EUR/USD: either the dollar isn’t the same, or the euro isn’t eagerly rushing forward

Trading 21 Fév 2021 Commentaire »

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The dollar continued to weaken against its main competitors last Friday, despite the rise in the yield on 10-year US government bonds to annual highs.

If earlier such dynamics of Treasuries caused the dollar to strengthen, now we get a slightly different picture.

Perhaps the fact is that the greenback is becoming more cyclical, as we have seen recently. Therefore, the correlation between assets has decreased.

At the same time, talk is louder and louder that a sharp jump in Treasury yields may provoke a fall in American stocks, which can pull down all world stock indices.

An important line here is the 1.5% yield level, which served as a support last year that led to a big sell-off in the stock markets.

In case of flight from risks, investors can rush back to the USD.

There are concerns that rising inflation in the United States will outpace the national economic recovery. It is assumed that this will force the Federal Reserve to start tightening monetary policy much earlier.

However, US Treasury Secretary Janet Yellen has already hastened to reassure investors, noting that the Fed has the necessary tools to eliminate the inflationary risk.

Next week, Fed Governor Jerome Powell will address the US Congress with a semi-annual report on the state of the national economy and monetary policy.

Earlier, he made it clear that an increase in interest rates is not on the horizon and it is too early to talk about reducing asset purchases. At the same time, Powell is optimistic about the prospects for a recovery in the US economy and expects stronger growth in the second half of the year.

If the Fed chairman remains positive, combined with the central bank's commitment to ultra-loose monetary policy, this will be good news for stocks and bad news for the dollar.

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Investors also continue to watch the fate of the $1.9 trillion fiscal stimulus package in the United States.

The main question is whether US President Joe Biden will be able to make progress on the issue of the aid program. Negotiations with the Democratic Party are continuing, and one of the contentious issues is raising the minimum wage. A congressional vote on the program is scheduled for next week. Any delays in the adoption of the program may negatively affect market sentiment and support the protective greenback.

The USD index fell by almost 0.2%, to 90.35 points the day before, an improvement in risk appetite attracted buyers to stocks, rather than the safe-haven dollar.

Meanwhile, the euro failed to take full advantage of the greenback's broadside weakness.

The EUR/USD pair climbed above 1.2040 last Friday, but then it corrected to 1.2117.

According to IHS Markit, the composite index of business activity in the eurozone, according to a preliminary estimate, rose to 48.1 points in February from 47.8 points in January.

Although the value of the indicator was the highest in two months, the indicator is still in the decline zone.

At the same time, the assessment of the US composite PMI index in February rose to 58.8 points, which indicates the highest growth rate of business activity in the country since March 2015.

In addition, the pace of deployment of the vaccination campaign against COVID-19 in the EU still leaves much to be desired, despite the new supplies of the vaccine.

In this regard, Europe lags behind the United States, where 17% of the population has already been vaccinated.

Although, following the results of the last five days, the EUR/USD pair expanded the boundaries of the weekly range, but remained in it.

In order to continue rising, the pair needs to surpass the resistance area of 1.2170-1.2180. This will make it possible for the bulls to test the January highs again near 1.2350.

Strong support is at 1.2060 and 1.1970. The pair should attract buyers in case the price falls to these levels.

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

Analytics and trading signals for beginners. How to trade GBP/USD on February 22? Analysis of Friday. Getting ready for Monday

Trading 21 Fév 2021 Commentaire »

Hourly chart of the GBP/USD pair

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The GBP/USD pair simply continued its upward movement without any hints of a correction last Friday. Thus, the upward trend continues, but, unfortunately, it does not add any clarity to the current technical picture. Recently, three upward trend lines have already been formed, each of which was canceled, afterwards the upward movement resumed. Thus, the pound continues to move extremely chaotic and is difficult to predict. Based on this, we believe that you should be extremely careful when working with this pair, or do not try to work it out at all. Too many false signals have been generated lately. Not a single trading signal on Friday, and this is probably for the best. We remind you that it is extremely difficult to find reasons for the pound's growth. It is difficult to even explain why the pound continues to rise. Macroeconomic statistics are ignored, global factors are too contradictory to draw conclusions on. Last Friday, we advised you to buy the pair if a new buy signal from the MACD indicator is generated. No such signal was generated during the day.

The UK published indexes of business activity in the services and manufacturing sectors. Quite unexpectedly, business activity in the service sector rose from 39.5 to 49.7, which is very positive news for the British economy. Recall that over the same period, business activity in the EU services sector declined. Thus, we can conclude that the reason why the pound rose in price in the first half of the day was due to statistics from Britain. But what about the US reports, which also turned out to be strong and better than the predicted values? Logically, they were supposed to support the dollar. However, if the euro/dollar pair began to correct by the end of the day, then the pound/dollar pair did not (25 points of downward movement at the end of trading is not a correction). Thus, we conclude that the statistics were ignored, and the upward movement of the pair in the morning is just a coincidence. Markets continue to buy the pound solely due to the speculative factor.

No major releases scheduled in the UK and US on Monday, February 22. We expect a correction in the euro/dollar pair, but anything can happen for the pound/dollar pair. No global topics recommended to track right now. The only thing is that we are waiting for is the new stimulus package for the American economy, which was proposed by Joe Biden and which must now be approved by the US Congress.

Possible scenarios on February 22:

1) Long positions became relevant again, since a new upward trend line was formed. Thus, novice traders are advised to wait for a downward correction and a buy signal in the form of an upward reversal of the MACD indicator or a price rebound from a new trend line. The targets in this case will be located at a distance of 50-60 points from the entry point.

2) Short positions have lost their relevance again, therefore, in order to be able to consider them, you need to wait for the price to fall beyond the upward trend line. Even if it happens tomorrow, it is unlikely that the pound will fall much in price after this event. At the moment, the price and the trend line are separated by about 130 points.

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 February 22? Analysis of Friday. Getting ready for Monday

Trading 21 Fév 2021 Commentaire »

Hourly chart of the EUR/USD pair

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The EUR/USD pair continued the upward movement for most of the day (Friday), which, frankly, we did not expect. Take note that the markets nearly ignore all of the macroeconomic reports, therefore, on the one hand, the trading process is facilitated, since only technical signals need to be taken into account, on the other hand, we are deprived of an important forecasting tool. However, let's look at the technical picture first. Last Friday, the euro/dollar pair only turned down towards the very end of the day. Thanks to this reversal, we were able to form a new downward trend line and we also have another upward trend line. Thus, the quotes turned out to be stuck between two lines, in a triangle. Since we have a rebound off the upper trend line, we now expect a decline to the lower trend line. In our last review, we did not recommend buying the pair, but we did advise you to sell it if we receive signals from the MACD indicator. There were two of them on February 19. The first one turned out to be false, since the price did not continue to move down after it was created. Novice traders could have lost about 20 points on it. The second one turned out to be more accurate and still remains relevant. According to it, the profit level is about 15 points at the moment, but we expect quotes to fall on Monday. Thus, beginners can still get several dozen points of profit on it if the downward movement continues.

The macroeconomic background was "as usual" on Friday. The European Union published business activity indices in the services and manufacturing sectors. These reports cannot be called extremely important, but still the markets could react to them. Moreover, business activity in the service sector began to decline again and fell from 45.4 to 44.7. This means that the service sector is still experiencing problems due to quarantine restrictions and will pull down GDP and economic recovery. This is a bad sign for the European economy, but, as we can see, traders were not at all embarrassed and did not start selling the euro. Thus, the statistics were again ignored.

No important and interesting macroeconomic events planned in either the EU or the US on Monday, and this is probably for the best. Following the banal logic, the corrective downward movement may begin (continue) on Monday, which we are counting on.

Possible scenarios on February 22:

1) Long positions are currently relevant, but we recommend considering them near the lower trend line. In case of a rebound from it, or a buy signal from MACD near it. In this case, you are advised to open long positions with targets around the level of 1.2100 or slightly higher.

2) Trading for a fall is also relevant at the moment. A sell signal already formed on Friday and it is recommended to maintain it on Monday. Most likely, we will see the euro drop by at least another 20-30 points. There can be low volatility movements at night, so we recommend waiting for the morning in order to assess the profitability of this signal. Stop Loss can be moved to breakeven.

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 in the Forex market should remember that every trade cannot be profitable. Developing a clear strategy and money management are the keys to success in trading over a long period of time.

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

Bitcoin lacks only one thing to become a full-fledged alternative to fiat money.

Trading 21 Fév 2021 Commentaire »

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Bitcoin continues to rise and is likely to continue to rise until large investors and holders start to get rid of it. Experts around the world continue to understand the reasons for such a strong growth of cryptocurrency and name several reasons that can be considered factors for the growth of bitcoin. First, after bitcoin reached the mark of $ 50,000 per coin, it began to get almost all over the media. Every news agency or periodical considers it its duty to review bitcoin, as it is a banal popular topic in 2021. Everyone in the world began to be interested in bitcoin much more than before, providing an influx of new investors who increased the demand for the cryptocurrency even more. Secondly, at a time of ultra-low interest rates and falling yields of government and commercial securities, bitcoin has become a very attractive tool that can bring returns much higher than stocks or gold. Thus, the process of banal flow of money from the sphere of stock instruments and gold to the cryptocurrency sphere, which offers a high yield, has begun. Investors and traders who set themselves the task of not just saving money, but making money, naturally choose more cryptocurrencies, which it can be done in 2021. Of course, bitcoin remains an ultra-volatile instrument and threatens huge losses to its owners, but so far it is only growing, as the value of its owners' investment portfolios is growing. By and large, everyone in the market understands that the most important thing is not to miss the moment when the "cue ball" will be massively disposed of (as it was in 2017 when bitcoin fell in price from $ 20,000 to $ 3,000). Meanwhile, analysts predict a drop in bitcoin volatility in the coming years. That is, the cryptocurrency will approach its market properties to ordinary assets, securities, and fiat money. And, from the point of view of many experts, this will further fuel interest in it. Now a lot of people are afraid of bitcoin, as they are afraid of its possible strong fall and loss of their funds. But if the volatility of bitcoin decreases, it really will be regarded by many investors as a hedging tool and a calculation tool, which is not without its attractiveness (due to anonymity). Thus, in the coming years, the cryptocurrency may continue to gain popularity. Naturally, this is not a matter of a couple of months. Bitcoin can gain popularity for several years and even decades. But each new round will also mean an increase in its price. At least until it is fully controlled by governments or central banks (which may not happen).

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

Elon Musk is once again influencing Bitcoin. The number 1 cryptocurrency is aiming for a fantastic $ 100,000.

Trading 21 Fév 2021 Commentaire »

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The bitcoin exchange rate continues to calmly rise in price and has already reached the mark of $ 57,000 per coin. There is still no question of any correction. In this article, we would like to analyze in detail the specifics of the cryptocurrency market and why bitcoin can grow to $ 100,000 per coin in the next one or two months. To begin with, let's remember that the number 1 cryptocurrency rose by $ 10,000 only thanks to a couple of tweets from Elon Musk and statements from representatives of several companies that they plan to work with bitcoin or invest in it. These actions are of great importance for the cryptocurrency market because they show the rest of the players what to do. It is these "cryptocurrency manipulations" that lead to serious price increases. Simply put, a huge number of bitcoin traders buy this cryptocurrency with one goal – to make money on growth. Accordingly, the more crypto traders join the "buy bitcoin" movement, the more its value will grow. Accordingly, large holders of bitcoin can only warm up interest in the cryptocurrency and make it clear to the market that they believe in further price growth and that $ 100,000 per coin (or any other goal) is an objective reality. That's what Elon Musk and the company are doing right now. The owner of Tesla and SpaceX has clearly shown an unhealthy interest in bitcoin in recent weeks. One of the richest people in the world (which automatically means a huge trust in his words) regularly comments on bitcoin, mentions it in his comments, and makes it clear that the cryptocurrency will continue to grow. And if the richest man on Earth says that the "cue ball" will continue to grow, then why not believe him? The latest news related to Elon Musk says that the businessman has joined the Internet movement "Laser Way for Bitcoin''. The meaning of this movement is to post images to their social networks with the image of "glowing eyes", which symbolize the further growth of the "cue ball". It is clear that everyone who posts such an image in their account is the owner of bitcoin and believes in its further growth. Now a similar image was posted by Elon Musk, and the number one cryptocurrency continued to rise in price. Thus, the main conclusion that we would like to draw is that large investors and players continue to manipulate the market to maximize the growth of bitcoin, in which they are personally interested. And it's not good, and it's not bad. This is reality. Recent events have already shown that if a large number of people unite with a single goal, they are quite capable of bringing down certain stocks or, on the contrary, provoking their huge and illogical (at first glance) growth. However, the price of any asset is determined by supply and demand. If an asset is bought, it increases in price. And why it is bought, it is no longer interesting to anyone in 2020-2021.

What do you think will be the reaction of bitcoin if tomorrow Elon Musk announces that he has sold all the coins he has?

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

GBP/USD. Preview of the new week. Important reports on orders for long-term goods and GDP in the US should influence the

Trading 21 Fév 2021 Commentaire »

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The British pound, unlike the euro, continues to trade quite strangely. And this "strange" applies to many aspects. For example, on a 24-hour timeframe, the movement is strange, because it is recoilless. The last round of movement to the north began on September 23 and since then there have been a couple of pullbacks down. In total, the pound is getting more expensive. It turns out that for exactly five months and during this time, it has grown by 14 cents. Thus, the British currency is extremely overbought. However, the pound in its movement is more similar to bitcoin. It is also overbought. It has been growing for several months in a row, but at the same time, traders do not worry about such aspects at all and continue to buy the pound for dollars. This week, the pair's quotes have already worked out the psychological level of $ 1.4000. And so far, there is no sign that buyers are ready to lock in some of the profits on long positions. It is also "strange" that the fundamental background cannot even theoretically provide such strong support for the pound. Yes, the same factors play a role for the pound as for the euro currency. That is, for example, the factor of economic decline in the second quarter of 2020. Then, recall, the Americans lost 31%, and the British - about 20%. However, the latest GDP data already suggests that the US recovered most of its losses. The total losses of the British economy compared to the fourth quarter of 2019 are 7.8%, the American - 2.5%. The difference is three times. Thus, it can no longer be said that the pound is growing due to the record fall in US GDP. The United States has already leveled most of the losses. There remains only the "money supply factor", the factor of pouring huge sums into the American economy. However, this factor alone cannot play a role for the markets. We remind you that Britain has a huge number of its own economic and epidemiological problems, as well as Brexit, which ended only a month and a half ago. And these problems were also during the last five months when the pound sterling became more expensive. That is, traders completely ignored the high probability (at that time) of the absence of a trade agreement with the EU, the weak economic recovery, two "lockdowns" this winter, new strains of "coronavirus", which are opened with enviable regularity in the UK. Thus, we continue to believe that the pound sterling shows only "speculative growth". And that says it all. Since the "foundation" and "macroeconomics" do not have any effect on the mood of traders.

Next week, there will be an extremely small amount of macroeconomic statistics in the UK. On Tuesday, the unemployment report and data on applications for unemployment benefits will be published, and this is probably all for the current week. No important speeches are scheduled. In the States, the situation will be a little more interesting. On Thursday, February 25, an important report will be published on orders for long-term goods, as well as on GDP for the fourth quarter in the second estimate. In addition to these reports, a few more minor ones will be published, however, we do not even recommend paying attention to them now, since it is not too likely that even the most important reports will be noticed and worked out by the markets. As we have repeatedly said, 90% of the macroeconomic statistics are still ignored. Thus, given that fundamental and macroeconomic factors do not play a special role now, traders will only have to pay attention to technical factors. This greatly simplifies the process of trading the pound/dollar pair. Moreover, in the last two weeks, the pair stopped moving in the "swing" mode and began the usual upward trend. Therefore, we continue to consider trading for an increase and look for upward trends on lower timeframes.

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Trading recommendations for the GBP/USD pair:

The pound/dollar pair continues to trade near its 2.5-year highs, regularly updating them. The "swing" on the 4-hour timeframe has stopped and now there is fairly strong growth in the pair. Last week, traders tried to start a downward correction, however, it ended very quickly, near the Kijun-sen line. Thus, the markets failed to consolidate the pair below this line, therefore, the upward trend should be continued with the aim of the resistance level of 1.4103.

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

EUR/USD. Preview of the new week. The bulls will continue to put pressure on the pair. We are waiting for a new round of

Trading 21 Fév 2021 Commentaire »

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A new working week begins, and we need to figure out what to expect from it. If you look at the 24-hour timeframe, you can see that the euro/dollar pair has been trading very calmly in recent months, without sudden movements and "swings". In the second half of last year, there was a 4-month flat, but after that, the global upward trend resumed. Thus, the euro continues to trade in the most logical, reasonable, and convenient way. Convenient – for working out this pair. By contrast, the pound – which has been very difficult to work off in the last six months. But everything is fine with the euro currency. There is a trend, there are corrections commensurate with this trend, the general fundamental background can be the basis for the global strengthening of the euro currency and the fall of the dollar. Thus, it is the euro/dollar pair that remains the most convenient pair. However, at the same time, we continue to note that the markets are paying less attention to the macroeconomic background. Before the pandemic, almost any report could trigger a market reaction. Reports such as GDP or NonFarm Payrolls could cause a movement of 100-150 points, which is a lot for the euro/dollar. But with the arrival of the pandemic and the crisis caused by it, everything has changed in the truest sense of the word. Now a maximum of 10% of the total number of published statistics is processed. Moreover, sometimes the pair moves in the same direction as the reports published on this day tell it, so some analysts interpret this as a test of the released data by the markets. We remind you that the reaction to a particular published report occurs either immediately or with the opening of the next important trading session. For example, in Europe, GDP was published, which unexpectedly grew more than predicted. The Europeans can work out this news, but so can the Americans. Since the US trading session begins in the afternoon, two bursts in the foreign exchange market may follow on the same news. Thus, most of the macroeconomic statistics continue to be ignored by the markets, and the movement in the "right" direction is nothing more than a simple coincidence.

Nevertheless, it is not necessary to ignore the macroeconomic statistics. You just need to understand that there is no point in waiting for serious movements in the market because of it at this time. However, statistics show the condition of a particular economy at a given time. Simply put, it is now important for determining the overall state of any economy, assessing the pace of recovery after the global crisis. In our previous articles, we assumed that everything now depends on two global factors: "the balance of power of the American and European economies'' and "stimulus packages from governments and central banks". However, the first factor is slowly being pushed into the background, as recent reports have shown that the US economy is recovering faster, and its losses compared to the fourth quarter of a year ago are less than those of Europe. Simply put, at the moment, due to the pandemic, "lockdown" and the crisis, the US economy has lost less in percentage terms than the EU economy. This, from our point of view, is quite a strong factor in favor of the dollar continuing to grow. However, the movement that was observed at the beginning of this year fits the description of a "technical correction". Moreover, we have already said that in the 24-hour timeframe, two strong signals indicate the continuation of the upward movement. Thus, we believe that now, in the long term, the pair is simply correcting and in the coming weeks, the upward movement can be resumed. This resumption may coincide with the news that the US Congress has approved a new $ 1.9 trillion stimulus package. It doesn't even matter how this money will be received and poured into the economy. In any case, this is an increase in cash. This is a growth of the money supply available to economic entities and ordinary Americans. Thus, if this package is approved (and this can no longer be doubted), we expect a new fall in the US currency.

As for the statistics, there will be an extremely small number of them next week. In the European Union, the preliminary value of the consumer price index for February will be published. Recall that the previous report for January showed acceleration from -0.3% y/y to +0.9% y/y, which caused a huge number of questions about such a gigantic growth rate. So, it is very interesting, what will be the inflation data for February? No more important publications and events are planned for the next week in the European Union.

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Trading recommendations for the EUR/USD pair:

The technical picture of the EUR/USD pair shows that the pair on the 24-hour timeframe bounced off important supports in the face of the Senkou Span B line and the 50.0% Fibonacci level. Thus, we still expect a new round of upward movement. And as long as the price is not fixed below the Senkou Span B line, this option will be the main one. On the 4-hour chart, it is now recommended to trade for an increase, however, the upward movement on this chart is not so unambiguous. The pair made another upward leap at the end of this week, however, it is impossible to say that there is a clear upward trend now. It may be better to trade the pair using the hourly timeframe at the beginning of the new week.

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