Opposite forces at work all the time in the Forex Market

analytics5f74965c3ea49.jpg

In the currency market opposite forces are at work all the time. Some companies need to buy USD and sell EUR to pay for goods or services and some companies needs to sell USD to buy EUR to pay for goods or services.

At the same time you have investors buying USD and selling EUR to buy US assets and you have investors selling USD to buy EUR to buy assets within the EU and the list of opposite forces working in the currency market goes on.

If the group of companies, investors and speculators selling USD and buying EUR is larger/stronger, than the opposite group EUR/USD will go up in price, which means you will have to pay more USD for the one EUR. In that case, we speak of EUR/USD being in an uptrend.

The above chart shows EUR/USD being in an uptrend, but within that uptrend, there will be times when the opposite forces will be equal or almost equal and the price of EUR against USD for a time will move sideways until one of the forces gains or regains the upper hand and the trend continues or it changes direction.

Currency pairs tend to move in a channel up or down and in the above chart of EUR/USD we can see that EUR/USD moved higher within the channel from mid-March to September, where EUR/USD top, at lest for now, and started a smaller channel lower. The question of course becomes has the uptrend from mid-March completed or will it continue higher?

This is still an open question. The uptrend from mid-March remains intact and only a break below key-support at 1.1605 will indicate a change in the trend from up to down, but as long as key-support at 1.1605 remains intact, we will need consider the decline from the 1.2014 peak as a temporary pause in the uptrend and more upside likely to come, once this temporary pause is complete.

Remember, that the primary trend – in this case the uptrend – is the most likely to continue rather than being reversed.

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

The market is expecting a shake-up on Wednesday

analytics5f748bfabb8be.jpg

The energy and financial sectors determined the mood of market players. All this was compounded by the official statistics on coronavirus – about 1 million deaths. The statement of New York Mayor Bill de Blasio that the number of positive test results for coronavirus is more than 3% for the first time in several months did not bring relief to the market.

This week, financial companies, in particular banks, which lost a significant part of the profit achieved just a day earlier, are also suffering a defeat. In recent months, investors have been concerned about how much the growth of coronavirus infection can affect the revival of the economy. Moreover, this problem is still open. The market is looking forward to the adoption of a bill to stimulate economic growth, however, this long-awaited event remains unfulfilled.

The following events may affect market sentiment on Wednesday: the next IPO of the technology company Palantir, the confrontation between two contenders for the US presidency (Trump and Biden), and the publication of economic data on home sales in the US.

Let’s start with the IPO or the first public sale of shares of a joint-stock company to an unlimited number of people. This time, Palantir Technologies is a public company. Founded in 2003, Palantir is a privately held American company that develops software for data analysis. It focuses on the intelligence agency of the US government, intelligence agencies, investment banks, and hedge funds. Palantir launches through a direct listing on the New York stock exchange. It is worth noting that investors expect the latest technologies to enter the market with great interest. It is noteworthy that the company’s founder, Peter Thiel, is also a co-founder of PayPal Holdings Inc. and one of the first investors in Facebook and Microsoft.

The declarative battle of US presidential candidates can also affect the market. On Tuesday night in Cleveland, Trump and Biden met for their first debate, and according to polls, the winner of the verbal battle was Joe Biden. During an hour and a half of the argument, he gave Donald Trump a large number of offensive characteristics. Two more meetings are expected ahead, during which the audience will form a certain opinion about the problem and largely determine the outcome of the upcoming elections in November. The second meeting of candidates for the post of head of the White House is scheduled for October 15 and will be held in Miami, and the third – on October 22 in Nashville. According to the Financial Times newspaper, which refers to a study by financial consultant deVere Group, the US presidential election concerns investors many times more than the second wave of coronavirus.

However, we will not underestimate the role of other equally important factors that can affect the market on Wednesday. Investors are waiting for the publication of economic data on home sales and expect that in the third reading, the US GDP for the 2nd quarter will remain unchanged, namely at the level of 31.7%. It is worth noting that the press release will present GDP statistics for the first time concerning industries. Investors also expect that the number of pending home sales in the US in August will be able to rise by 3.2% compared to July (then the number of transactions increased by 5.9%). Analysts also forecast that the number of people employed in the US non-agricultural sector will rise from 428 thousand in August up to 650 thousand.

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

Pre-election passions in the US heats up, USD rate rises

The US presidential election is about five weeks away, and the tension is growing every day. According to polls, Democratic candidate Joe Biden’s leadership has eased slightly, while the popularity of his Republican rival, Donald Trump, has recently sl…

Trading recommendations for the GBP/USD pair on September 30

The GBP / USD pair is currently in the stage of a correction, but yesterday, there was a stagnation at price levels 1.2822 / 1.2900, which could well serve as a signal of the end of the process. In addition, the bearish sentiment is prevailing all throughout the market, and it could result in a strong downward move, perhaps even below the current local lows.

Thus, if we analyze the M15 chart and look closely at the trades set yesterday, we will see that speculative positions surged in the market at 15: 15-17: 00, particularly at price levels 1.2822 / 1.2900.

The lowest activity was also recorded in terms of daily dynamics, so as a result, volatility was only 78 points, which is 37% below the average level. This very phenomenon indicates an upcoming surge in activity, as well as the completion of the current correction.

This is because as discussed in the previous review , market participants used the levels 1.2825 / 1.2885 / 1.2910 as a temporary platform for a slowdown, setting off such a result.

Meanwhile, if we look at the daily chart, we will see the consistent downward price movement with a scale of more than 800 points. Two corrections from this movement were recorded this September.

analytics5f744904e23b6.jpg

With regards to news, a better-than-expected statistics were published for the UK lending market yesterday, one of which was the strong improvement on approved mortgage loans. According to the latest report, it number to 84.7 thousand, while the volume of mortgage lending increased from £ 2.90 billion to £ 3.10 billion.

At the same time, the House of Commons have passed the third reading of the controversial internal market bill, which, if approved, would allow UK to violate the terms of the Brexit agreement. The next step is a formal consideration of the House of Lords, however, if this really happens, negotiations as well as relationship between the UK and the EU could break down.

Any update in this direction would lead to more speculative positions in the GBP / USD pair.

Back to statistics, the final data for the UK 2nd quarter GDP was released today, but it revealed that economic decline accelerated from -1.7% to -21.5%.

The same data will be published in the afternoon for the US GDP, but this time, it is expected to show an economic decline of -9.1% in annual terms, which coincides with the preliminary estimate.

However, what investors will pay particular attention to is the upcoming ADP report on the level of employment in the US private sector, where there is an expected increase of employment by 610,000. If this happens, the US dollar will rise in the markets.

US 13:15 – ADP Employment change report (September)

US 13:30 – GDP (Q2)

Further development

As we can see in the trading chart, the quote has broken out of the earlier price range (1.2822 / 1.2900) during the start of the European session, as a result of which the pound traded at a price of 1.2820. If the quote continues to consolidate below this level, short positions will rise again, which will then lead to a further decline towards 1.2770-1.2720.

But if the quote returns to the previous levels, the pound will move towards 1.2900, where activity will be high again in the market.

analytics5f74490badd2b.jpg

Indicator analysis

Looking at the different time frames (TF), we can see that the indicators on minute period signal SELL due to a local breakout from the earlier price range. Meanwhile, the hourly period signals BUY due to the current bullish correction in the GBP / USD pair. The daily period, which as before signals SELL, is still under the depth of the September decline.

analytics5f74748546026.jpg

Weekly volatility / Volatility measurement: Month; Quarter; Year

Volatility is measured relative to the average daily fluctuations, which are calculated every Month / Quarter / Year.

(The dynamics for today is calculated, all while taking into account the time this article is published)

Volatility is at 67 points, which is 45% below the average value.

The current accumulation has already managed to concentrate a sufficient amount of trading volumes, so as a result, an acceleration is to follow soon.

analytics5f74748840e29.jpg

Key levels

Resistance zones: 1.2885 *; 1.3000 ***; 1.3200; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.

Support Zones: 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411).

* Periodic level

** Range level

*** Psychological level

Also check trading recommendations for the EUR/USD pair here, or brief trading recommendations for the EUR/USD and GBP/USD pairs here.

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

US stocks fell while Asia went multidirectional

The US stock exchanges crashed on Tuesday. Major stock indexes reduced their positions amid unfavorable news in the surge of COVID-19 infection in New York. According to the official statement released by the city authorities, the number of cases that …

Trading plan for US Dollar Index for September 30, 2020

Technical outlook:GBPUSD had managed to push through 1 2930 levels early this week, after dropping through 1.2675 lows last week. The Cable currency pair is seen to be trading around 1.2833 levels at this point in writing and could continue to rally to…

Trading plan for EURUSD for September 30, 2020

Technical outlook:EURUSD had managed to push through 1.1720 levels yesterday and hit close to 1.1750 before pulling back. The single currency pair is seen to be trading around 1.1705/08 levels at this moment in time and might continue dropping lower fr…

Analysis of EUR/USD on September 30. First debate between Biden and Trump unexpectedly ended with Democrat’s victory

analytics5f7477f2e3221.jpg

Globally, the wave pattern of EUR/USD pair still looks quite convincing. According to it, the formation of the expected wave 4 as part of the upward trend section could already be completed. But the upward section of the trend can still take a longer, 5-wave form. This scenario requires only a strong news background for the EUR and a weak one for the USD..

analytics5f7477f605c09.jpg

In a smaller time frame, the wave pattern shows that there are three waves of a smaller order inside the supposed wave 4, while there are three more waves of an even smaller order inside the supposed wave b in 4. Thus, the entire wave 4 may already be completed. If this assumption is true, then the price can continue to rise from the current levels to goals located above the wave peaks 3 or C. How much higher will it go depends on the news background for this pair.

Last night, the first round of debate took place between Donald Trump and Joe Biden. Prior to this event, many expected the US President to win, considering his oratory skills. However, as practice has shown, his skills were not very useful. The six issues that both presidential candidates should have addressed were the most pressing ones for America and that is why they were not in favor of Donald Trump. In general, the debate was an hour and a half of mutual insults and accusations. However, the following polls showed that it was Biden who performed better in the debate – only 28% of respondents believe that the current President performed well. Moreover, 65% believe that Biden’s answers were true, and only 29% believe that Trump did not lie in his statements. 69% of respondents also said Biden’s attacks on Trump were fair. As we can see, public opinions are very important, since this is what debates are held for. Biden won the first round. However, there will be two more rounds.

According to the current wave pattern, there is a very high probability of a new decline in dollar quotes. Thus, it is only necessary that the news background does not suddenly take the side of the US currency, which can lead to a problem of wave 4. Today, the US GDP report will be released, but it is unlikely to cause a strong market reaction. The fact is that this is already the third publication of this report in recent months. Thus, the markets simply do not expect other numbers than those already known.

A report from ADP on the change in the number of employees, which has a very optimistic forecast of $ 650 thousand will also be released today. However, we don’t expect that it will be reached and so, the US currency will not receive market support today.

General conclusions and recommendations:

Since it is assumed that the euro/dollar pair has already completed the formation of a global wave 3 or C and wave 4, I recommend buying the pair with goals around the calculated level of 1.2012, which equates to 0.0% Fibonacci.

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

Time to buy gold

Bank analysts argue that after the US presidential elections, election results may be challenged. This will definitely increase market volatility and provide additional capital inflows to safe haven assets.Experts also believe that safe haven assets wi…

EUR/USD: plan for the American session on September 30

To open long positions on EURUSD, you need:

Despite the fundamental statistics that showed an improvement in the situation in the German economy, in particular the labor market, the sellers of the euro managed to achieve their goal. However, there was no clear entry into short positions. Let’s figure out why. If you look at the 5-minute chart, you will see how the bears are trying to break through the support of 1.1734, however, the test of this level from the bottom up occurred with an exit from this range, which crossed out all plans to sell the euro. Buyers tried several times to return to 1.1734, however, all to no avail. Therefore, the downward movement that was formed was skipped.

analytics5f746aa8d4654.jpg

At the moment, I have slightly revised the nearest levels and advise buyers to focus on the resistance of 1.1729. A return and consolidation above this range form a good signal to open long positions with the aim of further growth of EUR/USD already in the area of the maximum of 1.1779, where I recommend fixing the profits. It is quite possible that after the release of fundamental statistics for the United States, this breakthrough may occur. It doesn’t even matter if it’s good or bad. Yesterday’s market reaction to the US consumer confidence index confirmed this. The bulls’ longer-term target will be a maximum of 1.1826. If the pressure on the euro continues in the second half of the day, I advise you to pay attention to purchases from the level of 1.1685, but subject to the formation of a false breakout, since the bears can resume the downward trend at any time. I advise you to open long positions immediately for a rebound only after testing the minimum of 1.1640, based on a correction of 20-30 points within the day.

To open short positions on EURUSD, you need:

Sellers partially coped with their task and managed to win back a fairly important level, which has now shifted slightly and is located in the area of 1.1729. The formation of a false breakout there in the second half of the day forms an excellent signal for the continuation of sales of the European currency in order to break through and consolidate under the support of 1.1685. If there is no activity on the part of buyers at this level, you can continue to sell the euro with the aim of reducing to the area of 1.1640, where I recommend fixing the profits. A test of this level will also indicate a resumption of the bearish trend in the pair. In the scenario of the bulls returning to the resistance of 1.1729, you should not rush to sell. It is best to wait for the recovery of EUR/USD to the resistance area of 1.1779, and also sell even higher – from the maximum of 1.1826 with the aim of correction of 20-30 points within the day.

analytics5f746ab01ff0d.jpg

Let me remind you that COT reports (Commitment of Traders) for September 22 recorded an increase in both long and short positions, however, the first ones turned out to be more, which led to an increase in the delta. Apparently, such a low euro exchange rate for the first time in the last three months attracts new buyers, even despite the risk of a second wave of coronavirus infection across Europe. For example, long non-profit positions increased from 230,695 to 247,049, while short non-profit positions increased from only 52,199 to 56,227. The total non-commercial net position also rose during the reporting week to 190,822 from 178,576 a week earlier, indicating the bullish market sentiment in the medium term. The more the euro declines against the US dollar, the more attractive it will be for new investors.

Signals of indicators:

Moving averages

Trading is conducted around 30 and 50 daily moving averages, which calls into question the continuation of the upward correction in the pair.

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.

Bollinger Bands

If the euro rises in the second half of the day, the upper limit of the indicator around 1.1755 will act as a resistance.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence – moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • Total non-commercial net position is the difference between short and long positions of non-commercial traders.

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

GBP/USD: plan for the American session on September 30

To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to sales below the level of 1.2834, however, the desire of the bears is clearly not enough to resume the bearish trend. On the 5-minute chart, the sellers are trying …

Gold compromises

The debate between Donald Trump and Joe Biden did not allow gold to rise above $ 1,900 an ounce. A Democrat victory would strengthen its position in the race for the presidency and lead to a weakening of the US dollar. It was difficult to give preference to any of the candidates, as the dialogue turned into a mixture of constant interruptions of opponents, sarcasm, and even insults. The degree of uncertainty did not decrease at all, and the US currency perked up.

Although gold is one of the most effective tools for investment in 2020, September is likely to be the worst month for it in almost four years. Blame it on the rising US dollar and lower inflation expectations. They are measured using the break-even rate – the difference in the yield of Treasury bonds and inflation-protected bonds (TIPS). The precious metal is traditionally perceived as a hedging tool for risks associated with rising consumer prices, thus, this kind of change in the US debt market situation suggests an unfavorable background for it.

Trends in the debt market of the USA

analytics5f745f32c984f.jpg

In my opinion, the decline in inflation expectations is a direct consequence of the strengthening of the US dollar and the inability of Democrats and Republicans to find common ground on expanding fiscal stimulus. The new project is $ 2.2 trillion less than the previous one, however, Steve Mnuchin previously said that the White House is ready to go for only $ 1.5 trillion. At the same time, Donald Trump intends to promote a compromise, and the fact that Congress will be re-elected in 5 weeks increases the likelihood of reaching an agreement. It is unlikely that any lawmakers will want to be accused of refusing to approve additional aid for tactical partisan-political reasons.

The expansion of the fiscal stimulus will increase the break-even rate, which is a bullish factor for XAU/USD. Support for gold in the medium and long term can be provided by an increase in the activity of central banks in the field of purchases of physical metal. Citigroup estimates that in 2021 this figure will grow from the current 375 tons to 450 tons. China and Russia, which has taken the path of de-dollarization, will actively acquire the precious metal.

Dynamics of gold purchases by central banks

analytics5f745f430455e.jpg

In my opinion, gold may return to growth. As history shows, it takes time after a recession to reach historical highs. The 2011 peak occurred two years after the 2008-2009 crisis. Yes, its nature in 2020 is different from the previous one, however, the Fed preferred to act ahead of the curve and spread rumors about tightening monetary policy at the slightest sign of inflation rising to 2%. Currently, the Central Bank will not do this. It is unlikely that we will see an increase in the federal funds rate before 2023-2024.

I recommend keeping the gold longs formed from the level of $ 1860 per ounce and increasing them on the breakout of the $ 1905 and $ 1930 resistances. The stop order should be moved to the break-even point. A drop in quotes to $ 1840 will allow you to buy an asset cheaper.

Gold, the daily chart

analytics5f745f4f7a136.jpg

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

Technical analysis of EUR/USD for September 30, 2020

Overview :The EUR/USD pair has risen further and is starting to see an intermediate reversal. We expect a major ascending towards the 1.1773 and 1.1872 area as we look to buy above the spot of 1.1703 (current price). So, the EUR/USD pair remains bul…

Technical analysis of GBP/USD for September 30, 2020

Overview :The GBP/USD pair has broken key resistance which represents the weekly pivot point in the one-hour time frame.We look to buy on strength above major resistance at 1.2797 (38.2% Fibonacci retracement).After breaking the resistance at 1.2797….

EUR/USD Under Massive Pressure

EUR/USD rebound, temporary growth, seems over as the US Dollar Index increases again. We have a strong negative correlation between the USDX and the EUR/USD. When the index grows, EUR/USD drops, and when the dollar index drops, the pair increases.The p…