Analytics and trading signals for beginners. How to trade GBP/USD on January 5? Analysis of Monday. Getting ready for Tuesday

Trading 04 Jan 2021 Commentaire »

Hourly chart of the GBP/USD pair

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The GBP/USD pair on Monday, January 4, slowly moved upward for half a day, renewed its 2.5-year highs, and then it sharply fell. The pound was down 150 points. However, despite such a strong drop in the pair's quotes, we would not jump to conclusions about the beginning of a new downward trend. If you look at the 4-hour timeframe, you can clearly see that the pair regularly moves 300-400 points in different directions for short periods of time in the last couple of months. We call this phenomenon "high volatility swing". Thus, it is possible that it just started another downward spiral of these "swings" at this time. In any case, novice traders are advised to trade in accordance with the strategy. Since the pair's quotes have settled below the upward trend line today, and the trend has changed to a downward trend. The red circle in the chart shows the signal by which to open short positions. Those who followed our recommendations are currently in profit of about 60 points. We believe this is an excellent result and sell trades can be closed. Next, you should wait for a correction and a new sell signal, this time from the MACD.

Fundamentally, there is still absolutely nothing to say now. More precisely, there is plenty of important and interesting information, but most of the traders continue to ignore it. For example, why did the pound (together with the euro) fall today? It is logical to assume that because of some news from the US. But America did not report anything interesting. Meanwhile, another wave of coronavirus is raging in the UK, this time of a new strain. The authorities are going to tighten the quarantine, and the British economy will again be under a massive blow. However, could this news have an impact on the pound? It could, but why exactly today, when 50-55,000 new cases of the disease have been recorded every day in Britain for almost a week, and a new strain has already been known a couple of weeks ago? Thus, we do not link Britain's latest news with the pound's decline. Naturally, the index of business activity in the UK manufacturing sector did not have any impact on the course of trading.

No major releases scheduled in the UK on Tuesday, January 5, and only the ISM Manufacturing PMI will be released in the US. Traders' attention is slowly switching again to reports on the number of cases of COVID-2019. In America, the epidemiological situation remains extremely dire too.

Possible scenarios for January 5:

1) Buy orders have lost their relevance, since the pair's quotes have settled below the upward trend line. Thus, in order to be able to consider long positions, you should wait for a new upward trend or the end of the downward trend. This scenario is not expected in the next 24 hours.

2) Selling became relevant as traders crossed the trend line. Thus, beginners could open sell orders upon a signal to break the trend line. At the moment, they can already close these trades at a profit of 50-60 points, because if you wait for the MACD indicator to turn to the upside, you can lose half of the profit - the indicator may be very late with the signal.

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 January 5? Analysis of Monday. Getting ready for Tuesday

Trading 04 Jan 2021 Commentaire »

Hourly chart of the EUR/USD pair

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The EUR/USD pair increased by 70 points on Monday, afterwards it fell and started a downward movement. The first trading day of 2021 went by without updating the 2.5-year highs, although the pair came close to them during the day. However, it rebounded from the previous local high near the 1.2309 level and started a new round of downward movement. We remind you that the price had previously settled below the upward trend line, so the trend, according to this signal, changed to a downward trend. So now we should consider short positions, which we proposed to do in yesterday's review. However, we had to wait a long time for a new sell signal, since the pair was rising for most of the day. However, a few hours ago the MACD indicator turned down, which served as a sell signal. Thus, those novice traders who have already taken short positions have gained a small profit. Given the rather sharp and strong character of the downward movement that has begun, we can assume that it will continue. Therefore, it is better to keep sell orders open for now.

The EU and the US released reports on business activity in manufacturing areas. The European index turned out to be slightly below the forecasted value, but much higher than the key level of 50. Recall that the sector is considered to be growing when the result is above the value of 50, while it declines when the result is below. Thus, any value above 50 is a good value. The index was 57.1 in the US, which is slightly higher than the forecast value, but in general it does not matter. These reports are not the most important. The main thing was to make sure that there are no unexpected reductions in production areas. There were no more important news and macroeconomic reports during the day.

The US will publish another PMI on Tuesday, January 5, this time the ISM Manufacturing Index, which is considered more important than the one released today. However, as we said above, if nothing unexpected happens, the value of the ISM index will also turn out to be quite high, certainly above the level of 50. Germany will also publish data on retail trade for November, as well as on changes in the number of unemployed and the unemployment rate. But this is just one country out of 27, so the impact on the European currency rate will be minimal or even absent.

Possible scenarios on January 5:

1) Long positions have lost their relevance at the moment, as quotes have settled below the trend line, and the previous local highs have not been updated. Thus, in order to be able to re-consider buying the pair, you need to wait for a new upward trend or an eloquent cancellation of the downward trend that exists at the given time.

2) Trading for a fall looks more appropriate right now. Short positions should have already been opened by a sell signal from the MACD indicator. So now you are advised to keep short positions open today and tomorrow, with targets near the support level of 1.2185. Or before the MACD indicator turns up. In order to avoid possible losses (trades will still be left overnight), you are advised to place a Stop Loss order above the 1.2309 level.

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

Mexico Manufacturing PMI At 3-month Low

Trading 04 Jan 2021 Commentaire »

Mexico's manufacturing sector contraction deepened in December amid limited demand, job cuts and decline in output, survey data from IHS Markit showed on Monday.

The purchasing manager's index for the manufacturing sector dropped to a three-month low of 42.4 from 43.7 in November. A reading below 50 signals decline in activity in the sector.

"With domestic issues exacerbated by the pandemic, monthly rates of reduction in December for output, new orders and employment were all among the sharpest seen since data collection started in April 2011," Pollyanna De Lima, economics associate director at IHS Markit, said.

Meanwhile, firms turned optimistic regarding the growth outlook on expectations that the Covid-19 pandemic could subside as several countries across the world have started vaccination against the coronavirus.

IHS Markit forecast 3.7 percent growth in Mexico's output this year. The research firm also expects an upward revision should there be favorable negotiations between Mexico and the US once the new US administration takes over, De Lima said.


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

Colombia Manufacturing Growth Slows Slightly

Trading 04 Jan 2021 Commentaire »

Colombia's manufacturing sector expansion lost some steam in December amid a slowing in output growth, survey data from IHS Markit showed on Monday.

The Davivienda purchasing manager's index for the manufacturing sector dropped to 51.8 from 52.1 in November. A reading above 50 suggest growth in the sector.

The Colombian manufacturing sector expanded for the seventh month in a row.

New orders grew for a consecutive third month and at the fastest pace since July, thanks to better demand and restocking efforts of clients.

Meanwhile, production growth slowed due to difficulties in procuring some key materials.

Employment grew for a third month, but at a slightly slower pace than in November.

"Firms are positive about the outlook, as evidenced by an improvement in business confidence and initiatives to replace staff laid off at the onset of COVID-19," Pollyanna De Lima, economics associate director at IHS Markit, said.

"Companies have, however, some concerns which are centered on their ability to lift safety stocks, a second spike of cases before a vaccine roll-out and a slow economic recovery."


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

*Mexico December IHS Markit Factory PMI At Three-month Low 42.4 Vs. 43.7 In November

Trading 04 Jan 2021 Commentaire »

Mexico December IHS Markit Factory PMI At Three-month Low 42.4 Vs. 43.7 In November


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

U.S. Construction Spending Climbs Amid Jump In Spending On Residential Construction

Trading 04 Jan 2021 Commentaire »

With a jump in spending on private construction more than offsetting a modest drop in spending on public construction, the Commerce Department released a report on Monday showing a continued increase in U.S. construction spending in the month of November.

The report said construction spending climbed by 0.9 percent to an annual rate of $1.459 trillion in November after surging up by 1.6 percent to a revised rate of $1.447 trillion in October.

Economists had expected construction spending to increase by 1.0 percent compared to the 1.3 percent jump originally reported for the previous month.

The continued increase in construction spending came as spending on private construction shot up by 1.2 percent to an annual rate of $1.112 trillion.

Spending on residential construction spiked by 2.7 percent to a rate of $658.1 billion, more than offsetting a 0.8 percent drop in spending on non-residential construction to a rate of $453.8 billion.

"Strong residential activity has driven construction past pre-pandemic levels, but non-residential outlays remain nearly 6% below their early 2020 pace," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, "We expect this divergence in construction spending to narrow a bit as we move through 2020 as some recovery in non-residential outlays is expected to take hold, particularly in private spending."

Meanwhile, the Commerce Department said spending on public construction edged down by 0.2 percent to an annual rate of $347.6 billion.

The drop in spending on public construction came even though spending on educational construction rose by 0.3 percent to a rate of $86.7 billion and spending on highway construction jumped by 1.8 percent to a rate of $97.5 billion.

"Public outlays will likely continue to be constrained by tight state and local budgets despite a better than expected performance for revenues during the pandemic," said Vanden Houten.


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

Bank Of Israel Leaves Key Rate Unchanged

Trading 04 Jan 2021 Commentaire »

Israel's central bank left its key interest rate unchanged on Monday, and said it will expand the use of its existing policy tools and also launch new ones.

The Monetary Committee decided to keep the interest rate unchanged at 0.1 percent, the Bank of Israel said in a statement. The previous change in the interest rate was a 15 basis points reduction in April last year.

The central bank noted that the fast pace of the inoculation process against the coronavirus in Israel increases the optimism regarding a rapid return of the economy to a path of growth in the coming year.

But, the risks to economic activity remain high, and the adverse impact on the economy, and particularly on the labor market, is expected to be prolonged, the bank added.

"The Committee will therefore continue to utilize a range of tools in order to increase the extent of the monetary policy accommodation and to ensure the continued orderly functioning of the financial markets," the BoI said.

"The Committee will expand the use of the existing tools, including the interest rate tool, and will operate additional ones, to the extent that it assesses that it is necessary in order to achieve the monetary policy goals and to moderate the adverse economic impact resulting from the crisis."

Under a rapid vaccination scenario, the central bank projected GDP growth at 6.3 percent next year and 5.8 percent in the year after. In a slow vaccination scenario, economic growth would be 3.5 percent this year and 6.0 percent next year.

"In view of the fast pace of inoculations so far, it seems that the rapid inoculation scenario is more likely to come about than the slow inoculation scenario," the bank said. The BoI Research Department also projected the interest rate to remain very low at 0-0.1 percent, and forecast that the bank will continue to enhance the extent of monetary policy accommodation as needed.

The central bank expects the appreciation of the shekel to have some impact on exports going forward and the continued strengthening to lead to a further slowing of inflation.


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

Norway Industrial Expansion Slows Slightly

Trading 04 Jan 2021 Commentaire »

Norway's manufacturing sector growth remained broadly unchanged in December, defying expectations for a modest improvement, survey data from the logistics association NIMA showed on Monday.

The DNB/NIMA purchasing manager's index for the manufacturing sector dropped to 51.9 from 52.0 in November. Economists had expected the index to climb to 52.3.

A reading above 50 signals expansion in the sector.

The underlying trend remained positive, NIMA said.

That said, the sub-indexes for new orders and production declined sharply in December. The index for employment increased.


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

Denmark Manufacturing Sector Shrinks Sharply

Trading 04 Jan 2021 Commentaire »

Denmark's manufacturing sector contracted at a steep rate in December amid sharp declines in new orders and production, survey data from the logistics association DILF showed on Monday.

The purchasing manager's index for the manufacturing sector fell to 41.9 from 47 in November. Any reading below 50 suggests decline in activity.

The sub-indexes for new orders and production dropped steeply by around 10 points and reached below the 40-mark.

Suppliers' delivery time and stock of purchased products were the only sub-indexes to rise in December.


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

*Colombia December Davivienda/IHS Markit Manufacturing PMI 51.8 Vs. 52.1 In November

Trading 04 Jan 2021 Commentaire »

Colombia December Davivienda/IHS Markit Manufacturing PMI 51.8 Vs. 52.1 In November


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