Dollar sharply rose. Change of direction or false signal?

Trading 16 Fév 2021 Commentaire »

analytics602be6f8ed7b6.jpg

The markets are getting higher and higher. There were all the prerequisites for succeeding growth. Investors continue to be in a good mood, as nothing bad has happened in recent days, and the old growth drivers have not gone away.

US President Joe Biden's new incentive program is close to approval. It is quite possible that it will be approved in the very next few days. In addition, there are real signs of a decrease in the number of infected people. This information was also confirmed by the Director-General of the World Health Organization. The head of the WHO, Tedros Adhanom Ghebreyesus, made it clear that the weekly number of new cases of infection was reduced by almost half compared to the figures of the beginning of January. Positive results are added by the progress in universal vaccination of the population. In addition, judging by the reports of US companies, the business for the most part is in good condition and is ready to quickly restore the economy.

Tuesday was a fairly calm day, no important statements and publications. Investors will pay attention to Biden's first trip as president outside of Washington. He will deliver a speech in Wisconsin on the pandemic, a package of support measures for the country's economy. The president's speech may have a positive impact on investor sentiment.

The picture is just perfect, so it will be possible to see new highs in the indices. But something in all this makes us wary, including investors. Maybe it's all too good. The course of trading last week clearly demonstrated the uncertainty and doubts of the players, which may eventually result in profit-taking. More and more positive factors are needed to increase risk appetite without corrective pullbacks. After a long march since November, it is easy for markets to stumble and fail for a while, despite hopes of recovery. In the meantime, we're dealing with growth.

The downward trend in the dollar continues, which has been going on for several days. The border of the existing trend has shifted lower to the area of the 90.4 mark on the dollar index. While the US currency is under pressure, the dollar bears will look for new impulses to sell. We can talk about a reversal of the trend in the event of a sharp breakthrough in growth and in case the dollar index closes above the 90.4 mark. Buyers of the dollar became more active during the US session.

L8hH0O40PlRwCl5mTh0kNoi0qnOBz3SzsGEhvi31

Meanwhile, in favor of a downward trend, the state of dollar liquidity indicators can be cited. Here, the indicator signals the ongoing monetary pressure on the greenback throughout the week.

Current trends are likely to remain unchanged. In this regard, we need to carefully monitor the rhetoric of the US Federal Reserve members. If the third bailout package from the Biden administration is passed, the doping-ridden markets will continue to rise, and the pressure on the dollar will increase.

The decline in the University of Michigan's consumer confidence index may serve as a trigger for faster adoption of incentives. A similar weakness is not excluded in the retail sales data, which will be released on Wednesday. If the report turns out to be disappointing, then the US currency index risks falling below 90.0 points by the end of the week.

The EUR/USD pair hit resistance around the 1.2150 mark. Blame the cooling in the economic recovery. Data on industrial production indicated a decline. Prior to this, business sentiment indexes turned down, which set up markets for a second recession due to the winter outbreak of the pandemic.

The latest batch of macroeconomic data, namely the assessment of business sentiment from ZEW, should put an end to the tug of war between the bulls and bears. The index of investor confidence in the German economy unexpectedly rose to 71.2 points from 61.8 points in January. In addition, the second estimate of the fall in eurozone GDP was better than the first. Some macroeconomic positivity should have increased the euro's volatility in order to increase the quotes. However, as a fact, the pair declined back to the 1.20 mark.

IukX8dLK2kGymMMl49I8TluafbZow1n_MjrVKwiE

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

EUR/USD. Attack on the resistance level of 1.2150 ended in failure

Trading 16 Fév 2021 Commentaire »

The euro-dollar pair updated its three-week price high on Tuesday, testing the resistance level of 1.2150 (the upper line of the Bollinger Bands indicator on H4). Buyers of EUR/USD tried to gain a foothold above this target, thereby marking the next goal of the growth movement – the psychologically important mark of 1.2200 (the upper line of the Bollinger Bands, coinciding with the upper border of the Kumo cloud on the D1 timeframe). But as soon as the price surpassed the 1.2150 mark, the growth momentum faded – apparently, traders began to take profits en masse, opening short positions along the way.

In general, the current fundamental background contributes to the pair's succeeding growth in the medium term, although it will be quite difficult for EUR/USD bulls to conquer the area of the 22nd figure. Today, traders reacted to unexpectedly strong reports from ZEW, taking advantage of the fact that the US dollar index gradually declined to the bottom of the 90th figure. But as soon as the dollar bulls declared themselves, the European currency was forced to give way to them.

analytics602bea764eff2.jpg

So, let's start with the positive news for the euro. Business sentiment indices from the ZEW Institute came out in the green zone, although preliminary forecasts were also very optimistic. Nevertheless, the real figures exceeded the forecasts. Positive dynamics were recorded both in Germany and in the euro area as a whole. The German index has been growing for three months-after the autumn recession, when Europe was covered by the second wave of the coronavirus crisis. It rose to 71.2 points in February, with a growth forecast of 59 points. This is the best result since September last year (then a multi-year high of 77.4 was recorded). The pan-European indicator similarly came out in the green zone, reflecting the optimism of investors. The February index rose to 69.6 points (with a growth forecast of 59.2 points) – this is a 5-month high. This dynamic is primarily due to the optimism associated with mass vaccination against coronavirus. In addition, the rate of spread of the disease in Europe over the past four weeks is gradually slowing down. And although the authorities in key EU countries have extended quarantine restrictions until at least March, the trend itself is important here.

In addition, the second estimate of the growth of the pan-European GDP in the fourth quarter was published today. The published figures, on the one hand, came out in the green zone, but on the other hand – showed that the economy of the region is still on the verge of a double recession. So, according to the release, in the fourth quarter of last year, the volume of GDP decreased by 0.6% on a quarterly basis, although most analysts expected a more significant decline – to -1.2%. At the same time, the record growth of the third quarter was revised upward (+12.5% instead of the previous value of 12.4%). In annual terms, the key indicator decreased by 5.0% instead of the projected decline of 5.5%. It is worth noting that the latest figures were better than the initial ones that were published two weeks ago. This fact also made it possible for the EUR/USD bulls to overcome the 1.2150 mark.

However, buyers of the pair could not stay above the resistance level and returned to the bottom of the 21st figure at the beginning of the US session. And it's not just about taking profits after overcoming the price barrier. The main reason for the downward pullback is the strengthening of the greenback, which reacts to the news flow regarding the fate of the "Plan to Save America".

Let me remind you that US trading platforms were closed on Monday – America celebrated Presidents Day. Therefore, by and large, the currency market has only started to work in full force on Tuesday. The beginning of trading in the United States was marked by a strengthening of the dollar amid conflicting rumors about the form in which the resonant bill on the allocation of additional assistance to the national economy will be adopted. It is known that the initial cost of the law – $1.9 trillion - will be reduced. By what amount exactly is an open question. According to most currency strategists, congressmen will eventually approve a stimulus package at the level of $1.5-1.6 trillion. But there are also more pessimistic assessments in the American press, because in order to implement the Biden plan, the United States will have to increase the national debt. The Democratic team planned to patch up the budget holes by changing tax policy-primarily by raising income taxes for the rich. And this is where discussions begin within the Democratic Party, since any issues related to changes in tax policy are very sensitive from the point of view of political (electoral) consequences.

The dollar felt needed against the background of the resulting nervousness: it began to enjoy increased demand amid a surge in anti-risk sentiment. But given the previous similar spikes, we can assume that the greenback's appreciation will be temporary. As soon as the congressmen reach a certain figure, which will be equal to (or higher) $ 1.5 trillion, the dollar will again fall under a wave of sales. The greenback does not have enough strong arguments for the development of a dollar rally.

analytics602bea6a36489.jpg

From a technical point of view, buyers of the EUR/USD pair still need to overcome the resistance level of 1.2150 (the upper line of the Bollinger Bands indicator on the 4-hour chart) in order to open the way to the main target of the growth movement - the 1.2200 mark (the upper line of the Bollinger Bands on the daily the graph, coinciding with the upper border of the Kumo cloud). After overcoming this target, the Ichimoku indicator will form a bullish Parade of Lines signal: in this case, it will be possible to talk about reaching the upper Bollinger Bands line already on the weekly chart (1.2350 level). It is advisable to open longs after the EUR/USD bulls have settled above the first resistance level, that is, above 1.2150.

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

EUR/USD: While the greenback looks superfluous at this celebration of life, it will feel great if the US leads the recovery

Trading 16 Fév 2021 Commentaire »

analytics602bf4e4e2bf2.jpg

Global markets remain optimistic and demand for risky assets is increasing.

The protective greenback on this holiday of life looks superfluous.

The dollar's sell-off continues for the second consecutive week amid expectations of an early agreement on additional fiscal stimulus in the United States and increased hopes for a global economic recovery.

The U.S. dollar index slipped to three-week lows on Tuesday, in the area of 90.1 points.

"Risk appetite sentiment and a weaker dollar continue to prevail," Bank of Singapore strategists said.

The US currency is not particularly helped by the increase in the yield of 10-year treasuries, which has already updated 11-month peaks, rising above 1.27%. Such dynamics traditionally support the dollar, but at the moment investors prefer more risky assets, which, in particular, includes the European one.

The EUR/USD pair reached the highest levels since the end of January, breaking the resistance in the form of a 50-day moving average (around 1.2150) on the background of increased risk appetite and thanks to positive news from Europe.

Problems with the supply of vaccines to the EU from the pharmaceutical companies Pfizer/Biotech, Moderna and AstraZeneca are finally resolved, and the supply of drugs to the region is resumed.

A macroeconomic report on the eurozone provided additional support to the pair.

So, the ZEW index of economic sentiment in Germany unexpectedly rose to 71.2 points in February, and in the euro zone - to 69.6 points (from 61.8 and 58.3, respectively).

In addition, the revised GDP of the currency bloc for the fourth quarter was slightly better than the previous estimate (-0.6% vs. -0.7%).

Another reason for growth comes from the United States. President Joe Biden is set to push through a $1.9 trillion bailout package and now has all the senators' attention that was previously distracted by Donald Trump's trial.

analytics602bf59cc1388.jpg

It is assumed that the second major fiscal stimulus in the United States during the pandemic will push the growth of the national economy in 2021 significantly higher than expected, and an overabundance of productive capacity will lead to an acceleration of inflation in the country.

The Federal Reserve, as you know, will be willing to put up with exceeding the inflation target of 2%.

The European Central Bank, unlike its US counterpart, considers price stability as its main priority and considers the 2% threshold as a ceiling, not an average target level.

Jens Weidmann, one of the hawks of the ECB's Governing Council, believes that the central bank will have to abandon its stimulating monetary policy as soon as there are signs of approaching the inflation target.

Investors are now selling the dollar and buying the EUR/USD pair on declines, betting that the Fed will refrain from preemptive tightening and decide to wait and watch, while the ECB will be more difficult to contain if inflation exceeds the target level against the backdrop of a recovery in economic growth in the EU.

However, it is still unclear what excess of the inflation target is acceptable for the Fed and how long the central bank is willing to tolerate it. In addition, it is good to talk about inflation when there is no inflation. So, at the end of January, prices in the United States remained without significant changes. However, a question remains, how will the Fed's rhetoric change in the future, when the low base of 2020 will be overlaid with an increase in consumer demand.

A significant portion of the U.S. fiscal stimulus is expected to boost private consumption as vaccination, seasonality, and, ultimately, collective immunity allow forced savings to begin to be spent.

The "plan to save America" is gradually taking shape and promises to increase national GDP growth to the highest level in 37 years.

If the United States becomes the sole leader of the recovery, this will be a positive factor for the dollar and will lead to its broad strengthening.

"We expect the EUR/USD rate to be around 1.2200 in one or three months, but then decline to 1.1600 within 12 months," Danske Bank said.

"We believe the US economy should benefit from increased fiscal stimulus, progress in increasing vaccination rates, and potentially faster labor market recovery. In contrast, the eurozone economy is lagging behind due to the slow roll-out of vaccinations in the region and the negative impact of tailwinds," they added.

Realization of Danske Bank's forecast implies that greenback relative to current levels will strengthen against the single currency by about 5%.

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

Analytics and trading signals for beginners. How to trade GBP/USD on February 17? Analysis of Tuesday. Getting ready for

Trading 16 Fév 2021 Commentaire »

Hourly chart of the GBP/USD pair

analytics602c11d38111e.jpg

The GBP/USD pair began to correct on Tuesday, which was signaled by the MACD indicator with a downward reversal. The pair's quotes fell for most of the day, which fully fits into the correctional scenario. The rising trend line kept the upward trend in the pair. Thus, traders had to wait for either the price to settle below the trend line, or a buy signal from the MACD indicator. As a result, only one signal was generated during the day - to buy, following an upward reversal of the MACD indicator. However, when this signal was formed, most of the upward movement of the pair had already passed. The candlestick that preceded the formation of the signal is equal in size to 55 points. Thus, such a strong upward movement almost at the very end of the day could not be interpreted as a strong signal. We've talked about this before in our beginner reviews. You should avoid signals that were formed by such giant candlesticks. But even if newcomers to the foreign exchange market made this mistake and opened long positions, now they are even in a small profit and, at least, have the opportunity to close this transaction at zero. Or they may not close, but wait until the price rises to the target level of 1.3959, placing Stop Loss below the entry level just in case. You can potentially earn up to 40 points on this trade.

No major report released in the UK or the US on Tuesday, nor was there a single interesting event. Therefore, the pair's movements on Tuesday were not dictated by the fundamental background or macroeconomic statistics. Since there was absolutely nothing to pay attention to today. We remind you that the markets continue to ignore most of the news and reports, guided by other factors in their trading decisions. Thus, we advise you to trade with technical analysis first.

The UK will release its inflation report and the US will release its retail sales on Wednesday. Markets may ignore this data again, but it is still not worth leaving it unattended. Inflation in the UK may turn out to be worse than a month earlier, so the pound may resume its fall tomorrow. And at the same time, if the report turns out to be stronger than forecasts, the upward trend may resume.

Possible scenarios on February 17:

1) Long positions remain valid as the upward trend line remains in effect. A buy signal has already formed, however, as we mentioned, it was not strong. Thus, traders have the right to leave buy trades open while aiming for 1.3959 or wait for new buy signals. In the first case, you are advised to set Stop Loss below the entry point, since the deal will have to be left overnight.

2) Short positions are not irrelevant at the moment, as the upward trend continues. However, if the price settles below the trend line, then the downward movement may continue within the framework of at least a correction. Therefore, in this case, you are advised to open short positions while aiming for the support level of 1.3819.

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

February 16, 2021 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 16 Fév 2021 Commentaire »

analytics602bfdaae5d7e.jpg

Recently, the GBPUSD pair looked overbought while consolidating around the price-levels of 1.3700.

Sideway movement with slight bullish tendency was recently demonstrated while approaching these price levels around 1.3700-1.3750.

Bearish pullback was recently demonstrated. However, the GBP/USD pair has failed to maintain bearish decline.

Instead, Another temporary bullish movement was expressed above the previous WEEKLY High (1.3700).

Further upside movement was expected towards the upper limit of the current movement channel around 1.3900 where bearish rejection and a possible SELL Entry are suggested.

Short-term outlook can turn into bearish if only the GBP/USD pair could break below and maintain movement below 1.3780. If so, a quick bearish decline towards 1.3400 would be expected.

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

February 16, 2021 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 16 Fév 2021 Commentaire »

analytics602bf5acbd09f.jpg

Recently, the EURUSD pair looked overbought while approaching the price levels of 1.2250 (138% Fibonacci Level).

That's why, conservative traders were advised to look either for SELL Positions around the previous price levels at 1.2330 (150% Fibonacci Level) in the previous article.

Recently, Bearish closure and persistence below 1.2160 was needed to abort the ongoing bullish momentum. This allowed the recent bearish movement to pursue towards 1.2050 which failed to offer sufficient bullish pressure.

The price zone around 1.2000 provided temporary bullish SUPPORT for the EURUSD. However, lack of bullish momentum was recently demonstrated.Hence, we were waiting for a possible bearish continuation Pattern.

Bearish persistence below 1.2000 enhanced temporary bearish movement towards 1.1960 where significant bullish rejection was expressed.

That's why, the current bullish spike has pursued towards 1.2150 (backside of the broken channel limit) where bearish rejection and a valid SELL Entry should be anticipated.

Initial Bearish target would be located around 1.2020 while S/L should be placed above 1.2200

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

February 16, 2021 : EUR/USD daily technical review and trade recommendations.

Trading 16 Fév 2021 Commentaire »

analytics602bf811b623d.jpg

The previous episode of upside movement was expressed above the depicted uptrend line (in blue) towards 1.2250 then 1.2350 before the current downside reversal was initiated.

Bearish closure below the mentioned price zone around 1.2250 enabled a quick downside decline towards 1.2170 which corresponded to a previous congestion zone as well as a prominent key-zone.

Persistence below the price level of 1.2170 has turned the intermediate outlook for the pair into bearish and enhanced further downside decline was demonstrated towards 1.2080, 1.1990 and 1.1950.

However, Recent Buying Pressure existed around 1.1950, leading to the current quick upside spike above 1.1990 again.

This indicates lack of sufficient downside pressure for the pair. Hence, the current upside movement extended towards 1.2160 where some downside Selling Pressure is being applied on the EURUSD Pair.

Trade Recommendations:

Conservative traders should be considering the current upside movement anywhere around the depicted Resistance Level (1.2150 - 1.2170) for a valid SELL Entry.

S/L should be placed above 1.2170 while Initial T/P levels to be located around 1.1990 and 1.1950.

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

LTC/USD short-term analysis

Trading 16 Fév 2021 Commentaire »

LTC/USD has reached our $215 target and as we mentioned in our analysis we prefer to take profits of the triangle breakout. We observe in the short-term a weakness to break above $220 which was tested multiple times. This does not mean a trend change, I just believe that a pull back towards $190 is justified.

analytics602bf210136d0.jpg

Red rectangle - resistance

Trend remains bullish and I do not want to go against the trend. However I believe it is best to take profits and stay neutral or with minimal bullish exposure in LTC/USD. Price could make a sharp pull back towards the beak out area of $190 or even lower.

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

Ichimoku cloud indicator analysis of EURUSD

Trading 16 Fév 2021 Commentaire »

EURUSD in the 4 hour chart remains in a bullish trend as price is above the 4 hour Kumo (cloud). Support by the cloud is at 1.2070-1.2050. However as we explained in our last analysis, EURUSD is vulnerable to a pull back and a test of this critical short-term support.

analytics602bf087620e4.jpg

This vulnerability for a move below 1.21 is also shown in the 4 hour chart using the Ichimoku cloud indicator. Price is trading below the tenkan-sen and the kijun-sen indicators. These two indicators provide resistance at 1.2125-1.2130. Furthermore the slope of the tenkan-sen (red line indicator) is negative and we could soon have a weak bearish signal if the tenkan-sen crosses below the kijun-sen (yellow line indicator). I expect support by the cloud to be challenged soon. Breaking below the cloud will open the way for a move below 1.1950.The material has been provided by InstaForex Company - www.instaforex.com

USDJPY bullish idea plays out perfectly

Trading 16 Fév 2021 Commentaire »

USDJPY has broken above 105.50 and is heading towards our 106 target. The recent pull back reached our buy area of 104.65-104.30 as we explained in previous posts. Price has bounced strongly off the 50% Fibonacci retracement and is now making higher highs.

analytics602bef61752a5.jpg

Blue line - support

USDJPY has respected the blue upward sloping trend line support and is now trading at 105.77. We are bullish USDJPY since the end of January when price was breaking out of the multi-week bearish channel. Recent lows at 104.40 are key support and trend change level. We remain bullish looking for a move above 106 as long as we trade above 104.40.

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