Trading plan for GBP/USD for week of November 2-6. New COT (Commitments of Traders). GBP prospects getting worse day after

Trading 31 Oct 2020 Commentaire »

GBP/USD 24H

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For the whole week, GBP/USD was trading lower like EUR/USD. Nevertheless, for GBP/USD the crucial move was a 61.8% fibo bounce. After this had happened, the odds for a further downtrend increased sharply. At the end of the week, GBP/USD slipped to the Kijun-sen line. If broken, the pair is likely to continue a further bearish trajectory. Thus, the US currency is winning favor with investors for the nearest weeks especially against the pound sterling. This scenario could be disrupted by the presidential election in the US and unexpected news on the talks between London and Brussels. From the technical viewpoint, the buyers could enter the market again if the price fails to fix below the critical level.

COT report

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Over the week of October 20-26, GBP/USD surged nearly 70 pips. However, the pair reversed downwards in the following 4 days and plunged 90 pips. In essence, such losses are not so heavy, especially for the pound sterling. According to the latest COT report, non-commercial traders closed almost 8,300 buy-contracts and 3,400 sell-contracts. Thus, the market sentiment of the non-commercial group is turning more bearish because the net position decreased by nearly 5,000 contracts. During 3 previous weeks, traders were puzzled, trying to figure out whether it makes sense to sell EUR. The second indicator shows that sentiment of non-commercial traders was turning more bullish for three weeks in a row. However, on the reporting week traders resumed selling GBP. Please be aware that minus 5,000 of the net position is too much for the pound sterling. The overall number contracts opened by the non-commercial group equals 90,000. In this context, I expect a deeper fall of the pound sterling.

The fundamental background for GBP/USD can be described briefly: Brexit, the talks on the trade deal, and the presidential election in the US. This trading week, there has been no news on each of the issues. Last weekend, Brexit negotiators Michel Barnier and David Frost started a new round of the talks which should have been finished early this week. So, the talks were extended until Thursday. As a result, the parties have not unveiled any news. So, traders are at a loss about the ongoing developments and any progress. This is wrong to make any conclusions on the grounds of rumors. So, it would be better to wait for any official information from the negotiators or the UK and EU authorities. Meanwhile, they are keeping silence.

What information is available is the prospects of a new lockdown in the UK. British Premier Boris Johnson warned about it this week. Restrictive measures could come into force starting from November 4 for one month. According to surveys by Johns Hopkins University, the UK is dealing with rampant coronavirus rates. The UK reported almost 25,000 new daily cases over the last three days. So, the UK could be the third country like France and Germany to tighten restrictions. Earlier, Boris Johnson said that a new lockdown was out of the question because it would trigger a severe economic downturn. As we see, the Prime Minister promptly revised his viewpoint not for the first time. Well, a new lockdown will raise the likelihood of another nosedive in the British currency because this would entail another contraction of the national output. The UK GDP could have expanded 15.1% in Q3 2020, but the economy incurred heavier losses in Q2 2020. Experts say that the UK could enter the new 2021 year on the pessimistic note, extending losses in the wake of Brexit which would be officially over on December 31.

Trading plan for week of November 2-6

1)The buyers could lose any chance for the price to move upwards in the short term if the pair drops below the critical level. In case the price rebounds from the KIjun-sen line, the pair might resume the upward bias with a target at 1.3375. Meanwhile, there is a slim chance for a bounce. Moreover, don't forget about an important 61.8% fibo bounce.

2)The sellers still have more chances for developing the downtrend. They need to push the price down below the Kijun-sen line (1.2929) on the 24-hour time frame. In this case, there will be more chances for the price to go down with the first target at 1.2568. From the fundamental viewpoint, the sterling is set to extend weakness.

Notes for the pictures

The resistance/support levels are the target levels when opening long/short positions. You can place take profit levels next to them.

Indicators Ishimoku, Bollinger bands, MACD

Areas of support and resistance are the ones from where the price has rebounded or has been rejected a few times.

Indicator 1 in the COT charts is a size of net positions for each category of traders.

Indicator 2 in the COT charts is a size of net positions for the non-commercial group.

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

Trading plan for EUR/USD for week of November 2-6. New COT report (Commitments of Traders). Christine Lagarde and COVID-19

Trading 31 Oct 2020 Commentaire »

EUR/USD 24H

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According to the 24-hour timeframe, EUR/USD eventually made some efforts to quit a sideways trading. The currency pair was closing in the red for 5 days in a row. It looks a bit strange because the presidential election will take place on Tuesday. Nevertheless, market participants decided to buy USD selling EUR. Earlier last week, EUR had just few reasons for weakness. In the middle of the week, EUR came under strong selling pressure. Meanwhile, we can draw a conclusion that the currency pair left the Ishimoku cloud that increases the odds for the development of a new downtrend. If the election in the US does not spring any surprises, the US currency will have a solid excuse for a further reinforcement. The euro has advanced 13% over the recent six months. Interestingly, the euro has not gone through a standard correction afterwards.

COT report

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For the week of October 20-26, EUR/USD climbed almost 40 pips. After its rise, the pair sharply reversed downwards and dropped 160 pips in the following 4 days. A new COT report revealed that professional traders rushed to close buy contracts on the reported week. The number of buy-contracts with the non-commercial group decreased by nearly 12,000. At the same time, non-commercial traders closed 1,000 sell-contracts. So, the net position for this group fell instantly by 11,000. Thus, the decrease of the net positions means that market sentiment for the group of large market players is turning bearish. In fact, I told you about this sentiment change analyzing previous COT reports. Besides, I told you that the level of 1.2000 is likely to remain the high for EUR/USD. After this level had been reached, non-commercial traders decided to close buy-contracts. This is clearly seen with the first indicator in the picture (the green line). Actually, this is what is happening for two months. The green and red lines which are the net positions of both commercial and non-commercial traders are getting narrower. So, I still believe that the uptrend is over. For this reason, professional traders pushed EUR down last week. EUR is set to extend its weakness in the long term.

What about the fundamental background this trading week? First, traders got to know GDP data for the US and the EU. The US national output rebounded 33.1% sequentially in Q3 2020 following a 31.4% slump. Thus, the US economy incurred total losses of nearly 10% in Q2 and Q3. When it comes to the EU, the European economy tumbled 11.8% in Q2 and recovered 12.7% in Q3 2020. Hence, the eurozone's economy losses are measured at 1-2%. Nevertheless, traders were not impressed with the European resilience, so the US dollar carried on with its advance. Perhaps, EUR was hurt by the dovish rhetoric of Christine Lagarde. She said this week that new lockdowns in Europe could again deal a blow to the EU economy. The ECB President pointed out that a recovery in the summer was fragile, incomplete, and uneven. Now economic conditions could worsen again amid the second coronavirus wave. Business activity in the service sector which is especially vulnerable has been already in a tailspin. Meanwhile, the most advanced EU economies such as Germany and France have already imposed restrictions. In other words, the pandemic factor could have knocked down EUR. Indeed, the US is not considering a second lockdown and its economy is still gaining momentum. The US dollar is highly sensitive to developments in the presidential race. So, beware of extreme volatility and price gyrations next week. Let me remind you that the primaries in the US began a few weeks ago. As of now, almost 70 million Americans have voted for their candidates.

Trading plan for week of November 2-6

1)EUR/USD seems to have escapes from a trading range. However, the currency pair will greatly depend on the outcome of the major event next week. No one dares to predict what will happen in the wake of the election. Currently, the technical picture for EUR/USD suggests a further downtrend. So, a good trading idea would be to sell the pair with the target coinciding with support of 1.1551. Nevertheless, we should be ready for any twist next week.

2)If you want to buy EUR/USD, you should wait at least for the price to fix above the Kijun-sen and Senkou span B lines. Meanwhile, neither the technical charts nor the COT report nor the fundamental background indicate the prospects of an uptrend. In this context, we consider a further bearish trend as the most plausible scenario.

Notes for the pictures

The resistance/support levels are the target levels when opening long/short positions. You can place take profit levels next to them.

Indicators Ishimoku, Bollinger bands, MACD

Areas of support and resistance are the ones from where the price has rebounded or has been rejected a few times.

Indicator 1 in the COT charts is a size of net positions for each category of traders.

Indicator 2 in the COT charts is a size of net positions for the non-commercial group.

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

U.S. Dollar Recovers After Seeing Early Weakness

Trading 31 Oct 2020 Commentaire »

After coming under pressure in morning trading on Friday, the U.S. dollar has shown a notable recovery over the course of the day.

The U.S. dollar index is currently trading at 94.03, up 0.1 percent from the previous close, after falling as low as 93.65 earlier in the day.

The greenback is trading at 104.69 yen versus the 104.61 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1647 compared to yesterday's $1.1674.

The recovery by the dollar came as the currency benefitted from its safe haven appeal amid a continued spike in coronavirus cases.

The number of new COVID-19 cases in the United States reached a new record high on Thursday, with health experts expecting cases to soar going forward and death rates to triple by mid-January.

88,521 new coronavirus cases were reported in the U.S. on Thursday, according to data from Johns Hopkins University, an increase of 9,540 cases compared to Wednesday.

Uncertainty about the outcome of next week's presidential election may also have inspired traders to seek the relatively safe haven of the dollar.

In U.S. economic news, the Commerce Department released a report showing personal income rebounded by more than anticipated in the month of September.

The Commerce Department said personal income climbed by 0.9 percent in September after tumbling by a revised 2.5 percent in August.

Economists had expected personal income to rise by 0.4 percent compared to the 2.7 percent nosedive originally reported for the previous month.

The report also showed a bigger than expected increase in personal spending, which surged up by 1.4 percent in September. Spending was expected to match the 1.0 percent jump seen in August.

A separate report from the University of Michigan showed consumer sentiment improved slightly more than initially estimated in the month of October.

The report showed the consumer sentiment index for October was upwardly revised to 81.8 from the preliminary reading of 81.2. Economists had expected the reading to be unrevised.

With upward revision, the consumer sentiment index is a bit further above the final September reading of 80.4.


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

Oil Prices See Further Downside Amid Concerns About Demand

Trading 31 Oct 2020 Commentaire »

Oil prices moved to the downside during trading on Friday, extending the steep drop seen over the two previous sessions.

After plunging by $2.18 on Wednesday and slumping by $1.22 on Thursday, crude for December delivery fell $0.38 to a five-month low of $35.79 a barrel.

Concerns about the outlook for energy demand continued to weigh on oil prices amid a continued spike in coronavirus cases.

The number of new COVID-19 cases in the United States reached a new record high on Thursday, with health experts expecting cases to soar going forward and death rates to triple by mid-January.

88,521 new coronavirus cases were reported in the U.S. on Thursday, according to data from Johns Hopkins University, an increase of 9,540 cases compared to Wednesday.

Uncertainty about the outcome of next week's presidential elections also generated selling pressure as recent polls show Democratic nominee Joe Biden leading President Donald Trump.

Biden has signaled he plans to shift the country away from fossil fuels toward renewal energy if he emerges victories.


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

Treasuries Extend Yesterday's Move To The Downside

Trading 31 Oct 2020 Commentaire »

After coming under pressure over the course of the previous session, treasuries saw some further downside during trading on Friday.

Bond prices initially showed a lack of direction being slipping more firmly into negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.5 basis points to 0.850 percent.

With the increase on the day, the ten-year yield ended the session at its highest closing level in well over four months.

The weakness among treasuries was partly attributed to news that the Federal Reserve has adjusted the terms of the Main Street Lending Program to better target support to smaller businesses.

The Fed said the minimum loan size for three Main Street facilities available to for-profit and non-profit borrowers has been reduced from $250,000 to $100,000 and the fees have been adjusted to encourage the provision of these smaller loans.

Some upbeat economic data may also have reduced the appeal of treasuries, with a report from the Commerce Department showing personal income rebounded by more than anticipated in the month of September.

The Commerce Department said personal income climbed by 0.9 percent in September after tumbling by a revised 2.5 percent in August.

Economists had expected personal income to rise by 0.4 percent compared to the 2.7 percent nosedive originally reported for the previous month.

The report also showed a bigger than expected increase in personal spending, which surged up by 1.4 percent in September. Spending was expected to match the 1.0 percent jump seen in August.

A separate report from the University of Michigan showed consumer sentiment improved slightly more than initially estimated in the month of October.

The report showed the consumer sentiment index for October was upwardly revised to 81.8 from the preliminary reading of 81.2. Economists had expected the reading to be unrevised.

With upward revision, the consumer sentiment index is a bit further above the final September reading of 80.4.

The presidential election is likely to be in the spotlight next week, although the final results may not be known on election night.

Traders are also likely to keep an eye on reports on the monthly jobs report as well as the Federal Reserve's latest monetary policy decision.


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

Gold Prices Regain Ground Following Sharp Pullback

Trading 31 Oct 2020 Commentaire »

After moving sharply lower over the two previous sessions, the price of gold regained some ground during trading on Friday.

Gold for December delivery climbed $11.90 to $1,879.90 an ounce after slumping $11.20 on Thursday and plunging $32.70 on Wednesday.

The price of gold initially benefited from a pullback by the U.S. dollar, although the U.S. dollar index has since rebounded from a low of 93.65 and is up 0.1 percent at 94.05

Gold prices held on to their gains despite the rebound by the dollar, as the precious metal continued to benefit from its safe haven appeal amid a continued spike in coronavirus cases.

The number of new COVID-19 cases in the United States reached a new record high on Thursday, with health experts expecting cases to soar going forward and death rates to triple by mid-January.

88,521 new coronavirus cases were reported in the U.S. on Thursday, according to data from Johns Hopkins University, an increase of 9,540 cases compared to Wednesday.

Meanwhile, traders shrugged off some upbeat economic data, with a report from the Commerce Department showing personal income rebounded by more than anticipated in the month of September.

A separate report from the University of Michigan showed consumer sentiment improved slightly more than initially estimated in the month of October.


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

U.S. Consumer Sentiment Improves Slightly More Than Initially Estimated In October

Trading 30 Oct 2020 Commentaire »

Consumer sentiment in the U.S. improved slightly more than initially estimated in the month of October, according to revised data released by the University of Michigan on Friday.

The report showed the consumer sentiment index for October was upwardly revised to 81.8 from the preliminary reading of 81.2. Economists had expected the reading to be unrevised.

With upward revision, the consumer sentiment index is a bit further above the final September reading of 80.4.

The uptick by the headline index came as the index of consumer expectations climbed to 79.2 in October from 75.6 in September.

On the other hand, the current economic conditions index fell to 85.9 in October from 87.8 in the previous month.

The report said one-year inflation expectations were unchanged at 2.6 percent, while five-year inflation expectations fell to 2.4 percent in October from 2.7 percent in September.


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

Chicago Business Barometer Indicates Slightly Slower Growth In October

Trading 30 Oct 2020 Commentaire »

Chicago-area business activity saw continued growth in the month of October, according to a report released by MNI Indicators on Friday, although the pace of growth slowed modestly.

MNI Indicators said its Chicago business barometer edged down to 61.1 in October after spiking to 62.4 in September. Economists had expected the index to dip to 58.0.

Despite the modest decrease, the reading above 50 indicates growth in Chicago-area business activity for the fourth straight month.

The pullback by the business barometer was partly due to a notable decrease by the production index, which slumped by 5.9 points.

The employment index also backtracked in October and was the only major category to record a sub-50 reading, with firms noting staff reductions as a result of the pandemic.

On the other hand, MNI Indicators said demand picked up modestly in October, with the new orders index inching up 0.2 points to its highest level since November 2018.

The report said prices at the factory gate were stable in October, as firms reported higher prices for wood, steel and chemicals.


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

Dollar Little Changed After U.S. Consumer Sentiment Index

Trading 30 Oct 2020 Commentaire »

The University of Michigan's final consumer sentiment index for October has been released at 10:00 am ET Friday. After the data, the greenback changed little against its major opponents.

The greenback was trading at 1.2961 against the pound, 104.48 against the yen, 0.9153 against the franc and 1.1684 against the euro around 10:02 am ET.


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

*U.S. Consumer Sentiment Index Upwardly Revised To 81.8 In October

Trading 30 Oct 2020 Commentaire »

U.S. Consumer Sentiment Index Upwardly Revised To 81.8 In October


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