Tag: Fundamental Analysis

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Forex Course

196. Ever Wondered What ‘Trade-Weighted Dollar Index’ Is All About?

Introduction

Introduction

Introduction

The trade-weighted dollar is a prominent index developed by the FED in order to measure the value of the U.S. dollar spending on its competitiveness against the trading partners. It is used to determine the purchasing value of the U.S. dollar and to summarize the impact of appreciation and depreciation of the currency against foreign currencies.

The Importance Of Trade-Weighted Dollar Index

When the value of the U.S. dollar rises, the import to the country becomes less expensive, whereas exports become expensive. A Trade-Weighted Dollar Index is used to measure the value of the foreign exchange of the U.S. dollar in comparison to specific foreign currencies.

It offers weightage or importance to currencies that are most popularly used in international trade, instead of comparing the dollar value to every foreign currency. As the currencies are weighted distinctively, the modifications in each currency will have a different effect on the trade-weighted dollar as well as corresponding indexes.

After the U.S. Dollar Index, Trade-Weighted Dollar Index is the primary tool used to measure the strength of the U.S. dollar. It is also reckoned as the Broad Index was introduced in 1998 by the U.S. Federal Reserve Board.

It was created after the integration of the Euro and to reflect the trade patterns of the U.S. more precisely. The Federal Reserve picked 26 currencies for this broad index, envisioning the acceptance of the Euro by 11 countries belonging to the European Union.

Countries Included In The Trade-Weighted Dollar

Index

Here are the countries with the weight on the index –

  • Eurozone – 18.947
  • China – 15.835
  • Canada – 13.384
  • Mexico – 13.524
  • Japan – 6.272
  • United Kingdom – 5.306
  • Korea – 3.322
  • Taiwan – 1.95
  • Singapore – 1.848
  • Brazil – 1.979
  • Malaysia – 1.246
  • Hong Kong – 1.41
  • India – 2.874
  • Switzerland – 2.554
  • Thailand -1.096
  • Australia – 1.395
  • Russia – 0.526
  • Israel – 1.053
  • Sweden – 0.52
  • Indonesia – 0.675
  • Saudi Arabia – 0.499
  • Chile – 0.625
  • Philippines – 0.687
  • Colombia – 0.604
  • Argentina – 0.507

Final Thoughts

Trade-Weighted US Dollar is a broad index that includes countries from all across the world. Traders will also find some developing countries in the broad index list, which makes it a better reflection of the value of the U.S. dollar worldwide.

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Categories
Crypto Market Analysis

Daily Crypto Review, Dec 24 – XRP Downturn Pulls the Crypto Sector in the Red

The cryptocurrency sector reacted to XRP getting crushed by the market and ended up mostly in the red. Bitcoin is currently trading for $23,112, representing a decrease of 1.97% when compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 6.27% on the day, while XRP managed to lose a whopping 30.85%.

The cryptocurrency sector reacted to XRP getting crushed by the market and ended up mostly in the red. Bitcoin is currently trading for $23,112, representing a decrease of 1.97% when compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 6.27% on the day, while XRP managed to lose a whopping 30.85%.

The cryptocurrency sector reacted to XRP getting crushed by the market and ended up mostly in the red. Bitcoin is currently trading for $23,112, representing a decrease of 1.97% when compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 6.27% on the day, while XRP managed to lose a whopping 30.85%.

 Daily Crypto Sector Heat Map

Folgory Coin gained 5571.49% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by MINDOL’s 1224.26% and DACC’s 1070.44% gain. On the other hand, 3x Long XRP Token lost 77.00%, making it the most prominent daily loser. It is followed by B21 Invest’s loss of 74.30% and YFPRO Finance’s loss of 70.96%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved up over one percent since our last report, with its value currently being 69.3%. This value represents a 1.5% difference to the upside than the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has decreased significantly since we last reported, with its current value being $619.31 billion. This represents a $22.90 billion decrease when compared to our previous report.

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What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin was one of the few cryptocurrencies not affected by the major downturn of XRP after the SEC announced a lawsuit against Ripple and its executives. The largest cryptocurrency by market cap stayed within its wide range and continued trading sideways after bouncing back from the $24,000 level.

Traders currently have the option to catch a couple of safe trades within the trading range Bitcoin is in, or wait for it to spike in volume and break the range (either to the downside or upside).

BTC/USD 4-hour chart

While Bitcoin’s daily and weekly technicals are slightly tilted towards the bull side, its 4-hour and monthly technicals show some hints of neutrality alongside the bullishness.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is above its 50-period EMA and at its 21-period EMA
  • Price at its middle Bollinger band
  • RSI is neutral (53.57)
  • Volume is slightly above average
Key levels to the upside          Key levels to the downside

1: $24,315                                 1: $22,054

2: $24,700                                 2: $21,350

3: $25,511                                  3: $19,918

Ethereum

Unlike Bitcoin, Ethereum got affected by XRP’s downturn, which pulled it back over 5% on the day. The second-largest cryptocurrency fell below its $600 support level, and caused a quick panic-sell which brought its price as low as $550 (though just for a moment). Ether is now fighting to stay above the $581 level, which it will most likely succeed.

Many analysts are calling for a double bottom and are expecting an upswing from Ethereum. Traders should pay close attention to Ether’s volume and (possibly) order books.

ETH/USD 4-hour Chart

Ethereum’s weekly and monthly technicals are completely bullish, while its 4-hour and daily overview are mainly tilted towards the sell-side, but show some signs of uncertainty.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is below both its 50-period and its 21-period EMA
  • Price is close to its bottom Bollinger band
  • RSI is neutral (37.44)
  • Volume is on slightly above-average levels
Key levels to the upside          Key levels to the downside

1: $600                                     1: $581

2: $632                                     2: $564 

3: $675                                      3: $545

Ripple

XRP got crushed as more bad news came. The fourth-largest cryptocurrency by market cap got dropped by various exchanges, as well as its positions fully liquidated by major funds such as Bitwise. Its price dipped over 65% in just 5 days. However, XRP seems to have found support in (first) the $0.214 and (later) $0.25 levels.

XRP will most likely try to either hold its price level or push slightly towards the upside. While its further downside potential is not very high (unless more bad news comes out), buying or longing XRP is extremely risky.

XRP/USD 4-hour Chart

XRP’s technicals on all time-frames are completely tilted towards the sell-side.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Its price is currently far below both its 50-period EMA and its 21-period EMA
  • Price slightly above its bottom Bollinger band
  • RSI is in the oversold territory (19.40)
  • Volume is on extremely high levels
Key levels to the upside          Key levels to the downside

1: $0.30                                    1: $0.25

2: $0.358                                   2: $0.214

3: $0.475 

Categories
Forex Fundamental Analysis Forex Technical Analysis

Fundamental Analysis Vs Technical Analysis: Know the Differences!

Traders make decisions about when and what to trade based on several different factors. Fundamental and technical analysis are two different methods that one can use to predict what will happen with any given instrument by looking at different types of data. As a forex trader, you’ll need to understand the differences between these key […]

Traders make decisions about when and what to trade based on several different factors. Fundamental and technical analysis are two different methods that one can use to predict what will happen with any given instrument by looking at different types of data. As a forex trader, you’ll need to understand the differences between these key […]

Traders make decisions about when and what to trade based on several different factors. Fundamental and technical analysis are two different methods that one can use to predict what will happen with any given instrument by looking at different types of data. As a forex trader, you’ll need to understand the differences between these key schools of thought so that you can make more informed trading decisions. Both fundamental and technical analysis can give you an edge in the markets, but you’ll need to decide which one sounds the most appealing or consider using both methods. 

Fundamental Analysis

Fundamental analysis aims to measure the intrinsic value of a stock by looking at several different factors about the company. This method considers earnings, outgoing costs, assets, liabilities, the overall business model, the status of those in charge, and many other things about a company in order to get the best idea of where prices will go. Some of these things can be measured in simple numerical terms, while others can’t.

For example, you’ll find statistics and numbers when it comes to things like earning reports but evaluating the company’s business model is more of a personal interpretation. Real-time events can also affect the company evaluation. If a scandal goes down involving a certain company, for example, you can expect its revenue to fall. All of these things are taken into consideration when one measures the intrinsic value of a company through fundamental analysis. 

Technical Analysis

Technical analysts exclusively consider a stock’s price and volume, with no need to calculate extra factors. Traders using this method look at charts in order to identify the history of patterns and trends for an idea of what they will do in the future. Some examples of the most popular forms of technical analysis include simple moving averages, support & resistance, trend lines, and other indicators. There are three main types of technical analysis – bar, candlestick, and line charts. Each of these is created using the same price data but will display the data in different ways. This school of thought believes in the idea that charts are great for predicting the past. 

The Bottom Line

While fundamental and technical analysis both aim to predict where a stock’s price will go, each school of thought uses very different methods to come up with its prediction. Fundamental analysts aim to measure the intrinsic value of a company by taking several factors into account, including hard numbers and some personal interpretation. Technical analysts study charts from the past with the stock’s volume and price being the only information considered. While technical analysts look at more complex information about companies that affect a stock’s price in the present and future, technical analysts study charts from the past to get an idea of where the price will go in the future. Both methods have been proven to be effective, so one would need to personally decide which to use.

Categories
Forex Fundamental Analysis

EUR/GBP Global Macro Analysis – Part 3

EUR/GBP Exogenous Analysis

EUR/GBP Exogenous Analysis

EUR/GBP Exogenous Analysis

  • The EU and the UK Current Account to GDP differential

This indicator is used to measure how competitive an economy is in the international market. When a country has a higher trade surplus, the current account to GDP ratio is higher. Conversely, if a country has a lower trade surplus or deficit, the ratio is smaller.

Typically, economies with a higher surplus in terms of the balance of trade tend to have more exports than imports. That means that their value on exports is higher than imports, implying that the domestic currency is in high demand in the forex market. Similarly, a running deficit means lower demand for the domestic currency in the forex market since it is a net importer.

In 2020, the EU current account to GDP is expected to hit 3.4% while that of the UK -4%. The differential is 7%. Based on the correlation with the exchange rate of the EUR/GBP pair, we assign a score of 6. That means we expect a bullish trend for the pair.

This helps determine where the most investor capital will flow. Expectedly, investors will direct their capital to the country with a higher interest rate to earn superior returns. In the forex market, traders tend to be bullish when a currency pair has a positive interest rate differential and bearish if it has a negative interest rate differential.

In the EU, the ECB has maintained interest rates at 0%, while the BOE cut interest rates from 0.75% to 0.1%. Therefore, the interest rate differential for the EUR/GBP pair is -0.1%. Based on the correlation with the EUR/GBP exchange rate, we assign a score of -2.

  • The EU and the UK GDP Growth Rate differential

The differential in GDP growth helps to efficiently compare economic growth by eliminating the aspect of the size of different economies.

For the first three quarters of 2020, the EU economy has contracted by 2.9% while the UK has contracted by 6.8%. That makes the GDP growth rate differential between the two economies 3.9%. It means that the EU economy contracted at a slower pace than the UK. Based on the correlation with the EUR/GBP price, we assign a score of 5.

Conclusion

The exogenous analysis of the EUR/GBP pair has a score of 9. This inflationary score means that we can expect a bullish trend for the pair in the short-term.

Our technical analysis shows the pair trading above the 200-period MA. More so, notice that the EUR/GBP pair bounces off the lower Bollinger band crossing above the middle band, supporting our fundamental analysis. Happy  Trading.

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Forex Fundamental Analysis

EUR/GBP Global Macro Analysis – Part 2

GBP Endogenous Analysis – Summary

GBP Endogenous Analysis – Summary

GBP Endogenous Analysis – Summary

The GBP endogenous analysis has a score of -9. We can therefore understand that the GBP has depreciated in 2020.

  • United Kingdom Employment Change

The UK unemployment change measures the changes in the number of people who are above 16 years and employed. This data is a 3-month moving average of the change in employment, which measures a general trend in the labor industry changes, which typically corresponds to fluctuations in the economy.

In the three months to September 2020, the number of employed people in the UK dropped by 164,000. The YoY employment change shows a drop of 247,000 jobs, which is the worst in ten years. Based on correlation analysis, we assign a score of -7.

  • United Kingdom GDP Deflator

The UK GDP deflator is used as a measure of the comprehensive change in inflation. It filters out any nominal price changes in the entirety of the goods and services produced within the UK.

In Q3 of 2020, the UK GDP deflator dropped to 109.12 from 111.9 in Q2 – the highest ever recorded in UK history. The UK GDP deflator has increased by 6.41in 2020. We, therefore, assign a score of 4 based on its correlation with the GDP growth.

  • United Kingdom Industrial Production

This indicator tracks the changes in all the firms operating under the industrial sector in the UK. The manufacturing sector accounts for about 70% of the total industrial output. The major components of the manufacturing sector are food, tobacco, and drinks, which account for 11%. The manufacture of transport equipment and basic metals account for 17%, pharmaceuticals and non-metallic 6% each. Quarrying and mining activities account for 12% of the industrial production, with 10% for oil and gas extraction.

In September 2020, MoM industrial production in the UK rose by 0.5 while YoY dropped by 6.3%. Despite the growth and recovery of industrial activity from the coronavirus pandemic, the output is still 5.6% lower than the pre-pandemic levels. Thus, we assign a score of -3 based on correlation with GDP growth.

  • United Kingdom Manufacturing PMI

This index is a result of a survey of about 600 companies in the industrial sector. It is a composite of new orders, which accounts for 30%, output 25%, employment 20%, deliveries from suppliers 15%, and inventory 10%. When the index is above 50, it shows that the manufacturing sector is expanding. Below 50, the manufacturing sector is expected to contract, which impacts the GDP output.

In November 2020, the UK manufacturing PMI was 55.6 – the highest recorded in three years. This was mainly driven by increased inventories and increased new orders as a result of Brexit. We assign a score of 3 based on correlation with the GDP growth rate.

  • United Kingdom Consumer Spending

Consumer spending in the UK shows the amount of money that households spent on the purchase of goods and services in the retail sector. Note that expenditure by households is among the primary drivers of GDP growth.

In Q3 of 2020, the UK consumer spending rose to £304.5 billion from £258.32 billion in Q2. This increase is attributed to the restriction imposed at the onset of the coronavirus outbreak, resulting in the economic slowdown. It is, however, still lower than the pre-pandemic levels. Thus, we assign a score of -5 based on correlation with the GDP growth rate.

  • United Kingdom Consumer Confidence

In the UK, GfK surveys about 2000 households to establish their opinions about the past and future economic conditions, their financial situation, and prospects of saving. The survey period covers about 12 months into the future, which makes it a leading indicator of consumer spending, and by extension, the overall economy.

In November 2020, the UK consumer confidence dropped to -33 edging closer to yearly lows of -34 registered at the height of the pandemic. We assign a score of -5 based on its correlation with the GDP growth rate.

  • United Kingdom Public Sector Net Debt to GDP

This ratio tracks the indebtedness of the UK economy. Based on the economy out, both domestic and foreign investors use the ratio to determine whether the UK can be able to service its debt obligations in the future comfortably.

In the financial year 2018 – 2019, the UK’s public sector net debt to GDP was 80.8%, down from 82.4%. In 2020, it is expected to hit 100% with a longer-term average of 91%. We assign a score of 4 since the increased net pubic debt managed to avoid a deeper recession in 2020.

In the next article, we have performed the Exogenous analysis of the EUR/GBP pair and concluded what trend to expect in this currency pair in the near future. Cheers.

Categories
Forex Fundamental Analysis

EUR/GBP Global Macro Analysis – Part 1

Introduction

Introduction

Introduction

A global macro analysis attempts to analyze the endogenous factors that influence the value of a country’s domestic currency and exogenous factors that affect how the domestic currency fairs in the forex market. The endogenous analysis will cover fundamental economic factors that drive GDP growth in the UK and the Euro Area. The exogenous factors will analyze the price exchange rate dynamics between the EUR and the GBP.

Ranking Scale

Both the endogenous and the exogenous factors will be ranked on a scale of -10 to +10. A negative ranking for the endogenous factors means that they had a deflationary effect on the domestic currency. A positive ranking implies that they had an inflationary impact. Similarly, a negative score for the exogenous factors means the EUR/GBP is bearish and bullish when the score is positive.

EUR Endogenous Analysis – Summary

The endogenous analysis of the EUR has an overall score of -3. Based on the factors we have analyzed, we can expect that the Euro has marginally depreciated in 2020.

This is a quarterly measurement of the changes in both part-time and full-time employment in the EU. It includes individuals working for profit or pay and those who perform family work unpaid. Changes in employment help put economic growth in perspective since an expanding economy corresponds to increased employment opportunities and a contracting economy leads to job losses.

In the third quarter of 2020, employment in the EU increased by 0.9% compared to the 2.7% drop in Q2. Up to Q3 2020, employment in the EU has dropped by 2.1 %. Based on correlation with GDP, we assign a score of -5.

  • European Union GDP Deflator

The GDP deflator is an in-depth measure of the rate of inflation. It measures the changes in the price levels of all goods and services produced in an economy. Therefore, it is the perfect measure of the changes in real economic activities. i.e., it filters out any nominal changes in price.

In Q3 of 2020, the EU GDP deflator rose to 107.17 from 106.37 in Q2. Cumulatively, the EU GDP deflator in 2020 has increased by 2.45. We assign a score of 3 based on the weak correlation between the inflation rate and GDP.

  • European Union Manufacturing Production

In the EU, manufacturing production accounts for about 80% of the total industrial output. With most EU economies heavily reliant on manufacturing, the sector forms a significant portion of the GDP and the labor market.

In September 2020, the YoY manufacturing production in the EU decreased by 6.1%. This is an improvement from the decline of 6.3% in August. The overall industrial production reduced by 5.8% during the period.

We assign a score of -5 based on its correlation with the GDP.

  • Euro Area Manufacturing PMI

Markit surveys about 3000 manufacturing firms. The Markit manufacturing PMI comprises five indexes: new orders accounting for 30% weight of the index, output 25%, employment 20%, delivery by suppliers 15%, and inventory 10%. The Euro Area manufacturing is seen to be improving when the index is above 50 and contracting when below 50. At 50, the index shows that there is no change in the manufacturing sector.

In November 2020, the IHS Markit Eurozone Manufacturing PMI was 53.8, down from 54.8 registered in October. The October reading was the highest ever recorded in the past two years. Despite the November drop, the manufacturing PMI is still higher than during the pre-pandemic period. We, therefore, assign a score of 5.

  • European Union Retail Sales

Retail Sales measures the change in the value of goods and services purchased by households for final consumption. In the EU, food, drinks, and tobacco contribute to the highest in retail sales – 40%. Furniture and electrical goods account for 11.5%, books and computer equipment 11.4%, clothing and textile 9.2%, fuel 9%, medical and pharmaceuticals 8.9%, non-food products and others 10%.

In October 2020, the MoM EU retail sales increased by 1.5%, while the YoY increased by 4.2%. Based on our correlation analysis with EU GDP, we assign a score of 3.

  • Euro Area Consumer Confidence

The consumer confidence survey in the Euro Area covers about 23,000 households. Their opinions are gauged from issues ranging from economic expectations, financial situation, savings goals, and expenditure plans on households’ goods and services. These responses are aggregated into an index from -100 to 100. Consumer confidence is a leading indicator of household expenditure, which is a primary driver of the GDP.

In November 2020, the Euro Area consumer confidence was -17.6, down from -15.5 in October. It is also the lowest reading since May – primarily because of the new lockdown measures bound to impact the labor market. Based on correlation with GDP, we assign a score of -3.

  • Euro Area Government Debt to GDP

This is meant to gauge whether the government is over-leveraged and if it might run into problems servicing future debt obligations.

The Euro Area Government Debt to GDP dropped from 79.5% in 2018 to 77.6% in 2019. In 2020, it is projected to hit 102% but stabilize around 92% in the long run. Based on correlation with GDP, we assign a score of -1.

In our very next article, we have performed the Endogenous analysis of GBP to see if it has appreciated or depreciated in this year. Make sure to check that and let us know in case of any questions in the comments below. Cheers.

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 23 – Is This the End of XRP? SEC Officially Files Lawsuit Against Ripple and its Executives

The cryptocurrency sector was mostly neutral as Bitcoin gained even more market dominance. Bitcoin is currently trading for $23.498, representing an increase of 3.53% when compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 1.28% on the day, while XRP managed to lose a whopping 23.99%.

The cryptocurrency sector was mostly neutral as Bitcoin gained even more market dominance. Bitcoin is currently trading for $23.498, representing an increase of 3.53% when compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 1.28% on the day, while XRP managed to lose a whopping 23.99%.

The cryptocurrency sector was mostly neutral as Bitcoin gained even more market dominance. Bitcoin is currently trading for $23.498, representing an increase of 3.53% when compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 1.28% on the day, while XRP managed to lose a whopping 23.99%.

 Daily Crypto Sector Heat Map

SYNC Network gained 97.23% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by 3x Short XRP Token’s 84.56% and Basis Share’s 77.1% gain. On the other hand, DMme lost 85.99%, making it the most prominent daily loser. It is followed by 3x Long XRP Token’s loss of 66.89% and S4FE’s loss of 60.04%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved up over one percent since our last report, with its value currently being 67.8%. This value represents a 1.2% difference to the downside than the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has increased since we last reported, with its current value being $642.21 billion. This represents a $9.69 billion increase when compared to our previous report.

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What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin continued trading within a decently large range, bound by $22,054 to the downside and $24,315 to the upside. The largest cryptocurrency by market cap managed to gain a couple of percent on its price today, as most of the market consolidated. Therefore, Bitcoin market dominance has risen once again, almost reaching 70%.

Bitcoin’s descending volume and sideways trading were always a sign of a new move in the making. However, as the current trading range is quite wide, the sharp move to either side might not be so imminent.

BTC/USD 4-hour chart

While Bitcoin’s daily and weekly technicals are tilted towards the bull side, its 4-hour and monthly overviews are slightly bullish, but show some hints of neutrality.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is above its 50-period EMA and slightly above its 21-period EMA
  • Price near its middle Bollinger band
  • RSI is neutral (56.31)
  • Volume is slightly above average
Key levels to the upside          Key levels to the downside

1: $24,315                                 1: $22,054

2: $24,700                                 2: $21,350

3: $25,511                                  3: $19,918

Ethereum

Ethereum has followed Bitcoin to the upside and gained just enough traction to attempt a $632 level break, but not enough to actually break it. This triggered a small correction, which brought it to the middle of the range, bound by $600-$602 to the downside and $632 to the upside.

Ethereum’s price movements are (in the past couple of days) either an exact copy of Bitcoin’s moves, or an exaggerated move in the same direction. Traders could possibly use this to trade Ether’s exaggerated moves by watching Bitcoin’s movement.

ETH/USD 4-hour Chart

Ethereum’s daily, weekly, and monthly technicals are completely bullish, while its 4-hour overview is tilted towards the sell-side.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is slightly below both its 50-period and its 21-period EMA
  • Price is close to its middle Bollinger band
  • RSI is neutral (44.94)
  • Volume is on slightly above-average levels
Key levels to the upside          Key levels to the downside

1: $632                                     1: $600

2: $675                                     2: $581 

3: $738.5                                   3: $564

Ripple

XRP got crushed today on horrible news of SEC officially filing a lawsuit against its company Ripple as well as against its cofounders. While MoneyGram took a lenient position and didn’t want to make any negative comments, most crypto exchanges are planning on delisting XRP due to concerns regarding regulation.

While some may think that short-selling XRP is a good idea, watch out for slippage and insufficient demand.

XRP/USD 4-hour Chart

XRP’s short-term technicals show a heavy tilt towards the sell-side, while its long-term technicals (weekly and monthly) remain bullish.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Its price is currently far below both its 50-period EMA and its 21-period EMA
  • Price slightly below its bottom Bollinger band
  • RSI is in the oversold territory (18.53)
  • Volume is on extremely high levels
Key levels to the upside          Key levels to the downside

1: $0.40                                    1: $0.33

2: $0.475                                   2: $0.297

3: $0.481 

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 22 – XRP Plummets on News of SEC Suing Ripple; Crypto Sector in the Red

The cryptocurrency sector bounced back from its recent highs as the news of a new COVID-19 strain came out. Bitcoin is currently trading for $22,716, representing a decrease of 5.01% when compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 5.41% on the day, while XRP managed to lose a whopping 16.97%.

The cryptocurrency sector bounced back from its recent highs as the news of a new COVID-19 strain came out. Bitcoin is currently trading for $22,716, representing a decrease of 5.01% when compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 5.41% on the day, while XRP managed to lose a whopping 16.97%.

The cryptocurrency sector bounced back from its recent highs as the news of a new COVID-19 strain came out. Bitcoin is currently trading for $22,716, representing a decrease of 5.01% when compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 5.41% on the day, while XRP managed to lose a whopping 16.97%.

 Daily Crypto Sector Heat Map

P2P gained 185.24% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by DMme’s 123.95% and Actinium’s 96.18% gain. On the other hand, Wownero lost 54.05%, making it the most prominent daily loser. It is followed by Tap’s loss of 47.05% and Super Bitcoin’s loss of 46.31%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved up over one percent since our last report, with its value currently being 66.6%. This value represents a 1.4% difference to the downside than the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has decreased significantly since we last reported, with its current value being $632.90 billion. This represents a $36.72 billion decrease when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin experienced a 5% pullback after the news of a new strain of COVID-19 came out. Of course, Bitcoin was not the only one hit, as all traditional asset classes dipped in the past 24 hours as well. The downturn got stopped at the $22,054 level, and quickly sprung up to the current levels.

As mentioned in our previous daily crypto review, Bitcoin would experience an increase in volume as it exits consolidation below the recent highs, which happened today.

BTC/USD 4-hour chart

While Bitcoin’s daily technicals are tilted towards the bull side, its 4-hour overview is completely neutral. On the other hand, its weekly and monthly overviews are tilted towards the buy-side, but show hints of neutrality.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is above its 50-period EMA and below its 21-period EMA
  • Price between its bottom and middle Bollinger band
  • RSI is neutral (48.91)
  • Volume is slightly above average
Key levels to the upside          Key levels to the downside

1: $24,315                                 1: $22,054

2: $24,700                                 2: $21,350

3: $25,511                                  3: $19,918

Ethereum

Ethereum has followed Bitcoin to the downside, and lost just over 5% on the day. The second-largest cryptocurrency by market cap fell below the $632 level and attempted to break the $600-$602 support line. However, ETH bulls stopped the downturn, and the cryptocurrency is now consolidating right above this level.

Ethereum’s price movements are pretty tame so far, and traders should pay close attention to Bitcoin and its movement in the near future as Ether seems to follow it almost to the tee.

ETH/USD 4-hour Chart

Ethereum’s daily, weekly and monthly technicals show a strong bullish tilt, while its 4-hour overview is tilted towards the sell-side.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is below both its 50-period and its 21-period EMA
  • Price is close to its bottom Bollinger band
  • RSI is heading towards being oversold (37.52)
  • Volume is on slightly above-average levels
Key levels to the upside          Key levels to the downside

1: $632                                     1: $600

2: $675                                     2: $581 

3: $738.5                                   3: $564

Ripple

XRP had a horrible 24 hour trading session as its price crashed on Ripple’s announcement that they will most likely get sued by the SEC. This news brought its price down almost 20%, with it currently trading right above the $0.457 level, which stopped XRP from going down further.

XRP traders should pay attention to further updates on the lawsuit news as well as to any volume increase the cryptocurrency experiences.

XRP/USD 4-hour Chart

XRP’s long-term technicals (weekly and monthly) show a slight tilt towards the buy-side, while its short-term technicals (4-hour and daily) are completely bearish.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Its price is currently far below both its 50-period EMA and its 21-period EMA
  • Price slightly below its bottom Bollinger band
  • RSI is in the oversold territory (25.83)
  • Volume has returned to average levels
Key levels to the upside          Key levels to the downside

1: $0.5                                      1: $0.475

2: $0.543                                   2: $457

3: $0.57                                    3: $45

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 21 – Bitcoin Dangerously Close to Making a Sharp Move

The cryptocurrency sector is split between gainers and losers as Bitcoin consolidates right below its all-time high level. Bitcoin is currently trading for $23,825, representing an increase of 1.03% when compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 1.42% on the day, while XRP managed to lose 3.20%.

The cryptocurrency sector is split between gainers and losers as Bitcoin consolidates right below its all-time high level. Bitcoin is currently trading for $23,825, representing an increase of 1.03% when compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 1.42% on the day, while XRP managed to lose 3.20%.

The cryptocurrency sector is split between gainers and losers as Bitcoin consolidates right below its all-time high level. Bitcoin is currently trading for $23,825, representing an increase of 1.03% when compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 1.42% on the day, while XRP managed to lose 3.20%.

 Daily Crypto Sector Heat Map

Axion gained 3402.38% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by MahaDAO’s 199.69% and Elxis’ 186.79% gain. On the other hand, Golden Ratio Per Liquidity lost 59.64%, making it the most prominent daily loser. It is followed by ALL BEST ICO’s loss of 50.84% and Quras’s loss of 49.42%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved down almost half a percent since our last report, with its value currently being 65.1%. This value represents a 0.4% difference to the downside than the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has increased since we last reported, with its current value being $669.26 billion. This represents an $18.25billion increase when compared to our previous report.

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What happened in the past 24 hours?

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Technical analysis

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Bitcoin

Bitcoin has spent its weekend slowly rising towards the resistance level of its trading channel, which is bound by $22,055 to the downside and $24,315 to the upside. However, The two attempts to break the resistance level and enter the price discovery phase failed, leaving Bitcoin just below $24,315. With volume descending ever since Dec 17, we might expect this consolidation to end with a volume boom and a very sharp move.

While it is yet unknown whether this sharp move will be to the upside or downside, the increase in volume and a strong push towards one side will make it quite clear. Traders can use this momentum to catch a very safe trade.


BTC/USD 2-hour chart

While Bitcoin’s technicals are overall bullish, they either show signs of neutrality or even hints of bearishness. Its daily and monthly overviews have some indications of sellers being present, while its 4-hour and weekly overviews are bullish-neutral.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is far above both its 50-period and its 21-period EMA
  • Price slightly below its top Bollinger band
  • RSI is close to being overbought (65.90)
  • Volume is decreasing, and trading below the average level
Key levels to the upside          Key levels to the downside

1: $24,315                                 1: $22,054

2: $24,700                                 2: $21,350

3: $25,511                                  3: $19,918

Ethereum

Ethereum has, unlike Bitcoin, descended slowly within its trading range, which is bound by $675 to the upside and $632. The second-largest cryptocurrency by market cap had one strong push towards the downside, which brought its price all the way down to $620 on Dec 20. However, the bulls prevailed, and Ether is now trading above $632 safely.

Ethereum’s price movements seem pretty tame, meaning that its next move will be of larger magnitude. Traders should pay close attention to Bitcoin and its moves in the near future before trading any other cryptocurrency, including Ether.

ETH/USD 2-hour Chart

Ethereum’s technicals are very bullish on all time-frames, with only its weekly overview showing slight neutrality.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is far above its 50-period and at its 21-period EMA
  • Price is slightly below its bottom Bollinger band
  • RSI is neutral (52.43)
  • Volume is on slightly above-average levels
Key levels to the upside          Key levels to the downside

1: $675                                     1: $632

2: $738.5                                  2: $600 

3: $817.5                                   3: $581

Ripple

With XRP’s strong push towards the upside ending on Dec 17, the fourth-largest cryptocurrency by market cap has entered another descending channel. The price was slowly dwindling down over the weekend, breaking the $0.57 support level, and then confirming its position below it. The price even went below the $0.543 support at one point, but quickly recovered.

XRP’s volume is currently almost non-existent, and traders should pay attention to any volume spikes if they intend on trading XRP.

XRP/USD 2-hour Chart

XRP’s technicals are quite mixed, but overall tilted slightly towards the buy-side. It’s 4-hour and daily overviews are bullish-neutral, while its weekly overview shows some hints of bearishness. Its monthly overview, however, is completely bullish.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Its price is currently between its 50-period EMA and its 21-period EMA
  • Price slightly above its bottom Bollinger band
  • RSI is neutral (48.77)
  • Volume has descended to average levels
Key levels to the upside          Key levels to the downside

1: $0.57                                    1: $0.543

2: $0.597                                   2: $0.5

3: $0.63                                    3: $0.475

Categories
Crypto Videos

Stimulus Hope Is Driving Up The Dow Jones – Should You Buy Or Short it?

https://youtu.be/LzN_bjCRLrE

https://youtu.be/LzN_bjCRLrE


Stimulus hopes drive up the Dow Jones – where next? 

Thank you for joining this Forex Academy educational video

In this session, we will be looking at the Dow Jones 30 Industrial Index and looking for indications of the next likely move.

While the United States economy is still reeling from the ongoing Covid situation, which has as a country in its grip, investors are looking long-term, buoyed on by vaccine news and hopes of a speedy back to normal recovery once it has been rolled out to the general population. 

In reality, of course, this may still take over 12 months to implement. Therefore hopes of the recovery are fuelled by my hopes that the American government will continue to support individuals and companies via a Covid-19 relief aid stimulus to help unemployed and financial relief for other individuals and those who need it.

This has been stifled somewhat by the fact that the discussions between the democrats and republicans have not yet been able to agree on how much money the state should put up. Current estimations are that a $900 billion stimulus bill may include checks for $600 for eligible adults and their independents. 

Some Republicans have asked for hand-outs of $1,200 per individual and $2400 per couple, with $500 going to children, to support families through this critical time.

The plan is that the 900 billion stimulus package will be the first of two parts, with phase one considered as an emergency relief bill, and phase two will kick in during the early part of January 2021, once that has been agreed on.

It is talk of the stimulus package, which has been keeping the Dow Jones at record highs.

This is a daily chart of the Dow Jones 30 industrial index.  We can see that since March 2020, the general trend has been a bull trend to the upside, following on from the earlier crash as the pandemic took hold in early February. The technical line numbered 1 shows the general upward trend as hopes of a V-shaped recovery fuelled investor to buy the index.

More recently, talks of an emergency stimulus package, and especially during November where investors believed a deal was imminent, saw price action move higher from this average and particularly where we see the bullish bounce from the line where we see a steady rise up to the record-breaking 30,000 level at position A. 

Talks of the stimulus package went to and fro between the democrats and republicans, with concerns of the, will they or won’t they agree on a package and where price action moved lower to the trend line at position 2, while talks stalled, and where price action itself bounced this higher trend line, marked as 2, back up at position B C  and D in an overall bias squeeze to the upside, where price continued to flirt with 30,000 and eventually where there was a significant close and open above this key level.

In this 1-hour chart, we can see that price action is seeing resistance at around 30,300.

And by adding this support line, we now have rising wedge formation clearly evident, where price action is fading to the upside, with a potential break above the 30,300 level. Should this immanent covid relief bill be agreed upon, price action could punch higher and continue with potential for the 30,300 level to become a support line and a possible move higher by 200 or 300 points.

There is so much pressure on the American government right now to come up with an agreed amount of stimulus for those who need it that it is almost impossible that nothing will happen. This is what is driving the Dow Jones Index and other US indices higher at the moment.

  

Categories
Crypto Market Analysis

BTC/USD Weekly Chart Analysis + Possible Outcomes

In this week’s BTC/USD analysis, we will be taking an in-depth look at the most recent technical formations, as well as look for the possible price outcomes in the following days.

In this week’s BTC/USD analysis, we will be taking an in-depth look at the most recent technical formations, as well as look for the possible price outcomes in the following days.

In this week’s BTC/USD analysis, we will be taking an in-depth look at the most recent technical formations, as well as look for the possible price outcomes in the following days.

Overview

The crypto sector was nothing short of explosive as Bitcoin pushed past its old all-time highs and reached almost as high as $24,000. The largest cryptocurrency by market cap went into skyrocket mode without facing much resistance until it hit a wall near $23,800. As it failed to break this level twice, it started a consolidation phase.

While Bitcoin’s sentiment is extremely bullish, many analysts call for a pullback and say that the most recent push to the upside is still much overextended. However, Bitcoin is consolidating sideways rather than pulling back. One thing is certain, Bitcoin is preparing for its next move.

Technical factors



Bitcoin is currently in consolidation mode after it hit a wall twice near the $23,800 price level. The price range is getting narrower and narrower as time passes, indicating a strong breakout move out of the current boundaries inevitable. On top of that, Bitcoin’s volume has been steadily declining after the final attempt above $23,777. When it comes to support, Bitcoin’s downside is protected by the 21-period moving average as well as the $22,320 Fib retracement line.

While a move to the downside should be considered healthy, the current price bouncing off of its support levels might be just good enough for BTC to push towards the upside once again.

Likely Outcomes

We can expect three main outcomes for Bitcoin, with the ones starting with an upswing being just slightly more plausible.

  1. Bitcoin’s price can easily shoot up past $23,777 and enter price discovery mode yet again. Not much to say about the target levels there, except that the possible resistance zones might be Fib extensions from the current Fib retracement levels.
  2. Bitcoin’s price is most likely to push towards the upside, hit the all-time high level, and fail to break it, therefore prompting a pullback. In this case, the price will most likely fall below $22,320 and head straight for the $21,420 or even lower (some analysts are calling for a drop below $20,000 and a CME Futures gap fill).
  3. Bitcoin’s price might head straight down and break the $22,320 level, in which case the market will steadily test every single support level that has worked until now.

In any case, a significant increase in volume will be required, and traders should certainly pay attention to it.

Categories
Forex Market

Guidance for Trading Forex During Times of Crisis

People generally go about their daily routine without fail, but things change during times of crisis. For example, if the weatherman predicts tornados or even snow in some states, people suddenly go into panic mode and rush out to buy milk, bread, and toilet paper until grocery store shelves are empty. Whenever someone perceives a […]

People generally go about their daily routine without fail, but things change during times of crisis. For example, if the weatherman predicts tornados or even snow in some states, people suddenly go into panic mode and rush out to buy milk, bread, and toilet paper until grocery store shelves are empty. Whenever someone perceives a […]

People generally go about their daily routine without fail, but things change during times of crisis. For example, if the weatherman predicts tornados or even snow in some states, people suddenly go into panic mode and rush out to buy milk, bread, and toilet paper until grocery store shelves are empty. Whenever someone perceives a potential crisis on the horizon, their everyday thought process changes and they begin to go into survival mode.

In some cases, this is for the better, although people often overreact when it comes to small-scale events. Fortunately, we don’t have to deal with crisis mode too often and many of us forget about the frustrations of the last crisis shortly after it’s over. 

In the past, humans went into crisis mode a lot more often and for different reasons, like predators, hunting dangerous wild animals, or because of an incoming attack from a rival tribe. In today’s modern world, most of what we would consider a crisis revolves around the weather, economic, political, and health-related issues. A great example would be the Coronavirus Pandemic, which has inspired a lot of fear, along with hoarding, distrust of the government and in a vaccine, lockdowns, quarantine, and other problems. It would have been nearly impossible to predict what was to come just a few months before the virus began to spread. 

It could be argued that things could have been done to slow down the coronavirus pandemic and to stop it from reaching other countries. Many people believe that the government did not take the virus seriously enough in the beginning, which caused slower and less abrasive actions than what was necessary to stop it. This isn’t that surprising, considering that the modern world has not dealt with such a large pandemic in quite some time. Some scientists and institutions did promote research that suggested this type of thing was possible, but many of us simply weren’t prepared to deal with this crisis. 

Crisis and the Financial Markets

We mentioned how humans operate in two modes: regular everyday life, and crisis mode. It works the same way with the financial markets, as people tend to panic and act differently whenever they perceive a crisis. Since buyers and sellers drive the market, this can cause a lot of issues within the market itself. 

One of the most important things you can do as a trader is to learn to identify whether a potential “crisis” will be small-scale or if it is a world crisis. For example, traders all over the world obviously aren’t going to be worried about a tornado warning in your home state, while a world war would affect things on a global scale. The Cuban Missile Crisis of 1962 and the recent Coronavirus Pandemic are two more examples of world crises that had a large-scale effect on the market. Once you’ve identified which category a crisis falls into, you will need to apply different trading rules depending on what you expect to see with the market.

There are two rules that can be used to help you accurately identify whether a crisis should be considered normal or a world crisis:

  1. Consistent movement in the markets with unnaturally high volatility; declining stock markets; and ranges lasting for some time over their long-term averages are signs of a real-world crisis 
  2. Emotional reactions from traders that result in crashing stock markets are a sign of a real-world crisis that shouldn’t be taken likely

In order to check for the first rule, you can apply the average true range indicator over the long term in order to compare the results to recent daily ranges for the forex, stock, and commodity markets. 

The Bottom Line

Although we don’t have to worry about large-scale crisis too often in the modern world, things can happen quickly and catch us off guard, sending us into full-scale panic mode. As a trader, it’s important to be able to identify just how big of a deal any new crisis might be and whether it is a normal crisis or something that will affect the entire world. This can change the way the market behaves and you’ll need to be prepared and on top of your game to keep up. Remember, even if you believe that a crisis will be widespread, it’s important not to panic and to continue trading with a level head. Always stay up to date on the news and pay attention to what other savvy traders are saying to get a sense of what your peers expect.

Categories
Forex Fundamental Analysis

NZD/USD Global Macro Analysis – Part 3

NZD/USD Exogenous Analysis

NZD/USD Exogenous Analysis

NZD/USD Exogenous Analysis

To effectively compare the US and the New Zealand economies, we will conduct exogenous analysis using the following fundamental aspects;

  • The US and New Zealand balance of trade difference
  • GDP growth differential in the US and New Zealand
  • The US and New Zealand interest rate differential

The US and New Zealand balance of trade difference

A country’s participation in international trade tends to determine the demand for its domestic currency. If a country is a net exporter, its currency will be in high demand in the forex market, increasing its value against other currencies.

In October 2020, New Zealand’s trade deficit was NZD 500 million compared to the US trade deficit of $63.1 billion. Although New Zealand’s trade deficit is improving, it is still lower than the balance of trade in January. On the other hand, the US trade deficit has been widening throughout the year. The difference between the two countries’ balance of trade is the trade deficit differential. Based on its correlation with the price of the NZD/USD pair, we assign a score of 4.

GDP growth differential in the US and New Zealand

GDP growth differential is the difference between the rate at which the US and New Zealand economies are expanding. It will help to show which economy is growing at a faster pace hence impacting the exchange rate between the two countries. A country whose GDP is expanding faster will enjoy favorable domestic macroeconomic conditions. Hence its currency will appreciate.

In Q3 of 2020, the New Zealand GDP contracted by 12.2% while that of the US expanded by 33.1%. That represents a GDP growth rate differential of 45.3%. If this trend continues, we should expect that the USD will strengthen against the NZD hence a bearish NZD/USD pair.

Based on our correlation analysis, we assign the GDP growth differential between the US and New Zealand a score of -4.

The US and New Zealand interest rate differential

The interest rate differential is the difference between the prevailing interest rates in New Zealand and the US. The country with a higher interest rate tends to attract more capital, inceasing the value of its currency.

At the onset of the coronavirus pandemic, the Reserve Bank of New Zealand cut its official cash rate from 1% to 0.25%. During the same period, the US Federal Reserve cut the interest rate from 1.75% to 0.25%. Presently, the interest rate differential in NZD/USD is 0%.

Based on the correlation with the price of the NZD/USD pair, we assign a score of 1.

Conclusion

The NZD/USD pair has an exogenous score of 1. That means we should expect that the pair will continue on a mild bullish trend in the short-term. Note that this trend is also supported by technical analysis.

As seen in the above 1-week chart, the NZD/USD has successfully breached the upper Bollinger band indicating bullish momentum. This supports our fundamental analysis, as well. All the best.

Categories
Forex Fundamental Analysis

NZD/USD Global Macro Analysis – Part 1 & 2

Introduction

Introduction

Introduction

The global macro analysis of the NZD/USD pair will involve the endogenous and exogenous analyses of the US and New Zealand economies. The endogenous analysis will focus on domestic macroeconomic factors that drive the economy. The exogenous analysis will focus on economic indicators that comprehensively compare both the US and New Zealand economies.

Ranking Scale

Both the endogenous and exogenous factors will be ranked on a scale of -10 to +10. A negative ranking for the endogenous means that the factor had a negative impact on either the currency, while a positive ranking had a bullish impact on the currency.

Similarly, when the exogenous factor is negative, it has a bearish impact on the currency pair, while a positive ranking means it had a bullish impact.

Summary – USD Endogenous Analysis

From the above table, a clear deflationary effect can be seen on the USD currency and implies that USD has depreciated in its value since the beginning of 2020. For the complete USD Endogenous Analysis, please check here.

Summary – NZD Endogenous Analysis

The NZD endogenous analysis has a total score of 4. This shows that the NZD appreciated in 2020.

  • New Zealand Inflation Rate

The CPI is the most commonly used measure of inflation in New Zealand. Here are the top categories included in the CPI: Housing with a weight of 24.2%; food and non-alcoholic drinks 18.8%; transportation 15%; recreation 9.4%; alcoholic drinks 7%; clothing, household goods and services, health, and education all have a combined weight of 18.2%.

In September 2020, New Zealand CPI increased by 0.7%. Based on the correlation with the GDP, we assign a score of -1.

  • New Zealand Unemployment Rate

This rate shows the number of New Zealand’s working population out of work and actively looking for gainful employment. As an economic indicator, it can be used to show the economy’s ability to add new jobs to the market.

In Q3 of 2020, the New Zealand unemployment rate increased to 5.3% from 4% in Q2. This shows that the labor market is yet to recover from the economic shocks of the coronavirus pandemic. Based on correlation analysis, we assign a score of -5.

  • New Zealand Manufacturing PMI

This is an index that measures the growth in the manufacturing sector in New Zealand. It is a composite of new orders, employment, inventories, and orders delivered from the manufacturing sector. When the index is above 50, it means that the manufacturing sector in New Zealand is expanding. The sector is seen to be contracting when the index is below 50.

In October 2020, the index declined to 51.7 from 54. However, the index is above the pre-coronavirus levels. That implies the manufacturing sector is recovering swiftly. Based on the correlation analysis with GDP, we assign it a score of 3.

  • New Zealand Business Confidence

In any economy, business confidence goes hand-in-hand with business confidence. In New Zealand, the business confidence index is based on a survey of about 700 businesses. The index is the difference between the number of businesses that anticipate economic improvements and those that expect the economic conditions will decline. The index covers export intentions, profit expectations, employment intentions, activity outlook, and capacity utilization.

In November 2020, the ANZ Business Confidence was -6.9 compared to -15.7 in October. Although in the negative territory, the November reading is the highest since September 2017. This shows that more businesses are becoming optimistic about the future operating environment, mostly thanks to the aggressive expansionary monetary and fiscal policies.

Based on correlation analysis with the GDP, we assign ANZ business confidence a score of 4.

  • New Zealand Retail Sales

In New Zealand, retail sales data is aggregated quarterly. It measures the change in the value of goods and services purchased by households. Remember that consumer expenditure is the main driver of economic growth, which makes the retail sales data a leading indicator of GDP growth.

In Q3 of 2020, the New Zealand retail sales increased by 28% from a drop of 14.6% and 1.2% in Q2 and Q1, respectively. The 28% increase is the largest quarterly increase in 25 years. The YoY retail sales increased by 8.3% in Q3 compared to a 14.2% drop in Q2. Based on our correlation analysis, we assign the New Zealand retail sales a score of 6.

  • New Zealand Consumer Confidence

In New Zealand, consumer confidence tends to correlate with households’ willingness to spend in the economy. The Westpac McDermott Miller Consumer Confidence Index gauges the optimist of New Zealand households regarding the economy. The index covers households’ views on their finances, purchases in the economy, and the overall economy.

A score of above 100 shows an increasing level of optimism, while below 100 shows increasing pessimism.

In Q3 of 2020, the New Zealand consumer confidence index dropped to 95.1 from 97.2 in Q2 and 104.2 in Q1. Q3 reading is the lowest in New Zealand since 2008. Based on its correlation with GDP, we assign a score of -4.

  • New Zealand Government Net Debt to GDP

Gross national Debt to GDP helps both local and foreign creditors gauge a country’s ability to service its debt. This indicator shows the level at which the domestic economy is leveraged. A lower ratio is preferable since it means that the country has a higher GDP compared to its debt. This means that it can be able to access cheap debt in the future.

In the 2018/2019 fiscal year, the New Zealand government debt to GDP dropped to 19% from 19.6% in the 2017/2018 fiscal year. In 2020, the New Zealand government debt to GDP is projected to increase to 27% on account of the government’s aggressive spending to ease the economic pressure from the coronavirus pandemic. Based on correlation analysis with GDP, we assign New Zealand government debt to GDP a score of 1.

In the very next article, let’s analyze the exogenous indicators and forecast if this currency pair seems to be bullish or bearish in the near future.

Categories
Forex Course

193. Summary – Carry Trading

Introduction 

Introduction 

Introduction 

Carry trade involves borrowing or selling of an asset that has a low-interest rate, for the purpose of using the fund proceeds to make another investment with a higher rate of interest. By paying a lower rate of interest on assets and collecting a higher interest rate from another asset, traders make a difference in the interest rate.

Currency Carry Trading – How Does It Work?

In currency carry trading, the trader borrows one currency known as the borrowing fund. And, then they use this fund to purchase another currency. The traders pay low-interest rates on the borrowed currency while collecting a higher interest rate on the purchasing currency. This type of trade gives traders an effective alternative to purchasing low and sell high, which is difficult to do on other trading options. AUD/JPY and NZD/JPY are the most common currency pairs to carry trade.

Opportunities & Risks Involved

The most profitable time to perform a carry trade is when the country’s central banks are increasing or about to raise the interest rate. Low volatility situations are also profitable for these trades as traders are more likely to take more risks. Granted that the value of the currency does not fall, traders are likely to get a good amount.

There is a big risk associated with currency carry trading, primarily because of the uncertainties associated with the exchange rate. When high leverage levels are used in this trade, it implies that even small movement in the exchange rates can result in a substantial loss if the traders fail to hedge their positions properly.

Risk Management 

While lucrative, carry trading comes with its own share of risks. This is because currencies are prone to volatility. Moreover, the negative market sentiment of the traders within the currency market can also have a substantial impact on carry pair currencies. Without improper risk management, traders could end up bearing a high degree of risk. The best way to avoid risk in a carry trade is when the market sentiment and fundamentals support them.

Final Thoughts

If you are looking to invest in a carry trading, the first steps are to select the most lucrative broker vs currency pair combination. The charges of brokers vary significantly across various currencies. Therefore, it is important to ensure that the trade offers an effective risk-adjusted return. Cheers.

Categories
Forex Signals

Gold Trade Choppy – Can Upward Channel Underpin? 

During Friday’s Asian trading session, the yellow metal prices failed to extend their overnight winning streak. They edged lower around the $1,880 level mainly due to the upbeat market sentiment, which tends to undermine the yellow-metal prices as investors continuing a retreat from the safe-haven asset after progress in U.S. stimulus measures and Brexit talks. Elsewhere, the reason behind the risk-on market sentiment could also be associated with the expectations for global economic recovery on potential coronavirus vaccines. 

During Friday’s Asian trading session, the yellow metal prices failed to extend their overnight winning streak. They edged lower around the $1,880 level mainly due to the upbeat market sentiment, which tends to undermine the yellow-metal prices as investors continuing a retreat from the safe-haven asset after progress in U.S. stimulus measures and Brexit talks. Elsewhere, the reason behind the risk-on market sentiment could also be associated with the expectations for global economic recovery on potential coronavirus vaccines. 

During Friday’s Asian trading session, the yellow metal prices failed to extend their overnight winning streak. They edged lower around the $1,880 level mainly due to the upbeat market sentiment, which tends to undermine the yellow-metal prices as investors continuing a retreat from the safe-haven asset after progress in U.S. stimulus measures and Brexit talks. Elsewhere, the reason behind the risk-on market sentiment could also be associated with the expectations for global economic recovery on potential coronavirus vaccines. 

In contrast to this, the widespread rise in the COVID-19 cases from the U.K., U.S., and Europe keeps challenging the market risk-on mood, helping the bullion prices limit their deeper losses. Apart from this, the US-China long-lasting tussle is also questioning the market upside momentum, which also caps further downside for the gold. Besides this, the broad-based U.S. dollar weakness has also played its major role in supporting the gold prices as the price of gold is inversely related to the price of the U.S. dollar. The yellow metal is currently trading at 1,883.14 and consolidating in the range between 1,878.60 – 1,886.06.

The news about vaccine rollouts was supporting the market trading sentiment. In the meantime, the progress on both Brexit trade talks and the latest U.S. stimulus measures also boosted the market trading sentiment, which tends to undermine the safe-haven metal prices. As per the latest report, House Speaker Nancy Pelosi said she hopes to receive the final legislative text on the deal later on Thursday. Whereas, President Donald Trump said by a tweet that stimulus talks were looking good. However, the lawmakers are now confident to approve the stimulus before the year-end. Additionally, the market trading sentiment was supported by the on-going hopes of the coronavirus vaccine. Thus the positive tone surrounding the market trading sentiment was seen as one of the key factors that kept the gold prices under pressure. 

At the USD front, the broad-based U.S. dollar failed to stop its long bearish bias and dropped towards its worst week in a month as demand for the safe-haven assets declined amid progress toward agreeing U.S. fiscal stimulus. It is worth mentioning that the U.S. dollar was down 1.2% for the week so far and has dropped by 12.7% from a 3-year peak in March, falling to 89.862, just above a 2-and-a-half-year low seen on the previous day. Besides, the U.S. dollar losses could also be associated with Powell’s dovish comments on inflation. The U.S. Federal Reserve’s promised to keep interest rates low until an economic recovery is secure. However, the U.S. dollar losses helped the yellow-metal prices limit its deeper losses as the price of gold is inversely related to the U.S. dollar price.

In contrast to this, the growing worries over the resurgence of the coronavirus pandemic have been destroying the hopes of the global economic recovery, which keeps challenging the market trading sentiment and help the yellow-metal prices to limit their deeper losses. On the other hand, the long-lasting tussle between the United States and China remains on the cards as the U.S. continuously imposing sanctions on Beijing. This, in turn, added further questions around the market trading sentiment and became the key factor that kept the lid on any additional losses in the safe-haven metal prices.

Looking ahead, the market traders will keep their eyes on U.K. Retail Sales m/m, which are scheduled for publicity later in the day. Meanwhile, the German PPI m/m data will also be key to watch. Apart from this, the updates surrounding the Brexit, virus, and U.S. stimulus package will not lose their importance. 



Daily Support and Resistance

S1 1807.17

S2 1827.65

S3 1840.79

Pivot Point 1848.13

R1 1861.27

R2 1868.61

R3 1889.09

The yellow metal gold is trading in between a tight range of 1,884 – 1,880 mark. Gold retraced downward to complete 38.2% Fibonacci level of 1,876. On the daily timeframe, gold has formed an upward channel supporting gold around 1,874 level along with a resistance level of 1,894 and 1,910 level. The 50 periods EMA holds around 1,864, suggesting an upward trend in gold; however, we are not opening a buying trade yet as the MACD forms histograms below 0, supporting a selling trend. Let’s consider taking a buying trade over the 1,874 level today. Good luck! 

 

Categories
Forex Signals

AUD/USD Ascending Triangle Pattern Support – Buying Setup Looms! 

The AUD/USD closed at 0.76263 after placing a high of 0.76393 and a low of 0.75668. The AUD/USD rose above the 0.76300 level on Thursday to its highest level since June 2018 amid the broad-based weakness of the US dollar and the rising risk sentiment in the market. The risk-sensitive Aussie benefited from the market’s broadly positive risk appetite that raised the Wall streets’ main indexes added in the gains of AUD/USD pair. The S&P 500 and Nasdaq Composite indices hit an all-time high on Thursday and added in the risk sentiment that gave strength to risk perceived Aussie.

The AUD/USD closed at 0.76263 after placing a high of 0.76393 and a low of 0.75668. The AUD/USD rose above the 0.76300 level on Thursday to its highest level since June 2018 amid the broad-based weakness of the US dollar and the rising risk sentiment in the market. The risk-sensitive Aussie benefited from the market’s broadly positive risk appetite that raised the Wall streets’ main indexes added in the gains of AUD/USD pair. The S&P 500 and Nasdaq Composite indices hit an all-time high on Thursday and added in the risk sentiment that gave strength to risk perceived Aussie.

The AUD/USD closed at 0.76263 after placing a high of 0.76393 and a low of 0.75668. The AUD/USD rose above the 0.76300 level on Thursday to its highest level since June 2018 amid the broad-based weakness of the US dollar and the rising risk sentiment in the market. The risk-sensitive Aussie benefited from the market’s broadly positive risk appetite that raised the Wall streets’ main indexes added in the gains of AUD/USD pair. The S&P 500 and Nasdaq Composite indices hit an all-time high on Thursday and added in the risk sentiment that gave strength to risk perceived Aussie.

The dovish comments from Chairman of Federal Reserve Jerome Powell reassured market participants that the Fed’s ultra-accommodative monetary policy stance was not going anywhere anytime soon. This news also added in the risk sentiment, supported the risk-sensitive Australian dollar, and pushed the AUD/USD pair higher.

Furthermore, the UK and EU prospects reaching a deal before the end of the year as the EU parliament had given the deadline to get an agreement before 20th December also increased and supported the risk perceived Aussie and added in the upward trend of the AUD/USD pair.

On the data front, at 05:30 GMT, the Employment Change in November raised to 90.0K against the expected 40.9K and supported Aussie and added in the gains of AUD/USD pair. In November, the Unemployment Rate also decreased to 6.8% against the forecasted 7.0% and supported the Australian dollar and supported the upward momentum of the AUD/USD pair.

From the US side, at 18:29 GMT, the Philly Fed Manufacturing Index in December fell to 11.1 against the projected 20.1 and weighed on the US dollar and added AUD/USD pair gains. At 18:30 GMT, the Unemployment Claims from last week raised to 885K against the estimated 817K and weighed on the US dollar and supported the AUD/USD pair’s an upward trend. For November, the Building Permits surged to 1.64M against the forecasted 1.55M and supported the US dollar that capped further gains in AUD/USD pair. The Housing Starts in November remained flat as anticipated 1.55M.

The greenback was weak across the board on Thursday as the US Dollar Index (DXY) fell to its lowest since April 2018, below 90 levels to 89.7. The US dollar weakness was due to many factors, including the rising prospects of reaching a deal between Democrats and Republicans over the second round of the US stimulus bill. 

The US dollar was also weak because of the rising number of coronavirus cases in many US states despite the vaccine rollout and lockdown. The reports suggested that the total number of coronavirus cases in the US reached 17M and made the country the hardest-hit country in the world by the pandemic. Furthermore, the Federal Reserve’s latest decision to extend its bond purchases program also added pressure on the greenback that ultimately affected the movement of the AUD/USD pair. All these factors combined and weighed on the US dollar on Thursday that added strength in the currency pair AUD/USD pair.


Daily Technical Levels

Support Resistance

0.7550 0.7592

0.7542 0.7606

0.7509 0.7633

Pivot point: 0.7565

On the technical front, the AUD/USD is trading slightly bullish at 0.7590, facing immediate resistance at the 0.7640 level. Bullish crossover of this level can extend upward trend until the next target level of 0.7680. However, failure to break above the 0.7680 level can extend selling moves until the support area of the 0.7580 AND 0.7545 level. The 50 periods EMA is suggesting a buying trend, but the MACD is suggesting a buying scenario. Thus, we should look for buying trades over the 0.7580 level. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, December 18 – Top Trade Setups In Forex – German IFO Business Climate in Focus! 

On Friday, the fundamental side-eyes will remain on the German Ifo Business Climate figures, which are expected to drop from 90.7 to 90.2 along with the current account data, which is likely to drop from 25.2 B to 22.6B. Both of these figures extend bearish pressure on the Euro. Later, the Canadian retail sales will be in focus as it may drive some price action in the Canadian pairs.

On Friday, the fundamental side-eyes will remain on the German Ifo Business Climate figures, which are expected to drop from 90.7 to 90.2 along with the current account data, which is likely to drop from 25.2 B to 22.6B. Both of these figures extend bearish pressure on the Euro. Later, the Canadian retail sales will be in focus as it may drive some price action in the Canadian pairs.

On Friday, the fundamental side-eyes will remain on the German Ifo Business Climate figures, which are expected to drop from 90.7 to 90.2 along with the current account data, which is likely to drop from 25.2 B to 22.6B. Both of these figures extend bearish pressure on the Euro. Later, the Canadian retail sales will be in focus as it may drive some price action in the Canadian pairs.


 

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.22679 after placing a high of 1.22725 and a low of 1.21897. EUR/USD pair extended its gains on Thursday and peaked in April 2018, amid the broad-based U.S. dollar weakness and the rebound of the Eurozone economy. The U.S. dollar weakness was derived from various factors, including rising hopes that the coronavirus relief bill will release soon, the dovish comments from Powell post-meeting, and the soft U.S. labor market data on Thursday. 

The Democrats and Republicans were close to reaching a deal over a new $900 billion proposal, including $600-$700 in paychecks and unemployment benefits. The U.S. House Speaker Nancy Pelosi has even said that it might be possible that U.S. lawmakers will have the agreement in writing by the end of Thursday. These rising hopes for the U.S. stimulus bill added pressure on the U.S. dollar that ultimately supported the EUR/USD pair’s upward movement.

Powell emphasized that the Fed was following outcomes-based policies, which means if progress slows toward achieving those outcomes, then-Fed could step up its asset purchases. Powell’s dovish comments weighed on the U.S. dollar and supported rising EUR/USD prices on Thursday. Furthermore, on Thursday, the soft labor market data weighed on the U.S. dollar as the Unemployment Claims from last week surged to 885K. The weak U.S. dollar because of rising unemployment claims also supported the upward momentum in EUR/USD pair on Thursday.

On the data front, at 15:00 GMT, the Final CPI for the year in November remained flat at -0.3%. The Final Core CPI from Eurozone in November also remained as expected at 0.2%. From the U.S. side, at 18:29 GMT, the Philly Fed Manufacturing Index in December declined to 11.1 against the projected 20.1 and weighed on the U.S. dollar and supported EUR/USD prices. At 18:30 GMT, the Unemployment Claims from last week surged to 885K against the projected 817K and weighed on the U.S. dollar. For November, the Building Permits surged to 1.64M against the projected 1.55M and supported the U.S. dollar. The Housing Starts in November remained flat as projected 1.55M.

The Eurozone economy was rebounded as suggested by the December Eurozone’s Composite PMI that rose above 49 levels compared to expected 45.3 and supported the single currency. However, the Eurozone market confidence was tempered by the news that Germany, the largest Eurozone economy, would re-enter lockdown in January to curb coronavirus spread.

Meanwhile, the global economic outlook continued to improve following the news that Europe will be rolling out coronavirus vaccines. The E.U. Commission chief Ursula von der Leyen said that the coronavirus vaccination would start from December 27 in Austria, Germany, and Italy. The Health Minister Jens Spahn said that if the approval comes as planned, Germany will start vaccination on December 27. The potential vaccine rollout in Europe raised the Eurozone economy’s outlook and supported the single currency Euro and added the EUR/USD pair’s gains.

Daily Technical Levels

Support   Resistance

1.2143      1.2231

1.2090      1.2266

1.2055      1.2320

Pivot point: 1.2178

EUR/USD– Trading Tip

The EUR/USD bullish bias continues to drive an upward movement at 1.2245, and continuing an upward trend is likely to be continued. On the 4 hour timeframe, the EURUSD has entered the overbought zone, and it has completed 23.6% Fibonacci retracement at the 1.2240 level. A bearish breakout of 1.2240 can send the EUR/USD pair towards a 38.2% Fibo level of 1.2214. The odds of buying seems strong over the 1.2214 level today.

GBP/USD – Daily Analysis

 The GBP/USD pair was closed at 1.35833 after placing a high of 1.36244 and a low of 1.34950. GBP/USD pair extended its gains for the third consecutive day on Thursday and peaked since May 2018 due to broad-based U.S. dollar weakness. The British Pound pared some gains on Thursday after the U.K. Prime Minister Boris Johnson said that it was likely that a deal would not be reached until the European Union eased its stance over key sticking issues, including fishing rights.

Johnson poured cold water on the deal’s hopes, saying that it looked very likely that the agreement will not be finalized until the European Union shifts its position substantially. This update came in the right after the positive comments from European Commission President Ursula von der Leyen, who said that the progress in trade negotiations was seen.


Despite the hints of possible progress on a post-Brexit trade deal, PM Johnson has not shied away from his views that the possible outcome for the U.K. to leave the E.U. was without a deal. In this scenario, the U.K. and E.U. will follow the terms and conditions under the World Trade Organization that would not be good for both nations. The European Parliament has given Brexit negotiators until December 20 to strike a deal to allow enough time to ratify a potential agreement before the end of the U.K.’s transition period to leave the E.U.

Furthermore, on Thursday, the Bank of England kept interest rates at the lowest level on record after warning that rapid growth in coronavirus infections will deliver a bigger hit to the U.K. economy than expected in the final months of 2020. The official interest rate was kept unchanged at 0.1% by BoE, while the bank also left the Q.E. bond-buying program unchanged at 895 billion pounds after pumping an additional 150 billion pounds into the economy last month.

The bank acknowledged that against a backdrop of soaring coronavirus infections amid the second wave of the pandemic has forced the government to launch tier-3 restrictions in England and tighter control over Scotland, Wales, and Northern Ireland that has put the economy under pressure. The bank projected that the GDP of the U.K. in the final three months of 2020 would contract by a little over 1%, which means that national output for 2020 will be 11% below 2019, and it will be the biggest recession in 300 years. These dovish comments from the Bank of England removed some of the GBP/USD pair’s daily gain on Thursday.

On the data front, at 17:00 GMT, the Asset Purchase Facility from Great Britain in December remained flat at 895B. 

From the U.S. side, at 18:29 GMT, the Philly Fed Manufacturing Index in December fell to 11.1 against the anticipated 20.1 and weighed on the U.S. dollar and supported the GBP/USD pair. At 18:30 GMT, the Unemployment Claims from last week rose to 885K against the anticipated 817K and weighed on the U.S. dollar, and added further gains in GBP/USD pair. For November, the Building Permits rose to 1.64M against the anticipated 1.55M and supported the U.S. dollar. The Housing Starts in November remained flat as anticipated 1.55M.  The U.S. dollar was weak across the board as the hopes for the second round of stimulus bills raised as the Democrats and Republicans were coming closer to reach a $900 billion proposal that would include $600 to $700 paychecks and unemployment benefits. The rising hopes that U.S. stimulus will reach an agreement soon weighed on the U.S. dollar and added in the gains of GBP/USD.

The U.S. dollar was also weak because of the rising number of coronavirus cases in the U.S. despite the vaccine rollout. According to Johns Hopkins University, the U.S. confirmed 247,403 new coronavirus cases on Wednesday, and the number of Americans’ deaths was recorded as 3656 in a single day. Meanwhile, the risk perceived the latest improvement in risk sentiment also supported British Pound after the hopes of another vaccine approval rose. A vaccine by Moderna that will offer about 94% protection against the coronavirus was set to get emergency authorization as early as this week by US FDA. On Thursday, a panel of 22 members of experts met to discuss the efficacy and potential side effects of Moderna’s vaccine. However, the American public will start receiving vaccine shots possibly after months, and in the meantime, the hospitals across the country will be caring for the coronavirus patients. These rising optimism raised the hopes that global economic recovery will reach soon and supported the risk sentiment that added strength in Sterling and helped GBP/USD pair to continue its upward movement.

Daily Technical Levels

Support   Resistance

1.3442      1.3562

1.3378      1.3618 

1.3322      1.3683

Pivot point: 1.3498

GBP/USD– Trading Tip

The GBP/USD is trading at 1.3550 level, facing an immediate support level of 1.3518 level. This support level is extended by an upward trendline, which can be seen in the 4-hour timeframe. On the higher side, the pair can extend the buying trend until the 1.3588 level, and the continuation of the buying trend can also lead Sterling towards the 1.3625 level. Support holds around the 1.3518 level, and a breakout can lead the pair towards the 1.3495 area. Bullish bias dominates today.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.074 after placing a high of 103.560 and a low of 102.872. The currency pair USD/JPY fell for the third consecutive day on Thursday amid the U.S. dollar’s broad-based weakness. The U.S. dollar fell significantly against the Japanese Yen, and the USD/JPY pair reached 102 level on Thursday as the U.S. dollar index fell below 90 levels for the first time since April 2018. The U.S. Dollar Index that measures the value of the U.S. dollar against the basket of six currencies fell to 89.7 level on Thursday and dragged the USD/JPY pair further on the downside towards its lowest since March.

On Thursday, the Wall Street main indexes rose modestly, with Dow Jones up by 0.39% and the NASDAQ by 0.42%. Meanwhile, the Japanese Yen performed well against its rivals across the board despite the risk appetite and kept the USD/JPY pair under pressure. The hopes for the second round of U.S. stimulus bill from Congress rose and weighed on the U.S. dollar as the Democrats and Republicans reached a consensus over the proposal of $900 billion stimulus aid that will include $600-$700 in the paychecks and unemployment benefits. Furthermore, the rising number of coronavirus cases in the U.S. were also weighing on the local currency as the cases in total reached about 17M in the U.S. Despite the vaccine rollout in the U.S., the rising number of coronavirus causes added pressure on the U.S. dollar and added further downside on the USD/JPY pair.

The USD/JPY pair’s downward momentum was the disappointing U.S. jobless claims on Thursday. On the data front, at 18:29 GMT, the Philly Fed Manufacturing Index in December decreased to 11.1 against the estimated 20.1 and weighed on the U.S. dollar that added pressure over the USD/JPY pair. At 18:30 GMT, the Unemployment Claims from last week increased to 885K against the estimated 817K and weighed on the U.S. dollar and dragged the pair USD/JPY further on the downside. Building Permits for November increased to 1.64M against the estimated 1.55M and supported the U.S. dollar. The Housing Starts in November remained flat as estimated at 1.55M.

Since September, the rising number of unemployment claims to the highest level suggested the effect of increasingly restrictive measures in many states due to increased coronavirus cases and people’s loss of confidence. Meanwhile, in Japan, the main upcoming event was the central bank meeting on Friday. The most likely scenario was a no change in the monetary policy setting and keeping the rates at -10bps and the 10-year JGB yield target at 0.00%. The emergency lending facilities are expected to extend beyond the current run-off date of March 31, 2021. There were no macroeconomic figures to be released from Japan on Thursday, so the pair USD/JPY kept following the U.S. dollar movements that were weak across the board on the day.


Daily Technical Levels

Support   Resistance

103.47      104.02

103.25      104.37

102.91      104.58

Pivot point: 103.81

USD/JPY – Trading Tips

The USD/JPY has reversed the selling bias to trade at the 103.550 level. The safe-haven currency pair is trading beneath an immediate support mark of 103.750, and the formation of candles beneath this level will reinforce the bearish breakout. If this happens, we may have an opportunity to short the USD/JPY pair today. Bearish bias looks firm as the MACD is creating histograms underneath 0, and the 50 periods EMA is operating around 103.800 level, suggesting strong probabilities of selling. On the lower side, the USD/JPY pair may find subsequent support at the 102.900 level. It can be a good idea to take a selling position below 103.750 today. Good luck!

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 18 – Bitcoin at $23,000; Crypto Sector Preparing for the Next Move

The majority of the cryptocurrencies ended up in the green as the cryptocurrency sector tried to consolidate after Bitcoin’s price discovery in the all-time high territory. Bitcoin is currently trading for $22.912, representing an increase of 3.96% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 0.16% on the day, while XRP managed to gain 3.79%.

The majority of the cryptocurrencies ended up in the green as the cryptocurrency sector tried to consolidate after Bitcoin’s price discovery in the all-time high territory. Bitcoin is currently trading for $22.912, representing an increase of 3.96% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 0.16% on the day, while XRP managed to gain 3.79%.

The majority of the cryptocurrencies ended up in the green as the cryptocurrency sector tried to consolidate after Bitcoin’s price discovery in the all-time high territory. Bitcoin is currently trading for $22.912, representing an increase of 3.96% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 0.16% on the day, while XRP managed to gain 3.79%.

 Daily Crypto Sector Heat Map

MobileGo gained 94.96% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by Puriever’s 85.99% and Tokes’ 85.09% gain. On the other hand, Basis Share lost 49.6%, making it the most prominent daily loser. It is followed by 3x Short Litecoin Token’s loss of 46.73% and Force For Fast’s loss of 42.92%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved up half a percent since our last report, with its value currently being 65.5%. This value represents a 0.5% difference to the upside than the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has increased since we last reported, with its current value being $651.01 billion. This represents a $17.07 billion increase when compared to our previous report.

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What happened in the past 24 hours?

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Technical analysis

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Bitcoin

Bitcoin has stopped its price discovery phase as it bounced off the $24,000 level and began consolidating. The largest cryptocurrency by market cap is currently fighting for the $23,000 level, a minor pivot point within a larger range bound by $24,000 to the upside and $22,050 to the downside.

At the moment, the Fib extension sitting at $22,055 is the most likely strong support level, while Bitcoin’s upside is open to new highs if the cryptocurrency passes $24,000, $23,315, and $24,500.

BTC/USD 2-hour chart

Bitcoin’s 4-hour and weekly overview are fully bullish, while its daily and monthly time-frames show slight neutrality on top of the overall bullishness.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is far above both its 50-period and its 21-period EMA
  • Price slightly below its top Bollinger band
  • RSI is heavily overbought (80.71)
  • Volume is far higher than its average levels
Key levels to the upside          Key levels to the downside

1: $24,315                                 1: $22,054

2: $24,700                                 2: $21,350

3: $25,511                                  3: $19,918

Ethereum

Ethereum has, just like Bitcoin, hit a wall in its price ascension, triggering a pullback from the highs of $675. The second-largest cryptocurrency by market cap quickly fell to its immediate support level, which sits at $632. This level held up nicely, and Ethereum is now on a slow rise after confirming the support level.

An important thing to note is that Ethereum is very far from reaching its all-time high. It might be a good value investment simply because of its potential to increase its price faster than Bitcoin.

ETH/USD 2-hour Chart

Ethereum’s 4-hour and monthly overview are fully bullish, while its daily and weekly time-frames show slight neutrality on top of the overall bullishness.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is far above both its 50-period and its 21-period EMAs
  • Price is between its middle and top Bollinger band
  • RSI has barely left the overbought territory (67.29)
  • Volume is much higher than its weekly average but is descending
Key levels to the upside          Key levels to the downside

1: $675                                     1: $632

2: $738.5                                  2: $600 

3: $817.5                                   3: $581

Ripple

XRP was the cryptocurrency that experienced the largest gains out of the three cryptocurrencies we cover daily. The fourth-largest cryptocurrency by market cap couldn’t break a high of $0.597 with conviction (though the price briefly went as high as $0.656), which triggered a correction to its $0.57 support level. After confirming this level as strong support, XRP continued its path towards the upside and slowly started increasing in price. It is currently contesting the $0.597 level once again.


XRP/USD 2-hour Chart

XRP’s 4-hour and monthly overview are fully bullish, while its daily and weekly time-frames show slight neutrality on top of the overall bullishness.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Its price is currently above both its 50-period EMA and its 21-period EMA
  • Price slightly below its top Bollinger band
  • RSI is nearing the overbought territory (63.71)
  • Volume is well above its average level, thought descending
Key levels to the upside          Key levels to the downside

1: $0.597                                    1: $0.57

2: $0.63                                    2: $0.543

3: $0.66                                     3: $0.5

Categories
Forex Fundamental Analysis

USD/CHF Global Macro Analysis – Part 3

USD/CHF Exogenous Analysis

USD/CHF Exogenous Analysis

USD/CHF Exogenous Analysis

The exogenous analysis covers fundamental indicators that can compare the performance of the US and Swiss economies. Note that this comparison between the two economies is what drives the exchange rate of USD/CHF. They are:

  • US and Swiss interest rate differential
  • The difference in the GDP growth in the US and Switzerland
  • Balance of trade differential

Balance of trade differential

For each country, the balance of trade shows the demand for the domestic currency in the international market. When a country has a surplus of the balance of trade, it means that its currency is in high demand in international trade. The rationale behind this is that when a country exports more than it imports, other countries will need more of that country’s currency to participate in international trade.

The balance of trade differential measures the difference between the balance of trade in Switzerland and the US. If the Swiss balance of trade is higher than that of the US, the USD/CHF pair will be bearish.

In October 2020, Switzerland had a trade surplus of CHF 2.9 billion while the US a deficit of $63.1 billion. Throughout 2020, the US trade deficit has been widening from $37 billion in January, while the Swiss trade surplus has increased from CHF 2.8 billion.

Based on the correlation with the USD/CHF pair, we assign the balance of trade differential a score of -5.

US and Switzerland interest rate differential

Typically, the country with a higher interest rate attracts more foreign capital seeking superior returns. A higher interest rate increases the domestic currency demand, which makes it appreciate in the forex market. More so, forex traders tend to be bullish on the currency with the higher interest rate.

The interest rate by The Swiss National Bank is -0.75% since January 2015. In the US, the federal funds rate is 0.25%. That makes the interest rate differential 1% for the USD/CHF pair.

Based on the correlation analysis with the USD/CHF pair, we assign the interest rate differential a score of 3.

The difference in the GDP growth in the US and Switzerland

A country’s GDP is primarily driven by domestic consumption. Although the GDP size differs in absolute terms, we can compare the US and Swiss GDP in terms of growth rate. An expanding economy is accompanied by appreciating currency. Therefore, if the US growth rate is higher than Switzerland’s, we can expect a bullish trend for the USD/CHF pair.

In Q3 of 2020, the Swiss economy expanded by 7.2% and the US by 33.1%. It means that the US economy is recovering faster than that of Switzerland. We, therefore, assign a score of 2. This implies that the GDP growth rate differential between the US and Switzerland has led to a bullish USD/CHF.

Conclusion

The USD/CHF pair has an exogenous score of -2. This implies that we can expect the pair to continue with its current bearish trend in the near future.

Note that the USD/CHF pair has breached the lower Bollinger band. Therefore, we can expect the downtrend to continue for a while, which supports our fundamental analysis. All the best.

Categories
Forex Fundamental Analysis

USD/CHF Global Macro Analysis – Part 1 & 2

Introduction

Introduction

Introduction

When conducting the global macroeconomic analysis, endogenous and exogenous factors are considered. These analyses can be used to explain the price dynamic of a currency pair. In this case, we will analyze the endogenous factors that drive the economy in the US and Switzerland. We will also analyze the exogenous factors that primarily drives the price of the USD/CHF pair.

Ranking Scale

A sliding scale from -10 to +10 will be sued to ranks the impact of the individual endogenous and exogenous factors on the currency. A negative ranking for the endogenous factors means that they had a depreciating impact on the individual currencies, while a positive ranking means they resulted in currency appreciating.

Similarly, a negative ranking for the exogenous factors implies that they’ve had a bearish impact on the currency pair, while a positive ranking means they’ve had a bullish impact.

Summary of USD Endogenous Analysis

From the above table, we can see a clear deflationary effect on the USD currency and implies that it has depreciated in its value since the beginning of the year. You can find the complete USD Endogenous Analysis here.

Summary of CHF Endogenous Analysis

Overall, the endogenous analysis of CHF has a score of -5. That implies that the CHF is expected to have depreciated marginally in 2020.

  • Switzerland Inflation Rate

The rate of inflation is used to measure the changes in the price of consumer goods in Switzerland over a specified period – usually monthly or yearly. Here are the components of the CPI in Switzerland: Housing and energy, which accounts for 25% of the total CPI weight; 16% for healthcare; Transport accounts for 11%; Food and non-alcoholic drinks 11%; hotel and restaurant services 8%; 4% for Household goods and services; and clothing 3%. Education, communication services, and alcoholic beverages cumulatively account for 7% of the total CPI weight.

In November 2020, the YoY CPI in Switzerland dropped by 0.7%, while the MoM CPI dropped by 0.2%. The fall in prices of the hotel and holiday packages contributed to the drop in the inflation rate. The Switzerland CPI is at the lowest point since January 2018.

Based on our correlation analysis, we assign the Switzerland rate of inflation a score of -3.

  • Switzerland Unemployment Rate

This economic indicator shows the percentage of the total Swiss labor force that is actively seeking a job. Note that not all unemployed portion of the working-age population are seeking employment; so, they are not captured by the unemployment rate.

The unemployment rate can also be used to show the rate at which the economy is adding or cutting job opportunities. This can be used to show economic growth.

In October 2020, the Swiss unemployment rate was 3.2%, down from highs of 3.4% in May, while the employment rate in Q3 2020 was 79.7%. Although it is higher than the 79.1% registered in Q2, it is still significantly lower than the pre-pandemic rate of 80.4%.

The Swiss unemployment rate has a high correlation with the GDP, but since it only increased marginally, we assign it a score of -2.

  • Switzerland Manufacturing PMI

The Swiss procure.ch Manufacturing Purchasing Managers’ Index surveys the executives in the manufacturing sector. The index is a measure of the Swiss manufacturing sector’s performance and serves as a leading indicator for business expectations.

The Manufacturing PMI is an aggregate of five components: new orders, which a weight of  30%, output 25%, employment 20%, supplies 15%, and inventory 10%. The manufacturing sector is expected to expand when the index is above 50 and contract when the index is below 50.

In November 2020, the Swiss procure.ch Manufacturing PMI increased to 55.2, the highest since December 2018. Based on the correlation analysis with the GDP, we assign a score of 7 since it shows a robust expansion.

The Swiss services industry employs over 60% of the working population and accounts for 73% of Switzerland’s GDP. This makes the services PMI a crucial indicator of the overall economy. The Services PMI is obtained through a comprehensive survey of 300 purchasing managers in the services sector to evaluate the changes in business activities.

The survey covers areas such as customer new orders, purchasing, and sales prices, and changes in the employment level.

In November 2020, the Swiss services PMI dropped to 48 from 50.4 in October, primarily attributed to new orders’ contraction. Although it is almost double the 21.4 recorded in April, it is still lower than the 57.3 recorded in January 2020. We, therefore, assign it a score of -4.

  • Switzerland Consumer Confidence

In Switzerland, consumer confidence is used to evaluate households’ opinion on the overall economy and their financial position. Typically, consumer confidence is higher when there is high GDP growth, and the unemployment rate is low.

In the fourth quarter of 2020, the Swiss consumer confidence was -12.8, better than Q2 -39.3. Consumer confidence is used to show the likelihood of how much households will spend in the economy. Hence we assign it a score of -2.

  • Switzerland Government Gross Debt to GDP

The Swiss government debt is the totality of the government’s amount owed to both domestic and foreign lenders. This debt is expressed as a percentage of the GDP o help determine the indebtedness of the economy. Lenders also use this metric to determine if there is a possibility of default by the government. Typically, government debt that is less than 60% of the economy is considered ideal.

In 2019, Switzerland’s government gross debt to GDP was 41%, and it’s projected to hit 49% in 2020 due to increased government expenditure to curb the economic slowdown brought about by the coronavirus pandemic. However, the Swiss government’s gross debt to GDP has been steadily declining since 2004, averaging at around 37%. Based on our correlation analysis and the fact that it has marginally increased in 2020, we assign a score of -1.

Now we know that both USD and CHF have depreciated according to their respective endogenous indicators. Please check our next article to know if this pair is expected to be bullish or bearish in the near future according to their exogenous indicators. Cheers.

Categories
Forex Course

192. Criteria To Carry Trade The Forex Market and Risks Involved

Introduction

Introduction

Introduction

In the previous lesson, we discussed instances when a carry can work, and when it’s bound to fail. But, having this knowledge won’t be of much help if you do not know the best criteria for a currency carry trade and the risks involved.

Criteria to Carry Trade

There are two basic criteria to carry trade the Forex market profitably.

① The interest rate differential between two currency pairs needs to be high with no prospects of reducing in the near term.

② The currency pair that we choose has to be on a bullish trend in favor of the currency with the higher interest rate. The reason for this is to ensure you can remain bullish on the high yielding currency and profit from the interest rate differential for the longest possible time.

Let’s take the example of the AUD/JPY pair. Japan’s interest rate has remained at -0.1%, while in Australia was held at 0.25%. That means the interest rate differential between the AUD/JPY pair has been 0.35%. Therefore, if you were to borrow and sell the JPY to buy the AUD, you’d expect a pay-out of 0.35%. Note that this is the same as going long on the AUD/JPY pair.

In this scenario, going long on AUD/JPY from March 2020 to October 2020 would have earned you over 900 pips. At the same time, you’d be earning an interest rate differential of 0.35%.

Risks Involved In Carry Trading

So far, a carry trade sounds like a risk-free strategy. But, like any other investment, the carry trade has its fair amount of risks – especially when leverage is involved.

Remember, in the previous lesson, we mentioned two conditions for a carry trade to thrive. First, there had to be low volatility in the market. The reason for this is to ensure that your open position is not wiped out due to currency fluctuations before you reap the profits of interest rate differential. Note that using trailing stop orders can help mitigate the risk of price fluctuations in the forex market.

The second condition for a carry trade to thrive was the stable economic conditions that might encourage the hiking of interest rates. If the economic climate is full of uncertainties, like with the ongoing coronavirus pandemic, central banks are more likely to cut interest rates than hike them. Therefore, if extreme interest rate cuts occur while you are in a currency carry trade, it could result in losses. 

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Categories
Forex Market Analysis

Daily F.X. Analysis, December 17 – Top Trade Setups In Forex – BOE Policy In Limelight! 

On the news front, the eyes will remain on the U.K. Monetary Policy reports due during the late European hours. BOE isn’t expected to change the rates, and it may keep them at 0.10%. However, it will be essential to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today. During the U.S. session, the Unemployment Claims and Philly Fed Manufacturing Index will be the main highlight to drive further market movement.

On the news front, the eyes will remain on the U.K. Monetary Policy reports due during the late European hours. BOE isn’t expected to change the rates, and it may keep them at 0.10%. However, it will be essential to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today. During the U.S. session, the Unemployment Claims and Philly Fed Manufacturing Index will be the main highlight to drive further market movement.

On the news front, the eyes will remain on the U.K. Monetary Policy reports due during the late European hours. BOE isn’t expected to change the rates, and it may keep them at 0.10%. However, it will be essential to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today. During the U.S. session, the Unemployment Claims and Philly Fed Manufacturing Index will be the main highlight to drive further market movement.

 

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.21988 after placing a high of 1.22121 and a low of 1.21450. EUR/USD pair extended its gains and rose for 3rd consecutive day on Wednesday to reach its highest since April 2018.

EUR/USD pair broke above 1.22 level mainly because of the strong PMIs on Wednesday and the U.S. dollar weakness. On the data front, at 13:15 GMT, the French Flash Services PMI for December raised to 49.2 against the expected 39.9 and supported Euro. The French Flash Manufacturing PMI in December also raised to 51.1 against the estimated 50.0 and supported Euro. 

At 13:30 GMT, the German Flash Manufacturing PMI in December surged to 58.6 against the forecasted 56.4 and supported Euro. The German Flash Services PMI also advanced to 47.7 against the expected 44.1 and supported Euro. At 14:00 GMT, the Flash manufacturing PMI from Eurozone raised to 55.5 against the forecasted 53.0 and supported Euro. The Flash Services PMI in December from the whole bloc also raised to 47.3 from the expected 41.9 and supported Euro. At 15:00 GMT, the Trade Balance from Eurozone for October came in greater than expected 22.1B as 25,9B and supported Euro.

The manufacturing and services sector in Eurozone advanced and showed growth in December that supported the single currency Euro and added in the daily gains of the EUR/USD pair. From the U.S. side, at 18:30 GMT, the Core Retail Sales for November declined to -0.9% against the projected 0.1% and weighed on the U.S. dollar and supported EUR/USD gains. For November, the Retail Sales also declined to -1.1% against the projected -0.3% and weighed on the U.S. dollar and added in the EUR/USD pair. AT 19:45 GMT, the Flash manufacturing PMI for December rose to56.5 against the projected 55.9 and supported the U.S. dollar, and capped further gains in EUR/USD pair. 

The Flash Services PMI for December declined to 55.3 against the projected 55.7 and weighed on the U.S. dollar and supported momentum upward in EUR/USD pair. At 20:00 GMT, the Business Inventories for October rose to 0.7% against the projected 0.6%and weighed on the U.S. dollar. The NAHB Housing Market Index also declined to 86 against the projected 88 and weighed on the U.S. dollar, and added additional EUR/USD pair gains.

Apart from strong PMI figures, the latest news that Moderna’s vaccine was also up to getting emergency use authorization from the US FDA by the end of this week. This vaccine will be the second vaccine after Pfizer’s drug was approved last week and is currently being used on people. This news added in the risk sentiment and supported the risk perceived EUR/USD pair.

Furthermore, the Brexit hopes also raised on Wednesday and supported the single currency Euro after E.U.’s chief negotiator explained that she could not say if there will be a trade deal with Britain, but there had been progressing. The next few days would be critical. These developments also added to the upward trend of the EUR/USD pair on Wednesday.

Moreover, the Federal Reserve concluded its two-day meeting on Wednesday and decided to keep its interest rates at the same level until the inflation reaches its target. However, it decided to extend its Q.E. program that weighed on the U.S. dollar and supported the EUR/USD pair’s upward trend.


Daily Technical Levels

Support   Resistance

1.2126      1.2175

1.2077      1.2197

1.2099      1.2224

Pivot point: 1.2148

EUR/USD– Trading Tip

The EUR/USD bullish bias continues to dominate the market as it’s trading at 1.2225. On the higher side, the EUR/USD may target the 1.2250 level and 1.2282 resistance areas. The direct currency pair may find support at 1.2175, which is extended by a double top resistance, which now is working as a support. The MACD and RSI are supporting bullish bias along with the 50 periods EMA. We can expect a continuation of a bullish trend in the EUR/USD today.

GBP/USD – Daily Analysis

 The GBP/USD pair was closed at 1.35083 after placing a high of 1.35543 and a low of 1.34340. GBP/USD pair extended its gains on Wednesday and rose to its highest level since May 2018. The British Pound pared gains on Wednesday against the U.S. dollar as reports suggested that U.K. and E.U. were close to a breakthrough on a key sticking point amid the ongoing talks. The President of European Commission Ursula von der Leyen said that there was a narrow path to an agreement on a post-Brexit trade deal with the U.K.

The U.K. acknowledged that some progress had been made but continued to suggest a no-deal was most likely outcome as significant differences remain. Reports suggested that progress has been made over the level playing rules, but differences remain over the fisheries issue, as fishing quotas remain a challenge in negotiations.

However, the U.K. has softened its tone on fisheries in a bid to get a deal over the line. Britain ditched the demands for fishing vessels operating under the U.K. flag to be majority British-owned in the post Brexit era. Whereas PM Boris Johnson remained harsh in his speech on Wednesday and said that the E.U. should realize that the U.K. has a right to take control over its land and waters like every other country.

The hopes for the Brexit trade deal increased as the recent progress on talks came as both sides were coming under increasing pressure to secure a deal before the transition period on December 31. These hopes kept the British Pound supported and GBP/USD pair higher.

On the data front, at 12:00 GMT, the Consumer Price Index from the U.K. for November fell short of expectations of 0.6% and came in as 0.3% that weighed on the British Pound. In November, the Core CPI also fell to 1.1% against the expectations of 1.4% and weighed on Sterling. The RPI of the year from the U.K. for November also declined to 0.9% against the forecasted 1.3% and weighed heavily on GBP. At 12:02 GMT, the PPI Input from the U.K. declined to 0.2% from the expected 0.4% in November and weighed on the British Pound. The PPI Output, however, remained flat with the expectations of 0.2%. At 14:30 GMT, the Flash manufacturing PMI in December from Great Britain raised to 57.3 against the projected 55.9 and supported British Pound and added GBP/USD pair gains. The Flash Services PMI, however, declined to 49.9 against the forecasted 50.5 in December and weighed on Sterling. The Housing Price Index for October advanced to 5.4% against the estimated 5.1% and supported British Pound. 

Most of the data came in against the British Pound; however, the currency pair GBP/USD remains on the upside over the latest Brexit optimism.

From the U.S. side, at 18:30 GMT, the Core Retail Sales for November fell to -0.9% against the anticipated 0.1% and weighed on the U.S. dollar and supported GBP/USD pair. The Retail Sales for November also fell to -1.1% against the anticipated -0.3% and weighed on the U.S. dollar and added gains in GBP/USD pair. 

At 19:45 GMT, the Flash manufacturing PMI for December surged to56.5 against the anticipated 55.9 and supported the U.S. dollar. The Flash Services PMI for December fell to 55.3 against the anticipated 55.7 and weighed on the U.S. dollar. At 20:00 GMT, the Business Inventories for October surged to 0.7% against the anticipated 0.6%and weighed on the U.S. dollar. The NAHB Housing Market Index also fell to 86 against the anticipated 88 and weighed on the U.S. dollar and added further gains in GBP/USD pair.

Daily Technical Levels

Support   Resistance

1.3338      1.3258

1.3213      1.3595

1.3147      1.3719

Pivot point: 1.3404

GBP/USD– Trading Tip

Since the Cable is also a direct currency pair and the dollar is getting weaker, we can expect a continuation of an upward trend in the GBP/USD pair. The GBP/USD pair may find resistance at 1.3600 and 1.3706 level, while the support level stays at 1.3470 marks. The MACD and EMA are supporting the bullish trend in the Cable. On the 4 hour timeframe, the GBP/USD pair has formed an upward channel, which may keep pushing the Sterling further higher today. The buying trend can be seen over 1.3470 level until 1.3600 and 1.3706 level.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.419 after placing a high of 103.915 and a low of 103.259. The USD/JPY pair extended its losses on Wednesday and reached its lowest since November 9. The USD/JPY pair dropped on Wednesday amid the U.S. dollar weakness due to rising stimulus hopes and growing vaccine optimism. The U.S. lawmakers made progress toward a coronavirus relief package that added weight on the U.S. dollar and dragged the USD/JPY pair on the downside. The U.S. Dollar Index that tracks the greenback against a basket of six other currencies was down on Wednesday to 0.1% at 90.317. 

The bipartisan group had originally proposed a $908 billion stimulus bill, but it has now been split into two bills. The first bill includes a $748 billion proposal, including aid for vaccine distribution and unemployment benefits. This bill has gained traction and is expected to pass by Congress by the end of the week. The second bill that is worth $160 billion for local and state government support along with the temporary coronavirus liability protection that appears to be having more difficulty in gathering the necessary support from Congress.

On the data front, at 04:50 GMT, the Trade Balance from Japan for November surged to 0.57T against the forecasted 0.54T and supported the Japanese Yen that added further losses in the USD/JPY pair. At 05:30 GMT, the Flash Manufacturing PMI from Japan in December also raised to 49.7 against the forecasted 48.9 and supported the Japanese Yen that added additional losses in USD/JPY pair.

Meanwhile, the Federal Reserve kept its interest rates unchanged on Wednesday and said that they would remain the same until the inflation reaches 2-3%. However, Federal Reserve also announces to purchase at least $120 Billion of U.S. treasuries and mortgage-backed securities each month until employment gets better. This way to support the U.S. economy by increasing bond purchases also weighed on the U.S. dollar and dragged the USD/JPY pair on the downside.

From the U.S. side, at 02:00 GMT, the TIC Long-Term Purchases dropped to 51.9B against the forecasted 75.5 B and weighed on the U.S. dollar, and supported the downside movement in the USD/JPY pair. At 18:30 GMT, the Core Retail Sales for November decreased to -0.9% against the estimated 0.1% and weighed on the U.S. dollar and weighed on the USD/JPY pair. The Retail Sales for November also decreased to -1.1% against the estimated -0.3% and weighed on the U.S. dollar. AT 19:45 GMT, the Flash manufacturing PMI for December advanced to56.5 against the estimated 55.9 and supported the U.S. dollar. 

The Flash Services PMI for December decreased to 55.3 against the estimated 55.7 and weighed on the U.S. dollar and dragged the USD/JPY pair on the downside. At 20:00 GMT, the Business Inventories for October advanced to 0.7% against the estimated 0.6%and weighed on the U.S. dollar. The NAHB Housing Market Index also decreased to 86 against the estimated 88 and weighed on the U.S. dollar and added further losses in the USD/JPY pair.

Another factor included in the losses of the USD/JPY pair was the increasing risk sentiment of the market from another coronavirus vaccine. Moderna has also applied for emergency use authorization of its vaccine from the U.S. regulatory FDA that is expected to approve within a week. Moderna will become the second company to get authorization from the U.S. regulator after Pfizer got approval last week and is currently being roll-out. This latest news added in the risk sentiment and weighed on the safe-haven Japanese Yen that ultimately weighed on the USD/JPY pair.

Daily Technical Levels

Support   Resistance

103.47      104.02

103.25      104.37

102.91      104.58

Pivot point: 103.81

USD/JPY – Trading Tips

The USD/JPY extends it’s selling trend as the pair trades at 103.250. The safe-haven currency pair is trading below an immediate support level of 103.250, and the closing of candles below this level will confirm the bearish breakout. If this happens, we may have an opportunity to short the USD/JPY pair today. Bearish bias seems solid as the MACD is forming histograms below 0, and the 50 periods EMA is holding around 103.860 level, suggesting strong odds of selling. On the lower side, the USD/JPY pair may find next support at the 102.900 level. Let’s consider taking a selling trade below 103.650 today. Good luck! 

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 17 – BTC Reaches a New ATH at $22k; XRP Skyrockets as it Breaks its Descending Channel

The cryptocurrency sector experienced an overall major gain as Bitcoin reached its new all-time high. Bitcoin is currently trading for $22.095, representing an increase of 13.82% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 9.69% on the day, while XRP managed to gain a whopping 23.35%.

The cryptocurrency sector experienced an overall major gain as Bitcoin reached its new all-time high. Bitcoin is currently trading for $22.095, representing an increase of 13.82% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 9.69% on the day, while XRP managed to gain a whopping 23.35%.

The cryptocurrency sector experienced an overall major gain as Bitcoin reached its new all-time high. Bitcoin is currently trading for $22.095, representing an increase of 13.82% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 9.69% on the day, while XRP managed to gain a whopping 23.35%.

 Daily Crypto Sector Heat Map

Puriever gained 238.59% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by Combine.finance’s 159.58% and Amun Bitcoin 3x Daily Shorts’ 146.94% gain. On the other hand, BigGame lost 82.62%, making it the most prominent daily loser. It is followed by GNY’s loss of 75,95% and Hush’s loss of 61.30%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved up over a whole percent since our last report, with its value currently being 65%. This value represents a 1.1% difference to the upside than the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has increased drastically since we last reported, with its current value being $634.94 billion. This represents a whopping $70.94 billion increase when compared to our previous report.

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What happened in the past 24 hours?

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Technical analysis

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Bitcoin

Bitcoin has had quite an amazing day, as its price skyrocketed to new all-time highs. The largest cryptocurrency by market cap reached price discovery mode as its price topped at $22,400. While there are no set resistance levels at the moment, we can use Fib retracement extensions to determine where they could form.

At the moment, the Fib extensions sitting at $21,350 and $22,055 are the best contenders to act as support levels to Bitcoin’s eventual downturn.


BTC/USD 4-hour chart

Bitcoin’s daily and weekly overview are fully bullish, while its 4-hour and monthly time-frames show slight neutrality on top of the overall bullishness.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is far above both its 50-period and its 21-period EMA
  • Price slightly above its top Bollinger band
  • RSI is heavily overbought (86.76)
  • Volume is far higher than its average levels
Key levels to the upside          Key levels to the downside

1: $24,315                                 1: $22,054

2: $24,700                                 2: $21,350

3: $25,511                                  3: $19,918

Ethereum

Ethereum followed the extremely bullish sentiment caused by Bitcoin’s push, reaching a price of $625 before hitting a sell wall. The second-largest cryptocurrency by market cap has held these levels, and is currently consolidating above the $632 level.

An important thing to note is that, while Bitcoin has reached its ATH, Ethereum is very far from it. Ethereum might be a good value investment simply due to its potential to possibly reach towards higher levels on account of pushing towards its ATH.

ETH/USD 4-hour Chart

While Ethereum shows overall bullish sentiment on all time-frames, every time-frame except the monthly time-frame shows slight neutrality.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is far above both its 50-period and its 21-period EMAs
  • Price is at its top Bollinger band
  • RSI is heavily overbought (78.20)
  • Volume is much higher than its weekly average
Key levels to the upside          Key levels to the downside

1: $675                                     1: $636.5

2: $738.5                                  2: $632 

3: $817.5                                   3: $600

Ripple

Unlike most days where XRP is having larger moves to the downside and smaller moves to the upside compared to BTC and ETH, the roles are reversed this time. The fourth-largest cryptocurrency by market cap has gained almost 25% on the day as its price bounced off of the lower line of the descending channel, and pushed towards the upside, reaching as high as $0.583 before starting its consolidation.

XRP is now trading within a range, bound by the $0.57 resistance and $0.543 support levels.


XRP/USD 4-hour Chart

XRP has changed its sentiment to overall bullishness, with its monthly time-frame showing full tilt towards the buy-side, and the rest of the time-frames showing some neutrality or hints of bearishness remaining.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Its price is currently above both its 50-period EMA and its 21-period EMA
  • Price slightly below its top Bollinger band
  • RSI is nearing the overbought territory (61.30)
  • Volume is well above its average level
Key levels to the upside          Key levels to the downside

1: $0.57                                     1: $0.543

2: $0.597                                    2: $0.5

3: $0.63                                     3: $0.475

Categories
Forex Market Analysis

Daily F.X. Analysis, December 16 – Top Trade Setups In Forex – U.K.Manufacturing PMI Figures Ahead! 

On the news front, eyes will remain on the series of Manufacturing PMI figures from the Eurozone, U.K., and the U.S. Although it’s a low impact event, it may help determine the market sentiment today.

On the news front, eyes will remain on the series of Manufacturing PMI figures from the Eurozone, U.K., and the U.S. Although it’s a low impact event, it may help determine the market sentiment today.

On the news front, eyes will remain on the series of Manufacturing PMI figures from the Eurozone, U.K., and the U.S. Although it’s a low impact event, it may help determine the market sentiment today.

 

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD pair closed at 1.21522 after placing a high of 1.21687 and a low of 1.21210. Despite the coronavirus related lockdowns, the EUR/USD pair moved higher on Tuesday as the European stock markets traded higher amid the optimism over the ongoing Brexit trade negotiations.

The European Union negotiator Michel Barnier said that securing a trade deal with Britain was still possible. In contrast, European Commission Ursula von der Leyen said that there was some movement over the sticking points.

According to the Times of London, the two sides had made progress on the level playing field, and only the biggest obstacle to a deal has left of differences over fishing rights. However, the hopes increased that some form of a deal could be reached with just days to go before the U.K. leaves the E.U. trading bloc. This optimism kept the single currency Euro higher and supported the upward momentum in EUR/USD pair.

On the data front, at 12:45 GMT, the French Final CPI for November came in line with the expectations of 0.2%. At 15:00 GMT, the Italian Trade Balance for October raised to 7.57B against the forecasted 5.40B and supported Euro and added gains in the EUR/USD pair.

On the U.S. front, at 18:30 GMT, the Empire State Manufacturing Index for December declined to 4.9 against the projected 6.3 and weighed on the U.S. dollar that added further gains in EUR/USD pair. The U.S. Import Prices in November fell to 0.1% against the projected 0.3% and weighed on the U.S. dollar and supported the upward momentum in EUR/USD pair. At 19:15 GMT, the Capacity Utilization Rate from the U.S. for November rose to 73.3% against the projected 73.1% and supported the U.S. dollar. The Industrial Production in November also surged to 0.4%against the projected 0.3% and supported the U.S. dollar and capped further gains in EUR/USD pair.

Meanwhile, the lockdown restrictions increased in Europe, given the region’s rising number of coronavirus cases. On late Monday, the U.K. government imposed tighter restrictions on London amid the increased infection rates. It cited that these may be partly linked to a new variant of the coronavirus. From Wednesday, Germany will also enter a lockdown that will include the closure of non-essential stores. Netherland also announced a new five-week lockdown, while Italy was considering more restrictions over the Christmas holidays.

Throughout the region, these lockdown restrictions added pressure on the single currency Euro and capped further gains in the EUR/USD pair on Tuesday.

Daily Technical Levels

Support   Resistance

1.2126       1.2175

1.2099       1.2197

1.2077       1.2224

Pivot point: 1.2148

EUR/USD– Trading Tip

The precious metal gold continues to trade bullish at 1,857, having crossed over double top resistance level of 1,857 level. On the higher side, the metal opens up further room for buying until the next target level of 1,865 and 1,875 level. On the lower side, the precious metal gold may find support at 1,848, and below this level, the metal may drop until the 1,832 level. Let’s consider staying bullish over 1,848 today. The 50 periods EMA supports a bullish bias, keeping the EUR/USD pair in a little bit of buying mode. Simultaneously, the MACD and RSI are also supporting a buying trend; thus, we should look for a buying trade over the 1.2175 level to target the 1.2265 level today. 

GBP/USD – Daily Analysis

 The GBP/USD pair closed at 1.34635 after placing a high of 1.34688 and a low of 1.32800. The GBP/USD pair was among the best performer on the day amid the speculation regarding the prospect of an imminent Brexit deal.

There were speculations mostly amongst Conservative M.P.s that a Brexit deal was close and might be voted in the House of Commons next Monday and Tuesday. This optimism led the GBP/USD pair higher in the market to post gains for the day.

After posting losses for three consecutive days, the currency pair GBP/USD pair rose by nearly 1% on Tuesday after the speculation that there had been progressing on the issue of a level playing field. The European Union negotiator Michel Barnier said that reaching a trade pact with Britain was still possible. At the same time, European Commission Ursula von der Leyen noted that there was some progress made over the sticking points.

British Pound is highly sensitive to Brexit progress, and any news showing optimism regarding the post-Brexit trade deal with the E.U. will have a great impact on the GBP/USD pair. This was the reason behind the sudden surge in GBP/USD currency pair on Tuesday despite the renewed lockdown restrictions by the U.K. government over London.

The Health Secretary of the UK, Matt Hancock, said on Monday that this week London would return to a strict lockdown as the coronavirus cases have soared in the British capital. Hancock said London would move from England’s Tier 2 – high alert local restrictions to Tier 3 – very high alert on Wednesday noon. 

Under the highest restriction level, all hospitality venues, including pubs, restaurants, and cafes, will close except for takeout and delivery. People will avoid unnecessary traveling and reduce the number of journeys. Residents in London will be restricted from meeting in private gardens or outdoor venues.

Meanwhile, on the data front, at 12:00 GMT, the Average Earnings Index from Great Britain raised to 2.7% against the forecasted 2.2% and supported the British Pound that added gains in the GBP/USD pair. The Claimant Count Change from the U.K. raised to 64.3K against the expected 10.5K and weighed on British Pound. The Unemployment Rate from the U.K. dropped to 4.9% from the expected 5.1% and supported the Sterling that added strength to the GBP/USD pair.

From the U.S. side, at 18:30 GMT, the Empire State Manufacturing Index for December fell to 4.9 against the estimated 6.3 and weighed on the U.S. dollar that added further gains in GBP/USD pair. The U.S. Import Prices in November dropped to 0.1% against the estimated 0.3% and weighed on the U.S. dollar and supported the upward momentum in GBP/USD pair. At 19:15 GMT, the Capacity Utilization Rate from the U.S. for November surged to 73.3% against the estimated 73.1% and supported the U.S. dollar. The Industrial Production in November also rose to 0.4% against the estimated 0.3% and supported the U.S. dollar.

Daily Technical Levels

Support   Resistance

1.3338       1.3528

1.3218       1.3595

1.3147       1.3719

Pivot point: 1.3404

GBP/USD– Trading Tip

The GBP/USD pair is trading at 1.3460 level, facing immediate resistance at 1.3475 and 1.3538 level. While the support stays at 1.3430 and 1.3401 level. The RSI and MACD support the buying trend in the market, while Cable has the potential to stay bullish over 1.3400 today. A choppy session can be expected until the pair violates the 1.3345 – 1.3309 range.

USD/JPY – Daily Analysis

The USD/JPY pair closed at 103.647 after placing a high of 104.150 and a low of 103.604. The USD/JPY pair failed to capitalize on its previous daily gains and dropped on Tuesday over the fears of a new variant of coronavirus and the increased lockdown restrictions over the globe.

The safe-haven appeal in the market returned after the U.K. Health Minister Matt Hancock told parliament that a new variant of the coronavirus associated with faster spread had been identified in southeast England. This led to widespread concern as headlines in the newspaper called this new variant “Super covid” and “mutant covid.”

Matt Hancock added that about 60 different local authorities had recorded coronavirus infections caused by the new variant. He also said that the World Health Organization had been notified, and a detailed study by U.K. scientists has started.

The fear of new and improved disease raised the market’s safe-haven appeal as London went into renewed lockdown restriction of Tier-3 level. Along with London, Germany and Netherland also extended their lockdown restrictions. The rising demand for safe-haven assets added strength to the Japanese Yen that ultimately weighed on the USD/JPY pair.

Meanwhile, on the data front, at 18:30 GMT, the Empire State Manufacturing Index for December declined to 4.9 against the anticipated 6.3. It weighed on the U.S. dollar that added further losses in the USD/JPY pair. The U.S. Import Prices in November fell to 0.1% against the anticipated 0.3% and weighed on the U.S. dollar and added further in the losses of the USD/JPY pair. At 19:15 GMT, the Capacity Utilization Rate from the U.S. for November rose to 73.3% against the anticipated 73.1% and supported the U.S. dollar. The Industrial Production in November also surged to 0.4% against the anticipated 0.3% and supported the U.S. dollar and capped further losses in the USD/JPY pair.

Furthermore, on Tuesday, Dr. Anthony Fauci, the U.S. senior official for infectious diseases, predicted that the U.S. could begin to achieve early stages of herd immunity against the deadly coronavirus by late Spring or Summer. 

Fauci said that to see an impact of the vaccine over the coronavirus spread, almost 50% of people would have to get vaccinated. To achieve herd immunity, 75 to 85% of people would have to get vaccinated. 

Herd immunity occurs when enough people become immune to the disease that the spread of the virus from one person to another person becomes unlikely. Fauci pointed to polio and measles as examples of herd immunity. Despite these positive statements from the top health official from the U.S., the USD/JPY pair failed to reverse its direction upward because of traders’ focus on the new variant of coronavirus.

Daily Technical Levels

Support   Resistance

103.47       104.02

103.25       104.37

102.91       104.58

Pivot Point: 103.81

USD/JPY – Trading Tips

The USD/JPY is trading dramatically bearish, falling below 103.700. This resistance area is extended by a double bottom pattern, which later was violated on the 2-hour timeframe. Below this level, the USD/JPY pair has odds of extending a sell trade until the next support level of 103.211. The 50 EMA and MACD are supporting selling bias. Thus we can expect to sell below 103.700, to target the 103.200 mark. Good luck! 

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 16 – XRP Getting Crushed; BTC and ETH Stuck within a Range

The cryptocurrency sector was mostly stable today as Bitcoin kept within its trading range. Bitcoin is currently trading for $19,393, representing an increase of 1.13% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 0.10% on the day, while XRP managed to lose a whopping 8.56%.

The cryptocurrency sector was mostly stable today as Bitcoin kept within its trading range. Bitcoin is currently trading for $19,393, representing an increase of 1.13% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 0.10% on the day, while XRP managed to lose a whopping 8.56%.

The cryptocurrency sector was mostly stable today as Bitcoin kept within its trading range. Bitcoin is currently trading for $19,393, representing an increase of 1.13% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 0.10% on the day, while XRP managed to lose a whopping 8.56%.

 Daily Crypto Sector Heat Map

XcelToken Plus gained 263.82% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by Amun Bitcoin 3x Daily Long’s 161.53% and rbase.finance’s 129.84% gain. On the other hand, Maximine Coin lost 99.42%, making it the most prominent daily loser. It is followed by STEM CELL COIN’s loss of 97.69% and Patron’s loss of 89.45%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved up since our last report, with its value currently being 63.9%. This value represents a 0.4% difference to the upside than the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has decreased slightly since we last reported, with its current value being $564.0 billion. This represents a $4.20 billion decrease when compared to our previous report.

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What happened in the past 24 hours?

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Technical analysis

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Bitcoin

Bitcoin has continued trading within a range between $19,100 and $19,570, possibly hitting a wall of profit-taking institutional traders. Despite the overall bullishness of the market, the largest cryptocurrency by market cap failed to break the $19,666 level or even reach it. This is because of the increasing number of BTC Whales (holders of 10,000 to 100,000 Bitcoin) leaving the market and taking profit as the price approaches the $20,000 mark.

The sheer amount of resistance hovering above $19,500 will make it quite hard for Bitcoin bulls to push towards the all-time highs. In case the aforementioned push doesn’t happen, we can expect a possible dip towards $18,000.

BTC/USD 4-hour chart

Bitcoin’s overview on all time-frames is bullish, with its weekly time-frame being the only one completely bullish. The rest of the time-frames are slightly tilted to the neutral side.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is above its 50-period and slightly above its 21-period EMA
  • Price is between its middle and top Bollinger band
  • RSI is neutral (60.06)
  • Volume is average
Key levels to the upside          Key levels to the downside

1: $19,100                                 1: $18,600

2: $19,666                                 2: $18,190

3: $20,000                                  3: $17,800

Ethereum

Ethereum has hit a sell wall as well, stopping its upward price movement just below $600 for the third time in 3 days. The second-largest cryptocurrency by market cap is stuck between $581 to the downside and $600 to the upside, which is a very narrow range for long-term trading.

Ethereum will most likely experience a sharp break out of the current range, creating a potential safe trade with set parameters.

ETH/USD 4-hour Chart

Ethereum’s overview on all time-frames is bullish, with its daily time-frame being the only one completely bullish. The rest of the time-frames are slightly tilted to the neutral side.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is slightly above its 50-period and at its 21-period EMAs
  • Price is at its middle Bollinger band
  • RSI is neutral (54.03)
  • Volume is slightly below average when compared to the previous week
Key levels to the upside          Key levels to the downside

1: $600                                     1: $581

2: $632                                     2: $565 

3: $636.5                                   3: $545

Ripple

XRP has continued its downturn, this time breaking the crucial $0.475 level. Its price has steadily decreased ever since Dec 1, when it could not break $0.683. This steady descent has created a downtrend, which many analysts think is the death of XRP’s price.

However, there is still hope for XRP. Some analysts believe that this is the 4th of 5 waves in a pattern that XRP started creating on Aug 20 and that the next wave will start an uptrend that will propel its price above $1.

XRP/USD 4-hour Chart

XRP’s longer-term technicals are tilted towards the buy-side, while its short-term technicals are tilted towards the sell-side. While its 4-hour time-frame is completely bearish, its daily overview is slightly more neutral.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Its price is currently well below both its 50-period EMA and its 21-period EMA
  • Price is at its bottom Bollinger band
  • RSI is close to the oversold territory (31.25)
  • Volume is well below its average level
Key levels to the upside          Key levels to the downside

1: $0.5                                      1: $0.475

2: $0.543                                   2: $0.45

3: $0.57                                    3: $0.425

Categories
Forex Videos

Forex For Beginners – How To Trade EURGBP! Buying The Euro With A No Brexit Trade Deal!

https://youtu.be/Um4A8P5sDyo

https://youtu.be/Um4A8P5sDyo

For beginners – How to trade the EURGBP with no trade deal Brexit 

Thank you for joining this forex academy educational video.

Great Britain voted in a national referendum to leave the European Union June 2016.  The  United Kingdom officially left the EU you in January 2020 with a one-year transition period which ends on the 31st of December 2020.

This was to allow the EU and the United Kingdom four years to come up with a future trading solution with regard to laws and arrangements which would allow the United Kingdom to take back its sovereignty, which is what the people of Great Britain wanted.

However, unravelling the years of business ties between the two areas, including laws,  fishing rights,  humanitarian issues,  worker’s rights,  competitive fairness,  financial regulatory alignment, including a whole myriad of rules and regulations has been one of the most complicated issues in modern times.  The affair is turning into an acrimonious divorcAfter the transition period, theThe two sides agreed thod they would work towards having a free trade agreem,ent which would lead to an almost seamless continuation of business.

But the United Kingdom claims that many of the terms and conditions as set out by the European Union in order to grant a free trade agreement to the United Kingdom are seen as not acceptable to the British government.  Some of these conditions are centred around fishing, where the EU wants to continue fishing in British sovereign waters, a so-called level playing field,  where the United Kingdom cannot go out and sign up other trade agreements around the world by undercutting EU member states.  And where the EU has said that any breach by the UK of such a future agreement, or where the EU changes regulations, and the UK does not fall into line, would be penalised by tariffs and which the UK has said this is totally unacceptable.  Ten deadlines have come and passed between the two sides regarding reaching an agreement,  and where currently, at the time of writing,  there are just a few days left to instigate and agreement,  and where both sides are saying this is now very unlikely to happen.

This is a daily chart of the euro to Great British pound pair ,or EURGBP,  and where we can clearly by the blue candlesticks that since the latter part of November 2020, the Euro is gaining in value on the exchange rate.  

Investors believe that the sentiment has changed in the latter stages of November and certainly since the 7th of December, and  where they believe that in the current state there will likely be no deal and therefore because the European Union is economy is much greater than that of the United Kingdom that the Euro will fare better than the pound in the event of a no tariff-free arrangement being reached.

In in the same chart we have highlighted a section A,  where the pound was gaining against the euro since August,  because the market considered that an agreement would be reached.

 

 So how can investors get in on the action and ride the pair hire based on current sentiment?

Firstly, we need to bring the chart down to a smaller time frame, such as the one hour.  Here we can see a defined bull channel, with areas of support at two points and areas of resistance at two points as show by the exchange rate touching the two purple lines, and where we might consider going long at a pull-back to the support line, perhaps somewhere around the X mark.  

By reverting back to our daily chart we can see some potential targets, or areas of resistance, the closest is 0.9294  which was reached in September 2020 and way back in  the middle of March this year, where we have a target/resistance level of 0.9500.

Of course the exchange rate might be a little different by the time you get to view this video, however, should there be a no tariff deal agreement and where the United Kingdom crashes out of the EU on world trade organisation rules, where tariffs will be imposed by either side,  but most likely to be more detrimental to the UK than the EU, you should then be looking for setups such as we have shown today to buy the pair.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 15 – Top Trade Setups In Forex – U.K. Labor Market Figures! 

Investor’s eyes will stay on the French Final CPI and Italian Trade Balance due from the European Economy. Economists are expecting no major changes in these inflation and trade balance data. Thus it may go muted. However, the Claimant Count Change and Unemployment Rate data from the U.K. is likely to drive market movements. Let’s keep an eye on U.K. labor market figures today.

Investor’s eyes will stay on the French Final CPI and Italian Trade Balance due from the European Economy. Economists are expecting no major changes in these inflation and trade balance data. Thus it may go muted. However, the Claimant Count Change and Unemployment Rate data from the U.K. is likely to drive market movements. Let’s keep an eye on U.K. labor market figures today.

Investor’s eyes will stay on the French Final CPI and Italian Trade Balance due from the European Economy. Economists are expecting no major changes in these inflation and trade balance data. Thus it may go muted. However, the Claimant Count Change and Unemployment Rate data from the U.K. is likely to drive market movements. Let’s keep an eye on U.K. labor market figures today.

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

During Tuesday’s Asian trading session, the EUR/USD currency pair managed to extend its overnight winning streak and sidelined near above the 1.2150 level mainly due to the risk-on market sentiment. That was supported by the upbeat China data and optimism over treatment for the highly infectious coronavirus, which weakens the safe-haven U.S. dollar and contributes to the currency pair gains. Moreover, the upbeat market tone was further boosted by the further U.S. stimulus package’s rising expectations, which add further burden around the U.S. dollar and boost the currency pair. 

On the contrary, the ongoing concerns about increasing COVID-19 deaths and the possibility of economically-painful hard lockdowns become the key factor that kept the lid on any additional gains in the currency pair. As of writing, the EUR/USD currency pair is currently trading at 1.2149 and consolidating in the range between 1.2143 – 1.2165.

As we already mentioned, the market trading sentiment succeeded in extending its previous day bullish bias and still representing positive performance on the day as the bullish appearance of Asia-Pacific stocks and the gains of the U.S. stocks futures tends to highlight the risk-on mood. However, the risk-on market sentiment could be attributed to the vaccine optimism and upbeat China data, which showed the economic recovery increased in November. On the data front, China’s Retail Sales increased by 5.0% year-on-year in November, marking the 4th-successive month of growth. Industrial Production, a gauge of manufacturing, mining, and utility output, rose 7% year-on-year versus October’s 5.9% growth. 

On the other hand, the renewed optimism over a possible vaccine for the highly infectious coronavirus disease also keeps supporting the market trading sentiment. It is worth recalling that the U.S. Food and Drug Administration (FDA) granted permission for emergency use to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy) on December 11. The approval will see the first U.S. deliveries of BNT162b2 later in the day, which lifted hopes that the world’s largest economy will likely see a reduction in the COVID-19 cases. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and undermine the safe-haven U.S. dollar.

As in result, the broad-based U.S. dollar failed to stop its previous day bearish bias and drew further offers on the day as demand for the safe-haven assets decreased amid progress toward agreeing on U.S. fiscal stimulus and optimism for a Brexit deal. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the U.S. dollar losses helped the gold prices to deeper its losses as the gold price is inversely related to the U.S. dollar price. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped to 90.642.

On the contrary, the concerns about rising COVID-19 deaths and the possibility of economically-painful hard lockdowns keep challenging the upbeat market performance, which becomes the key factor that kept the lid on any additional gains currency pair. As per the latest report, the growing virus cases recall the local lockdowns in the U.K. and the U.S. After New York, that was witnessed readiness to enter a second full lockdown as the number of COVID-19 cases surge. In addition to this, Germany also extended national activity restrictions. Across the ocean, the fears of a full-fledged trade/political war between the West and China also challenge the market’s upbeat mood. The tension between the two biggest economies in the world was fueled after the U.S. imposed back to back travel restrictions over the Chinese Communist Party members and their families.

In the absence of the major data/events on the day, the market traders will keep their eyes on the continuous drama surrounding the U.S. stimulus package. In the meantime, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for a fresh direction. 

Daily Technical Levels

Support   Resistance

1.2044       1.2133

1.2006       1.2186

1.1954       1.2223

Pivot point: 1.2096

EUR/USD– Trading Tip

The technical side of the EUR/USD is still unchanged as it trades at the 1.2131 level, facing immediate resistance at 1.2160 and 1.2196 level along with a support level of 1.2085. Closing of candles below the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. The 50 periods EMA supports a bullish bias, keeping the EUR/USD pair in a little bit of buying mode. Simultaneously, the MACD and RSI are also in support of a buying trend; thus, we should look for a buying trade over the 1.2175 level to target the 1.2265 level today. 

GBP/USD – Daily Analysis

During Tuesday’s Asian trading session, the GBP/USD currency pair maintained its strong bid tone through the first half of the Asian session and remained positive around the 1.3335 level mainly due to the reports suggesting that the U.K. and the E.U. agreed to extend Brexit talks. Furthermore, the bid tone surrounding the British pound was further bolstered after the E.U.’s chief Brexit negotiator, Michel Barnier, said that they could face every hurdle to reach a post-Brexit trade deal. 

Across the ocean, the broad-based U.S. dollar fresh weakness, backed by the market risk-on mood, also played its major role in underpinning the currency pair. At a particular time, the GBP/USD currency pair is currently trading at 1.3333 and consolidating in the range between 1.3312 – 1.3348. Moving on, the traders seem cautious to place any strong position ahead of the U.K. jobs data, which is due to release later in the day.

It is worth recalling that the U.K. Prime Minister Boris Johnson and European Commission President announced that they discussed the key issues and decided to go for another round of discussions to reach a historic trade deal, which in turn, raised expectations for a free trade agreement before the end of Brexit transition period on December 31. However, these hopes were further fueled after the E.U.’s chief Brexit negotiator, Michel Barnier, told them to use every way to reach a post-Brexit trade deal.

Despite the prevalent doubts over the global economic recovery from coronavirus (COVID-19), the market trading sentiment managed to extend its previous day’s positive performance. It remained supportive by optimism over a potential vaccine/treatment for the highly infectious coronavirus. Let me remind you that the U.S. Food and Drug Administration (FDA) granted permission for emergency use to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy) on December 11. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and undermine the safe-haven U.S. dollar.

As in result, the broad-based U.S. dollar failed to stop its previous day bearish bias and drew further offers on the day as demand for the safe-haven assets decreased amid progress toward agreeing on U.S. fiscal stimulus and optimism for a Brexit deal. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the U.S. dollar losses provided an additional boost to the GBP/USD currency pair and remained supportive of the strong intraday positive move. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped to 90.642.

On the bearish side, the concerns about rising COVID-19 deaths and the possibilities of the economically-painful hard lockdowns keep challenging the upbeat market performance, which becomes the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the growing virus cases recall the local lockdowns in the U.K. and the U.S. After New York, that was witnessed readiness to enter a second full lockdown as the number of COVID-19 cases surge. In addition to this, Germany also extended national activity restrictions. 

Moving on, the traders seem cautious to place any strong position ahead of the U.K. jobs data, which is due to release later in the day. From the projected view, the U.K. labor market report is anticipated to show that the average weekly earnings, including bonuses, in the 3-months to October, to increase from the previous 1.3% to 2.2%, while ex-bonuses, the wages are seen improving from 1.9% to 2.6% during the stated period. 

In addition to this, the number of people asking for jobless benefits is expected to rise from -29.8K previous to +50K in November. Moreover, the ILO Unemployment Rate may rise from 4.8% to 5.1% during the 3- months ending in October. However, the positive earnings growth tends to underpin the GBP; conversely, the low figures would be seen as negative for the GBP currency.

In the absence of the major data/events on the day, the market traders will keep their eyes on the continuous drama surrounding the U.S. stimulus package. In the meantime, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for a fresh direction. 

Daily Technical Levels

Support   Resistance

1.3338       1.3466

1.3280       1.3536

1.3209       1.3594

Pivot point: 1.3408

GBP/USD– Trading Tip

The GBP/USD is trading at the 1.3330 level, maintaining a narrow trading range of 1.3345 – 1.3309. A lack of high-impact economic data drives the choppy session; however, the market will be offering us labor market figures, which are expected to be worse than before, and it may drive selling in the Sterling. Technically, the bearish breakout of the 1.3309 level can extend the selling trend until the 1.3265 level, whereas a bullish breakout can lead it towards the 1.3409 mark. A choppy session can be expected until the pair violates the 1.3345 – 1.3309 range.

USD/JPY – Daily Analysis

During Tuesday’s Asian trading session, the USD/JPY currency pair managed to stop its previous day losing streak and drew some modest bids around well above the 104.00 level. However, the bullish sentiment around the currency pair was supported by the upbeat market mood, which undermined the safe-haven Japanese yen and contributed to the currency pair gains. Apart from this, the latest local lockdowns in the northern hemispheres and the surge in Tokyo’s virus figures added further pressure on the Japanese yen and boosted the currency pair. On the contrary, the broad-based U.S. dollar, triggered by the upbeat market mood, has become the key factor that capped further upside momentum for the currency pair. Currently, the USD/JPY currency pair is currently trading at 104.09 and consolidating in the range between 103.98 – 104.15. 

As we already mentioned, market trading sentiment has been gaining positive traction since the day started and supported by the optimism over the U.S. President-elect Joe Biden’s victory in the Electoral College. As per the latest report, the U.S. President-elect Joe Biden recently won Electoral College and claimed his victory over President Donald Trump by achieving over 270 votes needed. In addition to this, the intensifying hopes of the U.S. covid stimulus also positively impacted the market trading sentiment. These hopes were triggered after Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi urged policymakers toward an early aid package while also indicating good progress in the discussions. 

Across the ocean, the reason behind the risk-on market sentiment could also be attributed to the upbeat China data, which showed the economic recovery improved in November. On the data front, China’s Retail Sales increased by 5.0% year-on-year in November, marking the 4th-successive month of growth. Industrial Production, a gauge of manufacturing, mining, and utility output, rose 7% year-on-year versus October’s 5.9% growth. 

On the other hand, the renewed optimism over a possible vaccine for the highly infectious coronavirus disease also keeps supporting the market trading sentiment. It is worth recalling that the U.S. Food and Drug Administration (FDA) granted permission for emergency use to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy) on December 11. The approval will see the first U.S. deliveries of BNT162b2 later in the day, which lifted hopes that the world’s largest economy will likely see a reduction in the COVID-19 cases. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and undermined the safe-haven assets like the Japanese yen and U.S. dollar.

At the USD front, the broad-based U.S. dollar extended its previous session bearish bias. It failed to gain any positive traction during the Asian trading hours amid risk-on market sentiment. Apart from this, the greenback losses could also be associated with the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the U.S. dollar losses might stop bulls from placing any strong position and keep a lid on any further gains for the USD/JPY currency pair. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped to 90.642.

However, the market trading sentiment was rather unaffected by the fresh lockdown restrictions in Britain and Europe. As per the latest report, the growing virus numbers recall the local lockdowns in the U.K. and the U.S. After New York, a willingness to enter a second full lockdown as the number of COVID-19 cases surge. In addition to this, Germany also extended national activity restrictions. 

In the absence of the major data/events on the day, the market traders will keep their eyes on the ongoing drama surrounding the U.S. stimulus package. In the meantime, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for a fresh direction. 

Daily Technical Levels

Support   Resistance

104.04       104.41

103.86       104.60

103.67       104.78

Pivot Point: 104.23

USD/JPY – Trading Tips

The USD/JPY is hardly moving as it continues to trade sideways below the 104.150 resistance area. This resistance area is extended by a double top level on the 2-hour timeframe. Bullish crossover of 104.156 level can open buying until 104.590 level. Conversely, the support holds around 103.910 level. A bearish breakout of this support can drive the selling trend until the next support area of 103.700 and 103.500. Let’s keep an eye on a breakout before placing any bullish or bearish bets. Good luck! 

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 15 – Bitcoin Whales Stopping the Push Towards $20k; XRP on the Downturn

The majority of the cryptocurrency sector ended up being in the slight green since we last reported, with Bitcoin trying to reach the all-time highs (though so-far unsuccessfully). Bitcoin is currently trading for $19,106, representing an increase of 0.15% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 0.32% on the day, while XRP managed to lose 2.97%.

The majority of the cryptocurrency sector ended up being in the slight green since we last reported, with Bitcoin trying to reach the all-time highs (though so-far unsuccessfully). Bitcoin is currently trading for $19,106, representing an increase of 0.15% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 0.32% on the day, while XRP managed to lose 2.97%.

The majority of the cryptocurrency sector ended up being in the slight green since we last reported, with Bitcoin trying to reach the all-time highs (though so-far unsuccessfully). Bitcoin is currently trading for $19,106, representing an increase of 0.15% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 0.32% on the day, while XRP managed to lose 2.97%.

 Daily Crypto Sector Heat Map

Mandi Token gained 175.35% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by yTSLA Finance’s 169.53% and DefHold’s 129.84% gain. On the other hand, DistX lost 98.32%, making it the most prominent daily loser. It is followed by AC Index’s loss of 94.05% and YXO’s loss of 43.16%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved up very slightly since our last report, with its value currently being 63.5%. This value represents a 0.2% difference to the upside compared to the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has increased since we last reported, with its current value being $569.80 billion. This represents a $9.01 billion increase when compared to our previous report.

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What happened in the past 24 hours?

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Technical analysis

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Bitcoin

Bitcoin had quite an interesting day as it (at one point) tried to push towards the all-time highs, or at least towards its next resistance level (sitting at $19,666). However, the sheer resistance near the $20k level was immense, and the largest cryptocurrency by market cap dipped to its immediate support level ($19,100), which is where it’s at right now.

The data provided by various sources point to Bitcoin whales blocking the way towards and past $20k, despite all the bullish sentiment currently surrounding the cryptocurrency.


BTC/USD 4-hour chart

Bitcoin’s overview on all time-frames is fully bullish, with its monthly time-frame being slightly more tilted to the neutral side than the rest.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is above its 50-period and slightly above its 21-period EMA
  • Price is near its middle Bollinger band
  • RSI is neutral (55.33)
  • Volume is average when compared to the past week
Key levels to the upside          Key levels to the downside

1: $19,100                                 1: $18,600

2: $19,666                                 2: $18,190

3: $20,000                                  3: $17,800

Ethereum

Ethereum was in the same boat as Bitcoin for the past couple of days, with its price movement mirroring Bitcoin’s. Ether tried to move towards the $600 mark, but got stopped out just below it, triggering a pullback to its immediate support level ($581). However, its downside is well-guarded, both by the $581 support level and the 4-hour 21-period moving average.

Ethereum will most likely continue mirroring Bitcoin’s moves in the short future, meaning that traders should either focus on trading Bitcoin or pay close attention to its movements while trading Ether.

ETH/USD 4-hour Chart

Ethereum’s overview on all time-frames is fully bullish, with its weekly time-frame being slightly more tilted to the neutral side than the rest.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is slightly above both its 50-period and 21-period EMAs
  • Price is near its middle Bollinger band
  • RSI is neutral (53.74)
  • Volume is slightly below average when compared to the previous week
Key levels to the upside          Key levels to the downside

1: $600                                     1: $581

2: $632                                     2: $565 

3: $636.5                                   3: $545

Ripple

XRP is one of the cryptocurrencies that rarely mirrors Bitcoin’s movements, and that was the case in the past 24 hours as well. However, the fact that its price doesn’t mirror the largest cryptocurrency was bad news lately. XRP’s price continued its slow descent, this time breaking the $0.5 mark to the downside. At one point, there was an attempt to regain this level, which got shut down pretty quickly.

While the overall crypto sector is surrounded by bullish sentiment, XRP is looking quite bearish in the short-term. Shorting the fourth-largest cryptocurrency by market cap can be a valid trading strategy, simply due to its consistency going down in recent days.

XRP/USD 4-hour Chart

XRP’s longer-term technicals are completely bullish, while its daily overview is slightly more tilted towards neutrality. Its 4-hour time-frame, however, is slightly tilted towards the sell-side.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Its price is currently below its 50-period EMA and slightly below its 21-period EMA
  • Price is between its middle and bottom Bollinger band
  • RSI is neutral (37.98)
  • Volume is well below its average level
Key levels to the upside          Key levels to the downside

1: $0.5                                      1: $0.475

2: $0.543                                   2: $0.45

3: $0.57                                    3: $0.425

Categories
Forex Fundamental Analysis

AUD/USD Global Macro Analysis – Part 3

AUD/USD Exogenous Analysis

AUD/USD Exogenous Analysis

AUD/USD Exogenous Analysis

In the exogenous analysis, we will compare the differentials in the US and the Australian economies at an international level. We will use:

  • The differential in GDP growth in the US and Australia
  • The US and Australian interest rate differential
  • The differential in the US and Australian balance of trade

The differential in GDP growth in the US and Australia

Domestically, the value of USD and AUD are pushed by the changes in the macroeconomic factors that drive GDP growth. The dynamic of the AUD/USD exchange rate is affected by the difference in the GDP growth rate. The country with a faster GDP growth will see its currency appreciate more than the one with slower growth.

In Q3 of 2020, the Australian GDP increased by 3.3% compared to the 7% drop in Q2. The US economy expanded by 33.1% in Q3 2020 compared to a 31.4% drop in Q2. In the first three quarters, the US economy has contracted by 3.3% while the Australian economy has contracted by 4%. Therefore, the GDP growth differential between Australia and the US is -0.7%. Based on the correlation analysis with the AUD/USD pair, we assign a score of -2.

The US and Australian interest rate differential

This measures the difference between the interest rate set by the Reserve Bank of Australia (RBA) and the US Federal Reserve. In the forex market, carry traders tend to be bullish when a currency pair has a positive interest rate differential and bearish when it is negative. That is because more investor funds flow towards the country with a higher interest rate.

At the onset of the COVID-19 pandemic, the RBA cut interest rates from 0.75% to 0.1%, while the Federal Reserve cut interest rates from 1.75% to 0.25%. That makes the interest rate differential for the AUD/USD pair -0.15%. Based on correlation analysis with the exchange rate for the AUD/USD pair, we assign a score of -2.

The differential in the US and Australian balance of trade

The difference between the balance of trade for Australia and the US will help determine which currency is in higher demand in international trade. Note that increased demand in the forex market also increases the value of that currency.

In October 2020, Australia’s trade surplus increased to AUD 7.46 billion compared to 5.82 billion in September. However, it is still lower than the highest recorded AUD 9.62 billion surpluses in March. The US had a trade deficit of $63.1 billion in October, which has been expanding since January. The balance of trade differential is $68.633 billion between Australia and the US. Based on the correlation with the AUD/USD exchange rate, we assign a score of 6.

Conclusion

The exogenous score for the AUD/USD pair is 2. It means that we can expect that the pair will be on a bullish trend in the short-term.

In technical analysis, the short-term bullish trend is supported by the fact that the pair is trading above the 200-period MA and breaching the upper Bollinger Band. Cheers!

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 14 – BTC and ETH Consolidating After A Bull Rally; XRP Left in the Dust

The majority of the cryptocurrency sector ended up in the green as Bitcoin spent the weekend regaining the value it lost after failing to break its all-time high with confidence. Bitcoin is currently trading for $19,144, representing an increase of 1.69% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 3.61% on the day, while XRP managed to gain 3.77%.

The majority of the cryptocurrency sector ended up in the green as Bitcoin spent the weekend regaining the value it lost after failing to break its all-time high with confidence. Bitcoin is currently trading for $19,144, representing an increase of 1.69% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 3.61% on the day, while XRP managed to gain 3.77%.

The majority of the cryptocurrency sector ended up in the green as Bitcoin spent the weekend regaining the value it lost after failing to break its all-time high with confidence. Bitcoin is currently trading for $19,144, representing an increase of 1.69% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 3.61% on the day, while XRP managed to gain 3.77%.

 Daily Crypto Sector Heat Map

BDCC Bitica COIN gained 229.29% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by Ethereum Lightning’s 223.18% and Nuggets’ 190.36% gain. On the other hand, rbase.finance lost 72.18%, making it the most prominent daily loser. It is followed by COIL’s loss of 48.85% and SBank’s loss of 40.65%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved up half a percent since we last reported, with its value currently being 63.3%. This value represents a 0.5% difference to the upside compared to the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has increased significantly over the weekend, with its current value being $560.79 billion. This represents a $31.22 billion increase when compared to our previous report.

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What happened in the past 24 hours?

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Technical analysis

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Bitcoin

Bitcoin has been on fire this weekend, with its price skyrocketing from its recent lows. The uptrend that started on Dec 11 brought its price from $17,600 all the way up to $19,400 before starting to consolidate. The steep ascending trend it created was unsustainable in the long run, so Bitcoin left it and continued trading sideways just above $19,100. The largest cryptocurrency by market cap is currently fighting for this level, with the previous five 4-hour candles holding above the support.

BTC/USD 4-hour chart

Bitcoin’s daily and monthly technicals show slight signs of neutrality on top of its overall bullishness. On the other hand, its 4-hour and weekly technicals are completely bullish.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is above both its 50-period and 21-period EMAs
  • Price is between its middle and top Bollinger band
  • RSI is neutral (59.17)
  • Volume is slightly below the average level
Key levels to the upside          Key levels to the downside

1: $19,100                                 1: $18,600

2: $19,666                                 2: $18,190

3: $20,000                                  3: $17,800

Ethereum

Ethereum has followed Bitcoin’s footsteps and created its own ascending channel, in which it moved from Dec 11 until Dec 13. The second-largest cryptocurrency by market cap has left this channel and started its own consolidation phase right above the $581 support level.

Ethereum’s moves seem like a mirror to Bitcoin’s moves, with slightly more or less intensity. Traders should be extremely careful of sudden moves Bitcoin can make that could disrupt their Ethereum trades.

ETH/USD 4-hour Chart

Ethereum’s 4-hour, daily, and weekly technicals overall bullish but show signs of neutrality or even some bearish indicators. On the other hand, its monthly technicals are completely tilted towards the buy-side.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is above both its 50-period and 21-period EMAs
  • Price is between its middle and top Bollinger band
  • RSI is starting to descend after being close to overbought (58.72)
  • Volume is average when compared to the previous week
Key levels to the upside          Key levels to the downside

1: $600                                     1: $581

2: $632                                     2: $565 

3: $636.5                                   3: $545

Ripple

XRP performed much worse than Bitcoin and Ethereum over the weekend, with its short-term outlook being quite bearish. The fourth-largest cryptocurrency by market cap ended up losing $13.11% of its value week-over-week, with its price currently sitting at the $0.5 level.

XRP is currently fighting to stay above the $0.5 level, with its past four 4-hour candles managing to do this. Traders may be able to catch a trade in either direction when XRP confirms its position above/below $0.5 on increased volume.

XRP/USD 4-hour Chart

XRP’s 4-hour and daily overviews are heavily tilted towards the sell-side but still show some neutral indicators. Its longer-term technicals, though, are completely bullish.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Its price is currently below both its 50-period EMA and its 21-period EMA
  • Price is between its middle and bottom Bollinger band
  • RSI is neutral (37.98)
  • Volume is slightly below the average level
Key levels to the upside          Key levels to the downside

1: $0.5435                                 1: $0.5

2: $0.57                                     2: $0.475

3: $0.6                                      3: $0.45

Categories
Forex Market Analysis

Daily F.X. Analysis, December 14 – Top Trade Setups In Forex – European Events in Highlights!  

On the news side, the market is expected to report a low impact on economic events, which may have a very slight or no effect on the market. The German WPI m/m, Industrial Production, and German Buba Monthly Report will be released from the European economy. Still, I suspect there’s not going to be any significant movement in the market.

On the news side, the market is expected to report a low impact on economic events, which may have a very slight or no effect on the market. The German WPI m/m, Industrial Production, and German Buba Monthly Report will be released from the European economy. Still, I suspect there’s not going to be any significant movement in the market.

On the news side, the market is expected to report a low impact on economic events, which may have a very slight or no effect on the market. The German WPI m/m, Industrial Production, and German Buba Monthly Report will be released from the European economy. Still, I suspect there’s not going to be any significant movement in the market.

Economic Events to Watch Today  

  

EUR/USD – Daily Analysis

During Monday’s Asian trading session, the EUR/USD currency pair succeeded in extending its overnight winning streak and remained well bid around the 1.2140 level mainly due to the risk-on market sentiment. That was supported by the optimism over treatment for the highly infectious coronavirus, which tends to weaken the safe-haven U.S. dollar and contributes to the currency pair gains. 

Moreover, the upbeat market tone was further boosted by the increasing expectations of a further U.S. stimulus package, which boosted the currency pair. On the contrary, the fresh jump in infections and death toll in Europe keeps fueling the doubts over the Eurozone economic recovery, which becomes the key factor that kept the lid on any additional currency pair gains. The EUR/USD is trading at 1.2134 and consolidating between 1.2116 and 1.2145.

The global equity market has been flashing green since the day started and is supported by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members are still progressing over the much-awaited stimulus talks. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. Across the pond, the optimism over treatment for the highly infectious coronavirus has also been favoring the market trading sentiment. These hopes were sparked after the U.S. Food and Drug Administration’s (FDA) officially authorized the Pfizer-BioNTech covid vaccine for emergency use. Thereby, the upbeat market mood has been playing its major role in underpinning the currency pair.

The broad-based U.S. dollar declined to obtain any positive traction and drew an offer on the day as doubts persist over the global economic recovery from COVID-19. That was witnessed by the U.S. previous week’s downbeat U.S. data. Meanwhile, the risk-on market sentiment also weighed on the U.S. currency. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair higher. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

On the contrary, the intensifying coronavirus woes across the globe and intensifying lockdowns restrictions in Europe and the U.S. keep challenging the upbeat market performance and become the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the growing virus cases recall the local lockdowns in the U.K. and the U.S. In the meantime, Germany also extended national activity restrictions. Meanwhile, the fears of a full-fledged trade/political war between the West and China also challenge the market’s upbeat mood. The tension between the two largest markets in the world was fueled after the U.S. imposed back to back travel restrictions over the Chinese Communist Party members and their families.

Looking forward, the traders will keep their eyes on the U.S. employment data for November along with Euro German Factory Orders data, which will likely entertain market players amid a light calendar. All in all, the updates surrounding the Brexit, virus, and U.S. stimulus package will not lose their importance. 

Daily Technical Levels

Support   Resistance

1.2044       1.2133

1.2006       1.2186

1.1954       1.2223

Pivot point: 1.2096

EUR/USD– Trading Tip

The technical side of the EUR/USD is trading choppy at the 1.2131 mark, meeting immediate resistance at 1.2160 and 1.2196 marks along with a support mark of 1.2085. Formation of candles beneath the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. Industrial Production and German Buba Monthly Report will remain in highlights. Let’s wait to trade a breakout setup during the European or the U.S. session today. 

GBP/USD – Daily Analysis

During Monday’s Asian trading session, the GBP/USD currency pair managed to stop its previous week’s bearish bias and refresh the intra-day high around above the mid-1.3300 level, mainly due to reports suggesting that the UK PM. Boris Johnson and the European Commission (E.C.) President Ursula von der Leyen agreed to extend the Brexit talks for one more week, which eased fears of a no-deal Brexit and contributed to the currency pair gains. On the other hand, the broad-based U.S. dollar fresh weakness, backed by the market risk-on mood, also played its major role in underpinning the currency pair. At a particular time, the GBP/USD currency pair is currently trading at 1.3325 and consolidating in the range between 1.3291 – 1.3354.

It is worth recalling that the U.K. Prime Minister Boris Johnson and European Commission President announced that they discussed the key issues and decided to go for another round of discussions to reach a historic trade deal, which in turn, boosted the sentiment around the British Pound and contributed to the currency pair gans. In contrast, the British PM Johnson repeats, “I’m afraid we’re still very far apart on some issues.” However, this negative statement failed to leave any meaningful impact on the Pound. 

Despite the lingering doubts about global economic recovery and the intensifying tension between the world’s two biggest economies, the market players continue to cheering the optimism over a possible vaccine for the highly infectious coronavirus disease. These hopes were fueled after the U.S. Food and Drug Administration’s (FDA) officially approved the Pfizer-BioNTech covid vaccine for emergency use. However, the positive developments over the covid vaccine keep favoring the market risk-on mood. Apart from this, the global equity market was further supported by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members keep working to give the much-awaited stimulus package ahead of this Friday’s deadline. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. 

As in result, the broad-based U.S. dollar failed to stop its bearish bias and remained depressed on the day. Moreover, the doubts over the global economic recovery from COVID-19 remains on the card. That was witnessed by the U.S. previous week’s downbeat U.S. data. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair higher. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

Conversely, the intensifying coronavirus woes in the U.K. and the U.S. and intensifying lockdown restrictions keep challenging the upbeat market performance and become the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the U.S. and U.K. policymakers were forced to impose the local lockdowns once again. In the meantime, Germany also extended national activity restrictions. 

Looking forward, the market traders will keep their eyes on the developments surrounding the Brexit story for some significant direction in the pair. Furthermore, the updates covering the virus and the US-China tussle will also be key to watch.

Daily Technical Levels

Support   Resistance

1.3338       1.3466

1.3280       1.3536

1.3209       1.3594

Pivot point: 1.3408

GBP/USD– Trading Tip

The GBP/USD is trading at the 1.3313 level, holding below an immediate resistance level of 1.3322. On the upper side, the GBP/USD pair can lead to a 1.3390 level, and support stays at 1.3269, which is extended by a double bottom level. Selling bias seems dominant; therefore, we should be looking for a sell trade only upon the violation of the 1.3265 level. The lagging technical indicators like 50 EMA suggest selling bias. Thus we should look for selling trades below 1.3400 and upon breakout 1.3265 level too.   

USD/JPY – Daily Analysis

During Monday’s Asian trading session, the USD/JPY currency pair failed to gain any positive traction. They witnessed some modest selling moves near below the 104.00 level, mainly due to the upbeat market sentiment, which tends to undermine the safe-haven U.S. dollar and contributes to the currency pair losses. However, the market trading sentiment was supported by the optimism about the coronavirus treatment and progress in the U.S. stimulus talks. Simultaneously, the market’s upbeat mood weakens the safe-haven Japanese yen, which could be considered one of the key factors that help the currency pair limit its deeper losses. In contrast, Japan’s Tankan data for the 4th-quarter (Q4) marked upbeat figures, which boosted the Japanese yen’s sentiment and contributed to the currency pair losses.  

At the data front, Tankan Large Manufacturing Index for Q4 grew from -27 to -10, against expectations of -15, while the Non-Manufacturing Index increased from -6 market consensus to -5 during the stated period. Moreover, Tankan Large Manufacturing Outlook and Non-Manufacturing Outlook also recorded upbeat numbers of -8 and -6 respectively, against -11 and -7 forecasts in that order.

Despite the lingering doubts over the U.S. economic recovery and the escalating tension between the world’s two biggest economies, the market players continue to cheer the optimism over a potential vaccine for the highly dangerous coronavirus infection. These hopes were fueled after the U.S. Food and Drug Administration’s (FDA) officially approved the Pfizer-BioNTech covid vaccine for emergency use. In turn, the New York Times got help to say that the White House staff members will be among the first to be vaccinated. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and contributed to the currency losses by undermining the safe-haven U.S. dollar.

Apart from this, the global equity market upticks were further fueled by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members keep working to give the much-awaited stimulus package ahead of this Friday’s deadline. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. 

This, in turn, the broad-based U.S. dollar failed to stop its bearish traction and edged lower on the day. Moreover, the doubts over the U.S. economic recovery from COVID-19 remains on the card, as witnessed by the U.S. previous week’s downbeat U.S. data. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

The rising tensions between the United States and China keep challenging the market risk-on tone and might suffer the currency pair into deeper losses. It’s also questioning the market risk-on mood could be the intensifying coronavirus woes in the U.K. and U.S., which leads to the intensifying lockdown restrictions. 

Daily Technical Levels

Support   Resistance

104.04       104.41

103.86       104.60

103.67       104.78

Pivot Point: 104.23

USD/JPY – Trading Tips

During the previous week, the USD/JPY violation of the symmetric triangle pattern at 104.346 faked out as the safe-haven currency pair reversed trade within the same triangle pattern. The current trading range of the USD/JPY pair remains 104.375 – 103.650, and violation of this range can extend the selling trend until the next support area of 103.200 level. Typically, such a triangle pattern can breakout on either side; this, we should be careful before opening any trade. The market is neutral as investors seem to wind up their positions ahead of the December holidays. Good luck

Categories
Crypto Market Analysis

BTC/USD Weekly Chart Analysis + Possible Outcomes

In this week’s BTC/USD analysis, we will be taking an in-depth look at the most recent technical formations, as well as look for the possible short-term price outcomes.

In this week’s BTC/USD analysis, we will be taking an in-depth look at the most recent technical formations, as well as look for the possible short-term price outcomes.

In this week’s BTC/USD analysis, we will be taking an in-depth look at the most recent technical formations, as well as look for the possible short-term price outcomes.

Overview

Bitcoin has had quite a volatile week experienced yet another steep decrease in price as a continuation of the bear retracement after the cryptocurrency couldn’t post new all-time highs with confidence. However, the largest cryptocurrency by market cap has recovered from the decline in a matter of days, with its price over $19,000 once again.

While Bitcoin’s fundamentals only grew stronger as more and more institutional investors acknowledge it as a competitor to gold. This trend of large public companies investing in the best-known cryptocurrency has been seen throughout 2020, and many say that this is the sole reason for the current Bitcoin’s run.

Technical factors



Bitcoin is currently in a steep upwards-facing trend, which brought its price from $17,600 all the way to $19,000. While the channel is way too steep to be considered a long-term option, Bitcoin has the option to follow it for a little bit more, possibly riding the way up to the $19,666 major resistance (and a previous all-time high on Bistamp). This will most likely be the pivot point for Bitcoin, which will decide if it will try to tackle the levels above $20,000 or stay below it and seek support near $19,100.

Likely Outcomes

Bitcoin’s currently sending out very bullish signals, but we included a slightly bearish scenario as well, just to make sure all bases are covered.

1: In case Bitcoin heads further up, its price will most likely stop at the major pivot point, which sits at $19,666. This level is the all-time high from 2017 and is a major resistance level. From here, Bitcoin bulls will have to decide whether they will push towards the upside or remain below this level:

  • In case that the price moves further up, its next possible resistance level (there isn’t much resistance above $20,000, so all possible resistance levels will be extensions of the Fib retracements) is most likely to be sitting at around $20,750.
  • In case the price decides to stay below $19,666, we can expect it to move down and look for support at $19,100 or $18,600 levels.

2: If Bitcoin breaks the ascending channel early and pushes towards the downside, its first strong support level is $19,100 (which it will inevitably break if it pushes down and breaks the channel) and then $18,600.

Entering any short trades could be quite risky at the moment due to the bullish momentum Bitcoin has gathered. However, trading above $20,000 is equally as risky as Bitcoin would be entering a zone with no set resistance and support levels. However, entering long traders is certainly a safer option at the moment.

Categories
Forex Signals

AUD/USD Violates Upward Channel – Brace for a Buying Trade 

The AUD/USD pair was closed at 0.75350 after placing a high of 0.75296 and a low of 0.74254. The Australian Dollar rose to its highest level in two and a half year as investors started to bet on a successful vaccine roll-out and improving global growth. The risk-sensitive Aussie gained as much as 0.8% on Thursday and rose to its highest since June 2018 as the market’s risk sentiment improved. The pair AUD/USD has gained about 6.8% this year as a rebound in China’s economy has boosted China-proxy Australian Dollar demand.

The AUD/USD pair was closed at 0.75350 after placing a high of 0.75296 and a low of 0.74254. The Australian Dollar rose to its highest level in two and a half year as investors started to bet on a successful vaccine roll-out and improving global growth. The risk-sensitive Aussie gained as much as 0.8% on Thursday and rose to its highest since June 2018 as the market’s risk sentiment improved. The pair AUD/USD has gained about 6.8% this year as a rebound in China’s economy has boosted China-proxy Australian Dollar demand.

The AUD/USD pair was closed at 0.75350 after placing a high of 0.75296 and a low of 0.74254. The Australian Dollar rose to its highest level in two and a half year as investors started to bet on a successful vaccine roll-out and improving global growth. The risk-sensitive Aussie gained as much as 0.8% on Thursday and rose to its highest since June 2018 as the market’s risk sentiment improved. The pair AUD/USD has gained about 6.8% this year as a rebound in China’s economy has boosted China-proxy Australian Dollar demand.

The risk sentiment in the market was supported by the combination of multiple factors on Thursday and supported the upward trend in the Australian Dollar. The rising hopes for the US stimulus bill after the US Treasury Secretary Steven Mnuchin that a lot of progress has been made regarding the stimulus talks added in the risk sentiment. Meanwhile, the US House Speaker Nancy Pelosi also said that bipartisan negotiations on the coronavirus relief bill were making great progress. These comments reflected the upbeat market mood and supported the risk perceived Australian Dollar.

On the other hand, the US dollar was also weak on Thursday that also supported the upside momentum in AUD/USD pair. The US dollar weakness was driven by the increased unemployment claims and additional stimulus from ECB on Thursday. 

At 05:00 GMT, the MI Inflation Expectations for November remain flat at 3.5% on the data front. From the US side, at 18:30 GMT, the CPI for November rose to 0.2% against the projected 0.1% and supported the US dollar. The Core CPI for November also increased to 0.2% against the forecasted 0.1% and supported the US dollar. The Unemployment Claims from last week raised to 853K against the anticipated 723K and weighed on the US dollar that added gains in AUD/USD pair. Furthermore, the hopes that the US FDA will approve within days using Pfizer’s vaccine also supported the risk sentiment in the market and gave strength to the risk perceived Aussie that ultimately added in the gains of AUD/USD pair.

The rising hopes for quick global economic growth also supported the market’s risk flows after the ECB announced on Thursday that it would expand its bond-buying program by nine months. It also raised the stimulus measure by 500 billion euros that will provide support to the Eurozone economy through the coronavirus pandemic. These updates also supported the risk-sensitive Aussie and helped the pair reach its multi-years highest level on Thursday above 0.7500.


Daily Technical Levels

Support Resistance

0.7403 0.7486

0.7362 0.7528

0.7320 0.7569

Pivot point: 0.7445

Entry Price – Buy 0.75374

Stop Loss – 0.74974

Take Profit – 0.75774

Risk to Reward – 1:1

Profit & Loss Per Standard Lot = -$400/ +$400

Profit & Loss Per Micro Lot = -$40/ +$40

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Categories
Forex Market Analysis

Daily F.X. Analysis, December 11 – Top Trade Setups In Forex on Friday! 

On the news front, eyes will remain on the German Final CPI m/m, which are expected to remain unchanged, and it may not drive any major movement in the market. BOE Gov Bailey is due to hold a press conference about the Financial Stability Report in London. Euro Summit also remains in highlight as the heads of state from the European Union countries are due to discuss the banking union and the capital markets union in Brussels.

On the news front, eyes will remain on the German Final CPI m/m, which are expected to remain unchanged, and it may not drive any major movement in the market. BOE Gov Bailey is due to hold a press conference about the Financial Stability Report in London. Euro Summit also remains in highlight as the heads of state from the European Union countries are due to discuss the banking union and the capital markets union in Brussels.

On the news front, eyes will remain on the German Final CPI m/m, which are expected to remain unchanged, and it may not drive any major movement in the market. BOE Gov Bailey is due to hold a press conference about the Financial Stability Report in London. Euro Summit also remains in highlight as the heads of state from the European Union countries are due to discuss the banking union and the capital markets union in Brussels.

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD closed at 1.21215 after placing a high of 1.21588 and a low of 1.20633. After falling for four consecutive days, the EUR/USD pair rose on Thursday amid the European Central Bank’s latest decision.

On Thursday, the European Central Bank held its interest rates on its main refinancing operations at 0.00%, marginal lending facility at 0.25%, and the deposit facility at -0.50%. ECB said that it would continue to monitor the exchange rate’s developments about their possible implications for the medium-term inflation outlook.

The European Central Bank expanded its massive monetary stimulus program by another 500 billion euros as the second wave of lockdown measures weighed on the euro area’s economic recovery. It also expanded the emergency bond purchases scheme for nine months worth 1.85 trillion euros and aimed to keep firms and governments afloat until the economy was ready to re-open.

Central Bank also announced that it would hold the interest rates at the same level until the inflation outlook comes close to its below 2% target. The additional support to the Eurozone economy from ECB added that the Eurozone economy will now recover quickly. These hopes added strength in the single currency Euro that helped EUR/USD pair to post gains on Thursday. Meanwhile, on the Data front, at 12:45 GMT, the French Industrial Production for October raised to 1.6% against the expected 0.4% and supported the single currency Euro. From the U.S. side, at 18:30 GMT, the CPI for November rose to 0.2% against the estimated 0.1% and supported the U.S. dollar. The Core CPI for November also raised to 0.2% against the expected 0.1% and supported the U.S. dollar. The Unemployment Claims from last week rose to 853K against the forecasted 723K and weighed on the U.S. dollar that added strength in the EUR/USD pair on Thursday.

The U.S. dollar was also weak on Thursday as the Unemployment claims rose from their expected level during last week due to increased restrictive measures in the U.S. and supported the EUR/USD pair’s upward trend. Furthermore, the U.S. dollar came under more pressure after releasing additional stimulus by the European Central Bank. The U.S. lawmakers were also unable to sort out disagreements over aid to state and local governments, holding up a broader spending package. The U.S. dollar weakness added further support to the upward momentum of the EUR/USD pair.

Daily Technical Levels

Support   Resistance

1.2044       1.2133

1.2006       1.2186

1.1954       1.2223

Pivot point: 1.2096

EUR/USD– Trading Tip

The technical side of the EUR/USD continues to remain the same as the pair is trading at 1.2103 level, facing immediate resistance at 1.2160 and 1.2196 level along with a support level of 1.2085. Closing of candles below the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. Euro Summit will remain in highlights, and the choppy session is expected until the release of the event.

 

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.32900 after placing a high of 1.34108 and a low of 1.32453. The GBP/USD pair declined on Thursday as the meeting between PM Boris Johnson and E.U. Commission President Ursula von der Leyen failed to bridge major gaps between them.

PM Boris Johnson offered his ministers to prepare for the strong possibility of a no-deal Brexit. He said that the E.U.’s current offer was unacceptable because the U.K. could not be treated like its twin. He added that the deal offered by the E.U. was not sensible and was unlike any other free trade deal. He said that it was a way of keeping the U.K. locked in the E.U.’s regulatory orbit.

Johnson added a strong possibility that they would have a solution that will be much more like an Australian & Canadian relationship with the E.U. However, after the meeting, the PM Boris Johnson and E.U. Commission President Ursula von der Leyen agreed that a firm decision should be taken about the future of the talks by Sunday. The talks between the E.U.’s top negotiator Michel Barnier and the U.K.’s top negotiator David Frost will resume Brussels. Whereas, Foreign Secretary Dominic Raab said that it was unlikely the negotiations would be extended beyond Sunday.

At 05:30 GMT, the RICS House Price Balance from the U.K. raised 66% against the estimated 64% and supported British Pound. At 12:00 GMT, the Construction Output in October declined to 1.0% against the expectations of 1.2%. The Gross Domestic Product from Great Britain in October remained flat with expectations of 0.4%. The Goods Trade Balance from the U.K. showed a deficit of -12.0B against the forecasted -9.6B and weighed on British Pound and added losses in the GBP/USD pair. The Index of Services for the quarter also dropped to 9.7% against the expected 9.8% and weighed on Sterling and added further losses in GBP/USD pair. The Industrial Production in October surged to 1.3% against the expected 0.3% and supported British Pound. The Manufacturing Production for October also raised to 1.7% against the projected 0.3% and supported British Pound. 

At 18:30 GMT, the CPI for November surged to 0.2% against the anticipated 0.1% and supported the U.S. dollar that added pressure on GBP/USD pair. For November, the Core CPI also rose to 0.2% against the anticipated 0.1% and supported the U.S. dollar and added losses on GBP/USD pair. The Unemployment Claims from last week increased to 853K against the anticipated 723K and weighed on the U.S. dollar.

Moreover, the E.U. outlined contingency measures for a no-deal Brexit that reflected significant uncertainty whether a deal would be in place on January 1, 2021. This also raised the expectations that a Brexit deal might not be reached and weighed on GBP/USD pair on Thursday.

Daily Technical Levels

Support   Resistance

1.3338       1.3466

1.3280       1.3536

1.3209       1.3594

Pivot point: 1.3408

GBP/USD– Trading Tip

The GBP/USD is trading at the 1.3313 level, holding below an immediate resistance level of 1.3322. On the upper side, the GBP/USD pair can lead to a 1.3390 level, and support stays at 1.3269, which is extended by a double bottom level. Selling bias seems dominant, therefore, we should be looking for a sell trade only upon the violation of 1.3265 level. The lagging technical indicators like 50 EMA is suggesting selling bias, thus we should look for selling trades below 1.3400 and upon breakout 1.3265 level too.   

 

USD/JPY – Daily Analysis

The USD/JPY was closed at 104.212 after placing a high of 104.577 and a low of 104.139. The USD/JPY pair rose in the early trading session on Thursday amid the rising risk sentiment in the market after the stimulus measure from ECB and the vaccine optimism. On Thursday, an independent committee of experts recommended the U.S. Food and Drug Administration to approve the use of Pfizer and BioNtech’s coronavirus vaccine for people over the age of 16. It will be up to the FDA to decide whether to follow the recommendation or not. The agency is anticipated to announce its decision within days, and if it decides to approve the vaccine, then the health care workers could begin receiving the shots almost immediately.

The vaccine optimism in the U.S. raised the risk sentiment in the market as the chances for vaccine approval raised the chance for quick economic recovery and weighed on the safe-haven Japanese Yen, which ultimately added gains in the USD/JPY pair. The European Central Bank announced expanding its debt purchases scheme and further stimulus measures that also added in the market’s risk sentiment and supported the upward trend in the USD/JPY pair after weighing on the safe-haven Japanese Yen.

However, the USD/JPY pair failed to hold its gain on Thursday and started to decline as the U.S. Unemployment claims from last week raised to their highest since September 19 level. The rise in Americans’ jobless claim benefits was due to the states’ increased restrictive measures that halted economic activities. The raised unemployment claims weighed on the U.S. dollar and dragged the USD/JPY pair on the downside. 

On the data front, at 04:50 GMT, the BSI Manufacturing Index for the 4th quarter raised to 21.6 from the expectations of 3.5 and supported the Japanese Yen and weighed on the USD/JPY pair. The Producer Price Index from Japan came in line as expected -2.2%.

From the U.S. side, at 18:30 GMT, the CPI for November rose to 0.2% against the projected 0.1% and supported the U.S. dollar. The Core CPI for November also raised to 0.2% against the estimated 0.1% and supported the U.S. dollar. The Unemployment Claims from last week rose to 853K against the forecasted 723K and weighed on the U.S. dollar that made the USD/JPY pair to lose all of its gains on Thursday.

Daily Technical Levels

Support   Resistance

104.04        104.41

103.86        104.60

103.67        104.78

Pivot Point: 104.23

USD/JPY – Trading Tips

The USD/JPY violation of the symmetric triangle pattern at 104.346 faked out as the safe-haven currency pair reversed trade within the same triangle pattern. The current trading range of the USD/JPY pair remains 104.375 – 103.650, and violation of this range can extend the selling trend until the next support area of 103.200 level. Typically, such a triangle pattern can breakout on either side; this, we should be careful before opening any trade. The market is neutral as investors seem to wind up their positions ahead of the December holidays. Good luck

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 11 – Bitcoin Fighting for $18,000; Crypto Market in the Red

The majority of the cryptocurrency sector has ended up being in the red as Bitcoin spent most of the day under the $18,000 level. Bitcoin is currently trading for $17,920, representing a decrease of 2.91% compared to our last report. Meanwhile, Ethereum’s price has decreased by 4.30% on the day, while XRP managed to lost 2.85%.

The majority of the cryptocurrency sector has ended up being in the red as Bitcoin spent most of the day under the $18,000 level. Bitcoin is currently trading for $17,920, representing a decrease of 2.91% compared to our last report. Meanwhile, Ethereum’s price has decreased by 4.30% on the day, while XRP managed to lost 2.85%.

The majority of the cryptocurrency sector has ended up being in the red as Bitcoin spent most of the day under the $18,000 level. Bitcoin is currently trading for $17,920, representing a decrease of 2.91% compared to our last report. Meanwhile, Ethereum’s price has decreased by 4.30% on the day, while XRP managed to lost 2.85%.

 Daily Crypto Sector Heat Map

Freedom Reserve gained 950.51% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by LBRY Credits’s 336.6% and Seigniorage Shares’ 117.99% gain. On the other hand, Basis Cash lost 87.95%, making it the most prominent daily loser. It is followed by xBTC’s loss of 55.09% and IterationSyndicate’s loss of 44.55%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved up less than half a percent since we last reported, with its value currently being 62.8%. This value represents a 0.2% difference to the upside compared to the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has decreased in the past 24 hours, with its current value being $528.97 46.31 billion. This represents a $17.34 billion decrease when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent most of the day in a price descent after it failed to break the $18,600 mark. BTC bulls tried to pick the price back up but failed, which has caused another mini-dip, which brought the price as low as $17,721 on Bitstamp. The $17,780 level has proven itself as great support once again, and Bitcoin is now trading in a range between it and $18,190.

Due to the amount of support and resistance levels in a narrow price range Bitcoin currently has, a push towards either side could be a possible safe trade to catch.

BTC/USD 2-hour chart

Bitcoin’s short-term technicals are tilted towards the sell-side but show slight signs of neutrality. Its long-time technicals, however, are completely bullish.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is below both its 50-period and 21-period EMAs
  • Price is close to its bottom Bollinger band
  • RSI is dipping towards being oversold (36.77)
  • Volume is slightly above the average level
Key levels to the upside          Key levels to the downside

1: $18,190                                 1: $17,780

2: $18,600                                 2: $17,500

3: $18,790                                  3: $17,200

Ethereum

Ethereum has quickly stopped in its tracks towards $600 after hitting a brick wall at $581. The rebound pulled its price back below $565, as well as $545, which it is now fighting for. The fact that Ethereum is in a short-term bear run is confirmed by higher volume candles during price drops than during price spikes.

Our call from yesterday regarding Ethereum’s dip after dropping below $565 turned out as predicted. Traders should pay attention to Bitcoin’s movements and the ascending (red) trend line when trading Etheruem.

ETH/USD 2-hour Chart

Ethereum’s short-term technicals are tilted towards the sell-side but show slight neutral signs. However, its long-time technicals are bullish, with its weekly overview being slightly neutral than its monthly overview.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is below both its 50-period and 21-period EMAs
  • Price is slightly above its bottom Bollinger band
  • RSI is dipping towards oversold territory (36.18)
  • Volume is slightly above the average level
Key levels to the upside          Key levels to the downside

1: $565                                     1: $545

2: $581                                      2: $525 

3: $600                                      3: $510

Ripple

XRP followed the rest of the crypto sector and made a price dip, which brought its price to the $0.543 level, which held up quite nicely. Its price is now recovering and consolidating between $0.543 and $0.57, with no signs of potential movement to either side.

XRP traders should pay attention to Bitcoin’s price movement, as most cryptocurrencies follow the general market direction it sets.

XRP/USD 2-hour Chart

XRP’s 4-hour and daily overviews show confusing signs, with some indicators being bullish and some bearish. Its long-term technicals are, however, completely bullish.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • The price is currently below both its 50-period EMA and its 21-period EMA
  • Price is slightly below its middle Bollinger band
  • RSI is neutral (41.75)
  • Volume is slightly above the average level
Key levels to the upside          Key levels to the downside

1: $0.57                                   1: $0.5435

2: $0.6                                       2: $0.5

3: $0.63                                    3: $0.475

Categories
Forex Market Analysis

Daily F.X. Analysis, December 10 – Top Trade Setups In Forex – Eyes on ECB Policy Decision! 

On the news front, it’s going to be an important day for the Euro and U.S. dollar as investors await the Main Refinancing Rate and the U.S. CPI figures during the European and the U.S. session. The ECB monetary policy decision, especially the Main Refinancing Rate, is expected to remain unchanged while the Inflation figures can support the U.S. dollar today.

On the news front, it’s going to be an important day for the Euro and U.S. dollar as investors await the Main Refinancing Rate and the U.S. CPI figures during the European and the U.S. session. The ECB monetary policy decision, especially the Main Refinancing Rate, is expected to remain unchanged while the Inflation figures can support the U.S. dollar today.

On the news front, it’s going to be an important day for the Euro and U.S. dollar as investors await the Main Refinancing Rate and the U.S. CPI figures during the European and the U.S. session. The ECB monetary policy decision, especially the Main Refinancing Rate, is expected to remain unchanged while the Inflation figures can support the U.S. dollar today.

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.20811 after placing a high of 1.21471 and a low of 1.20585. On Wednesday, the currency pair EUR/USD continued its bearish trend for the fourth consecutive day amid the deteriorated risk sentiment and higher U.S. yields that supported the greenback. The U.S. dollar was strong on Wednesday as the U.S. Dollar Index (DXY) rose above the 91.00 level, which was the highest in two days. The coronavirus situation in the U.S. has escalated to an alarming level as more than 200,000 Americans tested positive for the coronavirus every day on average. The total number of infections in the U.S. has surpassed 15 million.

Dr. Anthony Fauci, the nation’s top infectious disease expert, warned on Monday that the country was likely to see a Thanksgiving-related spike in coronavirus cases and hospitalizations in another week or so, in the middle of Hanukkah and just ahead of Christmas. The rising number of coronavirus cases in the U.S. raised the appeal for safe-haven and supported the greenback that ultimately added losses in EUR/USD pair.

Meanwhile, another reason for the continuous losses in the EUR/USD pair was the latest news from Great Britain about the coronavirus vaccine. On Wednesday, Britain’s health officials warned people with significant allergies to avoid receiving the Pfizer-BioNtech vaccine as two people reported an adverse reaction.

On the data front, at 12:00 GMT, the German Trade Balance for October showed a surplus of 18.2B against the expected 18.7B and weighed on Euro. From the U.S. side, at 20:00 GMT, the Final Wholesale Inventories for October surged to 1.1% against the forecasted 0.9% and weighed on the U.S. dollar. The JOLTS Job Opening for October also rose to 6.65M against the expected 6.30M and supported the U.S. dollar that added further losses in EUR/USD pair.

The U.S. dollar was also strong onboard after the hopes for further stimulus package were diminished with the White House’s latest proposal. Steven Mnuchin submitted a proposal on Wednesday worth $916 billion. The offer included only $40 billion towards unemployment benefits that were far less than the amount proposed in the package from a bipartisan group of lawmakers worth $180 billion. Democrats rejected the proposal as they have been trying since the CARES ACT for additional financial aid for laid-off workers.

This new proposal from the Trump administration gave mixed signals in the market. Some believed that the stalemate between Republicans & Democrats would remain intact for long to reach a deal. Others believed that the White House has reengaged in talks for the first time since the election and that it was a positive sign that a compromise could be reached before the end of the year. All the stimulus uncertainty added strength to the U.S. dollar and weighed on the riskier EUR/USD pair on Wednesday.

Daily Technical Levels

Support   Resistance

1.2042     1.2131

1.2006     1.2184

1.1954     1.2220

Pivot point: 1.2095

EUR/USD– Trading Tip

The technical side of the EUR/USD continues to remain the same as the pair is trading at 1.2103 level, facing immediate resistance at 1.2160 and 1.2196 level along with a support level of 1.2085. Closing of candles below the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. However, the focus is likely to stay on the ECB monetary policy decision, especially the Main Refinancing Rate, which is expected to remain unchanged. The choppy session is expected until the release of the ECB report.

 

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.34060 after placing a high of 1.34778 and a low of 1.33455. The GBP/USD pair ended its day in positive territory on Wednesday and climbed above 1.34700 as the final round of talks between UK PM Boris Johnson and the European Commission President Ursula von der Leyen started.

Ahead of the talks, the U.K. Pm Boris Johnson said that the E.U. insisted on terms that no prime minister could accept in EU-UK trade talks. The PM said that a good deal was still there to be done as the E.U. sought an automatic right to retaliate against the U.K. if its labor and environmental standards diverge from theirs. PM Boris Johnson also said that the E.U. could not accept the U.K. as having sovereign control over its fishing waters after Brexit. Major disagreements remain over fisheries, business competition rules, and governance issues.

PM Boris Johnson said that a deal would not be possible if the E.U. insisted that if a new law is passed in the future and if the U.K. did not follow suit, then the E.U. wanted an automatic right to punish the U.K. and retaliate. He also claimed that the E.U. wanted the U.K. to become the only country in the world not to have sovereign control over its fishing waters. He said that he would not believe that any prime minister of this country could accept under these terms. However, German Chancellor Angela Merkel has said that a Brexit deal was still possible but insisted that the E.U. single market’s integrity must be respected.

On Wednesday, PM Boris Johnson arrived in Brussels to find common grounds on significant differences that have stalled the talks for eight months. Over the past couple of days, the optimism has increased that a deal might reach as both sides have successfully reached a post-Brexit arrangement in principle over the Irish border. This optimism kept the British Pound on the upside ahead of the talks and pushed the GBP/USD pair higher. Both sides have confirmed that these final talks’ decision will be revealed on Sunday, and this statement forced investors to lose some of its early daily gains.

Meanwhile, on the USD front, the U.S. dollar was strong across the board. The risk sentiment deteriorated, and safe-haven appeal emerged after the rising number of coronavirus cases posted global economic recovery threats despite the vaccine development. The total number of infections in the U.S. surpassed 15 million on Wednesday, and it was reported that almost 200,000 Americans were tested positive for coronavirus every day in the U.S.

Furthermore, the British Pound lost some of its gains in the late trading session on Wednesday after Britain’s top medical adviser warned people with significant allergies to avoid having Pfizer and BioNtech’s vaccine shots as they could give an adverse reaction. On Wednesday, two people were reported to have an adverse reaction to Pfizer’s coronavirus vaccine in Great Britain and weighed on the local currency that capped further gains in GBP/USD pair.

Daily Technical Levels

Support   Resistance

1.3301     1.3453

1.3236     1.3542

1.3148     1.3606

Pivot point: 1.3389

GBP/USD– Trading Tip

The GBP/USD is trading at 1.3378, holding below an immediate resistance level of 1.3395. On the higher side, the GBP/USD pair can lead to a 1.3437 level, and support stays at 1.3340, which is extended by an upward trendline. Overall it’s an ascending triangle, and it typically breaks on the higher side; thus, we can expect the GBP/USD price to move until 1.3435.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.231 after placing a high of 104.403 and a low of 104.050. USD/JPY pair extended its gains for the second consecutive day on Wednesday as the U.S. dollar gained traction on the day. The hopes for the second round of massive stimulus package from Congress decreased n Wednesday after the Trump administration came up with a new proposal. The U.S. Secretary State Steven Mnuchin submitted a new proposal for an economic relief package that would offer far fewer unemployment benefits than what has been offered by a bipartisan group of lawmakers.

The unemployment benefits for millions of jobless Americans would be delivered as $180 billion under the framework proposed by a bipartisan group of lawmakers. But in contrast to this, the new package submitted by the Trump administration included $40billion in new funding for unemployment benefits.

The bipartisan effort of $908 billion packages has brought the Democrats and Republicans closer to a compromise on a coronavirus package. However, the new White House proposal of $916 billion was a sharp rejection from Democrats as the White House’s proposal was strongly criticized by House Speaker Nancy Pelosi and Senate Minority Leader Charles E. Schumer in a joint statement.

Meanwhile, on Wednesday, the U.S. House of Representatives agreed on a one-week extension of federal government funding that would give lawmakers more time to agree on a massive coronavirus relief package. However, the Senate Majority leader Mitch McConnell said that lawmakers were still looking forward to a relief package.

These developments raised the uncertainty related to the U.S. stimulus package, supported the U.S. dollar, and supported the USD/JPY pair’s upward trend.

Meanwhile, on the data front, At 04:50 GMT, the Core Machinery Orders for October raised to 17.1% against the forecasted 2.6% and supported the Japanese Yen. The M2 Money stock for the year from Japan also raised to 9.1% against the estimated 8.9% and supported the Japanese yen that capped further gains in the USD/JPY pair.

On the U.S. front, at 20:00 GMT, the Final Wholesale Inventories for October rose to 1.1% against the anticipated 0.9% and weighed on the U.S. dollar. The JOLTS Job Opening for October also raised to 6.65M against the projected 6.30M and supported the U.S. dollar that added further gains in the USD/JPY pair.

Daily Technical Levels

Support   Resistance

104.10      104.44

103.90      104.60

103.75      104.79

Pivot point: 104.25

USD/JPY – Trading Tips

The USD/JPY has violated the symmetric triangle pattern at 104.346, and it opens further odds of buying until the 104.750 level. The pair has recently disrupted the sideways trading series of 104.200 – 103850. Now it’s trading at 104.300 level, especially after bouncing off over 103.700 level on the lower side, supporting the pair nearby 103.700 mark. On the downside, the USD/JPY may find support at the 103.200 level upon a bearish breakout of the 103.750 support level. While resistance stays at 104.700 today. Good luck

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 10 – Bitcoin Bulls Back in the Game as Sector Recovers From The Dip

The cryptocurrency sector is mostly green as cryptocurrencies took the day to recover from the sudden drop that occurred on Dec 8. Bitcoin is currently trading for $18,411, representing an increase of 1.25% compared to our last report. Meanwhile, Ethereum’s price has increased by 3.37% on the day, while XRP managed to gain 4.66%.

The cryptocurrency sector is mostly green as cryptocurrencies took the day to recover from the sudden drop that occurred on Dec 8. Bitcoin is currently trading for $18,411, representing an increase of 1.25% compared to our last report. Meanwhile, Ethereum’s price has increased by 3.37% on the day, while XRP managed to gain 4.66%.

The cryptocurrency sector is mostly green as cryptocurrencies took the day to recover from the sudden drop that occurred on Dec 8. Bitcoin is currently trading for $18,411, representing an increase of 1.25% compared to our last report. Meanwhile, Ethereum’s price has increased by 3.37% on the day, while XRP managed to gain 4.66%.

 Daily Crypto Sector Heat Map

WinCash gained 207.65% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by Nyan V2’s 181.02% and Pamp Network’s 172.94% gain. On the other hand, DMme lost 68.63%, making it the most prominent daily loser. It is followed by ALL BEST ICO’s loss of 64.69% and Moonday Finance’s loss of 54.48%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved to the downside just under half a percent since we last reported, with its value currently being 62.6%. This value represents a 0.4% difference to the downside compared to the value it had when we last reported.

Daily Crypto Market Cap Chart

The cryptocurrency sector capitalization has increased significantly in the past 24 hours, with its current value being $546.31 billion. This represents a $10.23 billion increase when compared to our previous report.

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What happened in the past 24 hours?

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Technical analysis

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Bitcoin

Bitcoin has spent the day slowly moving up after a sharp price descent, which brought it to $18,000. After establishing itself above $18,190, Bitcoin even tried to push further up above $18,600 but failed almost instantly, making its price go back to previous levels.

We want to point out (once again) Micheal van de Poppe’s call of a large CME gap looming between $18,275 and $16,995.

Due to the amount of support/resistance levels Bitcoin currently has, any push towards either the upside or downside could be a possible safe trade in the same direction.

BTC/USD 2-hour chart

Bitcoin’s daily, weekly, and monthly technicals are completely tilted towards the buy-side and show no bearish signs. Its 4-hour overview, however, is completely bearish.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is below both its 50-period and 21-period EMAs
  • Price is between its middle and bottom Bollinger band
  • RSI is has recovered from being oversold (43.38)
  • Volume is slightly above average
Key levels to the upside          Key levels to the downside

1: $18,600                                 1: $18,190

2: $18,790                                 2: $17,780

3: $19,000                                  3: $17,200

Ethereum

Ethereum has not only recovered from its drop to $530, where it hit the ascending (red) trend line but pushed back towards $600. Even though the price is not yet ready to tackle this resistance level, it has made an attempt to break the $581 level but failed and returned to the $565 one.

Ethereum traders should pay attention to whether the cryptocurrency will end up above or below $565, which may be an indicator of its short-term movement. Traders should also pay attention to Bitcoin’s movement whenever taking a trade with Ethereum.

ETH/USD 2-hour Chart

Ethereum’s daily and monthly technicals are completely tilted towards the buy-side and show no signs of bearishness. However, its 4-hour overview is completely bearish, while its weekly overview is bullish but shows slight neutrality as well.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • Price is below both its 50-period and 21-period EMAs
  • Price is slightly below its middle Bollinger band
  • RSI has recovered from being in the oversold territory (42.83)
  • Volume is slightly above average
Key levels to the upside          Key levels to the downside

1: $565                                     1: $550

2: $581                                      2: $525 

3: $600                                      3: $510

Ripple

XRP made a sharp (to the upside) price recovery as well, with its price pushing past $0.5435, as well as its $0.57 resistance (now support) levels. The fourth-largest cryptocurrency by market cap even tried to break $0.6 but got shut down swiftly. Its price is now consolidating slightly above $0.57 and showing no signs of potential dips.

XRP traders (finally) have the option to trade this cryptocurrency after several days of close-to-no volatility. Keeping track of Bitcoin’s movements when trading XRP is a must, as any change in Bitcoin’s price could change the outlook of the market as a whole.

XRP/USD 2-hour Chart

XRP’s daily, weekly, as well as monthly technicals, are completely tilted towards the buy-side and show no signs of neutrality or bearishness. Its 4-hour overview, on the other hand, is bearish with slight signs of neutrality.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • The price is currently slightly below both its 50-period EMA, as well as its 21-period EMA
  • Price is slightly below its middle Bollinger band
  • RSI is neutral and recovered from being oversold (47.26)
  • Volume is slightly above average
Key levels to the upside          Key levels to the downside

1: $0.57                                   1: $0.5435

2: $0.6                                       2: $0.5

3: $0.63                                    3: $0.475

Categories
Forex Fundamental Analysis

USD/JPY Global Macro Analysis – Part 3

USD/JPY Exogenous Analysis

USD/JPY Exogenous Analysis

USD/JPY Exogenous Analysis

In the exogenous analysis, we will analyze economic indicators that exhaustively compare the performance of the US and the Japanese economies. These factors impact the dynamic of the USD/JPY pair in the forex market. They include:

  • US and Japan interest rate differential
  • The difference in the GDP growth in the US and Japan
  • Balance of trade

US and Japan interest rate differential

The interest rate differential is the difference between the interest rate in the US and that of Japan. Investors would prefer to invest their funds in a country that offers higher returns. Furthermore, carry traders are often bullish on the currency with a higher interest, which ensures that they earn higher yields.

The Bank of Japan has kept the interest rates at -0.1% since 2016. The current federal funds rate in the US is 0.25%. Thus, the interest rate differential for the USD/JPY is 0.35%. Since there are no foreseeable changes in the interest rates in either country, we assign it an inflationary score of 2.

Balance of trade

Balance of trade determines whether a country has a trade surplus or deficit in international trade. A trade surplus results from a country’s exports being of higher value than that of its imports. A deficit occurs when the imports are of higher value than exports. Japan mostly exports machinery and electronics, which puts it at a significant advantage due to the value of these goods. On the other hand, the US is a net importer.

In October 2020, japan has a trade surplus of ¥872.9 billion, which has been steadily increasing since June. The US has a trade deficit of $63.9 billion, which has been growing throughout the year.

The balance of trade differential between the US and Japan has been widening in favor of Japan. Based on our correlation analysis with the USD/JPY, we assign it a score of -6. It means that if this trend persists, we expect the USD/JPY to be bullish in the near term.

The difference in the GDP growth in the US and Japan

Although the US has a higher GDP than Japan, we can compare the two economies based on their growth rates.

The US economy had a GDP growth rate of 33.1% in Q3 2020, while Japan’s economy expanded by only 5%. The US economy is seen to be expanding at a faster pace than that of Japan. Based on the correlation with the price of the USD/JPY pair, we assign an inflationary score of 2. This means that we should expect a bullish trend on the USD/JPY pair if the US economy keeps expanding faster than that of Japan.

Conclusion

The total score from the exogenous analysis of the USD/JPY pair is -2. This implies that in the near term, we should expect a bearish trend in the pair.

Technical analysis of the USD/JPY pair shows that the weekly chart is still trading way below the 200-period MA. Furthermore, the pair has failed to successfully breach the middle Bollinger band, which has served as its resistance level. All the best!

Categories
Forex Fundamental Analysis

USD/JPY Global Macro Analysis – Part 1 & 2

Introduction

Introduction

Introduction

Global macro analysis of the USD/JPY pair involves the analysis of endogenous factors that impact both the USD and the JPY; and exogenous analysis for the USD/JPY pair.

In the endogenous analysis, we’ll focus on domestic macroeconomic factors that drive the domestic growth in the US and Japan. The exogenous analysis will involve the analysis of global macroeconomic factors that define the dynamics of the USD/JPY pair.

Ranking Scale

We will rank both the endogenous and the exogenous factors on a sliding scale of -10 to +10. Whenever the ranking is negative, it means that the macroeconomic indicator led to the depreciation of the currency. A positive ranking means that the indicator had an inflationary impact.

USD Endogenous Analysis – Summary

A score of -19.1 implies a clear deflationary effect on the US Dollar. This means that USD has lost its value since the beginning of 2020, according to these indicators.

You can find the complete USD Endogenous Analysis here.

JPY Endogenous Analysis – Summary

The endogenous analysis for the Japanese economy resulted in an overall inflationary score of 3. Based on this analysis, we can expect that the JPY had appreciated marginally in 2020.

  • Japan Inflation Rate

The inflation rate in Japan is measured by the consumer price index  (CPI). The CPI weights various consumer expenditures depending on their level of importance. Food is weighted at 25%, Housing 21%, transport and communication 14%, recreation 11.5%, energy and water 7%,  medical care 4.3%, and clothing 4%.

A higher rate of inflation is necessary for economic growth. It also forestalls a possible interest rate hike, which is accompanied by currency appreciation.

In October 2020, the MoM inflation rate in Japan decreased by 0.1% constant change since August. The YoY inflation rate decline by 0.4%, the first decline in about four years.

Based on our correlation analysis, we assign Japan’s inflation rate, a deflationary score of -2.

  • Japan Unemployment Rate

The unemployment rate measures the number of Japanese citizens eligible for employment who are currently seeking gainful employment opportunities.

An increasing rate of unemployment means that more jobs are lost in the economy faster than new jobs are being created. That’s an indicator that the economy is contracting.

In October 2020, Japan’s unemployment rate increased to 3.1%, representing 21.4 million people, the highest recorded since May 2017.

Due to the high correlation between the unemployment rate and GDP, we assign it a score of -5.

  • Japan Manufacturing PMI

The Japan manufacturing PMI is also known as the Jibun Bank Japan Manufacturing PMI. The PMI is compiled through a series of monthly questionnaires surveying about 400 manufacturers. The manufacturers are segregated depending on their industry’s contribution to GDP, and their responses aggregated into a diffusion index. When the index is above 50, it means that the manufacturing activity increased while a below 50 reading implies a slow-down in the manufacturing sector.

Japan is a highly industrialized economy, and its manufacturing activities have a high correlation with its GDP growth rate.

In November 2020, the Japan Manufacturing PMI was 49, inching closer to the highest recorded 49.3 in January. Since the manufacturing PMI has been steadily increasing from the lows of 38.4 in May, we assign it an inflationary score of 6.

This PMI is also known as Jibun Bank Japan Services PMI. It is a survey of over 400 services companies operating in the Japanese services industry. A Survey of the purchasing managers is used to track industry changes in employment, inventories, sales, and prices. Sectors covered by the survey include transport and communication, personal services, financial services, hotel industry, and IT. The responses are weighted based on the sector’s size and aggregated into an index from 0 to 100.

When the index is above 50, it signals that there is an expansion in the services industry, while below 50 shows contraction.

In November 2020, the Japan services PMI dropped to 46.7 from 47.7 in October. Although the index is above the lows of 21.5 recorded at the height of the coronavirus pandemic, it is still lower than the levels observed in the pre-pandemic period.

Based on our correlation analysis, we assign Japan services PMI an inflationary score of 2.

  • Japan Retail sales

The monthly retail sales measure the change in the value of goods consumed directly by households. In any economy, the growth in GDP is primarily driven by the demand by households. Thus, retail sales can be considered a significant indicator of economic growth.

In October 2020, the MoM retail sales in Japan increased by 0.4%, while YoY retail sales increased by 6.4%. The increase in October is the first time the YoY retail sales have increased since February. This shows demand in the Japanese economy is growing after the easing restrictions implemented in the wake of the pandemic.

Due to its high correlation with the GDP, we assign Japan retail sales an inflationary score of 5.

  • Japan General Government Gross Debt to GDP

This is the ratio between the amount of debt, both domestic and foreign, that the Japanese government has accumulated to national GDP. Typically, lenders use this ratio to determine if a country’s economy is overly leveraged and if the government might default in the future.

Note that Japan has the largest national debt to GDP in the world. However, although it is heavily indebted, unlike many other countries, Japanese debt is denominated in Yen. More so, foreigners only hold about 6.5% of the total debt. That is why Japan can continue to accumulate such massive debts without any fears of hyperinflation or default risks. But that doesn’t mean that the debt isn’t weighing down on the economy.

In 2019, the Japan national debt to GDP was 238%, an increase from 236.6% in 2018. In 2020, it is projected to exceed 240% due to the measures implemented to fight the pandemic. Based on our correlation analysis, we assign it a deflationary score of -3.

Please check our next article to find the Exogenous analysis of both USD and JPY currencies. We have also come to a conclusion on whether you should expect a bullish or bearish trend in this pair.

Categories
Forex Signals

USD/CHF Violates Descending Triangle Pattern – Brace for a Sell Signal! 

During Wednesday’s trading session, the USD/CHF currency pair failed to stop its previous-day bearish bias and remained pessimistic around below the 0.8900 level. However, the reason for the bearish tone around the currency pair could be associated with the broad-based U.S. dollar weakness. The U.S. dollar was being pressured by the optimism over the potential vaccine for the hazardous coronavirus infection, which urges investors to retreat from the safe-haven assets. 

During Wednesday’s trading session, the USD/CHF currency pair failed to stop its previous-day bearish bias and remained pessimistic around below the 0.8900 level. However, the reason for the bearish tone around the currency pair could be associated with the broad-based U.S. dollar weakness. The U.S. dollar was being pressured by the optimism over the potential vaccine for the hazardous coronavirus infection, which urges investors to retreat from the safe-haven assets. 

During Wednesday’s trading session, the USD/CHF currency pair failed to stop its previous-day bearish bias and remained pessimistic around below the 0.8900 level. However, the reason for the bearish tone around the currency pair could be associated with the broad-based U.S. dollar weakness. The U.S. dollar was being pressured by the optimism over the potential vaccine for the hazardous coronavirus infection, which urges investors to retreat from the safe-haven assets. 

Apart from this, the U.S. dollar losses could also be attributed to the on-going concerns of further monetary easing by the U.S. Federal Reserve, which adds burden around the U.S. dollar and contributes to the currency pair losses. On the contrary, the upbeat market sentiment boosted investors’ confidence and undermined the safe-haven Swiss Franc, which, in turn, was seen as one of the leading factors that help the USD/CHF currency pair to limit its deeper losses. Currently, the USD/CHF currency pair is currently trading at 0.8879 and consolidating in the range between 0.8871 – 0.8897.

The equity market had been flashing green since the Asian session started. The reason could be associated with the major positive catalysts. Be it the renewed probabilities of the U.S. aid package or optimism over treatment for the highly infectious coronavirus, both factors have favored the market trading sentiment. Therefore, the risk-on market mood tends to undermine the safe-haven Swiss franc, which becomes the key factor that lends some support to the currency pair to ease the intraday bearish pressure surrounding the USD/CHF currency pair.

The hopes of potential vaccines were further boosted after the U.K.’s has started vaccination, witnessed after the 1st-patients inoculated with BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy). In addition to this, the sentiment around the equity market was improved further after House Speaker Nancy Pelosi told that the stimulus discussions had made good progress. Meanwhile, the U.S. Treasury Secretary Steve Mnuchin offers a larger amount than the previously highlighted $908 billion for the stimulus package. 

At the USD front, the broad-based U.S. dollar failed to stop its bearish trend and remained depressed on the day as doubts persist over the U.S. economic recovery from COVID-19. Besides this, the risk-on market sentiment, backed by the optimism over a potential vaccine for the highly contagious coronavirus disease, also played its major role in undermining the safe-haven U.S. dollar. Besides this, the U.S. dollar losses could also be attributed to the concerns of further monetary easing by the U.S. Federal Reserve, which tends to undermine the American currency. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. Meantime, the U.S. Dollar Index, which tracks the greenback against a bucket of other currencies, dropped to 90.778.

Conversely, the optimism around the equity market was slightly unaffected by the intensifying market worries regarding the continuous surge in new coronavirus cases in the U.S. and Europe, which fueled the global economic recovery concerns imposing new lockdown restrictions on economic and social activity. Furthermore, the equity market gains were also capped by the lingering uncertainty over the Brexit deal and intensified China-US tussles over the U.S. sanctions on Chinese diplomats and the arrest of the Hong Kong opposition party members by police.

Moving ahead, the market traders will keep their eyes on the U.S. stimulus headlines and vaccine news. In the meantime, the updates surrounding the Brexit trade talks and the Sino-US tussle could not lose their importance on the day.

Daily Support and Resistance

S1 0.8767

S2 0.8839

S3 0.8874

Pivot Point 0.8911

R1 0.8946

R2 0.8982

R3 0.9054

Technically, the USD/CHF pair is gaining support above the 0.8875 mark, and it’s triggered an upward wave to achieve a 23.6% Fibonacci retracement mark of 0.8935. On the further higher front, an upward movement and violation of 0.8933 mark can drive more buying trend unto next Fibo level of 61.8% at 0.8965. However, the pair has formed a descending triangle pattern which, if violated, can send the pair until the 0.8835 level. Check out a trading plan below. 

Entry Price – Sell 0.88778

Stop Loss – 0.89178

Take Profit – 0.88378

Risk to Reward – 1:1

Profit & Loss Per Standard Lot = -$400/ +$400

Profit & Loss Per Micro Lot = -$40/ +$40

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Categories
Forex Market Analysis

Daily F.X. Analysis, December 09 – Top Trade Setups In Forex – Brace for BOC Policy! 

On the news front, the economic calendar is filled with the Bank of Canada’s policy rate. The BOC is expected to keep the Overnight Rate rate unchanged at 0.25%, which is likely to drive no major change in the Loonie. The BOC Rate Statement will be worth watching to determine further moves in CAD.

On the news front, the economic calendar is filled with the Bank of Canada’s policy rate. The BOC is expected to keep the Overnight Rate rate unchanged at 0.25%, which is likely to drive no major change in the Loonie. The BOC Rate Statement will be worth watching to determine further moves in CAD.

On the news front, the economic calendar is filled with the Bank of Canada’s policy rate. The BOC is expected to keep the Overnight Rate rate unchanged at 0.25%, which is likely to drive no major change in the Loonie. The BOC Rate Statement will be worth watching to determine further moves in CAD.

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD closed at 1.21044 after placing a high of 1.21337 and a low of 1.20952. EUR/USD pair fell on Tuesday for the third consecutive session but remained under consolidation in a tight range. The EUR/USD pair avoided major losses as the Euro remained appealing due to broad weakness in the U.S. dollar. The U.S. Dollar Index fell to its two and a half years lowest level on Tuesday and capped further losses in the EUR/USD pair. The U.S. dollar was weak on Tuesday as the country crossed the threshold of 15 million coronavirus cases, which was the world’s highest total. American hospitals braced to ration care amid staff shortages and warned about the rampant spread of the disease.

Pennsylvania’s governor Tom Wolf said that the coronavirus was running extensively throughout the state and could soon reach the level where hospitals will begin turning away patients. He also said that additional pandemic restrictions might be on controlling the spread of the virus.

Meanwhile, the talks for the second round of coronavirus relief stimulus between Democrats and the Republicans and the agreement of both parties over the bipartisan proposal of a $908 billion stimulus package also weighed on the U.S. dollar. Due to stimulus hopes and the rising number of coronavirus cases, the weak U.S. dollar capped further downside in the EUR/USD pair on Tuesday.

On the data front, at 11:30 GMT, the French Final Private Payrolls for the quarter raised to 1.6% against the expected -1.0% and supported the single currency Euro. At 12:45 GMT, the French Trade Balance showed a deficit of -4.8B against the expected -5.5B and supported Euro. At 15:00 GMT, the quarter raised the Final Employment Change to 1.0% against the forecasted 0.9% and supported Euro. The Revised GDP for the quarter dropped to 12.5% against the expected 12.6% and weighed on Euro. The ZEW Economic Sentiment raised in December to 54.4 against the estimated 37.5 and supported Euro. The German ZEW Economic Sentiment also surged to 55.0 from the projected 45.9 and supported Euro.

From the U.S. side, at 01:00 GMT, the Consumer Credit for October fell to 7.2B against the projected 17.6B and weighed on the U.S. dollar and capped further losses in EUR/USD pair. At 16:00 GMT, the NFIB Business Index fell to 101.4 against the estimated 102.6 in November and weighed on the U.S. dollar that capped further losses in the EUR/USD pair.

At 18:30 GMT, the Revised Nonfarm Productivity for the quarter declined to 4.6% against the expected 4.9% and supported the U.S. dollar and supported the downward momentum in EUR/USD pair. The Revised Unit Labor Costs for the quarter came in as -6.6% against the estimated -8.9% and supported the U.S. dollar. 

At 20:00 GMT, the IBD/TIPP Economic Optimism came in as 49.0 in December compared to the previous 50.0.

Moreover, the Euro remained comparatively appealing due to a more optimistic outlook of the Eurozone’s economy than the U.S. that capped further losses in the EUR/USD pair. The ECB’s policy decision is scheduled for Thursday. If the ECB takes a more hawkish tone, then Euro will rise and vice versa.

Daily Technical Levels

Support   Resistance

1.2086        1.2125

1.2071       1.2149

1.2046       1.2165

Pivot point: 1.2110

EUR/USD– Trading Tip

The EUR/USD is trading at 1.2127 level, finding an immediate resistance at 1.2160 and 1.2196 level along with a support level of 1.2085. Closing of candles underneath the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. However, the focus is likely to stay on the German Trade Balance, which is due during the European session. Choppy session expected until economic figures show major deviations. The MACD is mixed, suggesting bearish; therefore, the idea will be to open a sell trade below the 1.2175 level today to capture quick green pips. 

GBP/USD – Daily Analysis

The GBP/USD pair closed at 1.33564 after placing a high of 1.33935 and a low of 1.32894. The GBP/USD pair fell on Tuesday for the third consecutive day amid the rising Brexit uncertainty that took its toll on British Pound. The mixed comments from various officials from both sides raised the uncertainty in the market related to the Brexit deal and weighed on British Pound. The British Cabinet Minister Michael Gove announced that they had reached an agreement in principle. The E.U.’s chief negotiator Michel Barnier told European ministers that a deal’s chances were very thin. At the same time, German Minister Michael Roth said there was no substantial progress in the trade talks between the E.U. and the U.K. He added that it was uncertain whether Britain and the E.U. could reach a trade deal.

All this uncertainty in the market weighed on the British Pound and dragged the pair GBP/USD on the downside. Another factor involved in the GBP/USD pair’s downward momentum was the latest move by the U.K. government to drop parts of its controversial internal market bill that paved the way for both sides to meet in Brussels on Wednesday to settle an agreement.

The U.K. government reached a post-Brexit arrangement in principle over the Irish border with the European Union after agreeing to ditch the most controversial parts of its internal markets bill. On Tuesday, the U.K. government said that it would abandon all the Brexit clauses relating to Northern Ireland in the internal market bill in exchange for promises by the E.U. to minimize checks and control due to being imposed on food and medicines going into Northern Ireland from Great Britain from January 01.

A deal on Ireland is reached between the E.U. and the U.K. it was not one of the key sticking points that have held the Brexit talks hostage. The Brexit talks will enter a last decisive phase from Wednesday as the PM Boris Johnson has prepared to travel to Brussels on that day to secure a deal over the European Union’s relations with the U.K. If he failed to reach an agreement with the E.U. It would mean that from the start of next year, the tariffs would be applied to some trade between the U.K. and the E.U. for the first time in almost half a century. U.K. sends almost 43% of its exports to the trade bloc E.U. and tariffs on its exports will be harmful to its economy. Failure to reach a deal will also end many cooperation types between the U.K. and the E.U. over crime, security, and travel.

The British Pound remains under pressure on Tuesday ahead of the final round of talks between PM Johnson and E.U. Commission President Ursula von der Leyen on Wednesday. On the data front, at 05:01 GMT, the BRC Retail Sales Monitor for the Year raised to 7.7%against the forecasted 5.0% and supported British Pound, and capped further losses in GBP/USD pair.

From the U.S. side, at 01:00 GMT, the Consumer Credit for October declined to 7.2B against the estimated 17.6B and weighed on the U.S. dollar. At 16:00 GMT, the NFIB Business Index declined to 101.4 against the expected 102.6 in November and weighed on the U.S. dollar.

At 18:30 GMT, the Revised Nonfarm Productivity for the quarter fell to 4.6% against the expected 4.9% and supported the U.S. dollar. The Revised Unit Labor Costs for the quarter came in as -6.6% against the projected -8.9% and supported the U.S. dollar. At 20:00 GMT, the IBD/TIPP Economic Optimism came in as 49.0 in December compared to the previous 50.0.

Daily Technical Levels

Support   Resistance

1.3297       1.3400

1.3242       1.3448

1.3193       1.3504

Pivot point: 1.3345

GBP/USD– Trading Tip

The GBP/USD is trading at 1.3378, holding below an immediate resistance level of 1.3395. On the higher side, the GBP/USD pair can lead to a 1.3437 level, and support stays at 1.3340, which is extended by an upward trendline. Overall it’s an ascending triangle, and it typically breaks on the higher side; thus, we can expect the GBP/USD price to move until 1.3435.

USD/JPY – Daily Analysis

The USD/JPY pair closed at 104.161 after placing a high of 104.204 and a low of 103.953. The pair posted gains on Tuesday as the market’s risk sentiment improved due to a combination of factors.

The news that Great Britain has started using the Pfizer vaccine on patients from Tuesday increased the risk-on sentiment as the hopes for economic recovery increased. Another factor involved in the rising risk-on sentiment was the rising hopes that the U.S. will soon deliver the second round of stimulus measures.

On late Monday, the Chinese Foreign Minister, Wang Yi, said that Beijing was open to restarting its relationship with the U.S. He also declared that both countries were at a critical historical stage after a year of intensifying tensions. Wang said that U.S. policy on China needed to return to objectivity and rationality. He also said that both sides should struggle to restart the dialogue and get back on the right track and rebuild mutual trust in the next Sino-US relations phase. Wang blamed the growing division between the world’s two biggest economies on some Americans with outdated Cold War mentality and ideological preconceptions. All these developments in vaccine usage, rising hopes for stimulus, and the U.S. and China relationship raised the risk sentiment that weighed heavily on the safe-haven Japanese Yen that ultimately supported the USD/JPY pair on Tuesday.

On the data front, at 04:30 GMT, the Average Cash Earnings for the Year came in as -0.8% against the expected -0.7% and weighed on the Japanese Yen. The Household Spending for the Year dropped to 1.9% against the forecasted 2.7% and weighed on the Japanese Yen and added gains in the USD/JPY pair. At 04:50 GMT, the Bank Lending for the Year came in line with the expectations of 6.3%. The Current Account Balance from Japan showed a surplus of 1.98T against the forecasted 1.83T for October and supported the Japanese Yen.

The quarter’s final GDP also raised to 5.3% against the expected 5.0% and supported the Japanese Yen. AT 04:52 GMT, the Final GDP Price Index for the Year raised to 1.2% against the forecasted 1.1% and supported the Japanese Yen. At 10:00 GMT, the Economic Watchers Sentiment dropped to 45.6 against the expected 52.7 and weighed on the Japanese Yen that supported the USD/JPY pair’s upward trend.

From the U.S. side, at 01:00 GMT, the Consumer Credit for October fell to 7.2B against the estimated 17.6B and weighed on the U.S. dollar. At 16:00 GMT, the NFIB Business Index fell to 101.4 against the estimated 102.6 in November and weighed on the U.S. dollar. At 18:30 GMT, the Revised Nonfarm Productivity for the quarter declined to 4.6% against the forecasted 4.9%, supported the U.S. dollar, and added further gains in the USD/JPY pair. The Revised Unit Labor Costs for the quarter came in as -6.6% against the projected -8.9% and supported the U.S. dollar and supported the USD/JPY pair’s upside momentum. At 20:00 GMT, the IBD/TIPP Economic Optimism came in as 49.0 in December than the previous 50.0.

Meanwhile, the USD/JPY pair’s gains remained limited as the U.S. dollar was under pressure as the country crossed 15 million coronavirus cases, which was the world’s highest total. American hospitals started to give warnings about the staff shortage and extensive spread of the disease. Pennsylvania’s governor Tom Wolf said that the coronavirus was spreading extensively throughout the state and could soon reach the level where hospitals will begin turning away patients. He also said that additional pandemic restrictions might be on controlling the spread of the virus.

Daily Technical Levels

Support   Resistance

104.00       104.27

103.84       104.38

103.73       104.54

Pivot point: 104.11

USD/JPY – Trading Tips

The USD/JPY is trading within a symmetric triangle pattern observed in the 4-hour timeframe. The pair recently disrupted the sideways trading series of 104.600 – 104.200, and now it’s trading at 104.300 level, especially after bouncing off over 103.700 level on the lower side, supporting the pair nearby 103.700 mark. On the downside, the USD/JPY may find support at the 103.200 level upon a bearish breakout of the 103.750 support level. While resistance stays at 104.350 and 104.700 today. Good luck

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 09 – Bitcoin Drops to $18,000; Crypto Market Tumbles

The cryptocurrency sector has dropped significantly as bears took over the market. Bitcoin is currently trading for $18,315, representing a decrease of 4.50% compared to our last report. Meanwhile, Ethereum’s price has decreased by 6.17% on the day, while XRP managed to lose 7.73%.

The cryptocurrency sector has dropped significantly as bears took over the market. Bitcoin is currently trading for $18,315, representing a decrease of 4.50% compared to our last report. Meanwhile, Ethereum’s price has decreased by 6.17% on the day, while XRP managed to lose 7.73%.

The cryptocurrency sector has dropped significantly as bears took over the market. Bitcoin is currently trading for $18,315, representing a decrease of 4.50% compared to our last report. Meanwhile, Ethereum’s price has decreased by 6.17% on the day, while XRP managed to lose 7.73%.

 Daily Crypto Sector Heat Map

ALL BEST ICO gained 19,990.71% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by COIL’s 151.88% and Amun Bitcoin 3x Daily Short’s 112.92% gain. On the other hand, Monavale lost 54.51%, making it the most prominent daily loser. It is followed by KIMCHI.finance’s loss of 52.82% and Iteration Syndicate’s loss of 51.70%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved to the upside just under half a percent since we last reported, with its value currently being 63%. This value represents a difference of 0.4% to the upside when compared to yesterday’s value.

Daily Crypto Market Cap Chart

The crypto sector capitalization has decreased significantly in the past 24 hours, with its current value being $536.08 billion. This represents a $32.76 billion decrease when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

After spending the past couple of days in a very narrow range, Bitcoin has finally made a move as bears took over the market. The price went down rapidly and reached as low as $18,000 at one point, but then went slightly above this crucial level.

While Bitcoin is safe from breaking $18,000 to the downside at the moment, Micheal van de Poppe pointed out that a large CME gap is looming. The gap ranges from $18,275 to $16,995.

Lastly, the Hash Ribbons indicator has posted a buy signal, giving long-term investors the green light to invest in Bitcoin. This indicator has proven itself one of the best RoI indicators for Bitcoin when it comes to long-term investing.

BTC/USD 4-hour chart

Bitcoin’s long-term technicals (weekly and monthly) are completely tilted towards the buy-side, while its daily overview is still bullish but showing slight signs of neutrality. On the other hand, its 4-hour overview is completely bearish.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is currently below both its 50-period EMA and its 21-period EMA
  • Price is at its bottom Bollinger band
  • RSI is close to being oversold (31.73)
  • Volume is average
Key levels to the upside          Key levels to the downside

1: $18,600                                 1: $18,190

2: $18,790                                 2: $17,780

3: $19,000                                  3: $17,200

Ethereum

Ethereum wasn’t immune to the downturn either, with its price dropping from the sub-$600 levels all the way down to just above $550. Unlike Bitcoin, however, there are no CME gaps to worry about, and Ethereum seems quite stable above $550.

The only thing to worry about when anticipating Ether’s next price move is Bitcoin’s movement. At the moment, Bitcoin is dictating all consolidations, as well as large moves in either direction.

ETH/USD 4-hour Chart

Ethereum’s monthly overview shows a full tilt towards the buy-side, while its daily and weekly overviews still show some signs of neutrality. On the other hand, its 4-hour overview is bearish but shows slight signs of neutrality.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • The price is currently below both its 50-period EMA and its 21-period EMA
  • Price is at its bottom Bollinger band
  • RSI is in the oversold territory (28.61)
  • Volume is above average
Key levels to the upside          Key levels to the downside

1: $565                                     1: $550

2: $582                                     2: $525 

3: $600                                      3: $510

Ripple

The fourth-largest cryptocurrency by market cap moved to the downside as well, with its $0.545 support level holding up as the last-resort support. XRP is currently stable and trading between $0.545 to the downside and $0.571 to the upside, with its price, seemingly creating a double bottom (today and on Dec 5).

XRP traders might want to (still) refrain from trading XRP simply due to the disbalance of the risk and reward, as well as due to its low volatility.

XRP/USD 4-hour Chart

XRP’s longer weekly and monthly time-frames show complete bullishness, while its 4-hour overview is completely bearish. Its daily overview is still bullish but shows some signs of neutrality or even some bearishness.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • The price is currently below both its 50-period EMA, as well as its 21-period EMA
  • Price is at its bottom Bollinger band
  • RSI is close to being oversold (34.36)
  • Volume is slightly above average
Key levels to the upside          Key levels to the downside

1: $0.571                                   1: $0.545

2: $0.6                                       2: $0.5

3: $0.63                                    3: $0.475

Categories
Forex Course

187. Learning To Trade the News With Directional Bias

Introduction

Introduction

Introduction

In this course, we will further explain, with an example, how you can trade a news release with a directional bias. In the US, the labor market report is one of the most anticipated new releases in a month. The report has a significant impact on any pair with USD. Note that every trader has their approach to trading the news with a directional bias. Here’s our approach.

If you are a forex trader with a directional bias, you need to have in-depth knowledge of the news release you are trading. What do we mean by in-depth knowledge? Firstly, you have to know what that particular news release tells about the economy. For example, the US labor market report has the unemployment rate and nonfarm payroll data.

When both these indicators beat the analysts’ expectations, we can expect that the USD will become stronger than other currencies. The US labor market report is a leading indicator of consumer demand, contributing up to 70% of the GDP. Furthermore, in the current coronavirus pandemic, the labor market report is used to show the rate of economic recovery.

You’d also expect the USD to weaken relative to currencies it is paired with if the news of the labor market report doesn’t meet analysts’ expectations. In this case, it means that unemployment increased, and the economy didn’t add as many jobs as expected.

To make a proper directional bias trade, you need to understand how the labor market report impacts the forex price charts. You have to look into past releases and establish how much the market moved; this will help you get the average pip movement. You also need to be aware of the prevailing macroeconomic conditions and the recent unemployment rate trend.

What to do before the news release?

Go back a few hours on your chart and establish the intraday support and resistance levels. You will use these levels as your ‘take profit,’ and ‘stop-loss’ levels after the news is released.

Let’s check out the news release of the US unemployment rate on October 2, 2020, at 8.30 AM EST.

EUR/USD: Before US Unemployment Rate Release on October 2, 2020, 
just before 8.00 AM EST

Since the unemployment rate was lower than the previous release and also beat analysts’ expectations, our directional bias is to be bearish on the EUR/USD pair. In this case, we will use our previously established Support Level as the ‘take profit.’

EUR/USD: After US Unemployment Rate Release on October 2, 2020, 8.00 AM EST

[wp_quiz id=”94037″]
Categories
Forex Fundamental Analysis

EUR/USD Global Macro Analysis – Part 3

EUR/USD Exogenous Analysis

EUR/USD Exogenous Analysis

EUR/USD Exogenous Analysis

In the exogenous analysis, we’ll analyze the economic fundamentals that impact the Euro-US Dollar exchange rate. For this analysis, we’ll focus on:

EU and the US GDP Growth Difference

The primary drivers of GDP growth in an economy are domestic demand and international trade. When a country’s exports increase, it means that the demand for its currency also increases, which makes it appreciate.

The US and the EU GDP change are in tandem. In Q3 of 2020, the EU GDP expanded by 11.6%, while that of the US expanded at an annualized rate of 33.1%. Although this change seems much, the US GDP level is still about 3.5% lower than the pre-coronavirus pandemic levels.

Based on the correlation analysis of the GDP differential and the EUR/USD pair changes, we assign a deflationary score of -2. It implies that the difference in GDP growth between the EU and the US will lead to a bearish EUR/USD.

Trade Balance Difference

For each country, the trade balance shows if an economy is running on deficits in international trade. The trade balance is simply the difference between exports and imports. Surplus trade balance happens when an economy exports more than it imports. A negative trade balance means an economy is importing more than it exports.

The EU recorded a trade surplus of €24489.40 million in September 2020, while the US had a $63.9 billion trade deficit in the same period. The trade balance has a high correlation with the exchange rate of the EUR/USD pair. Therefore, we assign it an inflationary score of 7, meaning we expect a widening trade balance between the EU and the US to result in bullish EUR/USD.

EU and US Interest Rate Differential

This indicator measures the difference between the interest rates in the EU and that in the US. The economy with a higher interest rate will attract more investments from foreigners seeking higher returns.

In the US, the Federal Reserve has kept the interest rate within a range of 0% – 0.25%. In the EU, the ECB interest rate is 0%. Since the interest rate differential between the two economies is low, we do not expect it to impact the EUR/USD exchange rate. Therefore, we assign a deflationary score of -1. That means we expect it to result in a mild bearish trend for the EUR/USD pair.

Conclusion

The exogenous analysis of the EUR/USD fundamentals gives an inflationary score of 4. This implies that in 2020, the EUR/USD pair has had a bullish trend. In the short term, this bullish trend is expected to persist.

Note that the EUR/USD pair has formed a support level along with the middle Bollinger band. Therefore we can say that our Fundamental analysis is being supported by our Technical Analysis as well. Cheers!

Categories
Forex Fundamental Analysis

EUR/USD Global Macro Analysis – Part 1 & 2

Introduction

Introduction

Introduction

In this analysis, we’ll focus on endogenous economic growth factors in the EUR and the US. We’ll also analyze the exogenous factors that will help us compare the economic performance in both regions.

Endogenous economic factors are inherent within the domestic economy and are primarily driven by domestic demand. On the other hand, exogenous factors are external economic factors that result from a country’s participation in the international markets. Both of these factors influence the fluctuation of the currencies from both countries.

Ranking Scale

We will rank both the endogenous and the exogenous economic factors on a scale of -10 to +10. A negative ranking shows that the economic factor had a deflationary impact on the currency. Conversely, a positive ranking implies that it had an inflationary impact.

USD Endogenous Analysis – Summary

The USD endogenous factors recorded a score of -19.1, implying a deflationary effect on the USD. This essentially means that according to these indicators, the USD has lost its value since the beginning of this year.

You can find the complete USD Endogenous Analysis here.

EUR Endogenous Analysis – Summary

The endogenous analysis of the EU economy shows a modest deflationary score of -8.5. This means that in 2020, the Euro has shed some of its inherent value.

The endogenous economic indicators in the Eurozone are an aggregate of the 27 member countries in the EU.

  • Monthly retail sales

It measures the inflation-adjusted value of retail sales. About 40.1% of all retail sales in the EU are from food, drinks, and tobacco. Electronics and furniture account for 11.5%, while computer equipment accounts for11.4%. 9.2% of the retail sales are attributed to clothing and footwear,  while pharmaceutical and medical products account for 8.9%.

In September 2020, retail sales in the EU dropped by 2%. Given that retail sales account for about 70% of the GDP, our correlation analysis, we assign the EU retail sales an inflationary score of 2.5.

  • Industrial production

This indicator measures the total output by manufacturers, mines, and utility industries in the EU. The value is adjusted for inflation. Note that the industrial sector in the EU is among the top employers.

In September 2020, industrial production dropped by 0.4%, which is an improvement from the drop of 17.1% recorded in April. However, the change in industrial production has been steadily falling from a peak of 12.4% in May.

Based on our correlation analysis, we assign the EU change in monthly industrial production a deflationary score of -2.

  • Unemployment rate

This indicator shows the percentage of the total workforce in the EU who are seeking gainful employment. The data shows the monthly change.

In September 2020, the unemployment rate in the EU was 8.3%. Throughout the year, the EU has experienced a steady increase in the unemployment rate. This is due to the economic effects of the coronavirus pandemic. However, our correlation analysis shows the minimal impact of the unemployment rate on the EU GDP. Therefore, we assign it a deflationary score of -2.

  • Employment change

As an economic indicator, employment change shows the quarterly change in the number of EU citizens who are gainfully employed. This indicator can also be used to show the ability of the economy to create more jobs. It measures both full-time and part-time employment.

In the third quarter of 2020, the EU employment change increased by 0.9%, showing that the EU economy is recovering from the slump of Q2 2020. Our analysis shows a higher correlation of the employment change with the changes in GDP. Hence, we assign it an inflationary score of 4.

  • Business confidence

The business sentiment is also referred to as the Industry Sentiment. It measures the economic sentiment among manufacturers, consumers, and employers in the EU by rating the current and future economic conditions.

The lowest business confidence recorded in 2020 was -32.3 in April 2020. Since then, the indicator has been steadily improving to -9.5 in October. Based on the correlation analysis with the EU GDP, we assign business confidence a deflationary score of -3.

  • Consumer Spending

Consumer spending measures the quarterly amount that households spend on goods and services for personal consumption. As an economic indicator, it can be used to show households’ welfare and the prevailing economic conditions. Since consumer expenditure accounts for about 70% of the EU GDP, any changes in the quarterly expenditure are bound to impact the GDP levels directly.

In Q2 of 2020, consumer spending dropped to € 1511.14 billion from € 1716.59 billion in Q1 of 2020. It is the largest drop ever recorded in history and can be attributed to the pandemic-induced economic recession.

Due to its high correlation to the change in GDP, we assign consumer spending a deflationary score of -5.

  • European Union Government Debt To GDP

This ratio compares what the EU economy produces and what it owes. It shows the efficiency of the economic process and the capability of the government to service its debts without overstretching the available resources. Investors can use this ratio to gauge whether the debt in an economy is becoming unsustainable.

Increasing levels of government debt and a stagnating GDP results in a deflationary effect for the domestic currency.

By the end of 2020, the EU government debt to GDP is expected to reach 95% from 79.3% recorded in 2019. The higher government debt to GDP in 2020 is a direct result of the aggressive measures out in place to curb deep recessions from the coronavirus pandemic.

Based on our correlation analysis, we assign a deflationary score of -6 to the EU government debt to GDP.

  • EU Rate of inflation

In the EU, the inflation rate is best measured using the consumer price index (CPI). It measures the overall monthly change in the prices of consumer goods and services. The rate of inflation can be used as gauge the purchasing trends among households.

In theory, a rise in inflation implies that consumers’ demand for goods and services is increasing. Conversely, a drop in inflation implies that demand is shrinking hence corresponding to lower GDP levels.

In September 2020, the rate of inflation in the EU decreased by 0.2%. It is, however, an improvement from the -0.4% recorded in July and August. Based on its correlation with GDP, we assign the EU rate of inflation a score of 3.

In the next article, we have posted the Exogenous Analysis of the EUR/USD pair to have a clear idea of whether this pair is bullish or bearish market conditions.

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 08 – BTC, ETH and XRP Preparing for a Big Move; Crypto Sector in Consolidation Mode

The cryptocurrency sector has spent the past 24 mostly consolidating as it failed to reach past its resistance levels on Monday. Bitcoin is currently trading for $19,180, representing a decrease of 0.65% compared to our last report. Meanwhile, Ethereum’s price has decreased by 1.14% on the day, while XRP managed to lose 1.65%.

The cryptocurrency sector has spent the past 24 mostly consolidating as it failed to reach past its resistance levels on Monday. Bitcoin is currently trading for $19,180, representing a decrease of 0.65% compared to our last report. Meanwhile, Ethereum’s price has decreased by 1.14% on the day, while XRP managed to lose 1.65%.

The cryptocurrency sector has spent the past 24, mostly consolidating, as it failed to reach past its resistance levels on Monday. Bitcoin is currently trading for $19,180, representing a decrease of 0.65% compared to our last report. Meanwhile, Ethereum’s price has decreased by 1.14% on the day, while XRP managed to lose 1.65%.

 Daily Crypto Sector Heat Map

Prophet gained 358.97% in the past 24 hours, making it the most prominent daily crypto gainer. It is closely followed by Seigniorage Shares’ 344.54% and xBTC’s 340.23% gain. On the other hand, CryptoBet lost 95.85%, making it the most prominent daily loser. It is followed by Semux’s loss of 90.60% and Bitball Nyan v2’s loss of 51.05%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved to the upside over half a percent since we last reported, with its value currently being 62.6%. This value represents a difference of 0.6% to the upside when compared to yesterday’s value.

Daily Crypto Market Cap Chart

The crypto sector capitalization has increased in the past 24 hours, with its current value being $568.82 51.68 billion. This represents a $17.24 billion increase when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has continued with its slow movement as another low volatility day passed. The largest cryptocurrency by market cap oscillated between $18,905 and $19,431. The one time it dropped under the $19,000 mark, it found support in the 50-period moving average, which has proven to be a strong (both support and resistance) level.

Due to the low volatility, traders can’t really do much at the moment. However, they can prepare for the next move Bitcoin makes.

Lastly, the Hash Ribbons (one of the best accumulation indicators) indicator has posted a buy signal, giving long-term investors the green light.

BTC/USD 4-hour chart

Bitcoin’s technicals on both short and long time-frames are bullish, with its weekly time-frame showing full tilt to the buy-side and its 4-hour, daily, and monthly time-frames tilting more towards neutrality.

BTC/USD 1-day Technicals

Technical factors (4-hour Chart):
  • Price is slightly above its 50-period EMA while being at its 21-period EMA
  • Price is at its middle Bollinger band
  • RSI is neutral (51.61)
  • Volume is slightly below average
Key levels to the upside          Key levels to the downside

1: $19,500                                 1: $19,000

2: $19,666                                 2: $18,790

3: $20,000                                  3: $18,600

Ethereum

Ethereum has, just like Bitcoin, had quite a slow day, with its price moving slightly down. At the moment, the second-largest cryptocurrency by market cap doesn’t seem like it will tackle $600, as its volume is too low to pressure this major resistance level. However, if and when a bull run past $600 happens, traders will have a great opportunity to catch a safe trade with a stop-loss slightly below $600 and a possible target of $620 or $630.

ETH/USD 4-hour Chart

Ethereum’s monthly overview shows a full tilt towards the buy-side, while its daily and weekly overviews show some signs of neutrality. On the other hand, its 4-hour overview is completely bearish.

ETH/USD 1-day Technicals

Technical Factors (4-hour Chart):
  • The price is slightly above its 50-period EMA while being slightly below its 21-period EMA
  • Price is at its middle Bollinger band
  • RSI is neutral (48.32)
  • Volume is below average
Key levels to the upside          Key levels to the downside

1: $620                                     1: $600

2: $630                                     2: $530 

3: $735                                      3: $510

Ripple

The fourth-largest cryptocurrency by market cap has close to no volatility, as well as very low volume on most exchanges. With the price movement being non-existent, there is not much to say about the current XRP trading. However, whenever the trading range is getting this narrow, a breakout is on the horizon.

XRP has created a flag formation on the 1-day chart, signaling that an increase in volume could bring a breakout to the upside and a possible spike of up to 60%, which would take the coin’s price above $1,00.


XRP/USD 4-hour Chart

XRP’s longer time-frames (weekly and monthly) show complete bullishness, while its 4-hour and daily overviews show some signs of neutrality or even bearishness.

XRP/USD 1-day Technicals

Technical factors (4-hour Chart):
  • The price is at its 50-period EMA, as well as at its 21-period EMA
  • Price is at its middle Bollinger band
  • RSI is neutral (50.46)
  • Volume is well below average
Key levels to the upside          Key levels to the downside

1: $0.666                                   1: $0.6

2: $0.78                                     2: $0.596

3: $0.79                                   3: $0.535

Categories
Forex Signals

Daily F.X. Analysis, December 08 – Top Trade Setups In Forex – Eyes on European Events! 

On the news front, the market is likely to remain muted in the absence of high impact events. Italian banks will be closed in observance of Immaculate Conception Day while the Frend Trade Balance, European Revised GDP q/q, and German ZEW Economic Sentiment will remain in the highlights today.

On the news front, the market is likely to remain muted in the absence of high impact events. Italian banks will be closed in observance of Immaculate Conception Day while the Frend Trade Balance, European Revised GDP q/q, and German ZEW Economic Sentiment will remain in the highlights today.

On the news front, the market is likely to remain muted in the absence of high impact events. Italian banks will be closed in observance of Immaculate Conception Day while the Frend Trade Balance, European Revised GDP q/q, and German ZEW Economic Sentiment will remain in the highlights today.

Economic Events to Watch Today  

 


 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.21088 after placing a high of 1.21660 and a low of 1.20784. EUR/USD pair extended its losses on Monday for the second consecutive day over the diminishing risk sentiment and the hopes for further easing package from ECB. The EUR/USD pair remained under pressure on Monday ahead of the upcoming ECB meeting on Thursday. The European Central Bank was set to deliver a further easing package of almost 500 billion euros to the Pandemic Emergency Purchase Programme that will extend the purchases for many more months and weighed on the single currency Euro. 

Furthermore, the European Central Bank is also expected to increase its targeted longer-term refinancing operations and also to make them more accommodative. The ECB’s governing council members said that these decisions have been taken to extend the duration of accommodative financial conditions to support the recovery in 2021 further and beyond, rather than making financial conditions right now more accommodative.

The pressure on ECB to over-deliver on the market expectations declined due to the recent improvement in global financial market conditions since Joe Biden won the U.S. presidential election and positive vaccine news in early November. The more important event of the day for EUR was the Summit of 27 E.U. countries that will begin on Thursday and Friday.

The top agenda will be Brexit in the Summit as the question remained that UK PM Boris Johnson and E.U. Commission President Ursula von der Leyen will be successful in reaching a deal before the Summit. The paused Brexit talks by top E.U. negotiator Michel Barnier on Friday also added pressure on EUR/USD pair on Monday. Another factor pressuring the European Union was the Polish and Hungarian veto against the E.U. Recovery Fund and the 2021-2027 Budget. Both nations announced their intentions shortly before ambassadors of the E.U. member states met on Monday to veto various parts of the financial settlement. If a deal cannot be agreed with these two nations regarding the rule of law attachments being added to funding, then the E.U. has threatened to go with EU-minus Poland and Hungary fiscal package. 

On the data front, at 12:00 GMT, the German Industrial Production also raised to 3.2% against the estimated 1.8% and supported Euro and capped further losses in EUR/USD pair. At 14:30 GMT, the Sentix Investor Confidence came in as -2.7 against the estimated -11.9 and supported Euro and limited additional losses in EUR/USD pair.

Daily Technical Levels

Support   Resistance

1.2113      1.2129

1.2107      1.2139

1.2097     1.2146

Pivot point: 1.2123

EUR/USD– Trading Tip

The market’s technical side continues to be the same as the pair continues to trade sideways due to a lack of high impact economic events. On the higher side, the EUR/USD may find an immediate resistance at 1.2160 and 1.2196 level. Simultaneously, the closing of candles below the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040 level. The MACD is strongly bearish; therefore, the idea will be to open a sell trade below the 1.2175 level today to capture quick green pips. 

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.33785 after placing a high of 1.34375 and a low of 1.32239. The GBP/USD pair dropped to its lowest since November 19 on Monday in the early trading session due to the rising U.S. dollar, but it started to recover in the late trading session after the Brexit hopes raised. The U.S. dollar raised on Monday after the coronavirus cases continued to rise, and lockdowns expanded and weighed on the U.S. economic recovery. On Sunday, the Governor of California, Gavin Newsom, ordered large parts of the most populous U.S. state to close down as coronavirus cases spiked to record levels. 

On Sunday, California reported more than 30,000 new cases and marked a new record for hospitalized coronavirus patients. Other states including, New Jersey, North Carolina, Virginia, and West Virginia, also announced a record one-day rise in new infections. These increased cases raised concerns over the economic recovery hopes and raised the demand for safe-haven greenback that ultimately weighed on GBP/USD pair. However, the currency pair GBP/USD recovered some of its losses on Monday after the UK PM Boris Johnson revealed that he was set to travel to Brussels in a last-ditch effort to break a post-Brexit deal. The E.U. Commission President Ursula von der Leyen and the UK PM Boris Johnson will remove the differences on a post-Brexit deal in the coming days. This came in after a 90 minutes phone call between the two leaders failed to produce a breakthrough. 

In a joint statement, both said that the conditions for a deal were not there, and significant differences remained on fishing, level playing field, and any deal governance. They have asked their chief negotiators to prepare an overview of the remaining sticking points discussed in a physical meeting in Brussels in the coming days. A senior U.K. governmental source warned that a deal might not be possible after the phone call between Ursula and Johnson. It was also reported that the talks were in the same position as they were on Friday and made no progress. All these downbeat statements related to Brexit weighed heavily on GBP/USD pair.

On the data front, at 13:30 GMT, the Halifax Housing Price Index for November raised to 1.2% against the forecasted 0.6% and supported British Pound, and capped further losses in GBP/USD pair.

Daily Technical Levels

Support  Resistance

1.3377      1.3438

1.3338      1.3462

1.3315      1.350 0

Pivot point: 1.3400

GBP/USD– Trading Tip

The GBP/USD pair bounced off over 1.3263 level, trading at 1.3340 level now. On the 4 hour timeframe, the GBP/USD is consolidating in between a wide trading range of 1.3406 – 1.3263 level. The Cable may find the next support at 1.3204 level, and below this, the next support can also be found around 1.3100 level today. On the higher side, the resistance hold around the 1.3406 mark. The MACD and RSI are suggesting selling bais in the pair, and we should look for selling trades below 1.3400 and buying over 1.3265 level today. 

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.046 after placing a high of 104.310 and a low of 103.920. On Monday, the USD/JPY pair consolidated within a tight range around 104.00 level after placing a high of 104.310 on the U.S. dollar’s strength in the early European morning. However, the pair USD/JPY reversed its direction and started posting losses in late trading hours. The U.S. dollar was strong in early European trade on Monday as the coronavirus cases continued to rise and lockdowns expanded and weighed on the U.S. economic recovery. The U.S. Dollar Index that tracks the greenback against the six other currencies basket was up by 0.3% at 90.993.

The record hike in the coronavirus spread caused the Governor of California, Gavin Newsom, to order large parts of the most populous U.S. state to close down again. California state reported 30,000 new cases in a single day and broke its daily high record. Other states like New Jersey, North Carolina, Virginia, and West Virginia also reported a record-high number of coronavirus cases.

The rising number of coronavirus infections and the U.S. hospitalization rate added pressure on the U.S. economic recovery and raised the appeal for safe-haven that ultimately added strength to the greenback. The strong U.S. dollar helped the USD/JPY pair rise to the 104.300 level in the early trading session.

However, the USD/JPY pair’s gains were short-lived as the pair started to decline in the late trading session and posted losses for the day. The decline in the USD/JPY pair was due to appreciation in the Japanese Yen after the lower U.S. yields on the day.

The 10-year Treasury yield fell by 4bps to 0.929%, and the 10-year real rates also dropped to -0.97% by 3bps. The declining U.S. yields thus decreased the attractiveness of USD investments relative to Japanese government bonds and underpinned selling pressure in the USD/JPY pair.

On the data front, at 09:59 GMT, the Leading Indicators from Japan came in line with the expectations of 93.8%. Meanwhile, the latest optimism regarding the vaccine and fiscal stimulus also kept the USD/JPY pair supported and limited the day’s losses.

Another reason behind the increasing demand for safe-haven Japanese Yen was the recent financial sanctions imposed by the U.S. and a travel ban on 14 Chinese officials over their suspected role in disqualifying elected opposition legislators in Hong Kong.

Hong Kong’s Beijing-backed government expelled four opposition members last month. In this response, the U.S. levied sanctions on Chinese officials and also blocked any assets the official might have within the U.S. These sanctions added in the safe-haven demand in the market and added strength in the Japanese Yen against the U.S. dollar, and weighed on the USD/JPY pair on Monday.

Daily Technical Levels

Support   Resistance

104.10      104.27

104.00      104.34

103.94      104.44

Pivot point: 104.17

USD/JPY – Trading Tips

The USD/JPY is trading within a symmetric triangle pattern seen in the 4-hour timeframe. The pair lately violated the sideways trading range of 104.600 – 104.200, and now it’s trading at 104.300 level, especially after bouncing off over 103.700 level on the lower side, supporting the pair around 103.700 level. On the downside, the USD/JPY may find support at the 103.200 level upon a bearish breakout of the 103.750 support level. While resistance stays at 104.350 and 104.700 today. Good luck

Categories
Forex Economic Indicators

Want to Make a Quick Profit? Watch for These Reports…

As a forex trader, you’ll need to understand what factors drive market prices so that you can make the right financial decisions. In today’s world, forex has blown up into a global marketplace with buyers and sellers from all corners of the world investing in trades that total up to trillions of dollars each and […]

As a forex trader, you’ll need to understand what factors drive market prices so that you can make the right financial decisions. In today’s world, forex has blown up into a global marketplace with buyers and sellers from all corners of the world investing in trades that total up to trillions of dollars each and […]

As a forex trader, you’ll need to understand what factors drive market prices so that you can make the right financial decisions. In today’s world, forex has blown up into a global marketplace with buyers and sellers from all corners of the world investing in trades that total up to trillions of dollars each and every day. With such a wide range of market participants all over the world, the effect of microeconomic and news events has increased and now plays a large part in the prices you see for different currencies on the forex marketplace. Some of these events don’t have much of an impact on the market, while others play a major role in market prices. Below, we will explain the role of microeconomics in the forex market and review the different economic factors to look out for. 

Here’s a quick overview of the subjects we will cover in this article:

  • Interest Rates
  • Inflation Rates
  • GDP Growth Rates
  • Unemployment Rates
  • Retail Sales
  • Housing Data
  • Political News

Interest Rates

Interest rates have to do with the amount someone must pay to borrow someone else’s money and these prices have an immediate effect on financial markets. In this case, interest rates are related to central banks that need to borrow funds from the Federal Reserve. The federal funds rate, which directly affects the stock market, is adjusted by the Federal Reserve to control inflation. Higher interest rates generally have a negative effect on stock prices, while lower rates have the opposite effect. This is because it costs more money for central banks to borrow money from the Federal Reserve when interest rates are high, causing a ripple effect that goes through the entire economy. 

Inflation Rates

The inflation rate for the economy is measured by the Consumer Price Index (CPI). While you don’t have to have a deep understanding of the factors that drive inflation rates, it’s a good idea to have some knowledge about how this works. The Index reports the average prices consumers are paying for certain goods in order to point out whether those same goods are costing customers more or less. Central banks then look at this data to help adjust their policies. In the event that inflation is present, interest rates will rise to counter the inflated prices.

GDP Growth Rates

GDP stands for Gross Domestic Product and it is used to estimate an economy’s overall health. A higher GDP growth rate indicates a stronger economy and therefore makes the currency stronger. In order to measure this rate, the most recent quarter of the economy’s performance is compared against the previous quarter’s performance. You can perform a quick search engine search for the current GDP rate in any given country if you’re looking for that information. 

Unemployment Rates

Central banks consider unemployment rates to be a good measurement of the health of an economy, therefore, higher unemployment rates cause banks to increase interest rates in order to balance inflation rates with growth. Labor statistics that are released from the NFP also play a primary role in the central bank’s view of the economy based on employment. 

Retail Sales

Retail sales are considered to be a good indicator of the GDP rate for an economy because people tend to spend more money when they feel that their jobs are safe. Central banks eye spending reports that are released monthly in order to have an idea of how the economy is performing, however, there are other factors that must be considered, like wage increases, which can also lead to an increase in spending. 

Housing Data

Central banks pay attention to housing data because the sector makes up around 15% to 18% of a country’s economy. Although the exact percentage can vary slightly, the figures are usually quite impactful. When the price of houses in a certain country go up, it is a sign that the economy is strong and the building of new homes can also help raise unemployment rates. If people aren’t buying houses and prices are dropping, it’s a sign that the economy isn’t performing well.  

Political News

Different types of political news play an important role in market prices, from government spending, regulation shifts, elections, and referendums. Generally, central banks pay the most attention to fiscal and monetary policies in order to make government influenced decisions that could affect interest rates.

Categories
Forex Signals

USD/CAD Completes 23.6% Fibonacci – What’s Next? 

The USD/CAD closed at 1.27841 after placing a high of 1.28735 and a low of 1.27720. The USD/CAD pair extended its losses towards its lowest level since May 2018 amid the strength of the Canadian dollar against the US dollar and the rising crude oil prices. On Friday, the Canadian dollar outlook improved on the expectations that the currency will benefit from the domestic economic stimulus and the rollout of the coronavirus vaccine. On Monday, the Canadian Finance Minister Chrystia Freeland forecasted the budget deficit to hit a historic C$382 billion on coronavirus emergency aid. She also added that C$100 billion would be rolled out in stimulus once the virus came under control.

The USD/CAD closed at 1.27841 after placing a high of 1.28735 and a low of 1.27720. The USD/CAD pair extended its losses towards its lowest level since May 2018 amid the strength of the Canadian dollar against the US dollar and the rising crude oil prices. On Friday, the Canadian dollar outlook improved on the expectations that the currency will benefit from the domestic economic stimulus and the rollout of the coronavirus vaccine. On Monday, the Canadian Finance Minister Chrystia Freeland forecasted the budget deficit to hit a historic C$382 billion on coronavirus emergency aid. She also added that C$100 billion would be rolled out in stimulus once the virus came under control.

The USD/CAD closed at 1.27841 after placing a high of 1.28735 and a low of 1.27720. The USD/CAD pair extended its losses towards its lowest level since May 2018 amid the strength of the Canadian dollar against the US dollar and the rising crude oil prices. On Friday, the Canadian dollar outlook improved on the expectations that the currency will benefit from the domestic economic stimulus and the rollout of the coronavirus vaccine. On Monday, the Canadian Finance Minister Chrystia Freeland forecasted the budget deficit to hit a historic C$382 billion on coronavirus emergency aid. She also added that C$100 billion would be rolled out in stimulus once the virus came under control.

These statements from the Canadian Finance Minister added strength to the Canadian dollar as the hopes for Canadian economic recovery increased. The strong Canadian dollar added heavy pressure on the USD/CAD pair on Friday and dragged the pair on the downside.

Meanwhile, the Canadian dollar was also strong because of the positive macroeconomic data on Friday. At 18:30 GMT, the Employment Change from Canada raised to 62.1K against the forecasted 22.0K and supported the Canadian dollar and added losses in USD/CAD pair. 

The Unemployment Rate from Canada dropped to 8.5% against the forecasted 9.0% and supported the Canadian dollar and supported the USD/CAD pair’s downward trend. The Trade Balance from Canada came in as -3.8B against the forecasted -3.2B and weighed on the Canadian dollar.

From the US side, at 18:30 GMT, the Average Hourly Earnings raised to 0.3% against the estimated 0.1% and supported the US dollar, and capped further losses in the USD/CAD pair. The Non-Farm Employment Change declined to 245K against the estimated 480K and weighed on the US dollar and supported the USD/CAD pair’s losses. The Unemployment Rate dropped to 6.7% against the estimated 6.8% and supported the US dollar. The Trade Balance from the US came in as -63.1B against the estimated -64.7B and supported the US dollar. 

At 20:00 GMT, the Factory Orders for November raised to 1.0% against the estimated 0.8%, supported the US Dollar, and capped further USD/CAD pair losses. Most of the US dollar economic data came in favor of the US dollar, but the NFP employment change or the job creation by the US economy fell short of expectations and weighed on the US dollar that added losses in the USD/CAD pair.

Another important factor involved in the USD/CAD pair’s losses on Friday was the rising crude oil prices. The price of crude oil, one of Canada’s major export, rose on Friday above $46 per barrel after the coronavirus vaccine’s speedy approval that would boost the global economic recovery and ultimately increase the energy demand. The higher crude oil prices supported the commodity-linked currency Loonie and added pressure on the currency pair USD/CAD on Friday.


Daily Technical Levels

Support Resistance

1.2825 1.2918

1.2791 1.2977

1.2733 1.3011

Pivot point: 1.2884

The USD/CAD slipped to trade at a 1.2811 level, holding above an immediate support level of 1.2775. Above this level, the commodity currency pair has formed a Doji candle, suggesting odds of selling bias until the 1.2770 level. Taking a look at the 4-hour timeframe, the USD/CAD pair has closed a bullish engulfing pattern at the 1.2811 level, and it may head upward until the 38.2% Fibonacci retracement level of 1.2837 level. Bullish trend continuation can lead to its prices further higher until the next resistance level of the 1.2904 level marks a 61.8% Fibonacci level. Good luck!