Analytics and trading signals for beginners. How to trade GBP/USD on December 7? Analysis of Friday deals. Getting ready

Trading 06 Déc 2020 Commentaire »

Hourly chart of the GBP/USD pair

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We observed absolutely illogical movements from the GBP/USD pair on Friday, which continue to defy any analysis. After the pair was trading in a horizontal channel for more than a week, the quotes seemed to have overcome its upper border, but the upward movement did not last long. If you look at the higher charts, you can see that, in general, the upward trend has been ongoing for 2.5 months. The pair has just recently reached the September 1 high and now it is already difficult for buyers to move the pair up. And if you took note of the fundamental background from the UK, which has not supported the pound for a long time, it becomes completely unclear how the pound got to these heights. However, there are other things that are more important and interesting for novice traders. At this time, the pair has no technical formations, trend lines, triangles, channels. And the upward trend is by no means obvious. In such a situation, we recommend not trading at all, since it is not even clear which direction the majority of traders are looking.

Everything still revolves around Brexit and negotiations on a trade deal between the UK and the EU when it comes to the British pound. Every day, traders receive information that confirms that the parties are still far from an agreement. Friday, Saturday and Sunday were no exception. All that has become known these days is that London and Brussels have resumed negotiations and will try to negotiate a trade deal. Recall that the last announced deadline for these negotiations was November 15. After that, it is pointless to continue negotiations, because the parties will not have time until January 1. As you can see, this does not hinder the negotiation process, since it is better not to be in time and be late than not to be in time and not to conclude.

No major events scheduled for Monday in the UK. However, what are important developments for the British pound? We still recommend waiting for information on the talks' progress, but we told you the same both a week ago and two. However, novice traders can appreciate the beauty of the pair's recent movements and conclude whether they want to trade in such conditions? We believe that these movements are directly related to the uncertainty that the dialogue between London and Brussels is fraught with. Great Britain is now in a pan or lost position. If there is no deal, then the British economy will face new shocks in 2021.

Possible scenarios for December 7:

1) Traders managed to get the pair to settle above the horizontal channel of 1.3292-1.3397, but there is no upward trend now, like any trend lines and channels. Thus, formally, you can now consider an upward trend on the chart, but in fact there is none. We advise you to wait a few days for a more convenient and beautiful technical picture.

2) Sell positions, from our point of view, are also not convenient right now. There is neither a downward trend nor a signal about the end of the upward trend, and market participants are not particularly interested in the fundamental background right now. Everyone believes in a deal between the EU and Britain, and on this basis they brought the British pound quotes to two-year highs. But in fact, there is still no deal...

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 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

Analytics and trading signals for beginners. How to trade EUR/USD on December 7? Analysis of Friday deals. Getting ready

Trading 06 Déc 2020 Commentaire »

Hourly chart of the EUR/USD pair

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After the EUR/USD pair overcame the rising trend line on Friday, it went back to moving up and updated the previous day's high as if nothing happened. However, this is not the first case of a false trend reversal over the past few weeks. Earlier, we wrote about two trend lines, and the price also settled below it, but after that it went back to moving up. However, a round of technical correction began on Friday, which we warned about in the previous review. However, novice traders can assess the strength and power of this correction by themselves. The chart clearly shows the size of the upward trend segment (not even all, but only its final part) and the size of the correction, which is no more than 25%. Thus, we can formally declare the end of the upward trend, since the trendline was crossed anyway. In practice, the demand for the European currency remains very high after the price finally left the 1.1700-1.1900 channel, in which it spent four months. And most importantly, it is unfounded (from our point of view). Therefore, many technical formations and signals are now false. Markets are simply ignoring many factors right now. Trend trading systems (Ichimoku, Linear Regression Channels + Heiken Ashi) make it possible for trading to be more or less profitable. But this is already the next step in trading. Novice traders can start to deal with them and now is the best time for that.

No important news from the European Union on December 4, Friday, and no events of a global nature either. But there were several important publications from the US that were worth paying attention to. The most important would be the NonFarm Payrolls indicator (the number of new jobs created outside the agricultural sector). Their number turned out to be significantly lower than forecasted (245,000 versus 469,000). Therefore, this report should have caused the dollar to fall... If the dollar had not fallen uncontrollably for two weeks before. And if market participants did not continue to ignore macroeconomic statistics. And this is a paradoxical situation. The US dollar rose in price just when the macroeconomic background was against it...

No important publications or events scheduled for Monday. Of course, there are enough burning topics from both the EU and the US that should not be overlooked. However, the nature of the euro/dollar pair's movement at this time is such that markets brush off the vast majority of fundamental topics and macroeconomic reports. Even when the pair was inside the 1.17-1.19 horizontal channel, we regularly found short-term trends that allowed novice trends to trade consciously. Now the picture is much more complicated.

Possible scenarios for December 7:

1) Long positions have ceased to be relevant at the moment, since the price overcame the trend line. However, this trendline was purely nominal from the start. We said that any correction will cause the price to go below it. Any trend line should also take corrections into account. Thus, given the fact that the MACD indicator is discharged to the zero level, you can try to wait for a new buy signal on Monday and buy the pair while aiming for 1.2181. But close long deals when the MACD indicator turns down.

2) Trading down on Monday is not recommended for consideration. Although the price crossed the rising trend lines twice and settled below the third on Friday. In any case, you need to wait for a new sell signal from MACD and only then should you re-evaluate the pair's technical picture.

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 (14,22,3) 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

Trading plan for the GBP/USD pair for the week of December 7-11. New COT (Commitments of Traders) report. Negotiations continue

Trading 06 Déc 2020 Commentaire »

GBP/USD – 24H.

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The GBP/USD currency pair has increased by about 100 points over the past week. Nevertheless, the upward trend, although not strong at the moment, is stable. There are almost no downward corrections, and the previous high from September 1 was updated. Formally, we now have the "double top" pattern at our disposal. However, we now recommend paying more attention to short-term trends and technical factors. The problem is the same as in the case of the euro/dollar pair. The fundamental background does not support the growth of the pound in any way. However, it is this currency that continues to grow steadily, although there are now a huge number of global problems in the UK. Nevertheless, market participants continue to sell the dollar. Last week, the pair's quotes worked out the first resistance level of 1.3526. It can provide serious resistance to buyers. However, as long as the upward trend continues, we recommend continuing to trade higher, despite the "foundation", "macroeconomics", COT reports, and other factors.

COT report.

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During the last reporting week (November 24-30), the GBP/USD pair did not grow or fall by a single point. In other words, there were no price changes during this period. But in general, there was still an upward trend, which continued into the next week. If in the case of the euro/dollar pair, we have long expected the beginning of a new downward trend, in the case of the pound/dollar pair, COT reports did not allow us to draw such conclusions. You only need to look at both indicators in the illustration to understand that there is no trend in the mood of major players. The first indicator constantly shows the change of mood of commercial and non-commercial traders from "bearish" to "bullish" and vice-versa. The second indicator constantly shows that the net position of the "Non-commercial" group is growing and decreasing. In other words, no conclusions can be drawn about the future of the pair based on COT reports. During the reporting week, non-commercial traders opened 3.6 thousand new purchase contracts and closed 4.4 thousand sales contracts. That is, the net position increased by 8 thousand at once, which is a lot for the pound. But there were no price changes. The number of open buy and sell contracts for the "Non-commercial" group is almost the same.

The fundamental background for the GBP/USD pair remained discouraging last week. Throughout the trading week, participants in the negotiation process made it clear that "everything should be resolved in the coming days" and "the negotiations have entered a crucial phase". However, no official statements were made again. On Friday, Michel Barnier has traditionally announced the continuation of negotiations, however, information was received from a member of the government about the deterioration of the atmosphere at the talks. According to the unnamed MP, the European Union has started to introduce new items, which worsens the prospect of signing the agreement. According to London, because of Brussels, progress in the negotiations has rolled back by 24 hours. On Friday, the pair's quotes fell slightly in price. But in general, it cannot be said that this was due to the appearance of another tension in the negotiations on a trade deal. However, now it is very difficult to understand what guides traders when making trading decisions. First of all, of course, we are interested in major traders who set the tone for trading. For example, on Friday, the States also published quite important statistics that were not in favor of the US currency (NonFarm Payrolls report). But in the second half of the day, it was the dollar that rose in price. Most likely, there was a purely technical correction, traders simply decided to fix some of the long positions to withdraw profits. However, even in this case, the correction was extremely weak. In general, the upward trend continues, and we recommend starting from this fact in trading.

Trading plan for the week of December 7-11:

1) The upward movement continues in recent weeks. The maximum from September 1 was updated, and the "double top" pattern may be formed. However, the fundamental background continues to confuse, which does not support the British pound. Thus, for the time being, upward trends remain more preferable for working out on lower timeframes, but we continue to expect the end of the upward trend.

2) Sellers now remain quite weak. Some hopes are associated with a rebound from the resistance level of 1.3526. However, in any case, to start trading for a decrease, you need to wait for the formation of a downward trend at least in the 4-hour timeframe. So far, there is a fairly strong upward movement. If the level of 1.3526 is overcome, the start of a new downward trend will be postponed indefinitely. Bears can still rely only on the fundamental background, however, it is not recommended to open shorts without 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 December 7-11. New COT (Commitments of Traders) report. The unprecedented

Trading 06 Déc 2020 Commentaire »

EUR/USD - 24H.

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Over the past week, the EUR/USD pair has grown by more than 200 points. If a week earlier there was still hope for the bears, who for four months have not been able to start forming a new downward trend, then last week all these hopes collapsed. Quotes of the euro/dollar pair updated the previous high, and at the same time, two-year highs. Thus, we can now conclude that the upward trend has resumed. However, it is very difficult to say how long it will last. We have repeatedly drawn the attention of traders to a complex fundamental situation and a large number of factors that can affect the mood of traders and the movement of the pair. We still believe that from a fundamental point of view, there is no reason to strengthen the European currency. Macroeconomic statistics also do not speak in favor of the dollar and against the euro. Thus, the growth of the euro currency is purely speculative, or central banks and major players who conduct operations with the dollar and euro have entered the market without taking into account the "foundation" and other factors. Thus, as before, we recommend that any fundamental hypothesis be confirmed by "technique".

COT report.

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During the last reporting week (November 24-30), the EUR/USD pair increased by only 80 points. However, the new COT report for the second week in a row signals an increase in the "bullish" mood among professional traders. This time, the Non-commercial group opened 4.3 thousand new purchase contracts and closed 300 sales contracts. These numbers are not large. Even the general changes in favor of the bulls over the past two weeks can not be called "breaking the bearish trend". However, for two weeks in a row, the net position of non-commercial traders is growing. And it began to grow synchronously with the resumption of the upward movement of the euro/dollar pair. Unfortunately, COT reports are released three days late. Thus, they can be used to determine the trend, however, technical confirmation is always required for any conclusions made based on COT reports. What do we end up with? The number of open buy-contracts for professional traders remains high – 212 thousand, and the number of sell-contracts is three times lower than 67 thousand. The gap between them began to decrease around September (the second indicator showing the net position of the "Non-commercial" group), but at the moment it is increasing again. Thus, we still expect the end of the upward trend formation, because this is what all the data in the COT report (especially the first indicator) indicate. However, we need technical confirmation of this.

What can we say about the fundamental background of the past trading week? It didn't matter. Macroeconomic statistics were mostly ignored. Fundamental events were not taken into account. By and large, there are similar problems in the United States and the European Union, however, the American economy looks even a little more promising since it did not have a second "lockdown". This is very eloquently evidenced by data on business activity in the US and EU services sectors. There were fears that the unemployment rate in America will start to increase again due to the huge number of cases of "coronavirus", which is recorded daily. However, recent reports have shown that applications for unemployment benefits remain normal, secondary applications for benefits are decreasing in number, the official unemployment rate is decreasing, and inflation remains at quite normal values. Thus, we can even say that everything is fine in the US now if we take into account the global crisis and the pandemic. Of course, Jerome Powell regularly calls on the US Congress to agree on a new aid package for the economy. But it has not yet been agreed and it is unlikely that this is why the dollar is falling. After all, the European Union also has problems with assisting the economy. Poland and Hungary have blocked the EU's seven-year budget and recovery fund, and it may now take a long time to convince Warsaw and Budapest to withdraw their vetoes. And to do this, you will need to change the mechanism for observing the rule of law, which is not as easy as it may seem. In general, we do not believe that the European economy is now in a better state than the American one. Therefore, the reasons for the growth of the euro currency are not fundamental.

Trading plan for the week of December 7-11:

1) The pair's quotes have resumed the upward trend and now, in the next few weeks, they will aim for the levels of 1.2245 and 1.2487. Although the COT report and the fundamental background continue to signal a possible and very likely fall in the pair's quotes and the baselessness of the current growth, it can continue. "Technique" now eloquently signals an upward trend after a four-month flat.

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. However, we do not expect such a development in the near future, since the price is very far from these lines. Thus, short positions can only be considered on lower timeframes if a downward trend is formed.

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

EUR/USD, GBP/USD – results and prospects

Trading 06 Déc 2020 Commentaire »

EUR/USD

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Bulls continued to rally in the first week of December as it took advantage of the previous month's potential. On Friday, there was a slowdown when testing the historical milestone marked earlier at 1.2170. In case the rebound is confirmed and a downward correction appears, short-term trends will be the main reference points for the decline, first the daily Tenkan, currently located at 1.2006 and combining its efforts with the border of the monthly cloud (1.2019), then the weekly Tenkan, the level is at 1.1889 and strengthens the daily medium-term trend (1.1888). Maintaining positions and consolidating on what has been achieved, and subsequently overcoming 1.2170, will allow traders to consider the following upward benchmarks. In this case, the immediate task will be to update the monthly high (1.2555).

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Indicator analysis has no divergences now. The preconditions for the emergence of divergences have not yet been formed. At the same time, take note that Stochastic and CCI are currently in the oversold area on the daily and weekly timeframes. On the daily timeframe, they reacted to the deceleration and marked peaks, preparing to support the bearish sentiment.

GBP/USD

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All week the bulls acted with varying success, nevertheless, they managed, unlike their opponents, to consolidate their result on the chart - the pair grew, and the 1.3481 high was tested. The next big cluster of resistance is at 1.44-45-46. Here, the upper border of the monthly cloud (1.4588), reaching the weekly target for breaking the cloud (1.4220-1.4532) and the high (1.4376) is a combination of their efforts. Overcoming these boundaries will be a very significant stage for traders' further prospects for an increase. But inability to cope with the 1.3481 resistance that they may encounter in the near future, thanks to which it is possible to restore the monthly and weekly upward trend, will deprive players of plans to rise to 1.44-45-46. The most significant nearest support is now at 1.3413 (daily Tenkan) - 1.3350 (lower border of the monthly cloud). Consolidating below it will serve as a change in the balance of power in favor of the bears, as a result, we can expect bearish sentiment to strengthen further. The reference point will be the 1.32 area (record level + weekly Tenkan + daily Kijun).

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Indicator analysis shows that most indicators retain the prerequisites for forming a divergence. The discrepancies are still valid and growing. The opportunities for the players to rise remain in doubt.

Ichimoku Kinko Hyo (9.26.52), Pivot Points (Classic), Moving Average (120)

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