| 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 upward movement. 2021-02-21  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.  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. GBP/USD. Preview of the new week. Important reports on orders for long-term goods and GDP in the US should influence the mood of the markets. 2021-02-21  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.  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.
Author's today's articles: Stanislav Polyanskiy  Graduated from Odessa State Economic University. On Forex since 2006. Writes analytical reviews about international financial markets for more than 3 years. Worked as a currency analyst in different finance companies for a long time including the biggest companies of Russia and Ukraine.
Subscription's options management Theme's:
Fundamental analysis, Fractal analysis, Wave analysis, Technical analysis, Stock Markets
Author's :
A Zotova, Aleksey Almazov, Alexander Dneprovskiy, Alexandr Davidov, Alexandros Yfantis, Andrey Shevchenko, Arief Makmur, Dean Leo, Evgeny Klimov, Fedor Pavlov, Grigory Sokolov, I Belozerov, Igor Kovalyov, Irina Manzenko, Ivan Aleksandrov, l Kolesnikova, Maxim Magdalinin, Mihail Makarov, Mohamed Samy, Mourad El Keddani, Oleg Khmelevskiy, Oscar Ton, Pavel Vlasov, Petar Jacimovic, R Agafonov, S Doronina, Sebastian Seliga, Sergey Belyaev, Sergey Mityukov, Stanislav Polyanskiy, T Strelkova, Torben Melsted, V Isakov, Viktor Vasilevsky, Vladislav Tukhmenev, Vyacheslav Ognev, Yuriy Zaycev, Zhizhko Nadezhda
Edit data of subscription settings
Unsubscribe from the mailing list Sincerely,
Analysts Service | If you have any questions, you can make a phone call using one of the
InstaForex Toll free numbers right now:
|  | InstaForex Group is an international brand providing online trading services to the clients all over the world. InstaForex Group members include regulated companies in Europe, Russia and British Virgin Islands. This letter may contain personal information for access to your InstaForex trading account, so for the purpose of safety it is recommended to delete this data from the history. If you have received this letter by mistake, please contact InstaForex Customer Relations Department. |
No comments:
Post a Comment