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On March 20, the EURUSD pair has expressed remarkable bullish recovery around the newly-established bottom around 1.0650.
Shortly after, a sideway consolidation range was established in the price range extending between 1.0770 - 1.1000.
On May 14, evident signs of Bullish rejection as well as a recent ascending bottom have been manifested around the price zone of (1.0815 - 1.0775), which enhances the bullish side of the market in the short-term.
Bullish breakout above 1.1000 has enhanced further bullish advancement towards 1.1175 (61.8% Fibonacci Level) then 1.1315 (78.6% Fibonacci Level) where bearish rejection was anticipated.
Although the EUR/USD pair has temporarily expressed a bullish breakout above 1.1315 (78.6% Fibonacci Level), bearish rejection was being demonstrated in the period between June 10th- June 12th.
This suggested a probable bearish reversal around the Recent Price Zone of (1.1270-1.1315) to be watched by Intraday traders.
Despite the recent temporary bullish spike above 1.1350, Bearish persistence below 1.1250-1.1240 (Head & Shoulders Pattern neckline) is needed to confirm the pattern & to enhance further bearish decline towards 1.1150.
On the other hand, another bearish breakdown below the depicted keyzone around 1.1150 is mandatory to ensure further bearish decline towards 1.1070 and 1.0990 if enough bearish pressure is maintained.
Trade recommendations :
The recent bullish movement towards the price zone around 1.1300-1.1330 (recently-established supply zone) should be followed by Intraday Traders as a valid SELL Signal.T/P levels to be located around 1.1175 then 1.1100 while S/L to be placed above 1.1375.The material has been provided by InstaForex Company - www.instaforex.com.
Intermediate-term Technical outlook for the GBP/USD pair remains bullish as long as bullish persistence is maintained above 1.1890-1.1900 (Double-Bottom Neckline) on the H4 Charts.
Recently, Bullish breakout above 1.2265 has enhanced many bullish movements up to the price levels of 1.2520-1.2590 where temporary bearish rejection as well as a sideway consolidation range were established (In the period between March 27- May 12).
Shortly after, transient bearish breakout below 1.2265 (Consolidation Range Lower Limit) was demonstrated in the period between May 13 - May 26.
However, immediate bullish rebound has been expressed around the price level of 1.2080.
This brought the GBPUSD back above the depicted price zone of 1.2520-1.2600 which failed to offer sufficient bearish rejection.
Hence, short-term technical outlook has turned into bullish as well, further bullish advancement was expressed towards 1.2780 (Previous Key-Level) where signs of bearish rejection were expressed.
Short-term bearish pullback was expressed, initial bearish destination was located around 1.2600 and 1.2520.
Moreover, a bearish Head & Shoulders pattern (with potential bearish target around 1.2265) was recently demonstrated on the chart.
That's why, bearish persistence below 1.2500 ( neckline of the reversal pattern ) paused the bullish outlook for sometime & enabled further bearish decline towards 1.1265.
However, significant bullish rejection around 1.2265 brought the GBP/USD pair back towards 1.2600 - 1.2620 where a cluster of resistance levels are located.
Signs of bearish rejection should be watched around the current price zone of 1.2550-1.2620 (recent supply zone) as it indicates a high probability of bearish reversal.
Trade recommendations :
Intraday traders can consider the current bullish pullback towards the depicted Supply Zone (1.2550-1.2620) for a valid SELL Entry.
Stop Loss should be placed above 1.2650 while T/P level to be located around 1.2450 & 1.2265.The material has been provided by InstaForex Company - www.instaforex.com.
Contrary to hopes for growth, and despite the worsening epidemiological situation in the United States, the dollar index returned to the last month's minimum. Since early July, the indicator has lost 1.4% of its value. On Thursday, it tested the lower limit of the range at 96.34.
The pressure on the greenback is partly due to a moderate recovery in demand for risky assets. In many developed countries, there is an improvement in business and consumer activity, which increases the attractiveness of the financial assets of these countries. Even at the dawn of the coronavirus crisis, when the dollar was testing levels above 100 points, experts said that the decrease would mean the peak of the crisis. Perhaps this is happening now.
Meanwhile, the US financial authorities are increasingly doubting the steady recovery of the country's economy. Market players perceive the Fed's pessimism as a signal to further increase the asset buyback program. Such a policy further undermines the precarious position of the dollar.
Moreover, it is also worth paying attention to another important fact. The situation in the economy turned upside down. If earlier the US economy developed much faster than the Eurozone and accelerated in contrast to the slowdown in China, now it is the other way around. US economic dominance supported the dollar and allowed the Federal Reserve to raise interest rates, while other countries of such luxury could not afford to do the same.
This trend may linger for a long time, and the dollar will have to return to the positions won over the past six years. Some strategists have also begun talking about the potential for a 20% depreciation over the next few years. Everything is fine, but once again the coronavirus can destroy all predictions and illusions about this.
The United States recorded another record daily increase in the number of infected. This does not worry the markets much, but the situation is borderline. An outbreak can occur at any time, increasing demand for the US dollar.
Meanwhile, the negative factors for the greenback so far outweigh. Among them is the possible victory of Joseph Biden in the presidential election in November.
Opponent Donald Trump has stepped forward due to the incumbent president's inability to cope with a double crisis - a pandemic and protests against racism. Undoubtedly, the upcoming elections will have a huge impact on the greenback and global markets. This event will be more reflected in the next quarter. However, given that the situation in connection with the anticipated changes is starting to heat up now, the current quarter can also hook this event, pushing the greenback down.
Biden's presidency could result in higher taxes, lower minimum wages, tougher climate policies and other measures that would hit corporate profits and the attractiveness of local assets. The new team will want to increase spending on health care, infrastructure, and other areas that contribute to inflation. This is all later, and now everyone is interested in exactly when the dollar devaluation will occur.
The US dollar will sooner or later turn down due to the increasing pressure which is expected to be felt in the third quarter. The world is buried in dollar debt. This applies to both America and other countries of the world. Sustainable recovery requires a dollar devaluation.The material has been provided by InstaForex Company - www.instaforex.com.
No further changes were noted in the price of crude oil on Thursday. This is after a notable rise on Wednesday updating maximum values recorded in March this year. At the same time, both oil brands excelled in stability and growth. All this happens on the eve of the next batch of statistics on the level of raw material reserves in the United States of America.
The stocks of crude oil on July 3 were 5.654 million barrels higher as noted in the official report of the Ministry of Energy. At the same time, fuel inventories decreased by 4.839 million barrels. The reserves of distillates increased by 3.136 million barrels. While the strategically important terminal in Cushing also recorded growth of 2.206 million barrels.
Real data did not coincide with preliminary forecasts of experts who were preparing for the fact that the volume of raw materials decently reduced to a supposed 3.7 million barrels. The gasoline and distillates are also expected to dip by 1.2 million barrels and 500 thousand barrels, respectively.
The main reason for the increase in oil reserves in America was the rapid growth of imported raw materials. However, this fact reflects the positive changes that relate to an increase in demand for raw materials and fuel within the state, which then will affect the overall final statistics.
According to the latest data provided by the US government, oil production in the country should increase by 200 thousand barrels as early as next year. In June of this year, this figure was at around 11 million barrels per day. This year, production will remain at 11.6 million barrels per day.
The price of crude oil cannot escape the negative associated with the tense epidemiological situation in the world. The price would have rushed up and began to increase rapidly, but the news about the increase in the number of COVID-19 cases in the world and in the US forces it to slow down or even stop its movement. Recall that after the systematic removal of quarantine measures began on the territory of the southern states of America, new outbreaks of the disease began to be recorded, which already now testify to the more rapid spread of COVID-19 than it was in the spring. As soon as the country began to come out of the crisis, how should it return to restrictive measures again? On Tuesday alone, 60,000 new COVID cases were recorded. This has been an anti-record since the start of the pandemic.
The price of futures contracts for Brent crude oil for delivery in September on a trading floor in London fell slightly by 0.02% or $ 0.01. These changes remained almost invisible, and the price consolidated in the region of $43.28 per barrel. Wednesday's trading closed quite positive with an increase of 0.5% or $0.21.
The price of futures contracts for WTI light crude oil for delivery in August on an electronic trading platform in New York also slightly decreased by 0.2% or $0.08, which sent it to the level of $40.82 per barrel. On Wednesday, it reflected an increase of 0.7% or $0.28.
It is clear that Brent crude oil managed to get to its maximum marks recorded in the early spring of this year which was in the range of $43.23 per barrel. A good rise was provided by news on stocks in the United States. Until now, market participants have been able to not pay much attention to the spread of coronavirus infection, even despite the fact that extremely disappointing news and forecasts appeared.
However, it seems that investors will still have to react to the growth of COVID-19, but whether the price of raw materials can start a negative trend from this is a big question. Buyers' appetites in the market have grown too much, and it will be difficult to immediately stop this rally. Nevertheless, some inhibition is not excluded, as it happened today. But a serious fall can be discussed no earlier than the moment when the price of black gold reaches the next strategically important mark of $ 45 per barrel.The material has been provided by InstaForex Company - www.instaforex.com.
The recovery in the Asia-Pacific stock markets today is due to the rise in the US stock markets. But it is not possible to single out any individual factors contributing to growth. the markets as a whole are set to positive regardless of the external situation.
The US continues to record a new and growing number of COVID-19 patients every day. So far, the latest records showed an increase of 15 cases, which all came from different states. The country's authorities decided to introduce a new portion of quarantine measures, which should stop the spread of the virus to the extent that was observed in the first wave.
Meanwhile, the inflation rate in China for the first month of summer began to grow due to higher prices for a number of food products. The cost of products, in particular, has become higher due to supply disruptions amid the COVID-19 pandemic. The level of consumer prices in June also jumped immediately by 2.5% on a yearly basis. However, this did not become a catastrophic rise, since a month earlier this indicator also increased in the same range by 2.4%. This has become one of the lowest climbs recorded in more than a year. Analysts' preliminary forecasts were also worse with an expected increase of at least 2.6%.
In June, producer prices went down by 3% on a yearly basis.
China's Shanghai Composite Index climbed 1.33% in the morning. Hong Kong's Hang Seng Index, on the other hand, underwent a negative correction and fell 0.03%.
Japan's Nikkei 225 Index slightly increased by 0.4%. Good statistics are noted in the equipment orders sector. The total volume of contracts became 16.3% less over the year, and the previous decrease was 17.7%. On a monthly basis, the indicator grew by 1.7%, while in the middle of spring a tremendous reduction of 17% was noted. Analysts' preliminary expectations also turned out to be much worse than real numbers: the first and second indicators were expected to decrease by 17.1% and 5.4%, respectively.
The South Korean Kospi index changed in a positive direction noting an increase of 0.56%.
Australia's S & P / ASX 200 Index rose 0.59% to its previous level.
The US stock markets are also experiencing their best moments. Yesterday, an increase was recorded in all major areas. Nasdaq index takes the lead in the growth which again managed to accomplish the impossible and reach a record high against the backdrop of positive dynamics in the technology sector. The increase in the economy leveled out data on a significant increase in the number of COVID-19 cases in the country and the world as a whole.
According to the latest data, the incidence threshold of 3 million people has been crossed in the United States of America. At the same time, an increasing number of states announce new anti-records. In Florida, authorities are already faced with the problem of a shortage of hospital beds.
Despite this, stock markets continue to pretend that this situation does not concern them. Even the fact that market participants are currently experiencing serious stress does not mean at all that it is worth waiting for a collapse in the near future. Investors are inclined to take risks, although part of the assets is still transferred to a safe zone, as evidenced by the growth in ETFs.
The Dow Jones index rose 0.68%, which allowed it to move to the mark of 26,067.28 points. The S&P 500 index jumped 0.78% to reach 3,169.94 points. The Nasdaq index showed a record increase of 1.44%, and its current level was in the range of 10,492.50 points.
The European stock markets are also set for growth, which was observed almost everywhere. The positive dynamics were due to an increase in the quarterly profit of some of the largest enterprises operating in the software sector. This made investors hope for accelerated economic growth.
The UK FTSE index slightly increased by 0.1%. The German DAX index rose more rapidly by 1.3%. The French CAC 40 index also showed growth by 0.4%.
A meeting of finance ministers of the eurozone states is expected to take place. And the next summit of the European Union countries is scheduled for July 17-18. It is on it that the most important and exciting question of all members of the organization will be raised - the budget for several years. The organization of a fund to support and restore the economy of the region will also be discussed. Recall that earlier the total size of the fund was provided in the range of 750 billion euros, or 851 billion dollars, but it was not possible to reach a consensus.
Meanwhile, the extreme need for the existence of such a fund begins to be felt more and more as the economy develops and out of the crisis associated with the coronavirus pandemic. Nevertheless, some experts believe that the European region has already quite successfully overcome difficulties. In support of this, data are provided on the level of GDP, which were revised downward from the initial critical level. Thus, a decrease in the indicator is expected to be within 8.7%, whereas a more significant drop was previously forecasted.The material has been provided by InstaForex Company - www.instaforex.com.
The Chinese yuan continued to climb to the upper borders on Thursday due to a good strengthening of the main stock indexes and growth in the securities sector.
The positive noted on the stock exchanges of the PRC was transmitted to the foreign exchange market. The China CSI 300 index was able to significantly rise. The overall rise this week already amounted to 9%, which allowed it to reach maximum levels and even set another record after several years. Amid such positive news, the Chinese yuan also aims to strengthen. It was even able to overcome the level of 7 yuan per dollar, which was last stormed in March this year. Moreover, the USDCNY currency pair now checks the high value for strength, which was recorded almost two years ago.
Experts are not too surprised by the dynamics of the renminbi, as they previously noted that the state coped with the next wave of coronavirus infection that overtook the world this summer. The Chinese economy is gradually emerging from the crisis, which the country's authorities are in a hurry to share with the world. Literally, a shopping boom has occurred in the Chinese securities market. Investors were swiftly buying stocks, followed by inevitable growth. Thus, net purchases of securities in the first seven days of the current month turned out to be at the level of $ 7.85 billion, and this amount became more than for the entire previous month. China's bonds are also popular among foreign investors.
Such rapid positive dynamics can ultimately have a positive effect on the level of state GDP for the second quarter of this year. However, not all analysts are sure of this. There are also those who reacted rather restrainedly to the current situation while pointing out that it is worth waiting for the official statistics, which will be released next week.
Other experts established themselves in their position which in China is nothing more than a V-shaped economic recovery, which the United States of America dreams of. Nevertheless, it is not yet clear how significant and firm it will become. The unresolved conflict between America and China over Hong Kong adds fuel to the fire. Recently, there has been a surge of tension on this issue, which makes us think about a new round of disagreements.
There are more radical views on increasing interest in Chinese markets. Some argue that all this was created artificially due to the hype that the state media raised. Recently, they have been very active in promoting the purchase of shares as a way to preserve and increase their assets. However, history has already had a similar experience, when everything ended rather sadly. In the end, the US currency may lose support from the PRC. At least a separate part of the forecasts indicates a decrease in the dollar against the Chinese yuan to 6.95 yuan per dollar. However, some forecasts state that in the third and fourth quarters of the current year the currency pair will concentrate in the region of 7.18 yuan per dollar and 7.20 yuan per dollar, respectively.The material has been provided by InstaForex Company - www.instaforex.com.
Bitcoin is challenging the resistance at $,9500 area. This is important resistance for two reasons. First is the downward sloping resistance trend line from June 2019 highs. Secondly is the upper boundary of a technical pattern.
Red line - long-term resistance
Black lines- bullish pennant
Bitcoin has formed a bullish pennant pattern. An upward break out will be combined with the break above the red resistance trend line and it would be a very bullish signal. Bulls need to recapture the $9,500-$10,000 level in order to hope for a move towards $13,500-$15,000. Support is found at $9,000. A break below this level would be a bearish sign.The material has been provided by InstaForex Company - www.instaforex.com.
Gold price is very close to the 2020 higher highs that made yesterday. Trend remains bullish. Price is in a medium-term bullish trend and as long as price is above $1,750-60 level bulls have nothing to fear.
Red lines - bullish channel
Green rectangle- support zone
Gold price is approaching the upper channel boundary. This resistance is at $1,833. Our upside targets have been reached. Bulls need to be cautious as it is justified to see a pull back towards $1,760. Longer-term trend remains bullish as long as price is above $1,660. A pull back towards $1,785 area is highly likely. But be careful, trend is bullish and we consider such a pull back as an opportunity to buy not to go short.The material has been provided by InstaForex Company - www.instaforex.com.
On July 8, the EUR/USD pair gained about 55 basis points and thus continued to build the expected wave 5, C, or B. I expect a continued improvement of the instrument's quotes in terms of the building of this wave, after which the prolonged decline in quotes in the framework of the proposed global wave C. However, there are no signs of the completion of the construction of wave 5, C, or B. Wave 5 can also form inside this wave.
There have been no economic reports in recent days at all. However, there was a lot of news concerning the political and economic spheres of the European Union and the United States. Today, the meeting of EU Finance Ministers started, where they will choose the new President of the Eurogroup. However, the markets are not interested in this information. They are more interested if there will be a discussion of a 750-billion package of assistance to the European economy, which the Northern countries of the European Union do not want to approve. Judging by the announcements of the meeting, there will be no discussion on this issue. Thus, it is unlikely that the markets will receive the information that they are waiting for. It was also reported that the Bundesbank and the ECB have found a common language. The German Central Bank will not leave the jurisdiction of the European Bank and will not go against its will. However, this information will not affect the movement of the instrument in any way. What's important is the coronavirus epidemic in the United States. Yesterday we passed the threshold of 60 thousand cases per day. Donald Trump continues to distribute completely inappropriate comments and jokes on this topic in the style of "we need to reduce the number of tests to reduce the incidence of disease". At the same time, the main competitor of Trump in the race for the US President-2020, Joe Biden, said that 3 million cases of coronavirus in the US – "the merit" exclusively of Donald Trump, and called him "a commander-in-chief who is not able to command anything". The more the epidemic spreads, the more likely it is that the American economy will shrink again. Or recover at a slower pace. Accordingly, investors are worried about the future of the United States, especially on the eve of the presidential election, which is unknown how it will end. Now the position of Joe Biden looks stronger, this is confirmed by social studies, however, everything may still change by November.
General conclusions and recommendations:
The euro/dollar pair presumably continues to build an upward wave C or B. Thus, I recommend buying a tool with targets located near the calculated levels of 1.1406 and 1.1570, which is equal to 161.8% and 200.0% for Fibonacci for each "up" signal of the MACD in the calculation of building wave 5, C, or B.
The GBP/USD pair gained about 65 basis points on July 8. Thus, the construction of the assumed wave 5 continues. If this is true, then the increase in quotes will continue with targets located near the maximum of wave 3 or C or slightly higher. After completing the construction of this wave, it is also expected to build a new downward section of the trend, which can also turn out to be very long.
There were no noteworthy economic reports in the UK on Wednesday. There won't be any on Thursday or Friday. All the attention of the markets is still focused on the negotiations between London and Brussels on Brexit, which still do not end in anything positive. The British pound continues to rise due to the unhealthy political, economic, and epidemiological situation in America.
General conclusions and recommendations:
The pound/dollar tool has greatly complicated the current wave markup, which now involves building a new upward wave. Therefore, I recommend that you buy an instrument with targets around 1.2816 and 1.2990, which equates to the peak of wave 3 or C and 100.0% Fibonacci.The material has been provided by InstaForex Company - www.instaforex.com.
To open long positions on GBPUSD, you need:
The British pound continues to strengthen its position after yesterday's aid plan proposed by the UK government. The bulls successfully consolidated above the resistance of 1.2625, forming a good buy signal there. If you look at the 5-minute chart, you will see that after the breakout and consolidation above the level of 1.2625, buyers formed a good base for the continued growth of the pound. But even if you did not manage to enter the first wave, you could easily do so after a second decline and a test on the volume of the level of 1.2625. As long as trading is conducted above this range, the bullish momentum will continue, and the nearest target will be a maximum of 1.2676. Only a break of this level will provide the market with fresh players betting on the strengthening of GBP/USD in the area of highs of 1.2754 and 1.2803, where I recommend fixing the profits. In the scenario of a pound decline and a return to the level of 1.2625, it is best to postpone the new long positions until the support update 1.2572, where the moving averages are held or buy GBP/USD immediately to the rebound from the minimum 1.2526, slightly above which the lower border of the ascending channel is located.
To open short positions on GBPUSD, you need:
Sellers have one task – to return the pound to the support level of 1.2625. Until this happens, there is no point in talking about any correction at all. Only fixing below this range will form a good bearish signal that can return the pair to the minimum of 1.2572. The longer-term goal is the area of 1.2526, where I recommend fixing the profits, since this level will be noticeable actions of large buyers. Also, a good signal to open short positions in GBP/USD will be the formation of a false breakout in the resistance area of 1.2676. If there is no activity on the part of sellers at this level, it is best to postpone sales until the update of the maximum of 1.2754, where you can open short positions immediately on the rebound in the expectation of a correction of 30-40 points within the day.
Signals of indicators:
Trading is above the 30 and 50 daily averages, which indicates that the pound will continue to grow in the short term.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Breaking the upper limit in the area of 1.2660 will lead to a new wave of growth of the pound. If the pair falls, the lower border of the indicator around 1.2600 will provide support.
Description of indicators
To open long positions on EURUSD, you need:
The lack of fundamental statistics in the first half of the day did not allow euro buyers to hold above the rather important level of 1.1345, which served as a support in the first half of the day. On the 5-minute chart, you can clearly see how the bears broke below this range at the first attempt, and the entry point was a repeated test of this level from the bottom up, which brought about 20-25 points of intraday profit, which is half of the total volatility of the day. This is the scenario I drew attention to in my morning forecast. At the moment, traders will focus on data on the US labor market, however, it is worth paying attention to the change in the technical picture of the pair. On the hourly chart, a new resistance of 1.1360 is formed, a breakout and consolidation above which will be the key task of euro buyers for the second half of the day. Only then can you open new long positions in the expectation of continuing the upward trend to the highs of 1.1395 and 1.1430, where I recommend fixing the profits. If the bears push the pair back to the support area of 1.1319, I recommend returning from there to long positions only after forming a false breakout. Larger buyers will wait for the update of the area of 1.1267, where the lower border of the current ascending channel formed on July 1 of this year just passes.
To open short positions on EURUSD, you need:
Sellers need to protect the resistance of 1.1360, which the pair is currently aiming for. Weekly data on the US labor market is unlikely to lead to drastic changes in the market, so the formation of a false breakout at the level of 1.1360 will be a signal to open short positions in the expectation of a repeated decline to the support of 1.1319. Only fixing below this range will increase the pressure on EUR/USD, which will lead to a larger sale in the area of the low of 1.1267, where the lower border of the current ascending channel passes. If there is no activity from the bears at the level of 1.1360, it is best not to rush with sales, but wait for the update of the maximum in the area of 1.1395, from where you can open short positions immediately for a rebound in the expectation of a correction of 20-25 points within the day.
Signals of indicators:
Trading is conducted just above the 30 and 50 daily moving averages, which now perform a certain role of support.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Breaking the lower border of the indicator in the area of 1.1319 will increase pressure on the euro. Growth above the upper limit in the area of 1.1360 will lead to bullish momentum.
Description of indicators
The number of new coronavirus cases in the US is growing every day and has reached the highest levels. On Wednesday, the US reported more than 60,000 new COVID-19 infections. For the second day in a row, the number of deaths has climbed by more than 900 in a day.
US states such as Texas and Florida became the epicenter of the outbreak. In New Jersey, all residents were required to wear masks. At the same time, New York unveiled an educational plan for students in public schools. So, students will attend school two or three days a week.
According to recent data, the number of new COVID-19 cases has increased in 42 out of 50 states.
The continued growth of infected people in America may lead to the reintroduction of quarantine. The US economy is at stake. Experts believe that the US economy will start to revive no earlier than in 2021.
The United States is the country with the largest number of coronavirus cases in the world. The total number of infected people there exceeds 3 million while 132,000 people died.The material has been provided by InstaForex Company - www.instaforex.com.
BTChas been trading upwards at the price of $9,390. I see further upward movement due to the breakout of the trading range in the background.
Watch for potential buying opportunities on the dips. The upward targets are set at the price of $9,600 and $9,670The material has been provided by InstaForex Company - www.instaforex.com.
Gold has been trading upwards as I expected. The Gold reached our main objective at $1,820. Anyway, I found that there is the breakout of the rising trend line, which is sign for the potential downside movement.
Watch for potential selling opportunities with the downward targets at $1,797 and $1,790
Main resistance is set at $1,815-$1,820
Stochastic oscillator is in overbought zone, which is another confirmation for the further downside movement....The material has been provided by InstaForex Company - www.instaforex.com.
The coronavirus pandemic brought down oil prices. In April, prices fell to $23.3 per barrel. This is the lowest level logged in 2020. However, in May, Brent crude rose to $39.9 per barrel. Nevertheless, it is too early to talk about stability in the oil market.
Oil demand recovery was expected to happen faster. However, in April, the EIA predicted that in the second quarter, global oil consumption would decrease by 12% compared to the previous year, and in the third and fourth quarters - by 3% and 0.4% respectively. Then, in June, the EIA lowered its estimates of a decline to 17%, 7% and, 4%, respectively.
According to the IHS Markit forecast, the global GDP growth will occur only in the first quarter of 2021. Thus, demand will revive only in the third quarter of 2021 due to the global economic recovery.
However, an increase in the number of COVID-19 cases may lead to a new lockdown. In this case, the second wave of pandemic could easily reduce global economic growth to naught.
The countries' authorities were trying to avoid a global outbreak by closing the regions and municipalities. Thus, in Germany, Gutersloh district is closed as well as Texas and Florida in the USA. In these regions, gyms, museums and cinemas, bars and restaurants are shut down again. As the number of new cases in the United States is advancing every day, it is possible that other states may face the same problem.
Investors and traders are indignant because a renewed lockdown could return uncertainty and instability to the market.
A decline in global demand by 29 million barrels per day on a yearly basis forced the OPEC countries to come to a new agreement, the terms of which seem unrealistic.
Russia would have to reduce production in the second half of 2020 by 40.4 million tons. Russian oil companies will hardly accept these conditions.
Also, Iraq may fail to meet the new terms as in May, it fulfilled only 40% of its obligations. And Mexico, completely refused to sign the new deal. Other OPEC members may also take such a decision.
According to Refinitiv, from April to May, oil exports from Saudi Arabia fell by 31% and exports from OPEC countries declined by 21%. At the same time, in the US, exports grew by 3.5% compared to April. This has raised a question of the deal's feasibility. Moreover, uncertainties cause anxiety about a return to normal life.The material has been provided by InstaForex Company - www.instaforex.com.
EUR/USD has been trading downwards. The price tested the level of 1,3160. I see potential for the further drop due to the fake breakout of the resistance at 1,1346.
Watch for potential selling opportunities due to the fake breakoujt of the resistance at 1,1346 and rejection of the Fibonacci expansion 100%.
Downward targets are set at the price of 1,1267 and 1,1220The material has been provided by InstaForex Company - www.instaforex.com.
The US labor market report for June was a real blow to the Russian ruble. Meanwhile, the rally of Chinese stocks, which has been ongoing for eight trading days, allowed the ruble to recover losses. According to the IMF, China will escape recession in 2020. In addition, if the country manages to restore economic growth to the pre-crisis level, it will be able to leave the United States behind by 2029-2030, Bloomberg suggests. The realignment of the world's leading economies is of key importance to Russia, as it can determine the future of the country's national currency.
A record increase in employment and a decline in US unemployment became a matter of investors' concern as they feared that this might end in the reintroduction of quarantine restrictions. The rapid opening of the US economy has led to a surge in the number of COVID-19 cases and the implementation of social distancing in some states. Therefore, the demand for risky assets has reduced. For the first time since the end of May, the USD/RUB pair have risen above 72. Nevertheless, a sacred space is never empty. Therefore, China is ready to take the place of the United States.
The story repeats. The current situation is very similar to the events that had happened after the global economic crisis of 2007-2009. Gold and stock indices are growing, and China is leading the global economy to a better tomorrow. The SSE Composite Index also known as SSE Index has been rising for 8 days reaching its highest level since February 2018. The last time the stock index revealed such a long winning streak was 2.5 years ago. The situation in the China's stock market is getting better compared to its emerging markets counterparts. At the same time, the appreciation of the renminbi is usually a good sign for currencies of emerging markets.
Dynamics of stock indices
China and the EU are Russia's largest trading partners. Therefore, the fact that the epidemiological situation in Asia and Europe looks much better than in the United States should support the ruble in the medium and long term. If China escapes from a recession, the eurozone will have a great opportunity to recover faster than expected. Against this background, it is not surprising that US stock indexes are in no hurry to fall, even despite an increase in the number of coronavirus cases. The risk appetite is still high and supported by other regions except the United States.
Let's not forget about the strong oil position and the extremely cheap liquidity from the world's leading central banks. At the same time, both the Federal Reserve System and the European Central Bank are considering the use of innovative monetary policy instruments of targeting returns based on the Japanese and Australian experience. If these instruments are implemented, the cost of funding for carry trade operations will remain low for a long time, which is good news for risky assets.
As for the technical analysis of the USD/RUB pair on the daily chart, a depletion of the correctional movement takes place. It seems that the pullback is completed, and the pair is returning to a bearish trend. Against this background, it is preferable to sell the pair on a breakout at the support levels of 70.2, 70, and 69.2. The area near the 64 mark, where there are reference points of the Crab and AB=CD patterns, can be used as targets.
USD/RUB, daily chart
The material has been provided by InstaForex Company - www.instaforex.com.
The US currency declined against most of its major competitors on Thursday, as investors turned to more risky assets such as global stocks and raw materials.
According to experts, continuous concerns about the spread of COVID-19 in the world may keep some currency pairs in a narrow range, but dollar's losses are gradually increasing, as positive sentiment favors more risky rates for long-term economic growth.
This week, the USD index formed the so-called "death cross" (the "bearish" intersection of the 50- and 200-day moving averages).
According to analysts from Bank of America, such an intersection has been formed nine times since 1980, and in eight cases, this signal was followed by the weakening of the US currency.
"The Fed's accommodation policy, expectations of greater fiscal stimulus from the White House, as well as the stability of the technology sector, which is leading the stock market upward, all suggest that the dollar remains weak at the moment," the MUFG said.
The growth of global stock markets put pressure on a safe dollar, which contributed to the EUR/USD rally to monthly highs around 1.1365.
"The main currency pair was not able to break the level of 1.1200 in recent weeks, pushed off from it and reached its maximum values since June 11. At present, it can test the upper boundary of the current trading range 1.1200 - 1.1400," MUFG strategists said.
"The dollar is becoming more vulnerable as the coronavirus crisis subsides. Real US yields continue to show a more serious decline than in other Big Ten countries, and this is not yet fully reflected in the USD exchange rate," they added.
"The growth of the EUR/USD pair will continue amid softening of restrictive measures in Europe and the recovery of the global economy. Another factor favorable for the euro is the initiative to create an EU economic recovery fund. In the meantime, the dollar will be losing ground amid concerns over the Fed's inflated balance sheet and US government debt growth," UBS said.
Meanwhile, Danske Bank believes that one should not count on any significant directional movement in EUR/USD in the near future.
The bank said that although we are still waiting for the level of 1.15 to be tested in a three-month period, however, such a forecast is based solely on the possibility of increasing pressure on the dollar. The second wave of coronavirus in the USA gives cause for alarm and may cause a new monetary and fiscal reaction of the authorities. At the same time, the euro will be difficult to find fresh drivers for a leap higher: political risks, stimulating EU measures and optimism about the possibility of creating a single fund to help the region's economy are already taken into account in the EUR/USD rate.The material has been provided by InstaForex Company - www.instaforex.com.
The EUR / USD pair is once again on a wave of speculative operations, due to which the quote did not only return to the level of 1.1350, but also overcame it locally. This current breakout from the level of 1.1350 is the first movement since the formation of the flat 1.1180 // 1.1250 / 1.1350.
The horizontal move arose from the downward tact within the area of interaction of trade forces 1.1440 / 1.1500, with which prices neared the levels reached on June 10. Returning to the previous levels were actually not possible, but market participants managed to gain a foothold in the form of a range level at 1.1165 // 1.1180 // 1.1190. There, a horizontal course arose, in which the level of 1.1350 was a variable resistance. It led to a breakout from the level of 1.1350, which violates the boundaries of the amplitude but not the general chain. A local surge above the limit 1.1350 could change the mood as quickly as it arose on the market, in which in this case, the level 1.1350 is a variable coordinate, but the main area is the levels 1.1440 / 1.1500, the breakdown of which can lead to a change in the medium-term trend.
Thus, analyzing the trading yesterday in detail, we can see that the main round of long positions, which brought the quote to the level of 1.1350, arose at the start of the American trading session, during which the weakening dollar was felt throughout the Forex market.
It resulted to a volatility of 9%, which is relative to the average daily value of 81 -> 89 points. It also signals the speculative mood in the market.
Analyzing the trading chart in general terms (the daily period), only a slight stagnation is visible relative to the earlier inertial move.
As for news, the reports published yesterday did not have important macroeconomic statistics in Europe and the United States.
But there are other important news such as the speech of the European Parliament, in which German Chancellor Angela Merkel called on the EU countries to show solidarity in overcoming the consequences of the coronavirus pandemic.
"Europe will emerge strong from this crisis if we are ready to find common solutions, if we are ready to look at the world through the eyes of others, and if we are ready to demonstrate an understanding of the prospects of others," Merkel said .
Head of the European Commission, Ursula von der Leyen, also gave a similar speech, calling on the EU for a united effort in anti-crisis recovery.
"We must learn from the coronavirus crisis, and this time we must do it together. If we do it right, we will also be able to get stronger out of the crisis thanks to a common European goal based on a plan for economic recovery, "she said.
Such are another appeal to EU countries to tighten their bonds and strictly follow the plans of the Bundestag.
Meanwhile, today, the weekly data on the US labor market will be published, which is expected to record a decrease in initial applications for unemployment benefits from 1,427,000 to 1,380,000, and a drop in the repeated applications from 19,290,000 to 19,200,000. It may even support the US dollar into rising, as long as the data comes out better than expected.
Analyzing the current trading chart, we can see another round of speculation, which stopped the upward trend and returned the quote below the level of 1.1350. Thus, the focus now is on short positions, which means that a complete recovery relative to the past day may occur. Work on a wave of speculation, in which the level of 1.1280 plays a variable support.
In addition, short positions will again become relevant, and the signal for action will be a consolidation below the level of 1.1350. Such will lead to a gradual movement along the values 1.1280-1.1250 --- 1.1200.
Meanwhile, an alternative scenario will occur, if the quotes stop at the current values and consolidate higher than 1.1370.
Analyzing the different sectors of time frames (TF), we can see that the indicators of technical tools in the hourly and daily periods hold a bullish mood due to the residual signal. Minute intervals, meanwhile, have already changed position from buy to sell.
Volatility per week / Measurement of volatility: Month; Quarter year
The measurement of volatility measurement reflects the average daily fluctuation calculated by Month / Quarter / Year.
(July 9 was built, taking into account the time the article is published)
The volatility at this current time is 50 points, which is 38% lower than the average daily value. Thus, it is assumed that amid speculative excitement, the market will continue to show activity.
Resistance Zones: 1.1350; 1.1440 / 1.1500; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support areas: 1.1250 *; 1.111 **; 1.1080; 1,1000 ***; 1.0850 **; 1.0775 *; 1.0650 (1.0636); 1,0500 ***; 1.0350 **; 1,0000 ***.
* Periodic level
** Range Level
*** Psychological levelThe material has been provided by InstaForex Company - www.instaforex.com.
Hi dear colleagues! Recently, someone asked me how I protect my saving from a collapse in stock markets. Hmm, having mulled it over, I grasped the point that a modern investor has just few ways of how to diversify one's portfolio. Certainly, there are some ways which are too complicated for most amateur investors.
The first thing on my mind is to safeguard my investment through selling futures contracts on a stock index. For example, with bearish expectation for the US stocks, one can sell futures or a CFD on the #SPX futures contract with InstaForex. In this case, losses in the stock portfolio will be offset by returns from selling a futures contract. Nevertheless, without a trading background, the nerves of steel, and a precise strategy, any investor who is not a hedge fund manager is doomed to make snowballing losses.
To protect an investment portfolio, an investor used to buy a "put" option. Nowadays, amid extreme volatility in global markets, the cost of such a "put" option has increased dramatically. The simplest strategy in case stock indexes take a nosedive is to lock in profits. The thing is that most people find it hard psychologically. What I mean to say at is that under the current market conditions, retail investors have the only way to cushion their savings. I mean buying gold or its derivatives. This could be the physical precious metal in coins or bullion, futures contracts at various ETFs and mutual investment funds, or other derivatives like XAU/USD or #GOLD on a trading platform.
You might think that retail investors are the only group who has to deal with this puzzle. In fact, anyone wants to play safe. Nowadays, global investors are thinking hard how to sort out their portfolios. They are unwilling to buy expensive stocks. If anyone ventures to buy stocks, they don't know how to hedge them. So, a great alternative is to invest in gold, the best shelter asset in the time of global turbulence.
According to estimates of the World Gold Council (WDC), Exchange Traded Funds (ETF) closed the first half of 2020 with stunning profits of $39.5 billion. Only in June, ETFs added 104 tons of gold to its reserves. The net gold inventories of ETFs swelled to a whopping 734 tons in the first half of 2020, thus logging the sharpest annual increase of 646 tons since 2009. Besides, this figure has topped 45% of the global gold production. Remarkably, a steady inflow of gold into ETFs has been going on for 7 months in a row. This is an unprecedented situation. The lion's share of the gold holdings belongs to North America and Europe where such financial instrument has gained the most popularity (picture 1).
Picture 1: Overall inflow of gold into ETFs
The reasons behind such activity of American and European investors are turmoil in stock markets, the lack of alternative opportunities under the conditions of zero or negative interest rates as well as the overuse of the printing press which pumps market with free liquidity.
Oddly enough, the ongoing stellar rally of gold comes as a surprise to me. I assumed the scenario of a correctional decline in April – June, analyzing market behavior of various groups of traders on the grounds of the COT report released by the US Commodity Futures Trading Commission, data on open interest, and long speculative positions. At the same time, I had some doubts about the prospects of such a decline from the viewpoint of profitability of low cost investment for the wide circle of investors.
The thing is that gold is the third asset in terms of liquidity which is traded by powerful financial institutions. In this context, I have serious doubts that so-called "gold bugs" who have been amassing the yellow metal for decades will allow retail investors to buy gold at reasonable prices. So, the decline should be radical to nearly $1,500 that would enable the market to generate liquidity and spook retail investors. Apparently, gold bugs did not have enough zeal and most importantly volition to push the gold price as low as that.
On July 7, gold hit a multi-year high, having surpassed $1,800 per troy ounce. However, before that leap trading sentiment in the futures market turned radically amid a flood of money in the market. In early June, the open interest indicator was 875,000 contracts whereas the number of contracts topped 1 million in late June. Meanwhile, gold is enjoying buoyant demand. Likewise, long speculative positions of money managers increased to 206,000 in late June after 162,000 four weeks ago. Traders grasped the point that the gold price would hardly fall at all. So, they decided to buy it at current quotes. This strategy makes sense in light of remarks from Fed officials that the US central bank would provide the US economy with unlimited financial aid. In other words, the Fed is going to set the printing press at full capacity. Besides, one influential Chinese news agency added fuel to the fire. China Securities Times said that it is extremely important than ever to ensure the healthy bull market nowadays. China's market responded with a rapid rally of 7.5% and the yuan had the strongest intraday spike since early 2020.
Picture 2: Gold price dynamic, m/m
Planning and opening long deals on gold at such elevated prices, traders should be aware about a possible fake breakout. Let me share my ideas which could shed light on the prospects for gold. Usually, I hardly consider one-month charts. Nevertheless, speaking about gold, it would be a good idea to analyze a one-month chart. The gold price closed Q2 2020 and the 1st half of 2020 above resistance of $1,775. Previously, the price jumped above this level in August and September 2011. However, that time investors purchased a much smaller volume than nowadays. In July, 2011 investors bought jointly 111 tons but they lost their interest shortly after (picture 1). Such a drop in demand pushed the price steeply down in September 2011 (picture 2). In other months prior to the previous peak, demand was rather modest. At present, we're watching steady demand for the metal during the whole half a year that creates a solid background for a long-term uptrend.
In terms of technical analysis, the fact that gold closed the 1st half of 2020 above $1,775 amid robust investments in ETFs signals that the price has surpassed this resistance. This opens the door for gold to new highs at nearly $2,000 and even $2,200. It doesn't mean that everyone should rush to invest all savings in gold and its derivatives neglecting the rules of money management. The problem is that a reasonable level to set stop loss is located at $1,650 which is 8% lower than the current price. This makes us set the upward target level 15% higher. This corresponds to the values higher than the key level of $2,000. The question is whether the gold price will be able to climb that high in the near future. Apparently, there are fundamentals for this scenario. At the same time, the mistake will cost you too much. Please, be cautious and sensible! Make sure you follow the rules of money management!The material has been provided by InstaForex Company - www.instaforex.com.
GBP/USD is trading slightly higher and probably it will reach fresh highs in the upcoming days. The dollar is losing ground as the USDX has plunged in the short term. The pair is trading at 1.2660 level, far above 1.2622 yesterday's high.
The pair as registered an aggressive breakout above the near-term resistance levels, that's why we could think that the current momentum will resume. You should keep an eye also on the USDX because a further drop will weaken USD.
GBP/USD has managed to escape from the major black descending pitchfork, confirming a further increase. Also, the upside breakout from the up-channel between the inside sliding lines (sl, sl1) of the minor ascending pitchfork has signaled a strong momentum and a broader swing higher.
The rebound has started after the GBP/USD failure to reach the median line (ML) of the black descending pitchfork, so the bullish movement towards the upper median line (UML) was natural and expected, the breakout above this obstacle signals that the pair should jump higher.
GBP/USD is bullish as long as it stays above the broken upper median line (UML), the aggressive breakout has represented a strong bullish signal. The next upside target is seen at the R1 (1.2725) level, and at the upper median line (uml) of the orange ascending pitchfork.
We could have another log opportunity if the price will come back down to retest the broken upper median line (UML).The material has been provided by InstaForex Company - www.instaforex.com.
In the four time frame, the GBP/USD pair continues to move in an uptrend from the level of 1.2531 since yesterday.
So, major support is seen at 1.2531, while immediate resistance is found at 1.2689. Besides, it should be noted that the first support (1.2598) coincides with the ratio of 61.8% Fibonacci Expansion.
Today, we guess that the pair will be traded higher in the early session and try to reach the first resistance at the level of 1.2689. The bias is neutral in the nearest term probably with a little bullish bias testing 1.2605 area which needs to be clearly broken to the upside to keep the bullish scenario strong.
A clear break above that area (1.2605 ) could lead the price to the neutral zone in the nearest term testing 1.2689.
Thus, we confirm the bullish scenario. However, the bullish trend is still expected for the upcoming hours as long as the price is above 1.2598 levels.
The market is still indicating a strong bullish trend from the area of 1.2598/1.2605.
Therefore, the price is expected to reach a high once again. It is rather gainful to buy at the area 1.2598/1.2605 with the targets at 1.2689 and 1.2812 in order to form the double top. So, it is recommended to place take profit at the price of 1.2812 this week.The material has been provided by InstaForex Company - www.instaforex.com.
Finance Ministers of the European Union will conduct a meeting today, at which a new president of the Eurogroup will most likely be elected. It will determine which direction the euro will go to, in which if the new president supports the concept of a more peaceful coexistence between the North and South of the eurozone, the risk of a split will be slightly decreased. But if the new president does not share the common views and integrity of the EU (which, of course, is unlikely), the pressure on the European currency will increase significantly.
The Eurogroup is scheduled to have a meeting today, ahead of the EU summit on July 17-18. Its results will affect the future direction of the euro in the 3rd quarter, especially since the plans for a joint fiscal program will be discussed there.
Meanwhile, a number of macroeconomic reports were published yesterday, one of which was the data on the US budget deficit. According to the report, it rose again in June this year, amounting to $ 863 billion. This catastrophic increase in US government spending will not go unnoticed in the economy. However, experts say that this does not pose a serious risk. Nevertheless, the reduction in tax revenue amid a number of benefits has led to an increase in budget deficit.
According to the data published by the US Budget Office, spending in June finally to $ 1.1 trillion, because expenditures for just one unemployment benefit was increased to $ 116 billion. At the same time, budget revenues fell by 28% and settled to $ 242 billion, due to the sharp decline in economic activity, as well as reduction in wages.
As for other news, the speech made by the president of Atlanta Fed focused on the measures needed to further stimulate economic growth. According to Raphael Bostic, the current actions of the Fed are aimed at maintaining strong fundamental indicators of the economy, and timely emergency tools have completed their task. He believes that the pandemic can be effectively managed, but the latest data featuring a surge in infections do not really say so. It seems that some fiscal support programs should be extended. Nevertheless, Bostic is confident that another lockdown is not needed, and further measures to contain the pandemic are likely to be targeted.
"As for the pace of economic recovery, the incoming data indicates its recovery, but the prospects remain extremely uncertain, and the Fed should undoubtedly consider additional support measures," Bostic said.
Meanwhile, with regards to the technical picture of the EUR/USD pair, a breakout from the level of 1.1350 will lead to a new rising wave of the trading instrument, but it needs good reasons to support it. Thus, the bullish mood may be changed, if positive news does not appear. At the same time, the continued increase in the number of COVID-19 infections is taking a toll worldwide, which is enough to return the bear market for risky assets. For this, it is enough for sellers to return the quotes to the support level of 1.1310, which will increase the pressure on the pair and push it to the lows 1.1260 and 1.1190.The material has been provided by InstaForex Company - www.instaforex.com.
Gold is trading at $1,814 and it is approaching the $1,817 yesterday's high. The price is strongly bullish and is expected to climb higher in the upcoming period. The USD's aggressive drop has helped the yellow metal to resume its upside rally.
Finally, the gold price has invalidated the bearish divergence signaled by the RSI indicator, so the rate could register significant growth in the short term. Still, we cannot exclude a minor drop, maybe the price will come back to test and retest the $1,800 level.
Gold it was almost to reach the R1 ($1,820) level which could represent an important near-term obstacle. The breakout above the dotted line and above the $1,800 has confirmed that a further increase is coming.
A sideways movement, consolidation, between the $1,800 and the R1 ($1,820) could bring another long opportunity. Besides, a valid breakout above the R1 level will confirm a further increase towards the upper median line (UML) and towards the R2 ($1,861) level.
A $1,800 level retest, false breakdown, will bring a great long opportunity if you are not long already. The upper median line (UML) of the major ascending pitchfork remains as the major upside target.
The gold price could approach the UML after the rejection from the median line (ML) and most important because the rate has stabilized above the inside sliding line (SL) of the ascending pitchfork.
Gold is bullish, so we cannot talk about a selling opportunity right now, I believe that only a major bearish engulfing, or any other reversal pattern which will invalidate the breakout above the $1,800 could bring another short opportunity.The material has been provided by InstaForex Company - www.instaforex.com.
The second wave of the coronavirus is in full swing.
According to the latest data, the United States has recorded a huge number of new infections at 55 thousand per day, and listed deaths to almost 1,000 per day.
Brazil has a similar situation, recording 48 thousand new cases and 1,300 deaths.
India, meanwhile, has a daily increase of more than 23 thousand new infections.
US market - a consolidation will occur, after which growth will continue.
Sell positions from the highs that will be reached.
Today, an important report on the US labor market will come out at 13:30 (UTC + 1).
EUR / USD: a strong bullish signal surrounds the euro. It already hit the highest level reached in June (1.1350), and is now under a correction.
Buy positions at the current level 1.1335 or lower.
You may also buy from 1.1245, but stop at 1.1260.
Look forward to a continued growth in the direction of 1.1500 and above.
In case of a reversal, sell from 1.1260.The material has been provided by InstaForex Company - www.instaforex.com.