Analytics and trading signals for beginners. How to trade GBP/USD on December 14. Analysis of trade on Friday. Tips for

Trading 13 Déc 2020 Commentaire »

1-hour chart for GBP/USD

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On Thursday and Friday, GBP/USD resumed a downward move that enabled the price to form a downward broad channel and a downward trendline. Thus, the bearish trend is clearly outlined. This fact will be very helpful when analyzing a dynamic of GBP/USD and trading this downward move. At the moment, the currency pair rebounded from the lower border of the channel and resumed its move towards the trendline. So, a bounce from the trendline could reinforce a further downward move. By that time, the MACD indicator could nearly exhaust its sell signals that would allow us to expect a strong buy signal. At the same time, the buyers might receive a greenlight if the downward trendline is surpassed. The ongoing downward channel allows the pair to move towards the upper border 160 pips upwards. In other words, both the sellers and buyers could receive their signals on Monday.

The pound sterling is still sensitive to developments in the trade talks on a post-Brexit trade deal. Remarkably, today on Sunday there is still no information from Brexit negotiators Michel Barnier and David Frost. It is unclear whether they will again announce gridlock and continue the talks until any successful outcome or eventually announce a complete failure and terminate the talks. Either scenario will be bearish for the pound sterling. Personally, I reckon there is a slim chance for a trade deal between the UK and the EU. Any news on the Brexit front assures me of my viewpoint. On Friday, no macroeconomic event meaningful for the sterling took place. Earlier, UK Prime Minister Boris Johnson has already sent a message for the Britons to get ready for a hard Brexit.

On Monday, the economic calendar contains no economic data from the US and the EU. So, Monday is going to be a boring day. Nevertheless, official information on the Brexit talks could be reported by the negotiators. Anyway, beginners will be able to catch some trading opportunities. On Monday, GBP/USD could start an upward correction and even overcome the trendline. However, I foresee GBP weakness in the long term. The reason behind this prediction is that the British economy will suffer greatly without a trade deal with the EU. Everyone is aware of such gloomy prospects. The British Premier seems to be the only one who still insists that there is nothing wrong with hard Brexit.

The following scenarios are possible on December 14:

1) The chart reveals a new short-term bearish move with a clear-cut trendline and downward channel. Therefore, you would rather refrain from buying GBP/USD. Traders should wait at least until the price fixes above the trendline. Only then, the door will be open for long deals with targets at 1.3317 and 1.3388. This scenario is highly likely on Monday.

2) From my viewpoint, selling is more reasonable at present because there are a trendline and channel supporting a downtrend. Thus, a bounce from the trendline, especially with a sell signal by the MACD, could be used to open sell orders with downward targets at 1.3151 and 1.3056.

What's on the chart:

Support and Resistance levels are the levels that are targets when opening buy or sell orders. Take Profit levels can be placed near them.

Red lines are channels or trend lines that display the current trend and show which direction it is preferable to trade now.

Up / down arrows show whether the pair should be traded up or down when reaching or overcoming particular obstacles.

MACD indicator (10,20,3) - a histogram and a signal line. When they are crossed, this signals a market entry. It is recommended for use in combination with trend lines (channels, trend lines).

Important speeches and reports in the economic calendar can greatly influence the movement of the currency pair. Therefore, during their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.

Beginners in the forex market should remember that every trade cannot 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 14. Analysis of trade on Friday. Tips for

Trading 13 Déc 2020 Commentaire »

1-hour chart of EUR/USD

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EUR/USD rebounded from 1.2159 for five days in a row. The area from 1.2159 to 1.2177 has formed a resistance zone from where the price has rebounded five times. At first glance, it looks like the pair is on the verge of a new downward trend. Does it mean that beginners will be able to sell the pair at a beneficial price? In practice, things are much more complicated. Let me remind you that a few weeks ago EUR/USD was trading sideways at near one-year highs for 4 months straight. That time, there was a good chance to see a new downward trend. However, the price actually escaped the trading range upwards and resumes an uptrend. So, something similar is likely to happen this time. Last trading week, EUR/USD managed to correct 100 pips downwards following a 400-pips climb. Thus, the odds are that the pair is about to resume the uptrend again. Nevertheless, let me warn you that it is not recommended to open new long positions now until the price surpasses the area of 1.2159 – 1.2177. Unfortunately, at present there is neither a trendline nor a trend channel to recognize at least a short-term trend. The bearish move is a possibility but there are no signals for a downward move.

On Friday December 11, the economic calendar lacked any economic data neither from the US nor from the EU. Anyway, I've already told you that lately traders take little notice of economic reports. A day earlier, market participants neglected policy decisions of the ECB. This policy meeting in December was rather significant because the regulator published important forecasts. Oddly enough, instead of the expected weakness and sell-offs, EUR again carried on with its advance. Hence, the situation is erratic and the market is difficult to trade for beginners.

This Monday, the EU is due to post a report on industrial production for October. Again, traders will hardly pay attention to this report. Thus, the economic calendar will be of little importance to influence trading decisions. In other words, traders should watch whether EUR/USD will overcome the area of 1.2159 – 1.2177. If this actually happens, the pair will resume its uptrend. If no, we can expect a further 50-60 pips downward move.

The following scenarios are possible on December 14:

1)Long positions are out of the question now because the area of 1.2159 – 1.2177 has not been surpassed yet in 5 attempts. So, under the current market conditions we should wait until an uptrend comes into being. Then, it will be possible to trade following the uptrend. Otherwise, we should wait until the price surpasses the above-said area. Afterwards, we could open long positions with targets at 1.2208 and 1.2258.

2)Trading the bearish bias looks more logic now. Nevertheless, the overall outlook remains bullish. Thus, I assume that the bearish move is possible only for a short term. Still, we could benefit from this move on Monday with a downward target at near 1.2060 which is the last local low as the MACD indicator is generating a sell signal. Alternatively, we could wait for a new sell signal after an upward correction is over.

What's on the chart:

Support and Resistance levels are the levels that are targets when opening buy or sell orders. Take Profit levels can be placed near them.

Red lines are channels or trend lines that display the current trend and show which direction it is preferable to trade now.

Up / down arrows show whether the pair should be traded up or down when reaching or overcoming particular obstacles.

MACD indicator (10,20,3) - a histogram and a signal line. When they are crossed, this signals a market entry. It is recommended for use in combination with trend lines (channels, trend lines).

Important speeches and reports in the economic calendar can greatly influence the movement of the currency pair. Therefore, during their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.

Beginners in the forex market should remember that every trade cannot 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, GBP/USD – results of the week and future prospects

Trading 13 Déc 2020 Commentaire »

EUR/USD

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The pair spent the entire week in the area of a downward correction under the resistance of 1.2170 (record level). As a result, a small candle of uncertainty appeared. Perhaps, next week, the bearish players will continue to develop the correction. In this case, downward targets will serve as support for the daily short-term trend, on Monday it will be at 1.2108, the connection of the upper border of the monthly cloud and the daily Fibo Kijun (1.2018), the daily mid-term trend (1.1962) and the weekly short-term (1.1889). Since the weekly candle does not have a pronounced bearish character and bearish traders failed to produce a full-fledged rebound, the current corrective hitch can be interpreted as a pause and of bullish traders condensing forces for the next stage of the upward development. Therefore, you can expect players to push the upward movement upon overcoming the 1.2170-77 resistances. The next upward reference point will be 1.2555 (previous high of the month).

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The analyzed technical indicators in the current movement do not form the prerequisites for forming a divergence. The only exception is the OsMA indicator on the weekly timeframe, a rather impressive discrepancy between the indicator and the price chart is indicated here.

GBP/USD

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Bears had an advantage during the week, although it was difficult for them. However, the weekly candlestick is bearish. The pair retested the historic 1.32 milestone, which is now joining forces with the weekly short-term trend (1.3196), and closed below the daily Ichimoku gold cross. Eliminating the day's cross and overcoming 1.32 is now the top priority for bearish traders. Passing the daily cloud, strengthened by the weekly Fibo Kijun (1.3046), will be important. Failure to overcome the support could trigger another consolidation. Bullish players need to restore their positions in order to regain their initial advantage, taking possession of a cluster of levels around 1.3350 (lower border of the monthly cloud + daily cross). Only then will the question surface about testing the 1.3481-1.3538 area and bringing back the upward trend.

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Indicators have long shown how they are opposed to players trading to push the pair upward, despite the recent rally. As a result, divergences and bearish divergences appeared, and were formed at the current corrective decline. The development of a correction and a breakdown of the support trend line will lead to an increase in bearish sentiment.

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

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

Trading plan for the GBP/USD pair for the week of December 14-18. New COT (Commitments of Traders) report. London and Brussels

Trading 13 Déc 2020 Commentaire »

GBP/USD 24H.

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The GBP/USD currency pair has fallen by 200 points over the past week, although the fall could have been much stronger. On the other hand, given the general reluctance of markets to buy the US currency, such a fall is also a blessing. We have been expecting a fall in the pound for a long time, and the only reason for this expectation is that there was no trade deal on Brexit. And in such conditions, it was very strange to observe the strengthening of the pound. However, the fall has started, although it is not yet strong. From a technical point of view, the price went below the critical Kijun-sen line, which opens up certain prospects for bears. At the same time, everything will depend solely on the traders themselves and the major market players. The fact is that the deal looked "fantastic" from the very beginning. And we have been writing about this since March, the month when the negotiations started. So nothing has fundamentally changed since then. Yes, the pound has been growing for several months due to the "four types of crisis" in the US. But there is no denying that the UK economy is in no less bad shape than the US. Thus, we are still waiting for a global fall in the British currency.

COT report.

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During the last reporting week (December 1-7), the GBP/USD pair increased by 60 points. Although according to the latest COT report, this growth, on the contrary, is quite justified. During the reporting week, a group of non-commercial traders opened 2,866 new buy contracts and closed 9,189 sell contracts. Thus, the net position for non-commercial traders increased by 12 thousand contracts, which is very much for the British pound, given that the total number of contracts for the "Non-commercial" group is approximately 90 thousand. Thus, the mood of professional traders became sharply more "bullish", and the total number of contracts decreased. This suggests that there is still a very small number of major players who want to deal with the British currency at all. As for the indicators, they have been showing the absence of any trend for several months. In other words, professional traders do not increase purchases or sales in the long run. Thus, it is still impossible to draw long-term conclusions based on COT reports.

The fundamental background for the GBP/USD pair remained unchanged. During the week, it became known that the UK and the EU resumed negotiations and set the next deadline - December 13, that is, today. However, the resurrection has come, and no positive information has been received. It became known only that the parties did not manage to come closer to an agreement. There has probably been no progress on fishing, government support, and fair competition, as well as dispute resolution. Therefore, there is no reason for the pound to become more expensive. But there are new reasons to get cheaper. First, the pound remains overbought. Secondly, it has been getting more expensive since March. Third, the fundamental background puts pressure on it. Well, all the other news and macroeconomic statistics do not matter now. An important factor is the price rebound from the level of 1.3481, which is the previous local maximum. Traders failed to get the pair through this level, so this is an additional reason for the pound to fall. Thus, we believe that the pound will continue to fall this week. Although everything will depend again on the traders themselves. If they resume buying the pound for some reason known to them, nothing can be done about it, and this currency will continue to strengthen. You should also wait for official information from Michel Barnier and David Frost, who will have to make a summary: will the negotiations continue at all, or is there a fat point in this story? We still believe that negotiations will continue in one form or another for the entire year 2021. The question is, how will it be arranged?

Trading plan for the week of December 14-18:

1) Since the price is fixed below the critical line, further upward movement is now in question. But at the same time, we cannot say that the upward trend has ended. Thus, if the pound/dollar pair returns to the area above the critical line, we will be forced to state the resumption of the upward movement with the targets of the resistance levels of 1.3526 and 1.3734.

2) Sellers are still quite weak. The first steps towards a new downward trend have been made, but much still depends on the fundamental background and the reaction (or lack thereof) to it. In the 4-hour timeframe, the downward trend has already been formed, however, it is quite unstable and unconvincing. Markets continue to be quite nervous about the deal, negotiations, and the future of the British economy. Therefore, now the auction is "stormy".

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 14-18. New COT (Commitments of Traders) report. The ECB meeting

Trading 13 Déc 2020 Commentaire »

EUR/USD 24H.

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Over the past week, the EUR/USD pair has fallen by "as much as" 10 points. By and large, the price spent most of the week (the whole week) in a fairly narrow price range, which is especially clearly visible on the 24-hour timeframe. Thus, after the pair updated the highs of the year and reached 2.5-year peaks, even a downward correction did not begin. We have already encountered a similar situation. Just a couple of weeks ago, the pair was on a narrow side channel for four months. Then, the price first reached its annual highs, after which it simply traded in a 200-point side channel. Thus, we are not surprised at all at what is happening now with the pair. On the one hand, a downward correction has been brewing for a long time. On the other hand, the fundamental background has long implied a slight fall in the euro currency. On the other hand, market participants do not want to invest in the dollar and nothing can be done about it. Thus, at this time, the upward trend continues no matter what. We remind traders that any fundamental hypothesis must be supported by technical factors.

COT report.

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During the last reporting week (December 1-7), the EUR/USD pair increased by 180 points, which is quite a lot for it. Well, the latest COT report for the same period for the third time in a row showed an increase in the net position of non-commercial traders. This means that the mood of professional market players is again becoming more "bullish", they are again looking towards buying the European currency. Although from the very beginning of September, they did nothing but reduce long positions in the euro. But the fact remains. So far, instead of completing the upward trend, we have received its resumption, which does not change anything in the current situation. During the reporting week, the "Non-commercial" group of traders opened 12,736 new buy contracts and closed 278 sell contracts. Thus, the net position increased by 13 thousand. Both indicators in the illustration have started to show an increase again, which signals the continuation of the upward movement. However, the green and red lines of the first indicator are still quite far from each other, which is a signal that the upward trend is about to end. The euro remains extremely overbought, its growth can best be described by the word "speculative". Thus, in any case, we are waiting for the end of the upward trend. And in any case, you need to wait for technical signals.

What can we say about the fundamental background of the past trading week? It was potentially quite important and significant. However, looking at the chart of the pair's movement over this period, can we say that the markets were actively trading the pair? Consequently, all news, reports, and publications were ignored again. We have long been used to ignoring macroeconomic statistics. But this week there were at least two major events that traders could expect to react to. The most important, of course, was the ECB meeting. Moreover, this time it was not a "passing" meeting, but with several decisions that affect monetary policy. Of course, the most important decision was to expand the emergency PEPP program by 500 billion euros and extend its validity by 9 months. In essence, this means new cash injections into the economy through the purchase of securities. That is, the ECB will turn on the printing press again and flood the economy with money to stimulate it. Thus, this factor itself is "bearish". First, the number of euros will increase, which will increase the supply of this currency in the foreign exchange market. Secondly, the measures taken by the ECB are "dovish", which is also a negative for the euro. However, the euro could not even correct down this week. Thus, everything remains the same as a week ago: there is a groundless upward trend, possibly supported exclusively by speculators (or major players, like the Central Bank, who make deals based on their reasons); we need to wait for technical signals about its completion.

Trading plan for the week of December 14-18:

1) The pair's quotes continue their upward movement 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 there.

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