Forecast and trading signals for GBP/USD on November 26. COT report. Analysis of Wednesday. Recommendations for Thursday

Trading 25 Nov 2020 Commentaire »

GBPUSD 1H

The GBP/USD pair moved identically to the EUR/USD pair by moving in different directions on Wednesday, November 25. It resulted in the price rebounding from the lower line of the rising channel. Yes, the pound is facing an upward trend, in contrast to the euro. Accordingly, buyers continue to hold the initiative in their hands and the chances of sustaining the upward movement remain very good, from a purely technical point of view. The fundamental background is another matter. We have analyzed in previous articles that the pound does not have any fundamental support now. Moreover, if we take all the news from Great Britain over the past months into account, it becomes clear that the pound should, rather, have become cheaper. However, this is not the case. The pound continues to rise and does so almost every day. In total, this currency has risen in price by almost 20 cents since March. But as long as the price is within the rising channel and above the critical line, all our assumptions based on the foundation remain only assumptions and hypotheses.

GBPUSD 15M

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Both linear regression channels turned sideways on the 15-minute timeframe, which perfectly reflects the nature of trading in the last two days. If a clear upward trend persists in the long term, then it would be very difficult for the pound/dollar pair to overcome its local highs. Maybe this is the beginning of the end? The end of the upward trend?

COT report

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The GBP/USD pair rose by 25 points in the last reporting week (November 10-16), although the volatility was quite high during this time period. However, the Commitment of Traders (COT) report has not provided us with any important information that could help in forecasting and trading for several weeks now. Recall that the red and green lines must move away from each other or sharply change the direction of their movement, so that we can conclude that one trend ends and another begins. In recent months, both lines regularly change their direction, which indicates the absence of signals based on COT reports. What can we say about the most important group of non-commercial traders? This group opened 533 contracts to buy the pound and 616 contracts to sell during the reporting week. Therefore, it doesn't even make any special sense to calculate the change in the net position or the amount by which the attitude of professional traders has changed. A little more than 1000 contracts per week is very little. Therefore, in essence, there are no changes. What do we end up with? There are no changes, and the general picture of things does not make it possible to predict any definite development of the situation. So now it is better to pay more attention to technique and foundation.

The fundamentals for the British pound were rather weak on Wednesday, considering the news from the UK. In the next article, we will look at all aspects of Britain's fundamental background. It is already obvious that it's negative. In addition to the report on orders for durable goods, America also published reports on GDP for the third quarter, the number of applications for unemployment benefits, as well as changes in personal income and spending of US citizens. The first figure stood at 33.1% q/q, as expected, as published in the previous two estimates. The number of initial applications for benefits was higher than analysts expected, which is not surprising given the scale of the coronavirus pandemic in the United States. The third indicator was insignificant in the current environment. And so the most important reports on GDP and durable goods orders did not support the dollar, but did not also create additional pressure on this currency.

No major events or macroeconomic reports from the UK and the United States for today. The key factor for the pair is also technical. The rising channel keeps traders bullish and that says it all. There is a fairly high probability that Brexit trade talks will fail again this week. At least Michel Barnier warned his colleague David Frost that if there are no concessions, he will withdraw from the negotiations. Will this exit mean that the negotiations will fail completely? It is unlikely that the parties have time for ultimatums to each other and for reflection...

We have two trading ideas for November 26:

1) Buyers for the pound/dollar pair continue to hold the initiative in their hands and did not let the price go below the Kijun-sen line (1.3295) and the rising channel. Thus, we advise you to trade upwards while aiming for the resistance levels of 1.3397 and 1.3483 as long as the price is within the rising channel and above the critical line. Take Profit in this case will be up to 90 points.

2) Sellers failed to go below the critical line yesterday. If the price settles below the Kijun-sen line (1.3295) and below the rising channel, you are advised to sell the pound/dollar pair while aiming for the Senkou Span B line (1.3208). Take Profit in this case can be up to 70 points.

Forecast and trading signals for EUR/USD

Explanations for illustrations:

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.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

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

Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.

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

Forecast and trading signals for EUR/USD on November 26. COT report. Analysis of Wednesday. Recommendations for Thursday

Trading 25 Nov 2020 Commentaire »

EUR/USD 1H

The EUR/USD pair was trading absolutely incomprehensibly and extremely chaotic on the hourly timeframe on Wednesday, November 25. After the quotes fell by 100 points on Monday, the euro began to recover its positions, which ended with developing the resistance area of 1.1886-1.1912 today. Buyers were unable to guide the pair through this area once again. If it was possible to conclude that the price settled above the horizontal channel of $1.17-$1.19 on higher timeframes, then it is clearly visible that the price did not settle above the upper border of the horizontal channel (2-3 points do not count) on the hourly timeframe. Therefore, despite the fact that the pair has updated the highs of the past and also of this week, it still remains inside the same horizontal channel, in which it has been trading for four months(!!!). There is still no trendline or trend channel that signals at least a short-term trend inside the horizontal channel. This means that trading is really extremely chaotic and it is very difficult to work them out. Traders should take the technical picture into account when opening any positions.

EUR/USD 15M

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Both linear regression channels are directed to the upside on the 15-minute timeframe, the bulls' efforts are still not enough to clearly overcome the 1.1886-1.1912 area. Thus, no matter how many attempts they make to gain a foothold above, wherever both linear regression channels are directed and until the price overcomes this area, the upward movement will not proceed further.

COT report

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The EUR/USD pair increased by 40 points in the last reporting week (November 10-16). As you can see, price changes are still minimal. There were certain bursts of activity during the US presidential elections, but they ended very quickly and now the pair is just trading in a horizontal channel, with minimal volatility. Therefore, we expect clarification of the current situation from the Commitment of Traders (COT) reports. Unfortunately, COT reports for the last 8-10 weeks now show that non-commercial traders are reducing their net position. This means that their sentiment is becoming more bearish. The green and red lines of the first indicator show the net positions of commercial and non-commercial traders, and when they are far from each other, this is considered a strong signal for a trend change. However, the lines have moved away and they have been moving towards each other for two months now. There is no downward trend. The "non-commercial" group of traders, which is the most important and significant, opened 2,000 Buy-contracts (longs) and 1,500 Sell-contracts (shorts) for the euro during the reporting week. Therefore, there is simply no change in the mood of this group of traders. We are much less interested in other groups of traders. In general, we have a somewhat paradoxical situation, as professional traders have been reducing the number of purchases of the euro currency and increasing sales for more than two months, but the euro does not fall. Nevertheless, based on the data of the report, we still believe that the peak of the entire upward trend was near the 1.2000 level and sooner or later the downward movement will start.

All the most important macroeconomic reports were released in the US on Wednesday. Durable goods orders reports exceeded forecasted values, but the gains were small. Therefore, the dollar did not receive enough market support based on these data. The main indicator increased by 1.3% m/m (forecast +0.9%), the indicator excluding defense and aviation orders increased by 0.7% (forecast +0.5%), the indicator excluding transport orders increased by 1.3% (forecast +0.4%), the indicator excluding defense increased by 0.2%.

No important macroeconomic report or fundamental event from the European Union and the United States on Thursday, November 26. Therefore, traders will have nothing to react to during the day. However, fundamental and macroeconomic backgrounds are now less important than the technical picture. It all comes down to technique, because the foundation and macroeconomics could not bring the pair out of the horizontal channel in four months. Thus, we tend to believe that whatever the news is, it is unlikely to help buyers or sellers.

We have two trading ideas for November 26:

1) Buyers are still struggling to overcome the 1.1886-1.1912 resistance area, although they had five or six attempts to do so in the last ten days. Therefore, you are advised to open new long positions while aiming for the resistance levels of 1.1935 and 1.1976 if the price has firmly settled above the 1.1886-1.1912 area. Take Profit in this case will be no more than 55 points.

2) Bears keep the pair inside the horizontal channel and refuse to allow buyers to take it out of it. Therefore, you are advised to open new sell orders while aiming for the Senkou Span B line (1.1833) and support levels 1.1816 and 1.1775 if the price settles below the Kijun-sen line (1.1865). Take Profit in this case can be up to 80 points.

Forecast and trading signals for GBP/USD

Explanations for illustrations:

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.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

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

Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.

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

UK Chancellor Sunak Boosts Spending, Warns Of Economic Emergency

Trading 25 Nov 2020 Commentaire »

UK Chancellor of the Exchequer Rishi Sunak on Wednesday boosted spending on infrastructure and plans to create jobs for the unemployed as official forecasts pointed to the worst economic contraction in over 300 years due to the impact of the coronavirus pandemic.

"Our health emergency is not yet over," Sunak told lawmakers as he presented the latest Spending Review.

"And our economic emergency has only just begun."

The chancellor said public services funding to tackle coronavirus will total GBP 55 billion next year.

Earlier in the day, the Office for Budget Responsibility projected an 11.3 percent contraction for the UK economy this year, which will be the biggest fall in output for more than 300 years.

The economy is expected recover as Covid-19 lockdown restrictions are eased and log 5.5 percent growth next year and 6.6 percent expansion in 2022. The pace of growth is seen slowing to 2.3 percent in the following year.

That said, UK growth is not expected to return to pre-crisis levels until the fourth quarter of 2022. The damage will be lasting and is likely to keep the economy 3 percent smaller than earlier expected in 2025, Sunak said.

The chancellor raised borrowing to a record level for the peacetime. Borrowing is forecast at GBP 394 billion, or 19 percent of GDP, this year. This is expected to fall to GBP 16 billion next year and be around 4 percent of GDP beyond 2022-23. Underlying debt was forecast at 91.9 percent of GDP this year, excluding the one-off effect of the Bank of England asset purchases. The ratio is expected to keep growing and reach 97.5 percent in 2025-26. Sunak allocated nearly GBP 3 billion to start a new three-year Restart Programme aimed to help over a million unemployed people find new work. Despite the support measures from the government such as the furlough scheme, OBR projected unemployment to peak in the second quarter of next at 7.5 percent or 2.6 million people. Joblessness is then forecast to drop every year and touch 4.4 percent by the end of 2024. The chancellor guaranteed a pay rise of at least GBP 250 to 2.1 million public sector workers who earn below the median wage of GBP 24,000.

He also announced a pay rise to over a million nurses, doctors and others working in the NHS, but decided to freeze pay rise for the rest of the public sector in a bid to protect jobs. Sunak accepted recommendation to raise the National Living Wage by 2.2 percent to GBP 8.91 an hour, extend it to those aged 23 and above, and also to increase the National Minimum Wage rate. The core health budget is set grow by GBP 6.6 billion and the capital investment in the health care sector is set to be increased by GBP 2.3 billion.

Sunak increased the schools' budget next year by GBP 2.2 billion. The chancellor also launched a GBP 7.1 billion National Home Building Fund.


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

U.S. Personal Income Drops In October, But Personal Spending Rises

Trading 25 Nov 2020 Commentaire »

The Commerce Department released a report on Wednesday showing a decrease in U.S. personal income in the month of October.

The report said personal income fell by 0.7 percent in October after climbing by a downwardly revised 0.7 percent in September.

Economists had expected personal income to come in unchanged compared to the 0.9 percent increase originally reported for the previous month.

Disposable personal income, or personal income less personal current taxes, also slid by 0.8 percent in October after rising by 0.7 percent in September.

Meanwhile, the report said personal spending rose by 0.5 percent in October after jumping by a revised 1.2 percent in September.

Economists had expected spending to increase by 0.4 percent compared to the 1.4 percent spike originally reported for the previous month.

Excluding price changes, personal spending still rose by 0.5 percent in October following a 1.1 percent increase in September.

With income falling and spending climbing, personal saving as a percentage of disposable income dropped to 13.6 percent from 14.6 percent.


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

U.S. Consumer Sentiment Deteriorates Slightly More Than Initially Estimated

Trading 25 Nov 2020 Commentaire »

Revised data released by the University of Michigan on Wednesday showed consumer sentiment in the U.S. deteriorated by slightly more than expected in the month of November.

The report said the consumer sentiment index for November was downwardly revised to 76.9 from a preliminary reading of 77.0. Economists had expected the index to be unrevised, which was still down from 81.8 in October.

"Consumer sentiment was unchanged in late November--a difference of just 0.1 points from mid-month--although there was a significant decline in the Expectations component which was offset by more favorable assessments of current economic conditions," said Surveys of Consumers chief economist, Richard Curtin.

He added, "Importantly, the November data were less optimistic than last month due to the resurgence in covid infections and deaths as well as partisan shifts due to the outcome of the presidential election."

The report said the index of consumer expectations tumbled to 70.5 in November from 79.2 in October, while the current economic conditions index rose to 87.0 from 85.9.

On the inflation front, one-year inflation expectations ticked up to 2.8 percent in November from 2.6 percent in October and five-year inflation expectations inched up to 2.5 percent from 2.4 percent.


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

*U.S. Crude Oil Inventories Dip By 0.8 Million Barrels In Week Ended 11/20

Trading 25 Nov 2020 Commentaire »

U.S. Crude Oil Inventories Dip By 0.8 Million Barrels In Week Ended 11/20


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

U.S. New Home Sales Unexpectedly Dip 0.3% In October

Trading 25 Nov 2020 Commentaire »

New home sales in the U.S. unexpectedly edged lower in the month of October, according to a report released by the Commerce Department on Wednesday.

The Commerce Department said new home sales dipped by 0.3 percent to an annual rate of 999,000 in October after inching up by 0.1 percent to a revised rate of 1.002 million in September.

Economists had expected existing home sales to jump by 1.1 percent to a rate of 970,000 from the 959,000 originally reported for the previous month.

The unexpected drop in new home sales came as sales in the South and West slumped by 2.0 percent and 1.5 percent, respectively.

On the other hand, new home sales in the Midwest spiked by 11.2 percent and new home sales in the Northeast surged up by 5.1 percent.

The report said the median sales price of new houses sold in October was $330,600, down 0.3 percent from $311,600 in September but up 2.5 percent from $322,400 in the same month a year ago.

The estimate of new houses for sale at the end of October was 278,000, representing 3.3 months of supply at the current sales rate.

Last Thursday, a report released by the National Association of Realtors unexpectedly showed a continued increase in existing home sales in the U.S. in the month of October.

NAR said existing home sales jumped by 4.3 percent to an annual rate of 6.85 million in October after soaring by 9.9 percent to a revised rate of 6.57 million in September.

The sharp increase came as a surprise to economists, who had expected existing home sales to slump by 1.4 percent to a rate of 6.45 million from the 6.54 million originally reported for the previous month.


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

*U.S. Personal Income Decreases 0.7% In October, Personal Spending Rises 0.5%

Trading 25 Nov 2020 Commentaire »

U.S. Personal Income Decreases 0.7% In October, Personal Spending Rises 0.5%


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

*U.S. New Home Sales Dip 0.3% In October

Trading 25 Nov 2020 Commentaire »

U.S. New Home Sales Dip 0.3% In October


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

*U.S. Consumer Sentiment Index Downwardly Revised To 76.9 In November

Trading 25 Nov 2020 Commentaire »

U.S. Consumer Sentiment Index Downwardly Revised To 76.9 In November


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