Short-term analysis on LTC/USD for Sunday January 31, 2021

Trading 31 Jan 2021 Commentaire »

LTC/USD is bouncing off important Fibonacci support. Price can very well have formed a higher low and is about to start for the next leg higher. Resistance remains important at $141 by the medium-term downward sloping trend line. Breaking above it will open the way for a move towards $160 and higher.

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Red line - resistance

Green rectangle - support

LTC/USD is bouncing off the 61.8% Fibonacci retracement. So far we observe price forming a higher low. If price breaks above $141-$143 we should raise the important support level from $118.50 to $127.60 Saturday's lows. Upside potential for LTC/USD is at $155-$170 area. If recent low at $127.60 fails to hold, we should expect price to test the important green rectangle support area. In the short-term a bullish bet with stops at $127.60 are favored as the upside potential provides good risk reward ratio.

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Trading plan for GBP/USD for week of February 1 – 5. New COT report (Commitments of Traders). GBP trading firmly at 2.5-year

Trading 30 Jan 2021 Commentaire »

GBP/USD 4H.

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This trading week, GBP/USD has not made any higher highs but it has been holding firmly at near 2.5-year highs which is the level of 1.3758. Thus, the uptrend is still going on but the price is not logging higher highs. GBP/USD has been stuck in a 100-pips trading range. The question is open where it is going to move in the near time. On the one hand, it looks like the pair could tumble in the nearest days. If we look at a daily chart, we can clearly see that a non-stop upward move has been going on for 90 trading days that is longer than 3 months. Interestingly, the price hasn't made any downward correction or even a pullback. Thus, from the technical point, a downward correction is looming. The Ishimoku indicator's lines are of little importance now for analysis and forecasts because the indicator forms false signals in the flat market. Besides, a roller coaster turned into a moderate seesaw over the recent weeks. All in all, GBP/USD looks like the strangest currency pair now in terms of its dynamic.

COT report

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In the week of January 19 – 25, GBP/USD rose by 80 pips. This is a modest growth, but the pair has been steadily advancing for a long time. A new COT report disappointed traders again. Let me remind you that over the recent 2-3 months, an absolute majority of reports has logged minor changes. At the same time, we cannot say that sentiment of large traders have been stable. The green and red lines of the first indicator, which display changes in net positions of Non-commercial and Commercial groups, clearly reveal frequent changes in market sentiment. These lines frequently reverse their trajectories. It means that large market players are wondering what to do with the pound sterling. Earlier, I told you that things depend on demand for both GBP and USD. That's what COT reports don't display.

If hypothetically demand for GBP declines, but demand for USD also decreases at the same time, this will not lead to GBP weakness. This is what's happening over recent months. Professional traders are unable to state their preferences and rush to revise portfolios. Their sentiment cannot be termed stable bullish. Nevertheless, GBP is steadily moving up. In fact, it has appreciated 10 cents over the recent 3-4 months. In the reported week, traders opened 2,500 new long contracts on GBP/USD and 6,500 new short contracts. Therefore, the net position decreased by 4,000. Sentiment of non-commercial traders turned bearish. Remarkably, the sterling remains unaffected.

It doesn't make sense to discuss the fundamental background for GBP/USD. This week, I gave you comparative analysis of the UK and the US economies after Q2 2020. We came to a conclusion that the US economy has recovered to a less degree because it had contracted to a larger degree. The British economy also got a punch in Q2. However, events of the latest 10 months confirm that traders don't attach great importance to that. Amazingly, market participants take little notice of grave factors like Brexit, a slump in the UK economy in Q2 and Q4, a challenge of the Bank of England about negative interest rates, soaring coronavirus daily rates, new mutant strain, three lockdowns one of which is still going on.

As for the euro, it corrected downwards in the early 2021. Unlike EUR, the pound sterling hasn't done it yet. Thus, the sterling had been following an illogical, non-retraceable, and unreasonable upward trajectory which can persist indefinitely. One of the reasons behind this move could be the fact that $4 trillion has been pumped into the US economy. Such a steady advance is termed speculative growth. At present, I'm poised for the scenario about the sterling's fall which could be steep and unexpected. What I mean to say is that you should ignore placing stop loss levels when trading upwards.

Trading plan for week February 1 – 5:

1)The currency pair doesn't have any obstacles to retain the upward trajectory. Thus, according to a 4-hour chart, upward targets for GBP/USD are seen at 1.3776 and 1.3874. Meanwhile, the pair is trading in the flat market. So, it would be better to trade using junior time frames where you can promptly monitor changes in trading sentiment. Please be aware that the sterling could plunge anytime soon.

2)Meanwhile, sellers are quite weak. Recently, they lack strength even to form a downward correction. Hence, according to 4-hour and 24-hour timeframes, it is out of the question to plan trading downwards. However, it is possible to consider trading downwards in a 1-hour chart when a downward move is underway.

Notes for the pictures

The resistance/support levels are the target levels when opening long/short positions. You can place take profit levels next to them.

Indicators Ishimoku, Bollinger bands, MACD

Areas of support and resistance are the ones from where the price has rebounded or has been rejected a few times.

Indicator 1 in the COT charts is a size of net positions for each category of traders.

Indicator 2 in the COT charts is a size of net positions for the non-commercial group.

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

Trading plan for EUR/USD for week February 1 – 5. New COT report (Commitments of Traders). USD in disgrace braced for new

Trading 30 Jan 2021 Commentaire »

EUR/USD 4H.

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Last trading week, EUR/USD climbed a few dozens of pips. But this is not the most important. The thing is that a promising bearish trend which originated in 2021 can complete in the nearest time or perhaps has been already over. Having declined to 1.2060, the pair made another attempt to break it, though without any success. Moreover, at the second attempt, EUR/USD failed even to reach it. The bears were trying to approach this level for two days and each time was a failure. I spotted candlesticks with very long shadows on January 27 – 28. This means that the bears were exhausted to repeat the test of 1.2060. If so, either the downtrend is over or it needs serious fundamental factors to continue. From the technical point, the pair seems to have completed a downward correction after 2-3 months of the uptrend. Now the pair is likely to get ready for a new round of the uptrend. I assume it is premature to give up on the US dollar. Nevertheless, the fact is that the US currency is extending a losing streak.

COT report

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For the trading week of January 19 – 15, EUR/USD rose by 60 pips. Thus, the outlook for the long-term uptrend is still valid. So, it can resume anytime. The COT report mirrors trading sentiment of large market players. The recent report does not reveal waning interest in the single European currency. On the contrary, two weeks ago the COT report logged a sharp increase of the bullish sentiment among non-commercial traders. In that week, they opened 8,000 more long contracts. The latest COT report which was released overnight again did not show great changes with the overall bullish sentiment. This time, non-commercial traders opened 3,300 long contracts on EUR/USD and closed 1,200 short contracts.

All in all, the net positions for professional traders surged by 4,500. Not too many, but not too few. In essence, such figures do now allow analysts to affirm that the uptrend is over. Of course, it does not mean that EUR is unlikely to fall until large market players trim the number of buy contracts. Judging by the COT report, we cannot make a conclusion about a completion of the uptrend.

The US dollar came under spotlight for the whole trading week. Just a few events happened last week, but some of them were crucial for the US dollar. Unfortunately, none of them supported the greenback. For your reference, some analysts reckon that the severe downturn in the US economy in Q2 2020 is to blame for protracted USD weakness over the last 10 months. Another reason is massive cash injections into the US economy. Hence, if these suggestions are right, a new round of cash injections will trigger another decline of the greenback. Such prospects are around the corner. Indeed, Congress will hardly approve the stimulus package worth $1.9 trillion proposed by Joe Biden. To sum up, in addition to the financial aid of $4 trillion in 2020 allocated in 2020, the government will provide a relief package of nearly $2 trillion this year. This will erase 5-6 cents of the US dollar against the euro.

Apart from Joe Biden and Congress, the greenback was hurt by Treasury Secretary Janet Yellen. She stated that the US would not try to impact on the US dollars' forex rate. Besides, Federal Reserve Chair Jerome Powell sounded pessimistic at the press conference unveiling the policy update of the latest policy meeting. The final nail in the coffin came from the US GDP report. The actual figure undershot the expected score. The US national output expanded 4.0% in Q4 2020. On the one hand, it is a decent growth, but on the flip side, the reading was worse than expected. Bearing in mind a sharp contraction in Q2 2020, the US economy is still far below the pre-pandemic levels. That's what Jerome Powell told about on Wednesday. Last but not least, the coronavirus pandemic is still raging across the world.

Trading plan for week February 1 – 5:

1)This week, EUR/USD make attempts to carry on with the downtrend. However, all efforts were in vain. At the end of the trading week, the pair was trapped in a narrow range, so the market looked like flat. All lines of the Ishimoku indicator are close to each other. Thus, they don't have enough power and we cannot trade the pair with its help. Beginners are recommended to trade from 1.2060 considering Bollinger bands. If this level is not surpassed and Bollinger bands could reverse upwards, this will mean a strong likelihood of the new uptrend with the first upwards targets at resistance of 1.2223 and 1.2274.

2)The downtrend seems to have begun but it did not last for long. While the price is above 1.2060, we cannot speak about a new round of the downtrend. If the price manages to breach it, we will be able to trade downwards with the downward target at support of 1.2002. Make sure you trade cautiously as the US dollar finds it hard to gain ground.

Notes for the pictures

The resistance/support levels are the target levels when opening long/short positions. You can place take profit levels next to them.

Indicators Ishimoku, Bollinger bands, MACD

Areas of support and resistance are the ones from where the price has rebounded or has been rejected a few times.

Indicator 1 in the COT charts is a size of net positions for each category of traders.

Indicator 2 in the COT charts is a size of net positions for the non-commercial group.

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

Dollar Exhibits Mixed Trend Against Peers

Trading 30 Jan 2021 Commentaire »

The U.S. dollar was a bit sluggish on Friday, as major currencies reacted to a slew of economic data from across the globe.

Additionally, markets awaited announcements regarding stimulus, updates on vaccine supplies and continued to track news about coronavirus cases.

In U.S. economic news, a report from the Commerce Department showed personal income climbed by 0.6% in December after tumbling by a downwardly revised 1.3% in November. Economists had expected personal income to inch up by 0.1% compared to the 1.1% slump originally reported for the previous month.

The report also said personal spending dipped by 0.2% in December after falling by a downwardly revised 0.7% a month earlier. Economists had expected spending to decrease by 0.4%, matching the drop originally reported for the previous month.

The University of Michigan's report showed consumer sentiment deteriorated by slightly more than initially estimated in the month of January. The report said the consumer sentiment index for January was downwardly revised to 79.0 from the preliminary reading of 79.2.

Economists had expected the consumer sentiment index to be unrevised from the preliminary reading, which was still down from 80.7 in December.

The dollar index, which fell to 90.36 from a high of 90.78, recovered some ground subsequently and was last seen hovering around 90.55, up 0.11% from previous close.

Against the Euro, the dollar, the euro was up marginally, fetching $1.2133 a unit, compared to $1.2123 Thursday evening. In economic news, the German economy managed to expand in the fourth quarter avoiding a double-dip recession, despite the second wave of coronavirus triggered another lockdown at the end of 2020.

According to preliminary data from the statistical office Insee, the French economy contracted less-than-expected in the fourth quarter.

The dollar firmed up to 1.3701 against Sterling, recovering after trading at $1.3751 a unit of the British currency in the European session.

The Yen was weaker at 104.74 a dollar, sliding from 104.26 a dollar on Thursday. Japan's consumer confidence decreased to the lowest level in five months in January, data from the Cabinet Office showed. On a seasonally adjusted basis, the consumer confidence index decreased to 29.6 in January from 31.8 in December.

Against the Aussie, the dollar gained in strength. The AUD-USD pair was quoting at 0.7639, after trading at 0.7689 in the previous session.

The Swiss franc was weaker at 0.8910, sliding from 0.8888. The KOF Economic Barometer in Switzerland slid to its lowest level since July, falling to 96.5 in January of 2021 from a downwardly revised 104.1 in the previous month and much worse than market expectations of 102.

The Loonie firmed up to 1.2795, gaining from 1.2830 a dollar. The Canadian economy grew 0.7% over a month earlier in November of 2020, following a 0.4% expansion in the previous month and compared to market expectations of a 0.4% gain. GDP fose for the seventh consecutive month following the biggest contraction on record in March and April.


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Treasuries Extend Pullback Seen In Previous Session

Trading 30 Jan 2021 Commentaire »

Following the notable pullback seen in the previous session, treasuries saw further downside during trading on Friday.

Bond prices regained some ground after coming under pressure in early trading but remained negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.6 basis points to 1.093 percent.

The early weakness among treasuries came as traders continue to react to Thursday's upbeat economic data, including a Commerce Department showing U.S. GDP grew 4.0 percent in the fourth quarter.

The Commerce Department released a separate report this morning showing a much bigger than expected increase in U.S. personal income in the month of December, although the report also showed a modest decrease in personal spending.

The report said personal income climbed by 0.6 percent in December after tumbling by a downwardly revised 1.3 percent in November.

Economists had expected personal income to inch up by 0.1 percent compared to the 1.1 percent slump originally reported for the previous month.

Meanwhile, the Commerce Department said personal spending dipped by 0.2 percent in December after falling by a downwardly revised 0.7 percent in November.

Economists had expected spending to decrease by 0.4 percent, matching the drop originally reported for the previous month.

The University of Michigan also released a report showing consumer sentiment deteriorated by slightly more than initially estimated in the month of January.

The report said the consumer sentiment index for January was downwardly revised to 79.0 from the preliminary reading of 79.2.

Economists had expected the consumer sentiment index to be unrevised from the preliminary reading, which was still down from 80.7 in December.

Another report released by the National Association of Realtors on Friday showed pending home sales in the U.S. fell by more than expected in the month of December.

NAR said its pending home sales index slipped by 0.3 percent to 125.5 in December after tumbling by 2.5 percent to 125.9 in November. Economists had expected the index to edge down by 0.1 percent.

Pending home sales decreased for the fourth consecutive month but were still up by 21.4 percent compared to the same month a year ago.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

The Labor Department's closely watched monthly jobs report is likely to attract attention next week along with reports on manufacturing and service sector activity, factory orders and the U.S. trade deficit.


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

Oil Futures Fail To Hold Early Gains, Settle Lower On Demand Worries

Trading 30 Jan 2021 Commentaire »

Crude oil futures settled lower on Friday as worries about outlook for energy demand due to rising coronavirus cases and delay in vaccine supplies weighed on prices.

Oil prices were also weighed down by uncertainty about additional stimulus from Joe Biden administration happening anytime soon.

However, stronger than expected GDP data from Germany and France limited oil's downside.

West Texas Intermediate Crude oil futures for March ended down $0.14 or about 0.3% at $52.20 a barrel.

Brent crude futures were down $0.16 or about 0.29% at $54.94 a barrel a little while ago.

Crude oil futures gained about 7% in January 2020.

According to Baker Hughes, the number of active U.S. rigs drilling for oil rose by six to 295 this week, rising for the ninth straight week. The total active U.S. rig count rose to 384, adding six this week.


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Gold Futures Snap Six-session Losing Streak, Settle Modestly Higher

Trading 30 Jan 2021 Commentaire »

Gold futures moved higher on Friday, snapping a six-session losing streak, as investors sought the safe-haven asset following a sharp surge in speculative trading in stocks by retail investors.

Stock prices took a beating as investor sentiment was jolted by a huge increase in speculative trading from retail investors organized over online forums, such as Reddit.

According to data analytics company S3, hedge funds and other large investors that bet against GameStop have lost more than $5 billion after a cohort of amateur investors joined forces to inflate the price of shares in the U.S. video game chain.

The dollar index, which dropped to 90.36 in the European session from a high of 90.78, recovered subsequently and was last seen hovering around 90.55, up 0.11% from previous close.

Gold futures for April ended up $9.10 or about 0.5% at $1,850.30 an ounce. Gold futures shed about 2.4% in January.

Silver futures for March ended higher by $0.992 at $26.914 an ounce, while Copper futures for March settled at $3.5560 per pound, down $0.0220 from previous close.

In U.S. economic news, a report from the Commerce Department showed personal income climbed by 0.6% in December after tumbling by a downwardly revised 1.3% in November. Economists had expected personal income to inch up by 0.1% compared to the 1.1% slump originally reported for the previous month.

The report also said personal spending dipped by 0.2% in December after falling by a downwardly revised 0.7% a month earlier. Economists had expected spending to decrease by 0.4%, matching the drop originally reported for the previous month.

The University of Michigan's report showed consumer sentiment deteriorated by slightly more than initially estimated in the month of January. The report said the consumer sentiment index for January was downwardly revised to 79.0 from the preliminary reading of 79.2.

Economists had expected the consumer sentiment index to be unrevised from the preliminary reading, which was still down from 80.7 in December.


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

U.S. Pending Home Sales Dip More Than Expected In December

Trading 29 Jan 2021 Commentaire »

A report released by the National Association of Realtors on Friday showed pending home sales in the U.S. fell by more than expected in the month of December.

NAR said its pending home sales index slipped by 0.3 percent to 125.5 in December after tumbling by 2.5 percent to 125.9 in November. Economists had expected the index to edge down by 0.1 percent.

Pending home sales decreased for the fourth consecutive month but were still up by 21.4 percent compared to the same month a year ago.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

"Pending home sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale," said NAR chief economist Lawrence Yun. "There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings."

He added, "This elevated demand without a significant boost in supply has caused home prices to increase and we can expect further upward pressure on prices for the foreseeable future."

The continued decrease in pending home sales was led by a steep drop in pending sales in the Midwest, which plunged by 3.6 percent.

Meanwhile, pending home sales in the South and West were largely unchanged, while pending home sales in the Northeast jumped by 3.1 percent.

With mortgage rates expected to remain low, Yun expects existing home sales to reach 6.49 million in 2021, which would reflect a 15 percent spike from 5.64 million in 2020.

"There will also be slower home price appreciation, likely 6.6%, as increased confidence from homebuilders will ultimately lead to an increase in housing starts," Yun said.


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Indian Economy To See 'V'-shaped Recovery, Govt's Economic Survey Says

Trading 29 Jan 2021 Commentaire »

India's economy is set for a 'V'-shaped recovery in the next fiscal year, thanks to a massive vaccination drive and an expected rebound in the services sector, the Finance Ministry's latest Economic Survey report said Friday.

Real GDP is set to grow 11.0 percent n 2021-22 after an estimated 7.7 percent contraction in 2020-21 financial year.

Elsewhere on Friday, the statistics ministry revised the 2019-20 GDP growth estimate to 4.0 percent from 4.2 percent. In 2018-19, GDP grew 6.8 percent.

"The V-shaped economic recovery is supported by the initiation of a mega vaccination drive with hopes of a robust recovery in the services sector and prospects for robust growth in consumption and investment," the ministry said.

The economy would take two years to reach and go past the pre-pandemic level, the report said.

Earlier this week, the IMF forecast 11.5 percent growth for the Indian economy in 2021-22, which would be the fastest among major economies, and 6.8 percent for 2022-23. The economy is estimated to have shrunk 8 percent in 2020-21.

The survey showed that agriculture output is set to grow 3.4 percent in 2021-22, while output in industry and services are expected to contract 9.6 percent and 8.8 percent, respectively.

Further, the ministry forecast a current account surplus of 2 percent of GDP in the fiscal year 2021, which will mark a historic high after 17 years. The Finance Minister is set to present the latest budget on February 1.


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U.S. Consumer Sentiment Drops Slightly More Than Initially Estimated In January

Trading 29 Jan 2021 Commentaire »

Consumer sentiment in the U.S. decreased by slightly more than initially estimated in the month of January, according to revised data released by the University of Michigan on Friday.

The report said the consumer sentiment index for January was downwardly revised to 79.0 from the preliminary reading of 79.2.

Economists had expected the consumer sentiment index to be unrevised from the preliminary reading, which was still down from 80.7 in December.

"The overall level of the Sentiment Index has shown only relatively small variations since the pandemic started, averaging 81.5 in 2020, marginally above January's 79.0," said Surveys of Consumers chief economist Richard Curtin, who acknowledged levels are well below the average of 97.0 from 2017 to 2019.

He added, "Importantly, the level of key confidence indicators remained well above prior cyclical lows despite the sudden historic collapse in economic activity."

Curtin credited mask wearing and social distancing, the quick substitution of home for office work, and the prompt distribution of generous federal benefits for the overall stability of consumer.

"Although the nation is still being ravished by the pandemic, and the nation's cooperative reactions have been far from perfect, consumers have helped to dissipate the potential for further harm," Curtin said.

He continued, "Despite continuing job and income disparities, as precautionary motives begin to ease, accumulated savings will spark a significant gain in spending in late 2021."

The report said the current economic conditions index fell to 86.7 in January from 90.0 in December, while the index of consumer expectations edged down to 74.0 from 74.6.

On the inflation front, one-year inflation expectations jumped to 3.0 percent in January from 2.5 percent in December and five-year inflation expectations rose to 2.7 percent from 2.5 percent.

The Conference Board released a separate report on Tuesday showing an unexpected improvement in U.S. consumer confidence in the month of January, reflecting an increase in optimism about the short-term economic outlook.

The Conference Board said its consumer confidence index climbed to 89.3 in January from a downwardly revised 87.1 in December.

The increase surprised economists, who had expected the index to edge down to 88.5 from the 88.6 originally reported for the previous month.

"Consumers' appraisal of present-day conditions weakened further in January, with COVID-19 still the major suppressor," said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.

She added, "Consumers' expectations for the economy and jobs, however, advanced further, suggesting that consumers foresee conditions improving in the not-too-distant future."


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