Analytics and trading signals for beginners. How to trade EUR/USD on October 6? Getting ready for Tuesday session

Trading 05 oct 2020 Commentaire »

Hourly chart of the EUR/USD pair

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The EUR/USD pair moved up on Monday, October 5. The pair grew from the very morning and continued to do so throughout the day. In the morning we talked about the fact that the upward trend line was rebuilt and therefore we recommend trading up while aiming for 1.1745 and 1.1773. However, the euro/dollar pair exceeded the morning plan and reached the third resistance level of 1.1798 during the day. Novice traders who opened trades according to our recommendations in the morning could earn about 40 points if they closed buy trades near the 1.1773 level, and around 60 points if they are still in the longs (buy orders). You can close long positions by turning the MACD indicator down or even right now, without waiting for it. The fact is that the upward trend is still maintained, so the price needs to correct in order to possibly resume the upward movement later. The same goes for the MACD indicator. It needs to ease as close to the zero level as possible in order to form a new buy signal in time.

Several macroeconomic reports were published in the European Union and in the United States during the first trading day of the new week. However, we tend to believe that the markets completely ignored them. But do take note that the ISM index of business activity in the US services sector was at a high level (and did not provoke a rise in the US dollar), and the index of business activity in the EU services sector was at 50.0 (and did not put pressure on the European currency). The only exception was the report on retail sales in the European Union, which grew by 4.4% m/m in August, but it is unlikely that this one report provoked the euro's growth, while traders ignored other reports. Market participants showed much more interest in Donald Trump's condition, who is in the hospital right now after being infected with the coronavirus. All of the media covered this topic. However, the very fact that the US president was seriously ill a month before the election (Trump is at high risk, since he is 74 years old and overweight), it put pressure on the US currency.

European Central Bank President Christine Lagarde is scheduled to speak in the European Union on Tuesday, October 6, and Federal Reserve ChairmanJerome Powell is set to speak in the United States. Therefore, we have two speeches by high-ranking officials that are directly related to the EU and US economies. However, the recent speeches of Powell and Lagarde did not give the markets any fundamentally new information. However, no one knows in advance what the heads of the central banks of America and the European Union will be talking about this time.

Possible scenarios for September 29:

1) Buy positions on the EUR/USD pair remain relevant at the moment, since the ascending trend line has been rebuilt, and the price has not managed to gain a foothold below the 1.1696 level. Thus, we recommend novice traders to stay in long positions until the MACD indicator turns down. You are advised to open new buy orders after the price corrects downward and a new buy signal from MACD appears. In other words, tomorrow morning you will be able to see at what stage of implementation of this plan the pair is.

2) Sell positions may become relevant again if the pair settles below the trend line. This is the first prerequisite. However, it may be necessary to wait for the price to settle below the 1.1696 level and only after that consider the possibility of opening sell orders. Take note that the dollar seems reluctant to rise in price, and the fundamental background is not in its favor.

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

EUR/USD. Green zone PMIs, Congressional battles and Trump’s caps lock

Trading 05 oct 2020 Commentaire »

The decline in anti-risk sentiment, rumors about the health of US President Donald Trump and uncertainty about the prospects for additional assistance to the US economy - all these fundamental factors put pressure on the dollar. Even the ISM index in the non-manufacturing sector, which was in the green zone, did not help the greenback: today, the dollar index retreated from the local low of 93.90 to the current value of 93.40. In turn, the European currency received support today from the September PMI indices, which were revised up.

This combination of fundamental factors made it possible for EUR/USD buyers to take control of the situation, directing the price towards the upper limit of the flat range of 1.1630-1.1820 (the lower line of the Bollinger Bands is the upper limit of the Kumo cloud on the daily chart). But the bulls need an informational impulse to break the upper limit of this range. While we only see an "accumulation of negative potential" against the US currency at the moment. By and large, the pair is growing only due to the weakening of the greenback, while European fundamentals play a secondary role.

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Still, today's releases should not be ignored. The German index of business activity in the service sector was unexpectedly revised up. If the initial estimate was at 49.1 points, the final one is at 50.6 points. As you know, all values above the 50-point mark reflect an improvement in the situation, and vice versa. Therefore, in this case, the revision of the indicator was not a mere formality. PMI business activity indices in the service sector also came out in the green zone in other key European countries (except Spain). We were also pleased with the pan-European composite purchasing managers' index, which similarly turned out to be higher than the forecast level.

One more release today is worth mentioning separately. This is an indicator of retail trade in the eurozone countries. This indicator of consumer activity fell into negative territory in July, reflecting a slowdown in inflation processes. However, the August data showed significant growth, both in annual and monthly terms. According to forecasts, this indicator was expected to grow to 2.4% m/m and 2.2% y/y. However, in reality, the indicators rose by 4.4% and 3.7%, respectively. It is worth recalling that we received failed data on the growth of European inflation last Friday. Commenting on this release, the European Central Bank vice president complained about low consumer demand. Today's data partially offset pessimism about the prospects for the pan-European CPI.

However, all the above-mentioned successes of European data only provided background support for the euro. The dollar was the main driver of EUR/USD growth, which is showing weakness again today. And if the dollar index slowly slid down during the European session, then the downward dynamics intensified during the US session.

In general, the greenback is trading in conditions of increased uncertainty. Speculation about the health of Trump, as well as conflicting news on the topic of fiscal stimulus for the US economy, do not allow dollar bulls to show character. Traders can't find a firm foothold that would allow the greenback to claim an advantage. Even Nonfarm, which was published last Friday, left a mixed impression. On the one hand, the unemployment rate fell below the 8% mark, and the number of people employed in the manufacturing sector increased by 66,000 (with a forecast of 32,000). On the other hand, we were disappointed with wages, which are particularly important for the dollar in the context of the Federal Reserve's updated strategy. In addition, the number of people employed in the non-agricultural sector increased by only 660,000, while most analysts expected to see this indicator much higher (985,000). In other words, the Nonfarm report did not become a catalyst for the greenback's growth.

Dollar bulls were also puzzled by Trump, who contracted the coronavirus last week. He held a kind of performance during the weekend: in his motorcade, he toured the hospital area, greeting his supporters. At the same time, the press reported that Trump may be discharged on Monday. But today it became known that Trump was not only not discharged, but also began to be treated for COVID-19 with dexamethasone, a drug that is prescribed to seriously ill patients. This was reported by the Associated Press, citing its own sources. According to their information, doctors began using the steroid drug after the oxygen level in Trump's body dropped to 93%. According to some doctors who commented on this information, the use of dexamethasone implies "a higher degree of severity of the situation." By the way, while in the hospital, he wrote more than 20 tweets in just two hours today – and in all caps. In each of them, he called for voting for himself in the presidential election, and also told how bad it would be for Americans under the Democrats. This abnormal and somewhat unbalanced activity of Trump also alerted investors.

In addition, the US dollar is under pressure amid ongoing negotiations between Democrats, Republicans and the White House. Today, White House Chief of Staff Mark Meadows said that "the deal has potential." But judging by the dollar's reaction, traders are already skeptical of such statements. Let me remind you that similar theses were voiced last week by the US Treasury Secretary, who even announced serious progress in this direction until the beginning of October. But, as you know, "things are still there." Therefore, the market ignored the signals from the White House.

Thus, the EUR/USD pair has every reason for further upward movement – at least to the upper limit of the flat range, that is, to the 1.1820 level (the upper limit of the Kumo cloud on the daily chart). A break of this resistance level will open the way for buyers to the main resistance level of 1.1900 (the upper line of the Bollinger Bands on the same timeframe).

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

*Brazil September IHS Markit Composite PMI 53.6 Vs. 53.9 In August

Trading 05 oct 2020 Commentaire »

Brazil September IHS Markit Composite PMI 53.6 Vs. 53.9 In August


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

*Brazil September IHS Markit Services PMI 50.4 Vs. 49.5 In August

Trading 05 oct 2020 Commentaire »

Brazil September IHS Markit Services PMI 50.4 Vs. 49.5 In August


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

U.S. Service Sector Growth Unexpectedly Accelerates In September

Trading 05 oct 2020 Commentaire »

Activity in the U.S. service sector unexpectedly grew at a faster rate in the month of September, according to a report released by the Institute for Supply Management on Monday.

The ISM said its services PMI rose inched up 57.8 in September from 56.9 in August, with a reading above 50 indicating growth in the service sector. Economists had expected the index to edge down to 56.3.

"The composite index indicated growth for the fourth consecutive month after contraction in April and May," said Anthony Nieves, Chair of the ISM Services Business Survey Committee.

He added, "Respondents' comments remain mostly optimistic about business conditions and the economy, which correlates directly to those businesses that are operating."

The unexpected uptick by the headline was partly due to an acceleration in the pace of growth in new orders, as the new orders index jumped to 61.5 in September from 56.8 in August.

The report also showed a turnaround in employment in the service sector, with the employment index climbing to 51.8 in September from 47.9 in August.

Meanwhile, the report showed a slowdown in the pace of price growth in the sector, as the prices index slumped to 59.0 in September from 64.2 in August.

The ISM released a separate report last Thursday showing the manufacturing activity in the U.S. expanded for the fourth straight month in September, although the pace of growth unexpectedly slowed modestly.

The ISM said its purchasing managers index edged down to 55.4 in September after rising to 56.0 in August. While a reading above 50 still indicates growth in the manufacturing sector, economists had expected the index to inch up to 56.3.


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

*U.S. Dollar Drops To Near 2-week Low Of 0.9145 Against Franc

Trading 05 oct 2020 Commentaire »

U.S. Dollar Drops To Near 2-week Low Of 0.9145 Against Franc


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Dollar Little Changed Following U.S. ISM Non-manufacturing Composite Index

Trading 05 oct 2020 Commentaire »

After the release of U.S. ISM non-manufacturing composite index for September at 10:00 am ET Monday, the greenback changed little against its major counterparts.

The greenback was trading at 105.63 against the yen, 0.9152 against the franc, 1.2971 against the pound and 1.1788 against the euro around 10:05 am ET.


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

*ISM U.S. Services PMI Inches Up To 57.8 In September

Trading 05 oct 2020 Commentaire »

ISM U.S. Services PMI Inches Up To 57.8 In September


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

Dollar Falls Ahead Of U.S. ISM Non-manufacturing Composite Index

Trading 05 oct 2020 Commentaire »

The U.S. ISM non-manufacturing composite index for September is scheduled for release at 10:00 am ET Monday. Ahead of the data, the greenback slipped against its major counterparts.

The greenback was worth 105.55 against the yen, 0.9150 against the franc, 1.2975 against the pound and 1.1787 against the euro as of 9:55 am ET.


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

*U.S. Dollar Slides To Near 2-week Low Of 1.1771 Against Euro

Trading 05 oct 2020 Commentaire »

U.S. Dollar Slides To Near 2-week Low Of 1.1771 Against Euro


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