the news flow is coming from America, however, we cannot say that no important and significant messages are coming from the European Union. For example, until recently, the EU was at the center of a serious process in which all 27 member states of the alliance tried to agree on the economic recovery fund and the budget for 2021-2027. However, the amount of news that is available recently in the States crosses out the rest of the fundamental background. We have already talked about all the difficulties, problems, and crises that the United States faced in 2020 more than once. Today we propose to focus on a potentially serious problem of the European Union. A problem called ItExit (similar to BrExit). More recently, amid discussions by EU member states on the recovery fund and its distribution, there were rumors that Italy might initiate a "divorce" from the European Union. Back then, the Italians claimed that wealthier European countries that were less affected by the "coronavirus" pandemic refused to help them and other hard-hit countries on a gratuitous basis. Thus, some political leaders in Italy put the question as follows: "Why the need to stay in the EU at all, if the EU does not help at a difficult moment?" We can discuss this issue for a very long time. On the one hand, Germany, Austria, and the Scandinavian countries have repeatedly accused the Italians and French of excessive waste and uneconomical living. It is also unclear why more financially stable countries should simply give tens of billions of euros to Italy, Spain, Poland, and others. On the other hand, Italy is not obliged to remain in the EU. If its political forces believe that it is time to go in different directions, and in the next elections in 2021, these political forces will be supported by the Italians themselves, then the country has every right to follow the example of Great Britain. At the moment, this issue has subsided, since Italy still received free assistance. However, anti-European views have been maturing in Italy for a long time. For several years, some political parties are beginning to look towards separation from the EU, and only the 2021 elections will show how much the Italians themselves want the same. The main thing here is that it doesn't work out the same way as with the UK. We have nothing against the very exit of any country from the bloc, however, the absolute majority of the country's residents should vote for this option.

The same applies to the Netherlands. It is noted that anti-European sentiments and views have been maturing in the country for quite a long time. Amsterdam is not happy with the migration and financial policy of the European Union. However, the advantages of European integration still outweigh the disadvantages, so the process of a new "divorce" is not yet launched. On the issue with the Netherlands, the last straw may just be the EU summit, which resolved the problems with the recovery fund and the budget for 2021-2027. It's simple. The Netherlands was "on the other side of the barricades" from Italy, Spain, and other "southerners" or "spenders". Amsterdam believes that the seven-year budget is too expensive (recall that the European Parliament believes that the budget is too meager), and the plan to save the EU economy supports countries that spend a lot and require a lot of help from the EU itself. Dutch Prime Minister Mark Rutte believes that countries such as the Czech Republic, Estonia, Hungary, Italy, Greece, Spain, Latvia, Lithuania, Romania, Slovakia, Cyprus, and Portugal are interested in remaining in the EU. According to many experts, the last EU summit showed how much opinions differ between its 27 participants, and that national interests almost always prevail over common ones. Simply put, none of the "prosperous countries" wanted to just give away tens of billions of euros from their treasury. However, this is the option that the European Council insisted on and this option was adopted in the end. However, the fact that the Netherlands, Scandinavians, Germany, and Austria supported this option does not mean that they were satisfied with everything.

There is a political force that can implement NExit in the Netherlands. This is the "Freedom Party" with its leader Geert Wilders, who in 2014 called for leaving the European Union. That is two years before the UK referendum. "NExit is the best thing that can happen. We would be masters of our country again. We would be holding the key to all our doors again," Wilders said in an interview. The Prime Minister himself in 2014-2017 was not particularly zealous in supporting the exit from the EU. However, now that relations between many members of the alliance have been reduced to calculations of "who, to whom, how much", its eurosceptic mood has increased. The Netherlands, according to opinion polls, also support leaving the EU. A few years ago, this option was supported by about 56% of respondents. Now that the Netherlands has had to hand out grants to a whole list of countries, we can be sure that the number of eurosceptics has increased even more. It is also noted that Amsterdam is very dissatisfied with the quotas for refugees that the European Union has determined. The Netherlands has a fairly high population density and a small territory, so it is more difficult than others to accept refugees.

Although two new "Brexits" are already brewing in Europe, European political analysts believe that in the next few years or a decade, all members of the "lean four" can follow the example of the UK. We are talking about Sweden, Denmark, and Austria, which also opposed "coronabonds" and the free distribution of money to the most affected EU countries. Later, these countries were joined by Finland, which also had to support the decision within the framework of the notorious summit, according to which the country will have to invest free of charge in restoring the economies of European spenders. In general, the European Union still looks more or less stable. In the last three months, the European currency has strengthened quite a lot compared to the US dollar, and we can not say that it is completely groundless. There hasn't been much negative news from Europe lately. But in the future, the EU may face serious geopolitical problems, which is hardly possible, for example, in the United States.

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Trading recommendations for the EUR/USD pair:

The technical picture of the EUR/USD pair on the 24-hour timeframe shows that the semi-flat movement continues in recent months with a minimal upward slope. Thus, formally, purchase orders remain more relevant, since there are no technical grounds for selling the currency pair at all (on the current timeframe). At the same time, buyers are cautious when opening new longs.

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