Trading plan for the GBP/USD pair for the week of November 16-20. New COT (Commitments of Traders) report. The pound maintains

Trading 14 Nov 2020 Commentaire »

GBP/USD - 24H.

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The GBP/USD currency pair started to adjust against the correction during the past trading week. We still consider the movement after September 23 as a correction against the fall from September 1. Thus, we consider the fall of the British pound on Wednesday and Thursday as a correction. If traders manage to fix the pound/dollar pair below the Ichimoku cloud, then we can talk about the resumption of the downward trend from the beginning of September 1. However, given the fact that the pound has been climbing for quite a long time, we are beginning to doubt that the downward trend will resume in the near future. The fundamental background for the pound remains extremely weak, however, market participants do not want to take it into account yet, and the pound, although not too strong, continues to strengthen. We have already said repeatedly that any hypothesis based on fundamental analysis requires confirmation of the "technique". The fundamental background can say anything, but if market participants do not trade according to this background, we will not see the necessary results. Therefore, from a technical point of view, the upward trend is still maintained. But on the fundamental side, we continue to expect the British currency to fall.

The COT report.

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During the last reporting week (November 3 - 9), the GBP/USD pair increased by 250 points. Such a strengthening of the pound at that time is not at all surprising, since this was the period of the US presidential election, and the US dollar was declining against its main competitors. However, after this period, the pound began to grow. In general, it is the pound that has been growing in recent weeks. But the COT reports still don't give us any really useful information. During the reporting week, non-commercial traders closed 3.3 thousand buy-contracts and opened 1.1 thousand sell-contracts. Thus, their mood became more "bearish", and the net position decreased by 4.4 thousand, which is not so small for the pound. Recall that the total number of contracts opened by the "Non-commercial" group is 87 thousand. Thus, 4.4 thousand is 5%. As for the general trend among professional traders, the indicators in the illustration clearly show that there is no trend at this time. The green line (net position of non-commercial traders) on the first indicator constantly changes its direction. The second indicator also shows the absence of a trend, as professional traders increase the net position, then reduce it. Thus, no long-term conclusions or forecasts can still be made based on the COT report. We recommend paying more attention to "technique" and "foundation".

The fundamental background for the GBP/USD pair last week was quite interesting. Most of the macroeconomic reports were again ignored, although overall they showed that the state of the British economy remains a concern. The unemployment rate is rising, GDP in the third quarter recovered less than experts expected, and industrial production also grew less than expected. As for more global topics, there is still no information on negotiations on a trade deal between the UK and the European Union. Negotiations are continuing, but it is not clear whether there is progress or not. The deadline set by Boris Johnson expires tomorrow, however, the parties said that negotiations will continue next week. It is also unknown how long they will continue. In general, complete uncertainty. In the UK, as well as in several other EU countries, anti-records for the number of diseases from the "coronavirus" are updated almost every day. This is despite the "relatively strict" quarantine in the country. Well, the Bank of England last week expanded its quantitative easing program, and in the coming months, it may also lower rates to negative values. How the pound manages to grow against such a fundamental background is unclear. After all, in fact, there is not single positive news from the Foggy Albion. If there were still disappointing news coming from overseas, we could conclude that demand for the dollar is declining, so the pound is strengthening. However, there is no frankly disastrous news from America right now either.

Trading plan for the week of November 16-20:

1) Buyers retain some chances of forming an upward trend. Most of all, the fundamental background continues to confuse, which absolutely does not support the British pound. However, long positions remain relevant with targets at the resistance levels of 1.3336 and 1.3496, as the "technique" does not signal the end of the upward trend yet.

2) Sellers are also quite weak now. We can even conclude that neither the bulls nor the bears are now eager to trade the pound sterling. The COT report shows that even major market players do not have a clear plan of action right now. Sellers need to return the pair below the Ichimoku cloud in order to expect a downward trend to form again in the long term. We are still inclined to believe that the fall in the pound will resume and will be quite strong. But this hypothesis, like any other, needs technical confirmation.

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

Trading plan for the EUR/USD pair for the week of November 16-20. New COT (Commitments of Traders) report. The presidential

Trading 14 Nov 2020 Commentaire »

EUR/USD - 24H.

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Over the past week, the EUR/USD pair has fallen by 50 points. It is even better to say that the European currency has fallen by 50 points. Thus, during the day, the trend was still absent, and trading took place between the levels of 1.1700 and 1.1900, between which the pair is trading (at least) for three months now. In the most long-term perspective, therefore, the flat persists. And even the US presidential election and its results could not force traders to withdraw the pair from this range. From a technical point of view, there's not much to say right now. All lines of the Ichimoku indicator on the 24-hour timeframe are not strong, and therefore, bounces from them and overcoming them do not have any weight. They are not signals to trade on. The Bollinger Bands are now directed sideways, thus, we have a huge amount of evidence of a side channel. Thus, traders will continue to trade between the borders of the side channel using lower timeframes. Or wait for the flat to finish and the euro/dollar pair to exit the side channel.

The COT report.

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During the last reporting week (November 3-9), the EUR/USD pair increased by 170 points. The presidential election in America provoked a fairly strong drop in the US currency, however, it lasted no more than a few days. Nevertheless, the euro currency still rose in price, and market participants could count on a change in the mood of professional traders to a more "bullish" one. However, the latest COT report again showed that the mood of major traders has become more "bearish". The net position of the "Non-commercial" group of traders decreased again, this time by 17,000 contracts, which is quite a lot. Recall that non-commercial traders have been reducing their net position for several weeks in a row, which is eloquently indicated by the lower indicator in the illustration. A decrease in the net position means that the closing of buy-contracts and the opening of sell. The first professional traders in the reporting week closed 9.2 thousand, and the second - opened 7.8 thousand. However, although the net position of non-commercial traders has been falling since the beginning of September, the downward trend for the euro/dollar pair still does not begin. The green and red lines on the first indicator continue to move towards each other, which means that the trend has long started. However, there is no downward movement in the long term. Thus, based on the latest COT report, we can say the following: our forecasts remain the same since the reported data only allows us to draw such conclusions. We still believe that the upward trend ended around the 1.2000 level.

What can we say about the fundamental background of the past trading week? A large number of important macroeconomic reports were published during the week. However, most of them were ignored again. There were several speeches by the heads of the central banks of the European Union and the United States, however, they did not contain any important information. Christine Lagarde and Jerome Powell talked more about Pfizer's new vaccine and the prospects for their economies if mass vaccination starts. And both heads of the Central Bank agreed that the positive effect of creating a vaccine will not be visible in the coming months. It may take months for the vaccine to be fully approved, for it to go into mass production, for it to be delivered to all end-users, given the number of doses that need to be produced. The topic of the presidential election has left the front pages of periodicals. In most states, all votes are counted, so it's safe to say that Joe Biden won the election, as predicted. The Democrat won about 279 "electoral votes", while Trump won 214. Thus, even a review of the results in one or two states will not allow Trump to turn the election results upside down. It turns out, even to sue for nothing. The Trump team, of course, filed lawsuits in the courts of many states with requests to recount the votes, not taking into account the votes received after November 3-4 (by mail) and other claims. However, most of the claims were rejected for insufficient evidence. Thus, Trump lost and, in our humble opinion, lost on all fronts, as it should have been. Even though Trump is probably not the worst President in the history of the United States, he still did not give the main thing that was expected of him – the result. And most importantly, there is no trust in him. Various agencies' calculations of the number of times Trump misled or outright lied with his comments or statements are the "cherry on the cake" of Trump's presidency. According to various estimates, the American President lied at least 14 times a day.

Trading plan for the week of November 16-20 October:

1) The pair's quotes continue to trade in the side channel. It will be possible to talk about the resumption of the upward trend no earlier than overcoming the previous local maximum near the level of 1.2000. Until then, it is recommended to continue trading inside the side channel using lower timeframes.

2) To be able to sell the EUR/USD pair, you need to at least wait for the price to consolidate below the Kijun-sen and Senkou Span B lines. But even in this case, the potential for a downward movement is limited to the level of 1.1700. In this way, you can look for short-term trends on lower timeframes, but keep in mind that in the most long-term plan, it is the flat that remains.

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

The dollar and the euro are separated by a river of uncertainty, and time is running out against the pound

Trading 14 Nov 2020 Commentaire »

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News about progress in the development of a vaccine against COVID-19 and the deterioration of the epidemiological situation in the world compete for the right to determine the dynamics of global markets.

Key stock indices sell-off after touching local highs.

A similar picture is observed in the foreign exchange market.

Having failed to gain a foothold above 1.1900 at the very beginning of the week, the EUR/USD pair rolled back to the level of 1.1750, after which it returned to the area of 1.1800.

The euro is losing about 0.6% over the week, helping the USD index to show a weekly increase of 0.7%.

"The greenback is no longer showing the one-sided decline that was observed earlier. News about the vaccine from Pfizer and BioNTech set the bar high for future market expectations. Excessive optimism today may then turn into disappointment if further trials of the vaccine show weaker results. Also, even if the vaccine is completely successful, it may be difficult to produce and distribute it," Bloomberg experts said.

The coronavirus continues to advance on both sides of the Atlantic.

In the EU and the US, the second wave of the disease caused the re-introduction of social restrictions to stop the spread of COVID-19.

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"Now we see the other side of a huge river of uncertainty. But I don't want to exaggerate the excitement about the vaccine and future vaccination, because there is still uncertainty," ECB President Christine Lagarde said.

A similar opinion is held by the head of the Federal Reserve Jerome Powell.

"Progress in the development of a COVID-19 vaccine is certainly good and welcome news in the medium term, but there remains significant uncertainty about the timing, production, distribution, and effectiveness of the vaccine," he said.

The nearest strong resistance for EUR/USD is located near 1.1820, and while it is holding the pair back, the bears will try to push the pair to 1.1790, and then to the area of 1.1745-1.1750. Breaking the mark of 1.1740 will bring the levels of 1.1720 and 1.1700 into play.

However, a break above 1.1830 will neutralize the "bearish" forecast and target the pair at 1.1850 and further - at 1.1880.

The GBP/USD pair retreated from two-month highs around 1.3300 to weekly lows near 1.3110. This is not surprising, given the quarantine in the Foggy Albion, the lack of progress in Brexit negotiations, and the weakness of the UK's GDP and industrial production figures for the third quarter.

New restrictive measures in the United Kingdom are only in effect for a week, and the daily rate of coronavirus infection in the country is hitting anti-records. As of Thursday, the number of new cases of COVID-19 infection in Britain was 33,470, compared to 22,950 recorded a day earlier.

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According to preliminary estimates, the British economy in the third quarter declined by 9.6% in annual terms. Experts predicted its reduction by 9.4%.

Industrial production in the country in September increased by 0.5% compared to August, instead of the expected increase of 0.8%. In annual terms, the indicator decreased by 6.3%, while the forecast was for a decrease of 6.1%.

Meanwhile, trade talks between London and Brussels have stalled again.

The EU still believes that the UK seeks exclusive access to the common market, but does not want to obey the same standards and rules. Foggy Albion, in turn, accuses the Alliance of still trying to bind the United Kingdom to itself and does not recognize Brexit.

According to experts, the existing differences between the parties increase the likelihood that no trade deal will be concluded before the end of the transition period on December 31.

Thus, the GBP/USD pair retains the potential for further decline. If the sales increase, the first line of defense for the pair may be the area of 1.2900. A deeper correction can send it to 1.2700, where the 200-day moving average and the 61.8% Fibonacci retracement line from the March-September growth are located.

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

Treasuries Close Nearly Flat Following Choppy Trading Day

Trading 14 Nov 2020 Commentaire »

After ending the previous session notably higher, treasuries showed a lack of direction over the course of the trading day on Friday.

Bond prices spent the day bouncing back and forth across the unchanged line before closing nearly unchanged. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 0.893 percent.

The choppy trading on the day came as traders digested recent volatility in the bond market, which saw treasuries rebound strongly on Thursday after falling sharply earlier in the week.

Optimism about a potential coronavirus vaccine weighed on treasuries early in the week, while concerns about the recent spike in new cases contributed to the yesterday's recovery.

Traders largely shrugged off a report from the University of Michigan showing an unexpected decrease in U.S. consumer sentiment in the month of November.

The preliminary report said the consumer sentiment index fell to 77.0 in November after rising to a seven-month high of 81.8 in October. The pullback came as a surprise to economists, who had expected index to inch up to 82.0.

"The outcome of the presidential election as well as the resurgence in covid infections and deaths were responsible for the early November decline," said Surveys of Consumers chief economist Richard Curtin

"Interviews conducted following the election recorded a substantial negative shift in the Expectations Index among Republicans, but recorded no gain among Democrats," he added. "It is likely that Democrats' fears about the covid resurgence offset gains in economic expectations."

The Labor Department released a separate report showing producer prices increased by slightly more than anticipated in the month of October.

The Labor Department said its producer price index for final demand rose by 0.3 percent in October after climbing by 0.4 percent in September. Economists had expected prices to inch up by 0.2 percent.

The bigger than expected increase in producer prices was partly due to a jump in food prices, which surged up by 2.4 percent in October amid a spike in prices for fresh and dry vegetables.

Excluding food and energy prices, core producer prices crept up by 0.1 percent in October after rising by 0.4 percent in September. Core prices were expected to edge up by 0.2 percent.

Next week's trading may be impacted by reaction to the latest economic data, including reports on retail sales, industrial production, homebuilder confidence, housing starts, existing home sales and regional manufacturing activity.

Traders are also likely to keep an eye on the latest developments regarding the coronavirus pandemic, including potentially new restrictions and lockdowns.


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

Crude Oil Futures Settle Sharply Lower

Trading 14 Nov 2020 Commentaire »

Crude oil futures settled sharply lower on Friday, weighed down by concerns over excess supply, and weak outlook for energy demand due to rising coronavirus cases across the world.

However, despite today's fall, oil futures ended with a weekly gain thanks largely to optimism over a potential coronavirus vaccine.

West Texas Intermediate Crude oil futures for December ended down $0.99 or about 2.4% at $40.13 a barrel.

Brent crude futures were lower by $0.75 or 1.7% at $42.78 a barrel.

For the week, WTI crude oil futures gained about 8%.

Data from U.S. Energy Information Administration (EIA) on Thursday had showed crude inventories in the U.S. to have risen by about 4.3 million barrels last week, beating expectations for a drop of 913,000 barrels.

A Reuters report citing a Libyan oil source said oil production in Libya rose to 1.215 million barrels per day, up from 1.04 million barrels per day reported a week earlier by National Oil Corp.

Meanwhile, a report from Baker Hughes this afternoon showed the number of active U.S. rigs drilling for oil rose by 10 to 236 this week, rising for an eighth successive week.

The total active U.S. rig count, meanwhile, was up 12 to 312, according to Baker Hughes.

In Covid-19 updates, Europe is already grappling with a sharp increase in infections and new social restrictions while the United States again shattered records on Thursday, reporting more than 153,000 new coronavirus cases.

It is feared that rising Covid cases will continue to hold back an economic recovery, including fuel demand.


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

Gold Futures Settle Higher As Dollar Weakens

Trading 14 Nov 2020 Commentaire »

Gold prices edged higher on Friday, riding on dollar's weakness and on record spikes in new coronavirus cases across the U.S. and several countries in Europe.

The dollar index slipped to 92.74 early afternoon, and was last seen at 92.80, down 0.19% from previous close.

Gold futures for December closed firmer by $12.90 or about 0.7% at $1,886.20 after rallying to a high of 1,895.80 earlier in the day.

However, Gold futures suffered a loss of more than 3% in the week, with the steep slide on Monday contributing to the weekly decline.

Silver futures for December ended up $0.469 at $24.775 an ounce, while Copper futures for December settled at $3.1780 per pound, gaining $0.0330.

A report released by the Labor Department showed producer prices in the U.S. increased by slightly more than anticipated in the month of October. The report said the department's price index for final demand rose by 0.3% in the month, after climbing by 0.4% in September. Economists had expected prices to inch up by 0.2%.

The University of Michigan's report said consumer sentiment index fell to 77.0 in November after rising to a seven-month high of 81.8 in October. The pullback came as a surprise to economists, who had expected index to inch up to 82.0.

The unexpected decrease by the headline index came as the index of consumer expectations tumbled to 71.3 in November from 79.2 in October.

The report showed a much more modest drop by the current economic conditions index, which edged down to 85.8 in November from 85.9 in the previous month.

On the inflation front, the report said one-year inflation expectations crept up to 2.8% in November from 2.6% in October, while five-year inflation expectations rose to 2.6% from 2.4%.

On the virus front, U.S. Covid-19 infections hit fresh records and remained above 100,000 for an eighth consecutive day, prompting several cities and states to slap new restrictions on public life.

Germany is likely to continue with its restrictions, and France intends to keep lockdown for at least two more weeks. Spain and the UK also continue to see spikes in coronavirus cases.

White House coronavirus adviser Dr. Anthony Fauci said that the vaccine to bring an end to the pandemic now appears to be on the horizon, but it may not be enough to help eradicate the disease.


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