EUR/USD. Insider or a trap?

Trading 09 sept 2020 Commentaire »

The euro suddenly strengthened throughout the market on the eve of the September meeting of the European Central Bank. The euro's strongest growth dynamics was observed in cross pairs (for example, EUR/GBP), while the euro was only able to return to the area of the 18th figure against the dollar. Nevertheless, EUR/USD bears failed to overcome the support level of 1.1740 (the lower line of the Bollinger Bands indicator on the daily chart) once again - as soon as the pair fell to this price barrier, it turned 180 degrees, returning to previous positions in just a few minutes.

What happened?

On the eve of important events, as a rule, the market is flooded with all kinds of rumors - and not all of them are subsequently confirmed. Nevertheless, insiders are taken very seriously, especially if the information disseminated is fundamentally different from the generally accepted forecast scenario. Today we saw a classic example of a similar situation: according to the general opinion of the majority of experts, the ECB members will voice pessimistic assessments regarding the prospects for the European economy, in particular adjusting their inflation forecasts downward. In addition, many analysts warn that ECB President Christine Lagarde may voice her concerns about the euro's growth, given the slowdown in inflationary growth in August. At the same time, the ECB will most likely declare its readiness to extend the stimulus program by expanding its scope.

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In other words, the overwhelming number of experts are confident that the ECB will negatively assess the latest trends in the eurozone, noting a significant slowdown in the recovery process. Actually, there are no obvious reasons for optimism: the consumer price index collapsed into negative territory in monthly terms (deflation was recorded for the first time in four years), unemployment is growing, and industrial production indicators remain at low values. The service sector leaves much to be desired, with the corresponding PMIs declining in all key European countries. Coronavirus outbreaks (France, Spain) also do not contribute to any optimism.

The previous comments from the ECB representatives have also been very cautious. For example, ECB Chief Economist Philip Lane criticized the euro's high rate, which, in his opinion, serves as an "anchor" for inflationary growth. Another ECB spokesman, Pablo Hernandez de Cos, recently admitted that the economic recovery "is likely to be incomplete and uneven." At the same time, he admitted that Spanish companies with liquidity shortage due to the coronavirus crisis may face solvency problems. His colleague, Luis de Guindos, was also pessimistic about the prospects for economic recovery in the eurozone this year. In his opinion, key macroeconomic indicators (primarily inflation) will fall by the end of this year, and we will only see the recovery process in 2021.

Considering such news flow, the market was set up accordingly - the euro fell in price everywhere, and it dropped near a monthly low of 1.1753 against the dollar. But on Wednesday afternoon, influential news agency Bloomberg published the news that ECB members will express confidence that the European economy will show strong growth in the near future, in connection with which the forecast values will be increased. According to unnamed sources, "the updated forecasts of the ECB will reflect the growing confidence of a number of representatives of the central bank in the prospects for the economy."

The euro surged all over the market, and returned to the area of the 18th figure against the dollar.

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In my opinion, such insider information can provide EUR/USD traders with a disservice - both literally and figuratively. The fact is that the market is now determined to hear more optimistic estimates from the ECB, having laid such a scenario in prices. And if de facto forecasts remain the same or even be reduced (which is quite likely), the euro will significantly weaken. In other words, prior to the publication of the high-profile information from Bloomberg, the market seemed to win back the predicted pessimism of the ECB. Now the situation has changed. To be more precise, market expectations have changed, which may well not be justified.

How to trade?

Buyers of EUR/USD can fall into a trap they have set up for themselves. Now bulls have become hostages of inflated expectations. And if the ECB does not meet their expectations, the euro will significantly weaken, even against the dollar. Therefore, it is better to take a wait-and-see attitude at the moment, until the results of the September meeting have been announced, or rather, before the end of Christine Lagarde's press conference.

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

Analytics and trading signals for beginners. How to trade EUR/USD on September 10? Getting ready for Thursday session

Trading 09 sept 2020 Commentaire »

Hourly chart of the EUR/USD pair

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The EUR/USD pair, as a whole, continued to move down on Wednesday, September 9 and it nearly reached the first target level of 1.1752 during the day. However, it was not possible to overcome it and so it continued to move down. The price sharply turned up in the US trading session and grew quite significantly. The situation for the euro/dollar pair continues to be confusing. Not only does the price trade mainly within the side channel of 1.1700-1.1900, but also the very nature of the movement is rather chaotic. It is very difficult to find the trend, even in the very short term. For example, it would be possible to build a downward trend line based on the movement of the last few days, but the price would have to overcome it today. It is also impossible to build a descending channel now, and the pair's quotes left the side channel yesterday. Therefore, the current situation is very unfavorable for trading, especially for beginners. As for today's deals, traders did not get the desired profit again. After the price has settled below the side channel, we expect to move to the lower border of the higher side channel, that is, to 1.1700. However, instead, the price rallied, once again breaking the trading strategy.

No fundamental background for today, and traders continue to prepare for tomorrow's summary of the ECB's recent meeting. We have already said why this is an extremely important event. After all, the European Central Bank can not only apply monetary policy instruments, but also hint at their possible use in the future, provide forecasts for key indicators of the state of the economy (inflation, unemployment and GDP), from which one can understand what the central bank expects in the near future. Traders use all of this information in trading. In addition, ECB President Christine Lagarde will deliver a speech tomorrow, who can also share very important and interesting information. In short, the more dovish Lagarde's speech is and the ECB's decisions are, the more chances for the euro's fall. The term "dovish" (the opposite of "hawkish") refers to the rhetoric and actions of the central bank aimed at easing monetary policy and stimulating the economy. In other words, the central bank recognizes that the economy is currently experiencing problems, so it decides to help the economy. Help can be of a different nature. The most effective methods are direct cash injections into the economy through the repurchase of securities from the open market or lowering the key rate. We believe that the ECB will announce a new expansion of its quantitative stimulus programs in the near future, and at tomorrow's meeting it will hint at the need for such action in the future. Thus, there are great chances that the pair would move down tomorrow.

Possible scenarios for September 10:

1) Novice traders are not recommended to consider buy positions at this time, since the trend is formally downward now, but in fact it is going sideways, but not upward. There are no signals or technical patterns supporting the upward movement at the moment. Thus, buyers need to wait for an upward trend to emerge at least within the sideways channel of 1.1700-1.1900 in order to be able to trade down.

2) Selling continues to look more relevant despite the fact that the pair is currently trading indistinctly, and there is no trend. With a new reversal of the MACD indicator to the downside, it will be possible to try to sell the pair while aiming for 1.1752 and 1.1729, but we also advise you not to forget about Stop Loss. At this time, it is quite inconvenient to trade the pair, therefore, you should always be cautious when making trading decisions.

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 (10,20,3) 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

Evening review 09/09/2020. EURUSD

Trading 09 sept 2020 Commentaire »

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EURUSD - New entry levels (the main focus is on the ECB's decision tomorrow).

We are ready to buy from 1.1850.

We are ready to sell from 1.1750.

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

Pound Recovers As EU Signals Willingness To Continue Brexit Talks

Trading 09 sept 2020 Commentaire »

The pound recouped its early losses against its major counterparts in the European session on Wednesday, following a media report that the European Union would continue Brexit talks despite the publication of the Internal Market bill.

The EU would not suspend talks on Brexit because of the new UK internal market bill, according to a Reuters report.

The bill stated that some of its provisions will override international law.

If approved, the bill would grant ministers the power to reject parts of the Northern Ireland protocol of the Withdrawal Agreement by waiving export declarations and other exit procedures.

The pound rose to 1.3015 against the greenback, after falling to 1.2885 at 7:45 am ET, which was its lowest level since July 28. On the upside, 1.33 is likely seen as its next resistance level.

The pound firmed to 138.19 against the yen, up from nearly a 6-week low of 136.73 set at 2:45 am ET. Should the currency rises further, 141.00 is seen as its next resistance level.

The U.K. currency bounced off to 0.9081 against the euro and 1.1897 against the franc, from its early fresh 6-week lows of 0.9131 and 1.1831, respectively. The currency is likely to challenge resistance around 0.88 against the euro and 1.21 against the franc.


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

*Bank Of Canada Maintains Target For Overnight Rate At Effective Lower Bound Of 0.25%

Trading 09 sept 2020 Commentaire »

Bank Of Canada Maintains Target For Overnight Rate At Effective Lower Bound Of 0.25%


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

Loonie Slightly Up After BoC Decision

Trading 09 sept 2020 Commentaire »

As expected, the Bank of Canada maintained the benchmark rate at 0.25 percent. The loonie rose slightly against its major rivals after the decision.

The loonie was trading at 80.53 versus the yen, 1.5581 versus the euro, 1.3186 versus the greenback and 0.9588 versus the aussie around 10:04 am ET.


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

Loonie Mixed Ahead Of BoC Decision

Trading 09 sept 2020 Commentaire »

At 10:00 am ET Wednesday, the Bank of Canada announces decision on interest rates. Economists forecast the benchmark rate to remain at 0.25 percent.

The loonie traded mixed against its major rivals before the decision. While it fell versus the euro and the aussie, it climbed against the greenback and the yen.

The loonie was worth 80.44 versus the yen, 1.5599 versus the euro, 1.3196 versus the greenback and 0.9595 versus the aussie at 9:55 am ET.


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

USDCAD breaks out of bearish channels

Trading 09 sept 2020 Commentaire »

USDCAD today challenged the key resistance at 1.3230. Price has broken out of the bearish channels and this is a very important trend reversal signal. Price reached our stop level at 1.3230 and got rejected. Price is back testing the break out area.

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Blue lines - short-term bearish channel

Red lines - medium-term bearish channel

Green rectangle - horizontal resistance

USDCAD is pulling back towards the upper boundary of the red channel. Price usually back tests the break out area. Bulls now need to step in and break to new higher highs above 1.3230. If this happens then price could continue higher towards 1.3350-1.34. Price has started making higher highs and higher lows. Breaking out of the bearish channel has put on hold our bearish view for a move towards 1.29. Now it seems more likely to continue higher towards 1.34. Next support is at 1.31. With price now at 1.3156 we prefer to go long with 1.31 stop and 1.34 target. We look to add on longs on a break above 1.3260.

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

EURUSD bulls step in and price holds inside the bullish channel

Trading 09 sept 2020 Commentaire »

EURUSD has challenged support at 1.1750 area and price now back up above 1.18 again. Price remains inside the bullish channel. Price is bouncing off key support and this is a promising sign that bulls are not giving up. We remain bullish as long as price is above 1.1750.

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Blue lines - bullish channel

Pink line - support trend line

Green rectangle - target if channel holds

EURUSD is holding above the pink support trend line and inside the lower channel boundary. As we have been saying, EURUSD remains in a bullish trend as long as price is inside the channel and above 1.1750. Breaking below will open the way for a pull back towards 1.1650-1.16 at least.

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

Ichimoku cloud indicator Daily analysis of Gold for September 9, 2020

Trading 09 sept 2020 Commentaire »

Gold price has held above $1,900 support and is bouncing strongly from the upper Kumo (cloud) boundary. Gold price is challenging $1,950 resistance and as long as $1,900 holds, bulls still have hopes.

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Blue lines -sideways trading range

In the Daily chart Gold price is still above the cloud. Price is bouncing off the cloud support and this is a promising sign. Bulls now need to break above the tenkan-sen (red line indicator) and the kijun-sen (yellow line indicator).

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In the 4 hour chart we see Gold price challenging the cloud resistance. This $1,950-65 area is resistance also in the 4 hour chart portrayed by the Kumo (cloud). Bulls need to break above the 4 hour cloud in order to gain upward momentum.

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