Analytics and trading signals for beginners. How to trade GBP/USD on January 18? Analysis of Friday. Getting ready for Monday

Trading 17 Jan 2021 Commentaire »

Hourly chart of the GBP/USD pair

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A new round of downward movement began for the GBP/USD pair on January 15. Earlier (this can be seen in the chart) the pair's quotes settled above the descending channel, and so the trend changed to an upward one. Thus, bull trading should have been considered (since the upward trend was not cancelled). But on Friday, the quotes of the pound/dollar pair were only falling, so no buy signal was generated during the day. Perhaps it is for the best, since the pound's current movements are very strange, although this may not seem so at first glance. In other articles, we call this movement "high volatility swing", which indicates quite strong movements of the pair, both up and down without a clear trend. But this is not a flat, as the upward trend still persists in the long term, and the pair regularly renews its 2.5-year highs. As a result, last Friday we got a situation where the pair seemed to start a new downward movement, but at the same time there was not a single signal of a trend change. The situation will remain the same on Monday. The price can continue the "swing" mode, which is to move erratically, and it is very difficult to work out. It is very difficult to understand how the trend is now, at least in the short term.

Fundamentally, nothing changes for the British pound. And most importantly, the foundation does not clarify the technical picture at all, or make it more understandable. The UK released data on GDP for November, which showed less contraction than expected, but it's still a contraction. In theory, this value could support the pound, but traders once again showed their disinterest in important macroeconomic statistics. A report on industrial production was also published on this day, which, on the contrary, decreased in volume, contrary to forecasts. But, of course, this report had a lower priority and, moreover, was not processed.

Nothing interesting in either the UK or America on Monday, January 18. In the US, Trump is spending his last days in the White House, and in the UK, they are increasingly concerned about the epidemic, the third lockdown, and the "British" and "Brazilian" strains of the coronavirus. Thus, we are not expecting news and macroeconomic data on this day. Although it still doesn't matter, as the pound/dollar pair continues to trade according to its own rules.

Possible scenarios for January 18:

1) Buy orders are formally relevant at the moment, since the pair's quotes have previously left the descending channel. Nevertheless, it is highly likely that a new round of downward movement has begun in the long term (after the third unsuccessful attempt to overcome the 1.3700 level). Thus, the pair may move downward in the coming days.

2) Sell positions have lost their relevance. And although we are now expecting some quotes to drop even further, there are no technical signals. Therefore, you need to wait one or two days for a clear trend to form and trade based on that trend, and not at random. We recommend that novice traders wait a little outside the market.

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 18? Analysis of Friday. Getting ready for Monday

Trading 17 Jan 2021 Commentaire »

Hourly chart of the EUR/USD pair

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The EUR/USD pair turned to the downside last Friday, even at night, and so it resumed the downward movement, according to the formed trend, which is supported by the descending channel. Thus, novice traders could enter short positions that day. A sell signal from the MACD indicator was created early in the morning, which is very convenient - beginners had time to enter the market in time, or enter it only with a slight delay. The indicator was pre-discharged almost to a zero level, so the sell signal was considered strong. As a result, the euro/dollar pair was in a recoilless upward movement all day and no upward signal was created. Thus, newcomers could not even close sell orders or even close them just before the end of trading on Friday. This would bring them around 70 points of profit, which is an excellent result. Thus, at the moment, the downward trend continues, the MACD indicator will turn to the upside in almost any case in the coming hours, since it has nowhere to go further, and traders are advised to wait for a new sell signal from MACD.

No macroeconomic reports from the European Union last Friday, January 15, so everyone focused on America. In addition to all the political upheaval, the US also released reports on retail sales and industrial production. If the first indicator turned out to be significantly worse than forecasts (-0.7% m/m), then the second one turned out to be better than forecasts (+ 1.6% m/m). In general, the package of economic statistics can be considered neutral. Again, the market response does not match the nature of the macroeconomic data. From this we can conclude that there was no reaction. The markets simply ignored the reports again. And they are not interested in politics at all. Donald Trump is leaving office after three days and whether he will be impeached or not isn't that interesting anymore. This figure will no longer have any influence on the economy and politics of the United States.

Another speech from European Central Bank President Christine Lagarde scheduled in the European Union on Monday, January 18. Recall that her first speech in 2021 did not provide any new information to the markets, although in general, her speeches are an important event. Thus, potentially Lagarde can say something new and interesting regarding monetary policy. But are the markets ready to process this information?

Possible scenarios on January 18:

1) Long positions are still irrelevant at the moment, since the downward trend remains in force. Those who wish to buy the EUR/USD pair should wait until the quotes settle above the descending channel. In this case, you can consider long positions with targets at support levels 1.2184 and 1.2216 (targets will be specified tomorrow morning).

2) Trading for a fall is more relevant now, so you need to wait for a new sell signal. You are advised to open new short positions with targets at the support levels 1.2080 and 1.2048 (to be specified in the morning), if a new MACD sell signal is created, which should be discharged to the zero level. Also, a rebound from the upper border of a new descending channel can be considered as a sell 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 (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 January 18-22. New COT (Commitments of Traders) report. The pound maintains

Trading 17 Jan 2021 Commentaire »

GBP/USD - 24H.

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The GBP/USD currency pair continued to be in an upward trend during the second trading week of 2021. If the European currency still started a more or less noticeable downward correction this week, the pound sterling once again updated 2.5-year highs. That is, there was a de-correlation of the two main pairs. And only Andrew Bailey's speech could lead to this, as there were no other important events in the UK this week. But more on that below. So far, the pair continues to gradually move up, and the movement even on the 24-hour time frame looks like a "swing". The price regularly rolls down, and the size of the correction often almost coincides with the size of the main movement preceding it. Well, I don't want to talk about the reasons. From our point of view, the British currency is again becoming more expensive solely due to the "speculative" factor. There was no reason for the pound to strengthen so strongly in recent months. Now in the States, of course, not everything is calm, but in the UK everything is frankly bad. Both from an epidemiological point of view and a fundamental one.

The COT report

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During the last reporting week (January 5-11), the GBP/USD pair fell by 60 points. Although in general, the pound continues to maintain a steady upward trend. But the changes that the latest COT report showed are really impressive. Recall that the last few reports "differed" with scanty changes that did not allow us to draw any conclusions. Professional traders simply opened very few contracts in the British currency. From our point of view, this behavior of the "Non-commercial" group is quite understandable. For there are few reasons to trade the pound actively, given the news of an epidemiological and economic nature from the Foggy Albion. But in the last reporting week, professional traders opened 10.5 thousand buy contracts and 3.2 thousand sell contracts at once. Taking into account the fact that about 80 thousand contracts were opened before this report, +13 thousand is a lot. Thus, the net position of non-commercial traders increased by 7 thousand at once. Simply put, the mood of the major players has become much more "bullish". Thus, the "technique" and COT reports speak in favor of continuing the upward movement. But how much longer will market participants ignore the fundamental background?

The entire fundamental background for the GBP/USD pair this week was reduced to the speech of the head of the Bank of England, Andrew Bailey. As we said earlier, from our point of view, market participants ignored many negative theses and turned their attention only to the words about the problem of using negative rates. Although a day earlier, a member of the monetary committee, Silvana Tenreyro, said that the Bank of England continues to study the application of negative rates. However, after Bailey's speech, the pound sterling again began to rise in price and at this moment another round of decoupling of the euro/dollar and pound/dollar pairs began. Serious epidemiological problems remain in the UK. Recall that in recent weeks, the number of daily recorded cases of "coronavirus" has increased from 20 thousand to 50-60 thousand. The country continues to remain in the third "lockdown" and this will inevitably lead to a reduction in GDP. However, traders continue to buy the pound. And this is an inexplicable fact. Of course, we can assume that the case is in the US dollar. The situation in the United States is also quite difficult, however, it is difficult from a political point of view. And also recall that the euro currency has been getting cheaper all this week. In general, we can only draw the previous conclusion: market participants still ignore 90% of the fundamental background and macroeconomic statistics. In this situation, it remains only to trade on the "technique".

Trading plan for the week of January 18-22:

1) The price retains the upward trend without any problems and barely began to correct this Friday. The pair can even go down now 200-300 points in the "high-volatility swing" mode, but there is no reason to wait for the end of the upward trend right now. Thus, in the 24-hour timeframe, the target for an upward movement remains at the level of 1.3851. We recommend that you continue to consider options for opening long positions on the higher timeframe as long as the price is above the critical line, and do not try to guess the end of the upward trend.

2) Sellers are still quite weak. Last week, the bears tried to seize the initiative, but it ended with only a minimal pullback. Thus, for the possibility of opening short positions, it is now recommended to wait again, at least, for the price to consolidate below the critical line. If this condition is met, a downward trend may form on the 4-hour timeframe.

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 from which the price has repeatedly bounced.

Indicator 1 on the COT charts – 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

GBP/USD. Donald Trump can be considered the worst president in the history of the United States. How will the dollar react

Trading 17 Jan 2021 Commentaire »

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As we wrote in the first article, Donald Trump will leave his post in 4 days and probably for the best. Objectively, he can be called one of the worst presidents in the history of America. It is because Trump is not a politician, but a businessman. And he ran the country like his own business empire. Finally, we offer to recall why Trump can be considered the most failed president in the entire history of the United States. This is indicated by concrete facts, it is not just anyone's opinion.

First, Trump became the first president to be impeached twice. However, both were unsuccessful and accompanied by a political "circus". It is clear to everyone that there will be no impeachment, as it will be blocked by the Senate. For the States in general, the impeachment of the president is something out of the ordinary. Given that the forces in the Senate are usually distributed approximately equally between Democrats and Republicans, it is necessary that at least 10-15 senators approve the impeachment of their party member, which is unlikely.

The second is the attack on the Capitol, which according to many, including Congress, was provoked by Trump. And it was because of this event that the procedure for the second impeachment of the president was initiated. It was Trump at a rally on January 6 in Washington (which was pre-announced and planned) who veiled his supporters to enter the Capitol to cancel the results of the "stolen" presidential election. At this time, the US Congress was just confirming the victory of Joe Biden. As a result, 5 people were killed during the assault and subsequent cleaning by the special services, and many premises were destroyed, where Trump's vandals and barbarians managed to penetrate.

The third is the longest "shutdown" in the history of the United States. A shutdown occurs when money to fund public services runs out. More precisely, there is money, however, the Congress or the Senate could not agree and did not approve the budget. That is, there is money, but because of the bureaucracy, you can not spend it. This is exactly what happened in December 2018-January 2019. American government agencies were on an unscheduled "vacation" for 35 days since the budget for 2019, in which Trump wanted to contribute funding for the construction of a wall on the border with Mexico, was not approved by Democrats.

The fourth is the wall on the border with Mexico. As the apotheosis of the absurdity of Trump's actions. If this were to happen in a third world country, somewhere in Africa, we wouldn't be surprised. But it is quite difficult to imagine that the government of one of the most technologically advanced countries in the world believes that the flow of illegal migrants can be contained with a piece of iron up to 4.5 meters high. Anyway, some sections of the wall were built before Trump. The total length of the border with Mexico is 3145 kilometers. At the moment, the wall does not cover even half of its length.

The fifth is a personnel policy in the style of "who I want, I fire". Again, under Trump, officials worked like a powder keg. The reason for the dismissal could be banal insubordination or a difference of opinion. Most of all, Trump valued loyalty in the employees who were supposed to stand up for him. However, Trump did not lead China or North Korea, where this is possible. Therefore, most politicians and officials very quickly realized that unquestioningly obeying Trump is equal to the funeral of their career. Nevertheless, Trump continued to fire all those he did not like. During his presidency, there were two secretaries of state, two attorneys general, two defense ministers, and four national security advisers.

Sixth, the failed fight against the pandemic. Here, of course, you need to be fair and not blame it all on the president. Very few rulers have faced such a serious challenge. However, the president is also the president to make the right decisions in difficult and emergencies. Trump has not made a single correct decision regarding the pandemic. His statements concerning the "Chinese virus" will be remembered for a long time by the whole world. Well, the United States is still in first place in the world in terms of the number of diseases and the number of deaths from the "coronavirus".

The seventh is a constant lie. In America, about two years after the inauguration of Trump, many respected publications and agencies began to count the false statements of the president. That is, in the same issue of the same publication, for example, The Washington Post could contain an article about an interview with Trump, and next to it an article about the fact that the US president makes an average of 15 false statements a day. Absurd. As a result, by November 2020, The Washington Post counted almost 30 thousand false or misleading statements of Donald Trump.

The eighth is the attitude of the American nation itself to the president. Trump, as a Republican, was from the very beginning aimed more at the upper class of society. Of course, he tried to find support from the rest of the population, however, it is the Democrats who are more worried about the workers and peasants. Thus, even though more than 60 million people voted for Trump in the 2020 elections, in general, a huge number of opinion polls and ratings show that Trump is the worst president in the history of the United States. More than once, opinion polls have shown that Americans out of 45 US presidents give Trump the last place. Of course, such polls and their results are very conditional, but again, the attitude of the nation to the president is obvious.

The US currency does not show any interest in who will be the next president. The next round of the fall of the US currency in pair with the pound sterling began on September 23, when the trade deal between the UK and the European Union was just hanging in the balance. Nevertheless, all this time the pound was getting more expensive, and the dollar was getting cheaper. And in 2021, little has changed for the pound/dollar pair (although, for example, the euro/dollar pair still began to decline).

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Recommendations for the GBP/USD pair:

The pound/dollar pair continues to trade near its 2.5-year highs. Thus, the downward trend remains for the US currency. And since it persists, it is recommended to trade the pound/dollar pair further on the increase, until there are specific technical signals about the end of the upward trend. The targets on the 4-hour timeframe are the resistance levels of 1.3667 and 1.3771.

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

Trading plan for the EUR/USD pair for the week of January 18-22. New COT (Commitments of Traders) report. Christine Lagarde

Trading 17 Jan 2021 Commentaire »

EUR/USD - 24H.

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During the past week, the EUR/USD pair continued its downward movement, which began a week earlier. We can not say that we are now witnessing a new downward trend, after all, quotes have moved away from 2.5-year highs by only 250 points. However, the first step towards a new downward trend is laid. From a technical point of view, on the 24-hour timeframe, the pair's quotes are fixed below the critical Kijun-sen line, thus, the pair has excellent chances of further decline, at least to the Senkou Span B line. It should also be noted that we have long expected the end of the upward trend and more than once noted all the groundlessness of the rise in the price of the European currency. Starting with the empty fundamental background in the European Union, ending with the advantage of the American economy over the European one, and the departure of Donald Trump from the post of US president (which we consider as a positive factor for the dollar). Also, at least, a downward correction was long overdue from the technical point of view, as the continuous upward movement continued from November 4, that is, two full months, during which the euro rose by 700 points.

The COT report.

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During the last reporting week (January 5-11), the EUR/USD pair fell by 100 points. The euro/dollar pair has finally started a more or less tangible downward movement. However, professional market participants at this time closed contracts for the sale of the euro currency. First of all, I would like to note that during the reporting week, the group of "Non-commercial" traders was not too active again. The number of contracts it opens is less than the number of closed ones. Second, professional market participants closed sell contracts and opened buy contracts. The first 6 thousand were closed, and the second 2.7 thousand were opened. Thus, the net position increased by 8.7 thousand contracts, which is not so small. In other words, the mood of non-profit traders (who are considered the engine of the market) has become more "bullish". It was at the moment when the euro began to fall. However, let's try to look at the situation as a whole. Since the very beginning of September 2020, non-profit traders have started to reduce their net position. That is, it is preparing for the end of the upward trend. However, the trend has not ended. Perhaps because the demand for the dollar during this period was even lower than for the euro. Anyway, the ascent of the euro currency continued and here it should be noted that the major players were somewhat confused. They did not rush to buy the euro again once the upward trend was resumed. Only at the very end of November, the net position began to increase slightly. All this suggests that the "Non-commercial" group is still waiting for the end of the upward trend. We still remind traders that any fundamental information or data from COT reports must be confirmed by technical signals.

This week, the fundamental background in the European Union was practically absent. In the middle of the week, the head of the ECB, Christine Lagarde, made a speech, which did not tell the markets anything interesting. Therefore, it is not surprising that there was no market reaction. At the end of the week, Jerome Powell, the chairman of the Federal Reserve, made a speech, which also did not say anything interesting and noting only that the regulator is not going to tighten monetary policy in the near future or reduce the volume of asset purchases from the open market. Among the important macroeconomic reports, we highlight the US inflation response, the US jobless claims report, and the US retail sales report. Inflation in the United States continued to slowly accelerate, however, the nature of its growth lies in the strong fall of the dollar in the foreign exchange market over the past 9-10 months. The number of applications for unemployment benefits began to grow, and retail sales declined at the end of December. Thus, the entire package of statistics can be called very weak. However, the US dollar continued to ignore macroeconomics. The most interesting thing is that the fundamental background is now not on the side of the dollar. In America, there is a new political crisis, which, however, should end with the coming to power of Joe Biden and the departure of Donald Trump. However, what has been happening in the US in recent weeks is not normal for the country and its currency. But the dollar is still rising. Thus, from our point of view, technical factors continue to be in the first place.

Trading plan for the week of January 18-22:

1) The pair's quotes continue to pull back from 2.5-year highs, and the upward trend is currently canceled. COT reports and the fundamental background have long (in general) signaled a possible and very likely fall in quotes. "Technique" also signals the beginning of a downward trend. A drop is very likely to the support level of 1.1992 and slightly lower, where the Senkou Span B line runs on the 24-hour timeframe. Therefore, it is recommended to buy euro/dollar not earlier than the price returns back above the Kijun-sen line.

2) The downward trend seems to have started and it is already possible to trade down, especially on lower time frames. However, it should be noted that the quotes have not yet moved so far away from the 2.5-year highs to consider the upward trend completed. Therefore, we are still trading lower, but we keep in mind the fact that the unjustified growth of the euro currency may still resume.

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 from which the price has repeatedly bounced.

Indicator 1 on the COT charts – 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