Trading plan for the GBP/USD pair for the week of October 12-16. New COT (Commitments of Traders) report. Professional traders

Trading 10 oct 2020 Commentaire »

GBP/USD - 24H.

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The GBP/USD currency pair, unlike the euro/dollar, still shows signs of life and does not trade in absolute flat. Recent movements of the pair: correction after the upward trend to the Senkou Span B line on the 24-hour timeframe, rebound from this line and move up to the Kijun-sen line. As you can see, when there is no flat, all the strong lines of the Ichimoku indicator are worked out very accurately and clearly. Now we expect a price rebound from the Kijun-sen line with a resumption of downward movement (a rebound can occur from 1.3073 – this is the previous price value of this line) or a resumption of the upward trend. The fundamental background remains extremely heavy and negative for both currencies. Thus, it is the technical picture that now has the highest priority in forecasting.

The COT report.

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The New COT (Commitments of traders) report for the British pound showed that non-commercial traders in the period from September 29 to October 5 almost rested. The pound rose by about 140 points during this period, which is slightly more than the average daily volatility of this currency. A group of Non-commercial traders opened 1,093 buy contracts and closed 435 sell contracts during this time. Thus, the net position of professional traders increased by 1,500 thousand contracts. However, as with price changes, these changes in the mood of professional traders are purely formal. It is impossible to draw any conclusions or forecasts about the future movement of the pair. In general, since the beginning of September, the "Non-commercial" group has been reducing its net position, which means that they are becoming more bearish. In principle, this behavior of major traders completely coincides with what is happening in the market during this period. However, despite the growth of the British currency in the last few trading days, we are still inclined to resume the fall of the pound. Non-profit traders have more contracts to sell, and the fundamental background in the UK remains extremely weak and dangerous for the pound, in terms of prospects for the rest of 2020 and 2021.

The fundamental background for the GBP/USD pair can be described in just a few words: Brexit, trade deal negotiations, US elections. Moreover, if the elections in America are more important for the EUR/USD pair, then Brexit and negotiations on further relations between London and Brussels are more important for the GBP/USD pair. And recently, priority has been given to the second "wave" of the "coronavirus" in the Foggy Albion, which a couple of weeks after its start has already broken all records for the incidence of the first "wave". Thus, the British economy is in a "state of emergency". The Bank of England has been sending signals to the market throughout 2020 that it will start lowering the key rate below zero if necessary. And no one doubts that this need will come. Every day in Britain, 13-14 thousand new cases of the disease are recorded. Brexit talks extended by 1 month and this is all positive news on this topic. Legal proceedings between London and Brussels over the "Johnson bill" have not yet begun and this is all positive news on this topic. In any case, the British economy will start 2021 with losses associated with severing ties with the European Union, even if a trade deal is somehow agreed. Thus, in light of all these events, we believe that in the long term, the British pound has only one road – down. If there is a trade deal between the Alliance and the Kingdom, it will certainly mitigate the negative impact a little, but not so much. It should only be noted that over the past year, many manufacturing and financial companies have been actively leaving London and the UK. And it is unlikely that they do this based on divination on coffee grounds. Few big companies want to stay in Britain if it falls out with the EU and trades with it under WTO rules.

Trading plan for the week of October 12-16:

1) Buyers let the initiative out of their hands a few weeks ago. Now they need to return to the area above the critical line(1.2997-1.3073) on the 24-hour timeframe, and only then can we expect further strengthening of the British currency in the long term. So far, despite the growth of the pound in recent weeks, we are inclined to resume the fall of this currency.

2) Sellers still have a better chance of forming their own trend. To do this, they just need to keep the bulls above the Kijun-sen line and then consolidate below the Senkou Span B line (1.2865). Then the prospects for a new round of decline in the pair's quotes will grow significantly, and the first goal will be the support level of 1.2568.

Explanation of the illustrations:

Price levels of support and resistance (resistance/support) – levels that are targets when opening purchases or sales. You can place Take Profit levels near them.

Ichimoku indicators, Bollinger bands, MACD.

Support and resistance areas – areas that the price has repeatedly bounced from before.

Indicator 1 on the COT charts – shows the net position size of each category of traders.

Indicator 2 on the COT charts – the net position size for the "Non-commercial" group.

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

Trading plan for the EUR/USD pair for the week of October 12-16. New COT (Commitments of Traders) report. Major traders stop

Trading 10 oct 2020 Commentaire »

EUR/USD - 24H.

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As we have said many times in our daily articles, the euro/dollar pair has been trading mostly sideways in recent weeks and even months. There is no pronounced side channel at this time, however, the sideways movement itself is visible on the 24-hour timeframe. Previously, traders had a side channel of $ 1.17 - $ 1.19 at their disposal, however, now its borders are more blurred. The pair is trading approximately between 1.1620 and 1.1940. That is, the channel width is 320 points. The Bollinger bands are also mostly directed sideways, which is another proof of the lack of a trend at this time. Thus, it is very inconvenient to trade the pair on higher timeframes, i.e. in the long term. We'll talk about the reasons for the flat a little later.

The COT report.

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During the last reporting week (September 29 - October 5), the EUR/USD pair rose by about 120 points. But in general, as we have already discussed above, there have been no major price changes for the pair in recent months. Thus, data from any COT report can only be used for long-term forecasting. A new COT report showed that non-profit traders, which are the most important group of traders in the foreign exchange market, closed 10,784 buy contracts and opened 2,078 sell contracts. Recall that two weeks earlier, the "Non-commercial" group relatively actively increased its long positions, but now, for the second week in a row, it is reducing its net position. This may indicate that the upward trend for the pair is complete. Or nearing its end. We have already mentioned that the net position lines of the "Commercial" and "Non-commercial" groups (the upper indicator, green and red lines) diverge greatly when a trend change occurs. If this is the case this time, the peak point of the upward trend will remain $ 1.20. It was at this point that the net position of non-commercial traders was maximum. After reaching this level, it falls steadily. Thus, the pair may try to perform another upward dash, like the final assault of the bulls, however, it is unlikely to expect a pair much higher than the 20th figure.

Last week, Christine Lagarde and Jerome Powell spoke very often. So often that traders now have no doubts about what to expect from American and European regulators. Unfortunately, all this information passed the market. As well as 90% of macroeconomic statistics. Yes, we now clearly know that the US economy requires a new stimulus package to continue the recovery at the same pace. And negotiations on this package failed between Democrats and Republicans. In Europe, the second wave of "coronavirus" is feared. However, for the EUR/USD pair, the most important factor right now is political. Namely, the US presidential election. The economic situation in the Eurozone remains more stable than in the US, however, this factor has long been played back by traders (the euro has risen by 13 cents since April). Thus, to further strengthen the European currency, we need a new negative from overseas or a new positive from the EU. There are obvious problems with both now. Traders are simply afraid to buy the US currency three weeks before the election. As we have noted many times, there is no worse state for markets than a state of uncertainty. A change of government is always an uncertainty. Thus, we believe that the US dollar will not be able to show growth for at least another three weeks. Further, everything will depend on how smoothly and calmly the US elections will be held.

Trading plan for the week of October 12-16:

1) Taking into account the fact that in the long term we observe the movement as close as possible to the definition of "flat", it is recommended to trade using small timeframes, hourly and 4-hour. At this time, the euro is growing and may well reach 1.1900. The further upward movement is questionable. Therefore, as long as the Ichimoku indicator and the graphical patterns (channels, trend lines) that we use every day to build trading strategies in our articles support the upward movement, we recommend buying the pair.

2) To resume selling the EUR/USD pair, we recommend waiting for the price to consolidate below the Kijun-sen line. There is no clear trend on the hourly and 4-hour charts, thus, we rely on the main lines of the Ichimoku indicator when making trading decisions. On the 24-hour timeframe, the lines of the Ichimoku indicator are currently formal, since they are not strong in the flat.

Explanation of the illustrations:

Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them.

Ichimoku indicators, Bollinger bands, MACD.

Support and resistance areas – areas that the price has repeatedly bounced from before.

Indicator 1 on the COT charts – shows the net position size of each category of traders.

Indicator 2 on the COT charts – the net position size for the "Non-commercial" group.

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

Dollar Loses Ground Against Peers As Stimulus Hopes Rise

Trading 10 oct 2020 Commentaire »

The U.S. dollar weakened against other major currencies on Friday, weighed down by renewed optimism about a U.S. stimulus deal and on Joe Biden's lead over President Donald Trump in opinion polls ahead of the presidential election.

After the government said that it was open to a broader coronavirus stimulus package - one that includes support for airlines, state and local government aid, and jobless benefits, talks over a relief plan resumed between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin.

The dollar index slipped to 93.02, down more than 0.6% from Thursday's close.

Against the Euro, the dollar weakened to $1.1832, losing about 0.6%.

The pound sterling was stronger by more than 0.8% with a unit of sterling fetching $1.3045, compared to $1.2939 yesterday evening.

The U.K. economy grew at a moderate pace in August as lockdown measures continued to ease, the Office for National Statistics said. Gross domestic product climbed 2.1% sequentially, slower than the 6.4% expansion seen in July. This was the fourth consecutive monthly increase following a record fall of 19.5% in April.

The Yen firmed up to 105.60 a dollar, rising 0.4%. Data from the Ministry of Internal Affairs and Communications showed that Japan household spending fell 6.9 percent on year in August - coming in at 276,360 yen. That was in line with expectations following the 7.6 percent annual decline in July.

The Aussie strengthened by over 1% with the Aussie-USD pair at 0.7242. Data from the Australian Bureau of Statistics showed that Australia home loans rose a seasonally adjusted 13.6% on month in August - coming in at A$16.28 billion.

The Swiss franc was firmer at 0.9096 a dollar, gaining from 0.9170. The Loonie was stronger at C$1.3112 a dollar, rallying from C$1.3196 a dollar, buoyed by strong jobs data.

Data from Statistics Canada showed that employment rose by 378,200 jobs in September following an increase of 245,800 jobs in August. Economists had expected employment to grow by 150,000 jobs.

The unemployment rate dropped to 9% in September from 10.2% in August. Economists had expected the employment rate to fall by 9.8%.


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

Oil Futures Shed 1.4% In The Session, Gain 9.6% In Week

Trading 10 oct 2020 Commentaire »

Crude oil prices drifted lower on Friday as traders made largely cautious moves, weighing demand and supply position in the market.

According to reports, Norway reached an agreement with labor union officials, bringing the strike to an end, which otherwise could have resulted in a sharp reduction in Norwegian crude output next week.

According to the Bureau of Safety and Environmental Enforcement, around 91.55% of current oil production in the Gulf of Mexico had been shut in as a result of Hurricane Delta, along with 62.17% of natural-gas output.

West Texas Intermediate Crude oil futures for November ended lower by $0.59 or about 1.4% at $40.60 a barrel.

Despite ending lower today, WTI Crude oil futures notched up a gain of nearly 10% in the week, due largely to the impact of the hurricane, which forced the authorities to shut down energy production in the Gulf of Mexico region. Crude oil futures had ended the previous two weeks with losses.

Brent crude futures declined nearly $0.50 or about 1.1% to $42.85 a barrel.

According to a report from Baker Hughes, the number of active oil drilling rigs count in the U.S. went up by 4 to 193 this week.

Traders were also reacting to comments by the Organization of the Petroleum Exporting Countries (OPEC) that world oil demand will plateau in the late 2030s and could by then have begun to decline.


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

Treasuries Close Slightly Lower Following Volatile Session

Trading 10 oct 2020 Commentaire »

Treasuries showed some significant swings over the course of the trading session on Friday before ending the day slightly lower.

Bond prices came under pressure in late morning trading but climbed back toward the unchanged in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1 basis point to 0.775 percent.

The volatility in the bond market came as traders reacted to the latest headlines regarding a new coronavirus stimulus bill.

Treasuries showed a notable move to the downside after President Donald Trump suggested he was once again in favor of a broad relief package.

"Covid Relief Negotiations are moving along. Go Big!" Trump tweeted before later telling Rush Limbaugh he would like to see a bigger stimulus package than either the Democrats or Republicans are offering.

Trump's comments came amid reports that the White House was planning to offer a $1.8 trillion package, which is up from the administration's previous $1.6 trillion proposal but still below the $2.2 trillion bill passed by House Democrats.

House Speaker Nancy Pelosi's deputy chief of staff Drew Hammill later said Treasury Secretary Steven Mnuchin had "returned to the table with a proposal that attempted to address some of the concerns Democrats have."

"Of special concern, is the absence of an agreement on a strategic plan to crush the virus," Hammill tweeted. "For this and other provisions, we are still awaiting language from the Administration as negotiations on the overall funding amount continue."

Meanwhile, amid the back-and-forth between the White House and Pelosi, Senate Majority Leader Mitch McConnell said a new relief bill is "unlikely" to pass before the elections.

"I'd like to see us rise above [politics] like we did back in March and April, but I think that's unlikely in the next three weeks," McConnell said.

Developments regarding a new stimulus bill are likely to remain in the spotlight next week, potentially overshadowing reports on consumer and producer price inflation, retail sales and industrial production.


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

Gold Futures Rise Sharply, Post 3-week Closing High

Trading 10 oct 2020 Commentaire »

Gold prices moved up on Friday and the most active gold futures contract recorded a 3-week closing high, as optimism about a U.S. fiscal stimulus supported the commodity.

The dollar's weakness amid hopes about a stimulus and data showing a notable expansion Chinese services sector activity in the month of September aided the yellow metal's uptick.

The dollar index tumbled to 93.04, losing more than 0.6% from previous close.

Gold futures for December ended up $31.10 or about 1.6% at $1,926.20 an ounce. For the week, gold futures gained about 1%.

Silver futures for December moved up $1.232 or 5.2% to settle at $25.108 an ounce, while Copper futures for December settled at $3.0825 per pound, up $0.0405 or 1.3% from previous close.

According to reports, White House economic adviser Larry Kudlow said President Donald Trump had approved a revised stimulus package. Wall Street Journal's Kate Davidson has reportedly tweeted that Treasury Secretary Steven Mnuchin would present House Speaker Nancy Pelosi with a $1.8 trillion counteroffer to the Democrats' $2.2 trillion plan when they speak Friday.

The Caixin composite services Purchasing Managers' Index for China rose to 54.8 in September from 54.0 in August, marking the fifth consecutive increase in service sector output. The expansion was underpinned by a sustained rise in total new business.

Investors are also preparing for Biden's victory in presidential election and expect that he will offer bigger stimulus package after the election.


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