Trading plan for the GBP/USD pair for the week of March 8-12. New COT (Commitments of Traders) report. The pound is not interested

Trading 06 Mar 2021 Commentaire »

GBP/USD - 24H.

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The GBP/USD currency pair has been growing in recent weeks and months, ignoring many fundamental factors. Therefore, the downward movement that has been observed in the last week or a little more can be interpreted simply as a banal technical correction in the long term. On the 24-hour timeframe, in principle, this is visible. At the end of this week, the pound sterling also fell in price, as well as the euro currency. The reasons are the same since both pairs moved almost identically. The only difference is that the euro currency has been correcting for two full months, and the pound sterling began a correction a week ago. Although, from our point of view, the reason for the fall of the pound sterling is much more than the euro currency. But we have already drawn the attention of traders to some illogic in the movements of the pound and the "speculative" factor many times. Thus, now, after a year of strengthening the pound and five months of its recoilless growth, such trifles are no longer particularly impressive. The correction eventually began, which is good. Now, what happens next? We believe that there may now be a conflict between the "technique" and the "foundation". The fact is that in general, the "foundation" is stronger in America than in the UK, so it seems logical that the dollar will now grow. According to the "technique", it is also logical to move down by 400 points. However, if Joe Biden's "plan to save America" is approved by the US Senate, an additional $ 2 trillion will flow into the US economy, and we have previously analyzed changes in the volume of money supply, so the probability that the dollar will resume falling is high. But until the new trillions of freshly printed money start to be dropped from the helicopter, the US dollar can continue to grow.

COT report.

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During the last reporting week (February 23-March 1), the GBP/USD pair fell by 140 points. Although the pound fell during the reporting week and continued to fall after it, the mood of the group of "Non-commercial" traders is becoming more "bullish". Right now, when the probability of the end of the upward trend, on the contrary, is growing. During the reporting week, non-profit traders closed 2.5 thousand contracts for buying and 8.2 thousand contracts for selling. Thus, the net position increased by about 6 thousand contracts, and the mood of the major players became more "bullish". This change is much better displayed with the help of indicators. The second indicator, which reflects just the change in the size of the net position of "Non-commercial", shows an increase in this indicator over the past five weeks. At the same time, starting from mid-December, the green and red lines of the first indicator, which displays the size of the net positions "Commercial" and "Non-commercial", are removed from each other. And this, we recall, is a sign of a strengthening trend. Thus, in general, the data of the COT report now speak not about the end of the upward trend, but its preservation and strengthening. As we said earlier, absolutely any conclusions made based on COT or foundation reports require confirmation by technical signals. Therefore, we recommend that you keep in mind the conclusion drawn from the COT reports, but at the same time remember that on the 24-hour timeframe, the pair was fixed below the Kijun-sen line, and on the lower timeframes, downward trends were formed.

During the current week, there were almost no interesting events in the UK. Only on Wednesday, Rishi Sunak, the finance minister, presented in Parliament a draft budget for 2021, which caused some concerns among UK residents and businesses. However, the fears were in vain, as Sunak assured that all those in need will continue to receive assistance from the state, at least until September of this year, when it is planned to complete the vaccination of the entire adult population of the country. Thus, the markets were able to exhale and focus on the hype topic with US Treasury bonds. The growth in yields of which is the reason for the strong strengthening of the dollar, according to the overwhelming majority of analysts and experts. It is worth noting that yesterday the yield of 10-year treasuries rose again and is already 1.566%. Jerome Powell this week said that in the future, the Fed will limit inflation in the States (if it accelerates strongly), but the regulator is not going to target bond yields. The markets interpreted this statement as a call to buy the dollar again because it was during Powell's speech that a new collapse in the pair's quotes followed. British government bond yields have also been rising in recent weeks, but no one cares about this point.

Trading plan for the week of March 8-12:

1) The pound/dollar pair has consolidated below the critical line on the 24-hour timeframe, so now the downward movement is more relevant. To identify the resumption of the upward movement, the bulls must return to the area above the Kijun-sen line. Up to this point, it is more preferable to move down and trade down.

2) Sellers have finally started to put pressure on the pound/dollar pair. In the coming weeks, the fundamental background will favor the further strengthening of the US dollar. However, when the $ 2 trillion "rescue plan for the US economy" is approved, the US currency may again be under market pressure. In any case, the dollar now has a certain respite.

Explanation of 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 before.

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

Trading plan for the EUR/USD pair for the week of March 8-12. New COT (Commitments of Traders) report. Traders are panicking

Trading 06 Mar 2021 Commentaire »

EUR/USD - 24H.

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The second week in a row ends with the collapse of the euro/dollar pair. At the end of last week, quite strong macroeconomic statistics were released in the United States, and the US Air Force attacked Syrian facilities, which immediately provoked an increase in "anti-risk" sentiment in the markets. But still, at the end of last week, the strengthening of the dollar looked rather doubtful. There was an impression that this is only a momentary confusion in the market, after which the planned fall of the US currency will resume. However, during this week, traders found more and more factors in favor of the US dollar. The current week ended with another fall of the pair, this time again due to strong macroeconomic statistics from overseas. Thus, in one week, the US currency broke the absolutely "bullish" trend for the euro/dollar pair. The 50.0% Fibonacci level, which we have been talking about in recent weeks, has been overcome. The price also left the Ichimoku cloud, so the chances of continuing to strengthen the dollar have increased dramatically. Something happened that few people expected. However, we always recommend our readers to support any fundamental theory or assumption with technical factors and specific signals. It should be remembered that this is a market and no one in the world can predict its behavior with a 100% probability, and also take into account all the factors that affect the exchange rate formation at the moment.

COT report.

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During the last reporting week (February 23-March 1), the EUR/USD pair fell by 110 points. In the last couple of months, we supported the option of continuing the global upward trend, and COT reports partially confirmed this scenario. However, we would like to remind you that since September last year, either a strong correction for the euro/dollar pair or a new downward trend is brewing. This output is solely based on COT reports. It's simple: the green and red lines of the first indicator in the illustration, which show the net positions of the "Non-commercial" and "Commercial" groups of traders, reached the point of maximum divergence in September. Such points are considered either the endpoints of the trend or the harbingers of its end. If these lines begin to move towards each other, it means that the mood of non-commercial traders and commercial ones changes to the opposite, and with them the trend. However, the pandemic and the crisis, as well as the unprecedented actions of central banks, which caused the strongest growth of the money supply and, as a result, the imbalance between the money supply of various currencies, ultimately led to the fact that this phenomenon did not cause a trend reversal. However, all the time since September, the big players walked on the edge of the abyss. The green and red lines then narrowed slightly, then diverged again, that is, this signal began to have a delayed execution. Therefore, solely based on COT reports, we can say that now is an excellent time to continue forming a new downward trend. Moreover, during the reporting week, professional traders closed 8 thousand buy contracts and opened 8 thousand sell contracts. Thus, their net position decreased by 16 thousand, that is, their mood became more "bearish".

This week, there were many interesting fundamental and macroeconomic events. However, by and large, traders have been tracking only one factor all week – the growth factor in the yield of American treasuries, which for some reason began exactly a week ago to provoke a strong strengthening of the US currency. We have already drawn attention to the fact that the yield of treasuries has been growing for a long time, and the fact that the yield is growing indicates a low demand for government bonds and investors' fears about future inflation. Thus, these are more "bearish" factors for the US currency. However, the US dollar has been doing well in the last 7 trading days. And the markets do not think much about whether this is a bullish factor, an increase in government bond yields, or a bearish one. For the pound, over the past five months, there were few growth factors, however, the currency grew and became more expensive all this time. Thus, the bears may have reversed the long-term bullish trend. If so, even the factor of a new $ 2 trillion stimulus package for the US economy may not help the US currency. The general conclusion is that the foundation is still not on the side of the dollar, however, the technology is now on a downward trend. Thus, we work out a downward trend.

Trading plan for the week of March 8-12:

1) On the 24-hour timeframe, the whole technical picture is confused. The pair turned sharply down and started a strong downward movement, which raises some questions from a fundamental point of view. The pair's quotes were fixed below the Ichimoku cloud and below the 50.0% Fibonacci level. Therefore, theoretically, the pair's path to the south still has an important level of 61.8% on the Fibonacci – 1.1887. If it stops the bears, then a new round of upward movement can begin, which on the 4-hour and hourly timeframes will turn into the formation of an upward trend.

2) In fact, we can now conclude that a downward trend has begun. However, there are a lot of factors that can now influence the exchange rate formation of the euro/dollar pair, and many of them speak of opposite directions of movement. Thus, it is recommended to trade downwards now, using lower timeframes, because there is a clear trend. But it should be remembered that from a fundamental point of view, the probability of a new and strong fall in the US currency in 2021 is high.

Explanation of 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 before.

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

Dollar Continues To Climb Higher

Trading 06 Mar 2021 Commentaire »

The U.S. dollar turned in a strong performance against its peers on Friday, extending recent climb, after data showed a bigger than expected increase in job growth in the month of February.

According to the report released by the Labor Department Friday morning, non-farm payroll employment jumped by 379,000 jobs in February after climbing by an upwardly revised 166,000 jobs in January. Economists had expected employment to increase by 182,000 jobs compared to the uptick of 49,000 jobs originally reported for January.

The data also showed the unemployment rate edged down to 6.2% in February from 6.3% a month earlier.

The Federal Reserve Chairman Jerome Powell's comments on Thursday that he expects some inflationary pressures in the time ahead contributed a bit to the dollar and bond yields' surge.

Powell said the recent run-up in bond yields was "notable" and that "disorderly conditions in financial markets" or a broad tightening of financial conditions would provoke a policy change. But he stopped short of saying that recent market gyrations meet those tests.

The dollar index, which rose to a fresh three-month high at 92.19, gave up some gains subsequently, but it was still up 0.35% at 91.95 a little while ago.

Against the Euro, the dollar firmed up to 1.1919, gaining nearly 0.5%.

The Pound Sterling, which slid sharply, fetching $1.3779 in the European session, regained some ground as the day progressed, but was still weak at $1.3838, netting a loss of about 0.4%.

The Yen was weak at 108.38 a dollar, compared to 107.98 Thursday evening.

The Swiss franc was weaker by about 0.3% at 0.9312 a dollar. The Loonie, riding on higher crude oil prices, firmed up to C$1.2651 a dollar, from C$1.2667.


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

Ten-Year Yield Closes Nearly Flat After Spiking Above 1.6%

Trading 06 Mar 2021 Commentaire »

After moving sharply lower early in the session, treasuries regained ground over the course of the trading day on Friday.

Bond prices climbed well off their early lows to end the day nearly unchanged. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.554 percent.

Before the turnaround, the ten-year yield rose as high as 1.626 percent, its highest intraday level in over a year.

The initial weakness among treasuries came after the Labor Department released a report showing much stronger than expected job growth in the month of February.

The Labor Department said non-farm payroll employment jumped by 379,000 jobs in February after climbing by an upwardly revised 166,000 jobs in January.

Economists had expected employment to increase by 182,000 jobs compared to the uptick of 49,000 jobs originally reported for the previous month.

The stronger than expected job growth was primarily due to a rebound in employment in the leisure and hospitality industry, which added 355,000 jobs.

The report also said the unemployment rate unexpectedly edged down to 6.2 percent in February from 6.3 percent in January. Economists had expected the unemployment rate to remain unchanged.

The modest decrease pulled the unemployment rate down to its lowest level since hitting 4.4 percent last March, when coronavirus-related lockdowns began to take effect.

The subsequent recovery by treasuries may have reflected bargain hunting, with the pullback by yields inspiring a rally by stocks on Wall Street.

In light of recent concerns about inflation, next week's trading may be impacted by reaction to reports on consumer and producer prices in the month of February.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.


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

Oil Futures Settle Sharply Higher For The Day, Gain Over 7% In Week

Trading 06 Mar 2021 Commentaire »

Crude oil prices rose sharply on Friday, extending recent gains, reacting to the decision of the Organization of the Petroleum Exporting Countries and its allies to maintain output reduction agreement through end of April.

Saudi Arabia said it will retain its 1 million barrel-a-day voluntary production cut in order to support crude prices. Saudi Energy Minister Prince Abdulaziz bin Salman, who cautioned about raising production, said cuts will be withdrawn over the next few months depending upon the market conditions.

West Texas Intermediate Crude oil futures for April ended higher by $2.26 or about 3.5% at $66.09 a barrel, the highest settlement since June 2019.

WTI crude oil futures gained more than 7% in the week.

Brent crude oil futures were up $2.63 or 3.91% at $69.37 a barrel a little while ago.

With the economy showing signs of a quick recovery, it is widely expected that energy demand will see a significant jump across the world.

According to the report released by Baker Hughes Friday afternoon, U.S. energy firms added oil and natural gas rigs for a second week in a row amid rising crude prices.

The oil and gas rig count in the U.S. rose to 403 this week, an addition of one rig from a week earlier. The total rig count has increased for the past seven months after dropping to a record low of 244 in August, the data showed.


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

*U.S. Consumer Credit Increased By $9.7 Billion In January

Trading 06 Mar 2021 Commentaire »

U.S. Consumer Credit Increased By $9.7 Billion In January


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

Gold Futures Settle Lower As Bond Yields, Dollar Rise

Trading 06 Mar 2021 Commentaire »

Gold prices drifted lower on Friday and the most active gold futures contract suffered its third weekly loss in a row, as rising optimism about quick economic recovery on the back of buoyant jobs data, and a strong dollar weighed on the commodity.

The Federal Reserve Chairman Jerome Powell's comments on Thursday that he expects some inflationary pressures in the time ahead contributed a bit to the dollar and bond yields' surge.

Powell said the recent run-up in bond yields was "notable" and that "disorderly conditions in financial markets" or a broad tightening of financial conditions would provoke a policy change. But he stopped short of saying that recent market gyrations meet those tests.

While the dollar, extending recent gains, rose to a fresh 3-month high today, the yield on the U.S. 10-Year Treasury Note surged past 1.6%, dimming the demand for the safe-haven asset.

The dollar index rose to 92.19 earlier in the day, and despite paring some gains subsequently, was still fairly well above the flat line a little while ago at 91.97, up nearly 0.4% from Thursday's close.

Gold futures for April ended lower by $2.20 or about 0.1% at $1,698.50 an ounce, the lowest close since early June 2020.

Silver futures for May ended down $0.174 or about 0.7% at $25.287 an ounce, while Copper futures for March settled at $4.0755 per pound, gaining $0.0970 or 2.4%.

Data released by the Labor Department showedn non-farm payroll employment jumped by 379,000 jobs in February after climbing by an upwardly revised 166,000 jobs in January. Economists had expected employment to increase by 182,000 jobs compared to the uptick of 49,000 jobs originally reported for the previous month.

The unemployment rate unexpectedly edged down to 6.2% in February from 6.3 percent in January. Economists had expected the unemployment rate to remain unchanged.

A report from the Commerce Department said the trade deficit widened to $68.2 billion in January from a revised $67.0 billion in December. Economists had expected the trade deficit to widen to $67.5 billion from the $66.6 billion originally reported for the previous month.


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