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Forex Fundamental Analysis

GBP/CAD Global Macro Analysis – Part 3

GBP/CAD Exogenous Analysis

GBP/CAD Exogenous Analysis

GBP/CAD Exogenous Analysis

The UK and Canada Current Account Differential

The current account differential between the UK and Canada can determine if the GBP/CAD pair is bullish or bearish. If the differential is positive, it means that the UK has a higher current account balance than Canada. This would imply that the GBP is in higher demand in the forex market than the CAD; hence, it is a bullish trend for the pair. Conversely, if the current account differential is negative, it means that the UK has a lesser current balance than Canada. It would imply that the GBP has a lower demand than the CAD in the forex market; hence, a bearish trend for the pair.

In Q3 of 2020, the UK had a current account deficit of $20.97 billion while Canada had a $5.83 billion deficit. Thus, the current account differential is -$15.14 billion. We assign a score of -2.

The interest rate differential between the UK and Canada

The interest rate differential is the difference between the Bank of England’s interest rate and that by the Bank of Canada. In the forex market, carry traders use the interest rate differential to decide whether to buy or short a currency pair. When the interest rate differential is positive, traders will earn the differential by going long. If the differential is negative, traders can earn the differential by shorting the currency pair.

Therefore, if the GBP/CAD pair’s interest rate differential is positive, the pair is bound to adopt a bullish trend. Conversely, if negative, the pair is bound to be bearish.

In 2020, the interest rate in the UK dropped from 0.75% to 0.1%. In Canada, the BOC cut interest rates from 1.75% to 0.25%. Therefore, the interest rate differential is -0.15%. The interest rate differential between the UK and Canada has a score of -1.

The differential in GDP growth rate between the UK and Canada

This differential measures the changes in the growth rate between the two economies. It is a preferred method of comparison since economies are of different sizes. Naturally, the economy with a higher GDP growth rate will have its currency appreciate more. Therefore, if the GDP growth rate differential is positive, it means that the GBP/CAD pair is bullish. If negative, then the pair is bearish.

During the first three quarters of 2020, the UK economy has contracted by 5.8%, while the Canadian economy has contracted by 3.3%. This makes the GDP growth rate differential -2.5%. Hence, a score of -1.

Conclusion

Indicator Score Total State Comment
The UK and Canada Current Account Differential -2 10 A differential of – $15.14 The UK has a higher deficit than Canada
The interest rate differential between the UK and Canada -1 10 -0.15% Expected to remain at -0.15% until either economy have recovered
The differential in GDP growth rate between the UK and Canada -1 10 3.30% The Canadian economy contracted at a slower pace than the UK economy
TOTAL SCORE -4

The cumulative score for the exogenous factors is -4. This means that we can expect the GBP/CAD pair to trade in a downtrend in the short term.

However, technical analysis shows the pair adopting a bullish trend with the weekly chart trading above the 200-period MA. More so, the pair is seen bouncing off the lower Bollinger band. Keep an eye on the near-term changes in the exogenous factors.

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Forex Fundamental Analysis

GBP/CAD Global Macro Analysis – Part 1 & 2

Introduction

Introduction

Introduction

This analysis will evaluate the endogenous factors that affect the domestic economy in both the UK and Canada. We’ll also cover exogenous factors that influence the price of the GBP/CAD pair.

Ranking Scale

After analysis, we will rank both the exogenous and the endogenous factors on a scale from -10 to +10.

Endogenous factors will be ranked after a correlation analysis with the GDP growth rate. If negative, it means that either the GBP or the CAD have depreciated. If positive, it means that the domestic currency has appreciated.

The exogenous factors are ranked based on their correlation with the GBP/CAD pair’s exchange rate. When negative, it means that the price will drop. The price will be expected to increase if the exogenous analysis is positive.

Summary – GBP Endogenous Analysis

A -15 score on Pound’s Endogenous Analysis indicates that this currency has depreciated since the beginning of 2020.

Summary – CAD Endogenous Analysis

  • Canada Employment Rate

The Canadian employment rate measures the percentage of the labor force that is employed during a particular period. The developments in the labor market are a leading indicator of overall economic growth. When the economy is expanding, there are more job openings, hence a higher employment rate. Conversely, when the economy is going through a recession, businesses close down, leading to a dropping employment rate.

In November 2020, the employment rate in Canada rose to 59.5% from 59.4% in October. Although the employment rate has been steadily increasing from the lows of 52.1% in April, it is still lower than in January. Canada’s employment rate has a score of -6.

  • Canada Core Consumer Prices

This index measures the overall change in Canada’s inflation rate based on a survey of price changes for a basket of consumer goods. The rate of inflation gauges the increase in economic activity. Typically, when demand is depressed in an economy, prices drop, resulting in lower inflation. Conversely, when demand increases, prices tend to increase, resulting in a higher rate of inflation.

In November 2020, Canada’s core consumer prices rose to 136.6 points from 136.3 in October. Between January and November, the index has increased by 2 points. It has a score of 3.

  • Canada Manufacturing Production

This index measures the YoY change in the value of the output from the Canadian manufacturing sector. Canadian manufacturing is a significant contributor to the labor market and economic growth. In the age of the coronavirus disruption, changes in manufacturing production show how faster the economy is bouncing back.

In September 2020, the YoY manufacturing production in Canada dropped by 4.24%. This is an improvement compared to the 5.34% drop recorded in August. Canadian manufacturing production has a score of -2.

  • Canada Business Confidence

The Ivey Purchasing Managers Index (PMI) measures monthly business confidence in Canada. In the survey, private and public companies rate whether the current business activity is higher or lower than the previous month. The index survey aspects including inventories, purchases, deliveries from suppliers, output prices, and employment.

When the index is over 50, it means that purchases have increased from the preceding month. Reading of below 50 shows a decrease in purchases.

In November 2020, Canadian business confidence dropped to 52.7 from 54.5 in October. This was the lowest reading since May, when the economy began rebounding from the shocks of  COVID-19. Consequently, Canada’s business confidence has a score of 1.

  • Canada Consumer Spending

This measures the final market value of all household expenditures on goods and services. It also includes expenditure by non-profit organizations that serve households in Canada but excludes purchases of homes. Consumer spending plays a critical role in economic growth.

In Q3 of 2020, consumer spending in Canada rose to CAD 1.13 trillion from CAD 1 trillion in Q2. However, it is still lower than consumer spending recorded in Q1. Thus, Canada’s consumer spending has a score of -4.

  • Canada New Housing Price Index

The Canadian NHPI measures the changes in the selling price of newly built residential houses. The price measured is that paid by the home buyers to the contractors. Note that the price comparison is strictly between houses of the same specification. The NHPI shows the construction sector’s growth trends; hence, it corresponds to changes in the labor market and GDP growth.

In November 2020, the Canadian NHPI rose to 107.9 from 107.3 in October. Thus, we assign a score of 3.

  • Canada Government Budget Value

This indicator tracks the changes in the difference between the Canadian government revenues and expenditures. It shows whether the government is running a surplus or a deficit. It also breaks down the changes in the receipts by the government. This helps to show how the overall economy is fairing.

In October 2020, the Canadian government budget had a deficit of CAD 18.51 billion compared to CAD 27.59 billion in September. Throughout the year, the budget deficits have been due to the economic shocks brought on by the coronavirus pandemic. The Canadian government had to ramp up expenditure through its Economic Response Plan, while revenues dropped in the same period. We assign it a score of -5.

Conclusion

Indicator Score Total State Comment
Canada Employment Rate -6 10 59.5% in November 2020 The employment rate is steadily increasing. It is, however, still below January levels
Canada Core Consumer Prices 3 10 136.6 points in November 2020 Since January, it has increased by 2 points. That shows demand in the economy has kept prices higher
Canada Manufacturing Production -2 10 YoY dropped by 4.24% in September 2020 A slight increase from -5.34% recorded in August. This shows that the manufacturing production is returning to the pre-pandemic levels
Canada Business Confidence 1 10 52.7 in November November level was the lowest since the economy began to recover in May. It’s expected to improve as mass vaccinations against COVID-19 rolls out
Canada Consumer Spending -4 10 Was CAD 1.13 trillion Q3 2020 Recovered from CAD 1 trillion in Q2 but still lower than Q1. This shows that demand is increasing in the economy
Canada New Housing Price Index 3 10 November NHPI was 107.9 It has been increasing, which shows that output in the construction industry is improving
Canada Government Budget Value -5 10 a budget deficit of CAD 18.51 billion in October The deficit widened in 2020, driven by unprecedented fiscal policies to curb recessionary pressure from the pandemic
TOTAL SCORE -10

A score of -10 indicates that the CAD has depreciated since the beginning of the year 2020.

In the next article, you can find the exogenous analysis of GBP/CAD where we have forecasted this pair’s future price movements. Cheers.

GBP/CAD Exogenous Analysis

  • The UK and Canada Current Account Differential

The current account differential between the UK and Canada can determine if the GBP/CAD pair is bullish or bearish. If the differential is positive, it means that the UK has a higher current account balance than Canada. This would imply that the GBP is in higher demand in the forex market than the CAD; hence, it is a bullish trend for the pair. Conversely, if the current account differential is negative, it means that the UK has a lesser current balance than Canada. It would imply that the GBP has a lower demand than the CAD in the forex market; hence, a bearish trend for the pair.

In Q3 of 2020, the UK had a current account deficit of $20.97 billion while Canada had a $5.83 billion deficit. Thus, the current account differential is -$15.14 billion. We assign a score of -2.

The interest rate differential is the difference between the Bank of England’s interest rate and that by the Bank of Canada. In the forex market, carry traders use the interest rate differential to decide whether to buy or short a currency pair. When the interest rate differential is positive, traders will earn the differential by going long. If the differential is negative, traders can earn the differential by shorting the currency pair.

Therefore, if the GBP/CAD pair’s interest rate differential is positive, the pair is bound to adopt a bullish trend. Conversely, if negative, the pair is bound to be bearish.

In 2020, the interest rate in the UK dropped from 0.75% to 0.1%. In Canada, the BOC cut the interest rate from 1.75% to 0.25%. Therefore, the interest rate differential is -0.15%. The interest rate differential between the UK and Canada has a score of -1.

  • The differential in GDP growth rate between the UK and Canada

This differential measures the changes in the growth rate between the two economies. It is a preferred method of comparison since economies are of different sizes. Naturally, the economy with a higher GDP growth rate will have its currency appreciate more. Therefore, if the GDP growth rate differential is positive, it means that the GBP/CAD pair is bullish. If negative, then the pair is bearish.

During the first three quarters of 2020, the UK economy has contracted by 5.8%, while the Canadian economy has contracted by 3.3%. This makes the GDP growth rate differential -2.5%. Hence, a score of -1.

Conclusion

Indicator Score Total State Comment
The UK and Canada Current Account Differential -2 10 A differential of – $15.14 The UK has a higher deficit than Canada
The interest rate differential between the UK and Canada -1 10 -0.15% Expected to remain at -0.15% until either economy have recovered
The differential in GDP growth rate between the UK and Canada -1 10 3.30% The Canadian economy contracted at a slower pace than the UK economy
TOTAL SCORE -4

 

The cumulative score for the exogenous factors is -4. This means that we can expect the GBP/CAD pair to trade in a downtrend in the short term. However, technical analysis shows the pair adopting a bullish trend with the weekly chart trading above the 200-period MA. More so, the pair is seen bouncing off the lower Bollinger band.

Keep an eye on the near-term changes in the exogenous factors.

 

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Uncategorised

Daily F.X. Analysis, January 29 – Europe’s GDP’s / Consumer Sentiment + Join Forex Academy’s Telegram Signal Channel! 

Dear traders,

We are moving signals from website to telegram channel. If you enjoyed our signals and want to continue to receive ing them, please subscribe to our telegram channel:

The German Prelim GDP q/q, French Flash GDP q/q, and Spanish Flash GDP q/q report will remain in highlights today on the news front. Later Revised UoM Consumer Sentiment and Pending Home Sales m/m can drive market movements today.

Economic Events to Watch Today  

  


 

EUR/USD – Daily Analysis

The EUR/USD closed at 1.21220 after placing a high of 1.21422 and a low of 1.20806. The EUR/USD pair remained higher on Thursday amid the broad-based U.S. dollar weakness and the positive macroeconomic data from the European side. Behind the gradual upward momentum in EUR/USD pair was the U.S. dollar’s weakness driven by the improvement in the market’s appetite for risk. The U.S. Dollar Index that measures the greenback’s value against major currencies dropped by 0.3% and weighed on the U.S. dollar, supporting the upward momentum in EUR/USD pair on Thursday.

On the data front, from the U.S. side, at 18:30 GMT, the Advance GDP for the quarter declined to 4.0% against the forecasted 4.2% and weighed on the U.S. dollar that capped further gains in EUR/USD pair. The Unemployment Claims from last week were declined to 847K against the forecasted 880K and supported the U.S. dollar that also limited the upward momentum in EUR/USD pair. The Goods Trade Balance from December declined to -82.58B from the forecasted -83.4B and supported U.S. dollar. For December, the Prelim Wholesale Inventories also fell to 0.1% against the forecasted 0.5% and supported the U.S. dollar.

At 18:32 GMT, the Advance GDP Price Index for the quarter declined to 2.0% against the forecasted 2.2% and weighed on the U.S. dollar hat added further gains in EUR/USD pair. At 20:00 GMT, the C.B. Leading Index for December came in line with a 0.3% forecast. In December from the U.S., the New Home Sales declined to 842K against the forecasted 860K and weighed on U.S. dollar to and pushed the EUR.USD pair are even higher.

From the European side, the German Prelim CPI in January raised to 0.8% against the expected 0.4% and supported Euro that ultimately pushed EUR/USD pair higher. At 13:00 GMT, the Spanish Unemployment Rate dropped to 16.1% against the expected 16.7% and supported Euro to add further gains in EUR/USD pair on Thursday. 

Moreover, Wall Street suffered its biggest one-day percentage decline in three months overnight, with declines accelerated in the wake of the U.S. Federal Reserve’s policy statement. The Fed signaled a worrying slowdown in the pace of recovery of the world’s top economy and sworn continued support until a full economic rebound was in place. This also weighed on the U.S. dollar and supported an upward momentum in EUR/USD pair.


Daily Technical Levels

Support   Resistance

1.2054      1.2167

1.1999     1.2225

1.1940      1.2280

Pivot point: 1.2112

EUR/USD– Trading Tip

The direct currency pair EUR/USD is trading with a bearish bias at 1.2090, facing immediate resistance at 1.2132 level. The EUR/USD is again forming three black crows on the hourly chart, dispensing the selling trend in the EURUSD pair. On the downside, the pair is expected to go after the 1.2090 and 1.2055 level. The 50 periods EMA are signaling the selling trend in Euro today. Violation of 1.2050 will determine long term trend.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.37267 after placing a high of 1.37458 and a low of 1.36299. The U.S. dollar’s fresh weakness and the rise in British Pound against other major currencies lifted the currency pair GBP/USD on Thursday. Prime Minister Boris Johnson announced no schools until 8-March and laid out a lengthy exit strategy from the lockdown this week. However, a detailed plan will be out on the week of February 22. This showed that Johnson may have learned from past promises and was now going wrong on the side of caution. Because people were expecting an earlier exit from the restrictions and this announcement killed their expectations.

In December, Johnson rejected calls for a lockdown and refused to cancel Christmas, only to back down several days later. However, the U.K. has been vaccinating its population rapidly, which should have led to the lifting restrictions not extending them. Despite all these lockdown developments in the U.K., the British Pound remained amongst the top three best performing G10 currencies on Thursday and supported the upward momentum in GBP/USD pair.

On the data front, from the U.S. side, at 18:30 GMT, the Advance GDP for the quarter fell to 4.0% against the anticipated 4.2% and weighed on the U.S. dollar that added more gains in GBP/USD pair. The Unemployment Claims from last week dipped to 847K against the anticipated 880K, supported the U.S. dollar, and capped further GBP/USD pair gains. The Goods Trade Balance fell to -82.58B from the anticipated -83.4B and supported the U.S. dollar from December. The Prelim Wholesale Inventories for December also fell to 0.1% against the anticipated 0.5% and supported the U.S. dollar. 

At 18:32 GMT, the Advance GDP Price Index for the quarter fell to 2.0% against the anticipated 2.2% and weighed on the U.S. dollar that pushed the currency pair GBP/USD higher. At 20:00 GMT, the C.B. Leading Index for December came in line with the anticipation of 0.3%. The New Home Sales in December from the U.S. fell to 842K against the anticipated 860K and weighed on the U.S. dollar and supported the rising prices of the GBP/USD pair.

The declining GDP numbers from the world’s largest economy in the last quarter of 2020 added weight on the local currency U.S. dollar and supported the GBP/USD pair’s rising prices on Thursday. Furthermore, the market’s risk sentiment was somehow supported by the rally in precious metals markets triggered by speculation that retail traders who had been focusing on pumping stocks like GameStop were now turning their focus to silver. The rising risk sentiment in the market also helped the risk perceived GBP/USD pair rise on Thursday.


Daily Technical Levels

Support   Resistance

1.3643      1.3746

1.3600      1.3804

1.3541      1.3848

Pivot point: 1.3702

GBP/USD– Trading Tip

A day before, the GBP/USD pair traded bullish after violating the narrow trading range of 1.3680 – 1.3670. It placed a high of around 1.3753 level, and it later reversed back to trade between the same trading range of 1.3696 – 1.3646. The GBP/USD may find support around the 1.3647 level, and violation of this level can extend selling bias until 1.3610. Approaching the 2-hour timeframe, the GBP/USD is holding below 10 and 20 periods EMA, and it may extend the selling trend today. Let’s consider taking a sell trade until 1.3645 and 1.361 level.  

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.259 after placing a high of 104.460 and a low of 104.053. The currency pair USD/JPY extended its gains on Thursday amid the pickup in risk appetite in the market that drove weakness in both the U.S. dollar and Japanese Yen versus most of their major G10 counterparts due to their safe-haven status. 

However, nominal U.S. yields rose on Thursday, with U.S. Treasury yields on the 10-year note up more than 4bps at 1.06%. It drove an increase in U.S./Japanese rate differentials that favor Japanese Yen flows into the U.S. dollar, supporting the currency pair USD/JPY. On the data front, at 04:50 GMT, the Retail Sales from Japan in December dropped to -0.3% against the expected -0.4% and supported Japanese Yen, and capped further upside in the USD/JPY pair.

From the U.S. side, at 18:30 GMT, the Advance GDP for the quarter decreased to 4.0% against the projected 4.2% and weighed on the U.S. dollar and limited further upside momentum in the USD/JPY pair. Last week, the Unemployment Claims decreased to 847K against the projected 880K and supported the U.S. dollar that added further gains in the USD/JPY pair. The Goods Trade Balance from December decreased to -82.58B from the projected -83.4B and supported the U.S. dollar and pushed the currency pair USD/JPY higher.

 For December, the Prelim Wholesale Inventories also decreased to 0.1% against the projected 0.5% and supported the U.S. dollar that extended gains in the USD/JPY pair. At 18:32 GMT, the Advance GDP Price Index for the quarter decreased to 2.0% against the projected 2.2% and weighed on the U.S. dollar and capped further upside in the USD/JPY pair. At 20:00 GMT, the C.B. Leading Index for December came in line with the projection of 0.3%. In December from the U.S., the New Home Sales decreased to 842K against the projected 860K and weighed on the U.S. dollar and capped further gains in the USD/JPY pair.

Risk appetite in the market took a meaningful turn on Thursday, with U.S. equities erasing losses incurred on Wednesday leading up to the FOMC monetary policy decision event. The ultra-dovish tone of the Federal Reserve was actually seen as positive for the risk appetite as Wednesday’s risk-off was a result of overvaluation fears as well as because of the short-selling hedge funds being forced to liquidate profitable large-cap stock long positions as speculative retail trade-driven mania continued in the likes of GameStop. Furthermore, another reason behind the rising USD/JPY pair prices was that the U.S. stimulus package proposed by Joe Biden did not receive approval from Republicans as of yet. This also supported the U.S. dollar that ultimately added gains in the USD/JPY pair.


Daily Technical Levels

Support   Resistance

103.71      104.34

103.33      104.58

103.09      104.96

Pivot point: 103.96

USD/JPY – Trading Tips

On Friday, the USD/JPY pair is trading with a bullish bias at 104.475, and it has violated the resistance level of 104.385. It’s likely to lead the USD/JPY pair until the 104.745 level. On the lower side, the USD/JPY may find support at the 104.300 level. The USD/JPY pair is likely to stay bullish as MACD and EMA suggest bullish bias in the USD/JPY pair on the four hourly timeframes. We can expect USDJPY to bounce off upon 104.300 to continue buying trend today. Good luck! 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 29 – Dogecoin Skyrockets as r/Wallstreetbets Enters on Crypto; Bitcoin Jumps on Elon Musk’s Twitter Profile

The crypto sector ended the day with most of the top cryptocurrencies in the green. Most analysts speculate that the recent wave of buyers came as a result of Dogecoin’s incredible pump, which was caused by the notorious r/WallStreetBets subreddit. Bitcoin is currently trading for $32,964, representing an increase of 5.26% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 1.41% on the day, while Litecoin gained 5.11% of its value.

The crypto sector ended the day with most of the top cryptocurrencies in the green. Most analysts speculate that the recent wave of buyers came as a result of Dogecoin’s incredible pump, which was caused by the notorious r/WallStreetBets subreddit. Bitcoin is currently trading for $32,964, representing an increase of 5.26% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 1.41% on the day, while Litecoin gained 5.11% of its value.

The cryptocurrency space had a wild week, first because of the r/WallStreetBets community entering the market (and pumping Dogecoin’s price by over 1000%) and then because of Tesla’s CEO Elon Musk tweeting about Bitcoin and promoting it. This has, in turn, caused Bitcoin to spike from $31,000 all the way to $38,200 in a matter of one hour. An interesting fact is that Musk’s Twitter bio now has #bitcoin displayed for everyone to see.

The crypto sector ended the day with most of the top cryptocurrencies in the green. Most analysts speculate that the recent wave of buyers came as a result of Dogecoin’s incredible pump, which was caused by the notorious r/WallStreetBets subreddit. Bitcoin is currently trading for $32,964, representing an increase of 5.26% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 1.41% on the day, while Litecoin gained 5.11% of its value.

Daily Crypto Sector Heat Map

3X Long Dogecoin Token gained 905.02% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by Dogecoin’s 513.17% and DOGEFI’s 369.90% gain. On the other hand, 3X Short Dogecoin Token lost 99.85%, making it the most prominent daily loser. It is followed by Panda Yield’s loss of 83.13% and Psychic’s loss of 72.46%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance decreased slightly from when we last reported, currently 62.8%. This represents a 0.1% decrease from our previous report.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has increased greatly since we last reported, with its current value being $979.02 billion. This represents a $54.27billion 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 attempting to push its price up as the market turned to green. Its price conquered the $32,350 level and pushed higher without hesitation. The move ended as bulls reached exhaustion near the $34,627 level. BTC’s inability to push past its immediate resistance has triggered a pullback, and the cryptocurrency is now most likely to retest the $32,350 level.

The overall change in market direction today came as a result of (as most speculate) Dogecoin’s insane upswing triggered by r/WallStreetBets.

BTC/USD 1-hour chart

Bitcoin’s technicals on all time-frames are either neutral with a slight hint of bullishness or bullish with a slight hint of neutrality.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is above its 50-period EMA and at its 21-period EMA
  • Price is at its middle Bollinger band
  • RSI is neutral (51.01)
  • Volume is above average

Key levels to the upside:          Key levels to the downside:

1: $34,627                             1: $32,350

2: $37,445                             2: $30,072

3: $38,000                             3: $27,960

Ethereum

After yesterday’s failed break of the top downtrend line, the second-largest cryptocurrency by market cap pushed past and broke its descending pattern. Its price (at one point) went past the $1,350 level, but as bulls couldn’t confidently hold this level, bears initiated a pullback.

Ethereum’s short-term price direction will be dictated by how the cryptocurrency handles the top downtrend line (which is now a support rather than a resistance line) as well as by Bitcoin’s price direction.

ETH/USD 1-hour Chart

Ethereum’s technicals on all time-frames are bullish but also show a hint of bearishness.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is slightly below both its 50-period and its 21-period EMA
  • Price slightly below its middle Bollinger band
  • RSI is neutral (45.66)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $1,350                               1: $1,211

2: $1,420                               2: $1,183.85

3: $1,440                               3: $1047.6

Litecoin

Litecoin has confirmed its position above the $128.4 level after pushing its price above it yesterday. LTC is now in consolidation mode and is currently testing the 21-hour EMA. Its recent moves seem slightly unenthusiastic, meaning that its short-term price direction will most likely be determined by other cryptocurrencies’ movements.

LTC/USD 1-hour Chart

Litecoin’s 4-hour and daily overviews are neutral/bearish, while its weekly and monthly overviews are completely bullish.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is slightly above both its 50-period EMA and its 21-period EMA
  • Price slightly above its middle Bollinger band
  • RSI is neutral (55.45)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $142.1                               1: $128.42

2: $161.5                               2: $120

3: $181.3                               3: $114.75

Categories
Forex Videos

Beginners – Analysis Feature of MT4 Helps You Fund A Trading Strategy!

https://youtu.be/ngitjajY_io

https://youtu.be/ngitjajY_io


Beginners: analysis feature of MT4 to help find a trading strategy

Thank you for joining this forex academy educational video. 

In this session, we will be looking at an analysis feature of the MT4 platform, which helps traders to find a winning trading strategy.

The Metatrader mt4 platform is one of the widest the most available trading platforms on earth.  It is fully customisable….

And there are a host of technical analysis tools available in the Navigator section, which are freely available from most brokers, and which can be added to, either freely found ones on the internet or paid tools, which can be mostly found on the mql5 website.

On this one-hour chart of the US dollar CAD pair, we have selected three widely used and popular technical analysis tools from the navigator section, which are Bollinger bands, moving average convergence divergence commonly known as the MACD, and the stochastic oscillator indicator.

 Although as a new trader, we must consider many factors when trading, such as fundamental analysis, the time of day while trading, whether or not economic data is due to be released, whether or not political or policymaker decisions, which might affect the particular currency pair we are interested in, are about to make an announcement, which could affect our trade, without doubt, the most critical aspect to trading, and which has the most influence on the movement of a currency exchange rate, is technical analysis.  Technical analysis often overrides fundamental analysis and even economic data releases.

While we cannot be in control, as traders, of fundamental reasons for why a particular currency pair is moving in any particular direction, and nor can we control political events, we can become masters of technical analysis, and where we can study our charts and seek out regular and consistent screen trading patterns which can stack the odds in our favour with regard to consistent winning trades, and with regard to knowing where to place tight stop losses to maintain the health of our account balance.

Now chart patterns have a habit of reoccurring, and technical analysis traders know this.  Therefore, as new traders, we must find regular and consistent winning setups, and this takes a lot of time as a new trader, and this requires a lot of patience and a whole lot of studying.

Only when we have found regular setups, which consistently work, can we then build a successful trading methodology, which should be adhered to.

Because these chart patterns are always changing, we can take advantage of the drawing tools such as the ‘’draw text label’’ as highlighted, and where we can make notes on the chart, and because of the flexibility of the MetaTrader platform…..

 

If we right-click on the chart, we have the option to save the chart as a picture for further analysis at a later time.  

As we see here, to save the chart as a picture, we can set the desired parameters, including the size, and then click ok….

You will then be asked where to save it on your computer, select your destination folder, and save it.

This saves an awful lot of time and alleviates the need to scroll back through hours and hours of charts just to find the setup which you may have been interested in. 

Categories
Forex Daily Topic Forex System Design

Trading System design -Creating Your Strategy with Tradingview’s Pine Script – Part 2

In part 1 of this article series, we have created the Stochastic RSI indicator as part of our idea for a scalping strategy. Now that we have it functional, we will make the bull/bear phases and visually inspect whether it captures the turning market’s turning points.

In part 1 of this article series, we have created the Stochastic RSI indicator as part of our idea for a scalping strategy. Now that we have it functional, we will make the bull/bear phases and visually inspect whether it captures the turning market’s turning points.

In part 1 of this article series, we have created the Stochastic RSI indicator as part of our idea for a scalping strategy. Now that we have it functional, we will make the bull/bear phases and visually inspect whether it captures the turning market’s turning points.

Possible ways to create bull/bear slices

Our Stochastic RSI consists of two lines, k and d, and two trigger lines, ob and os. Therefore we can use multiple variants that may allow the creation of bull/bear price legs. Let’s consider the following 3

Variant 1 – The transition occurs at the SRSI entrance of the oversold or overbought regions.

Bull: The d-line crosses under the ob-line, which indicates it is into the overbought area
Bear: The d-line crosses over the os-line, indicating d‘s entry into the oversold area.

Code:
if crossunder (d, os)
    SRSI_Long := true
    SRSI_Short := false
else if crossover (d, ob)
    SRSI_Long := false
    SRSI_Short := true 
else
    SRSI_Long := SRSI_Long[1]
    SRSI_Short := SRSI_Short[1]

This code creates a condition SRSI_Long at the cross of d under os, which holds until d crosses over ob and reverses it, creating an SRSI_Short state. This condition is only modified by d crossing under os.
The else statement ensures the condition does not change from the previous bar.

Once we have defined the bull and bear segments, we can color-shade them to visualize them in the chart. To do it, we will use the bgcolor() function.

bgcolor(SRSI_Long ? color.green: na)
bgcolor(SRSI_Short ? color.red: na)

The first statement asks the condition of SRI-Long ( the ? sign). If true, the background color changes to green. Otherwise, no change (an). The second statement behaves similarly for SRSI_Short.

Let’s see how this piece of code behaves in the BTCUSD chart.

Variant 1 triggers the transitions too early. We see that on many occasions when the stochastic RSI enters the overbought or oversold region, it is more a signal of trend strength than a turning point.

Variant 2 – The transition occurs at D and K’s crossovers if in the overbought/oversold regions.

Bull: the k-line crosses over the d-line, if below os ( inside the oversold region. We ignore crosses in the mid-area)
Bear: the k-line crosses under the d-line, if above ob ( in the overbought area. We ignore crosses in the mid-area)

Code:

// creating the long and short conditions for case 2

if crossover(k,d) and d < os
     SRSI_Long := true
     SRSI_Short := false

else if crossunder(k,d) and d > ob
     SRSI_Long := false
     SRSI_Short := true
else
     SRSI_Long := SRSI_Long[1]
     SRSI_Short := SRSI_Short[1]
// bacground color change
bgcolor(SRSI_Long ? color.green: na) 
bgcolor(SRSI_Short ? color.red: na)

The last section for the background change is similar to Variant 1.

Let’s see how it behaves in the chart.

Variant 2 is an improvement. We see that the bull and bear phases match the actual movements of the market, although entries are still a bit early, and in some cases, it missed the right direction. It can be useful as a trigger signal, provided we can filter out the faulty signals.

Variant 3 – the transition occurs when d moved to the overbought or oversold region and, later, crosses to the mid-area.

Bull: the d-line crosses over the os-line
Bear: the d-line crosses under the ob-line.

if crossover (d, os)
    SRSI_Long := true
    SRSI_Short := false
else if crossunder (d, ob)
    SRSI_Long := false
    SRSI_Short := true 
else
    SRSI_Long := SRSI_Long[1]
    SRSI_Short := SRSI_Short[1]
// bacground color change
bgcolor(SRSI_Long ? color.green: na) 
bgcolor(SRSI_Short ? color.red: na)

 

And this is how it behaves in the chart.


Variant 3 lags the turning points slightly, but this quality makes it more robust, as, on most occasions, it’s right about the market direction. This signal, combined with the right take-profit, may create a high-probability trade strategy.

Let’s try this one. But this will be resolved in our next and last article of this series.

Stay tuned!

Categories
Forex Elliott Wave Forex Market Analysis

USDJPY: Be Ready for this Flag Pattern Breakout

The USDJPY pair presents the breakout of a flag pattern corresponding to the third wave of Subminuette degree identified in green, triggered after the flag pattern breakout observed in Wednesday 26th session. Examine with us what’s next for the coming trading sessions.

The USDJPY pair presents the breakout of a flag pattern corresponding to the third wave of Subminuette degree identified in green, triggered after the flag pattern breakout observed in Wednesday 26th session. Examine with us what’s next for the coming trading sessions.

The USDJPY pair presents the breakout of a flag pattern corresponding to the third wave of Subminuette degree identified in green, triggered after the flag pattern breakout observed in Wednesday 26th session. Examine with us what’s next for the coming trading sessions.

Our Previous Analysis

Our previous Elliott wave analysis of the USDJPY pair commented on the complex corrective formation developed by USDJPY since the price topped at 111.715 in March 2020. Also, we recognized the internal structure as an incomplete triple-three pattern. 

As illustrated in the previous daily chart released in late December 2020, the USDJPY pair moved in an incomplete wave (c) of Minuette degree labeled in blue. Likewise, the lower degree sequence revealed the progress in an ending diagonal pattern, suggesting the corrective formation’s exhaustion, which belongs to wave B of Minor degree in green.

Likewise, the breakout of the trendline that connects the end of waves ii and iv of Subminuette degree labeled in green would confirm the end of wave B of Minor degree. In this context, once the USDJPY surpassed the upper-line of the ending diagonal pattern, the pair confirmed the end of wave B and the beginning of wave C of the same degree.

What’s Next?

The USDJPY surpassing the upper guideline of the ending diagonal pattern on January 07th confirmed the completion of wave B of Minor degree and the beginning of wave C of the same degree.

In this context, the first breakout the USDJPY formed in early January corresponds to wave i in green. Likewise, the consolidation sequence recognized as a flag pattern corresponds to wave ii. Both waves belong to wave C of Minor degree labeled in green.

The last breakout developed by the USDJPY activates wave iii that belongs to wave C in green. Its potential advance could strike the psychological barrier of level 106.

Summarizing, the mid-term Elliott wave view for the USDJPY pair suggests that the price action may advance in its wave iii of Subminuette degree, which belongs to the first segment of the internal structure of wave C of Minor degree identified in green. The upward wave iii in progress could exceed the psychological barrier of 106. It even could strike the supply zone between 106.561 and 107.050. Finally, the bullish scenario’s invalidation level is at the beginning of wave i in green, at 102.591.

Categories
Forex Market Analysis

Daily F.X. Analysis, January 28 – Top Trade Setups In Forex – Advance GDP in Focus!

Later today, the focus will remain on the German Prelim CPI and Advance GDP figures from the U.S. both of the events are expected to perform worse than before as the data represents the economic activity of the lockdown period. So most of it is already priced in. However, the U.S. Jobless claims will remain in the highlights, and these are expected to rise again, perhaps due to the second wave of COVID19 in the U.S.

Later today, the focus will remain on the German Prelim CPI and Advance GDP figures from the U.S. both of the events are expected to perform worse than before as the data represents the economic activity of the lockdown period. So most of it is already priced in. However, the U.S. Jobless claims will remain in the highlights, and these are expected to rise again, perhaps due to the second wave of COVID19 in the U.S.

Later today, the focus will remain on the German Prelim CPI and Advance GDP figures from the U.S. both of the events are expected to perform worse than before as the data represents the economic activity of the lockdown period. So most of it is already priced in. However, the U.S. Jobless claims will remain in the highlights, and these are expected to rise again, perhaps due to the second wave of COVID19 in the U.S.

Economic Events to Watch Today  

  

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.21117 after placing a high of 1.21696 and a low of 1.20581. The EUR/USD pair posted losses on Wednesday as the Federal Reserve kept its benchmark short-term interest rates unchanged near zero and maintained an asset purchasing program at $120 billion a month. 

The Federal Reserve Open Market Committee released its statement from the January meeting that stated that the pace of recovery in economic activity and employment has moderate in recent months with weakness concentrated in the sectors most adversely affected by the pandemic. 

According to the statement, the coronavirus pandemic was causing tremendous human and economic hardship across the United States and worldwide. The committee also stated that the economy’s path would depend significantly on the course of the virus, including the progress on vaccination.

The market’s reaction to the Federal Reserve policy decision kept the EUR/USD pair under pressure, and hence, the currency pair started to extend its losses on Wednesday. Whereas the single currency Euro faced mixed movements throughout the day, the currency remained under pressure with fresh speculations that the ECB could soon cut Eurozone interest rates. The Central Bank was reportedly concerned that markets were pricing out the chances of more interest rate cuts from the ECB. 

Furthermore, the fears for vaccine shortage in Eurozone also weighed on the single currency on Wednesday after the European Union called out vaccine makers AstraZeneca and Pfizer over delivery delays that could slow its recovery from the pandemic. Officials were even threatening to restrict exports and take legal actions as anger mounts. 

According to E.U. officials, AstraZeneca will not deliver as many doses as it promised and has put the government rollout plans and economic recovery at risk. The news came in after Pfizer said that it had delivered fewer doses of its vaccine than expected last week. European Commission President Ursula von der Leyen turned up the pharmaceutical companies’ heat and said that Europe had invested billions in helping develop the world’s first coronavirus vaccine to create a truly global common good, and now companies must deliver and honor their obligations. 

The European Union has devoted part of 2.7 billion euros emergency fund to assist with vaccine development. E.U. countries we recounted on the vaccines to rein in the health crisis and jumpstart their economies, but now they were forced to modify their plans. Furthermore, the E.U. urged the pharmaceutical firm AstraZeneca to supply it with more coronavirus vaccine doses from U.K. plants to row over shortages. However, the company denied and said that the production delay in European plants could only deliver a fraction of the doses it promised for the first quarter of the year. However, the E.U. insisted that doses made elsewhere should make up the shortfall and d criticize the slow rollout of vaccination.

This vaccine drama in the European Union raised concerns over the delayed economic recovery and added weight on the single currency Euro that ultimately added EUR/USD pair losses on Wednesday.

On a data front, at 18:30 GMT, the Core Durable Goods Orders for December rose to 0.7% against the expected 0.5% and supported the U.S. dollar that added more losses in EUR/USD pair. 

In December, the Durable Goods Orders dropped to 0.2% against the expected 1.0% and weighed on the U.S. dollar. From the European side, at 12:00 GMT, the German GfK Consumer Climate dropped in January to -15.6 against the forecasted -7.8. It weighed on Euro that ultimately dragged the currency pair EUR/USD further on the downside on Wednesday. 


Daily Technical Levels

Support Resistance

1.2119 1.2189

1.2079 1.2217

1.2050 1.2258

Pivot point: 1.2148

EUR/USD– Trading Tip

The EUR/USD pair is trading with a bearish bias at 1.2090, facing immediate resistance at 1.2120 level. The EUR/USD is closing three black crows on the hourly timeframe, suggesting selling bias in the pair. On the lower side, the pair is expected to go after 1.2095 and 1.2060 level. The 50 periods EMA are suggesting selling bias in Euro today.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.36887 after placing a high of 1.37586 and a low of 1.36590. On Wednesday, the currency pair GBP/USD dropped and posted losses for the day amid the broad-based U.S. dollar strength after the FOMC statement and Fed’s monetary policy decision.

The Federal Reserve Open Market Committee released its statement from January’s meeting on Wednesday that mentioned that the Fed will keep its interest rates near zero and maintain the asset purchasing program of $120 billion per month.

Federal Reserve said that the economic path would solely be decided by pandemic and vaccine rollout developments. Other than this, everything stated in the statement issued by FOMC was just as expected and supported the U.S. dollar that ultimately kept the GBP/USD pair under pressure for the day. On the data front, at 18:30 GMT, the Core Durable Goods Orders for December surged to 0.7% against the anticipated 0.5% and supported the U.S. dollar that ultimately added weight on GBP/USD pair. In December, the Durable Goods Orders fell to 0.2% against the anticipated 1.0% and weighed on the U.S. dollar that capped further GBP/USD pair losses. 

From Britain’s side, at 05:01 GMT, the BRC Shop Price Index for the year came in as -2.2% against the previous -1.8%.

The GBP/USD pair rose to its highest since May 2018 on Wednesday however failed to remain there and reversed its direction. The rise in the GBP/USD pair during the session’s early trading hours could be attributed to U.K. Prime Minister Boris Johnson’s latest comments.

The PM has said that he hopes that a gradual and phased relaxation of coronavirus restrictions could begin in early March. Johnson said that he intended to set out a plan to ease the lockdown in England. The factors will include death and hospitalization numbers, the progress of vaccinations, and changes in viruses.

He also ruled out schools in England re-opening after the February half term instead set a target of 8-March. He also announced a 10-day self-funded quarantine restriction for all travelers entering the U.K. from high-risk countries under tighter border restrictions to combat new variants of coronavirus. The PM was under pressure from Tory MPs to spell out plans for how the current lockdown will end. Then PM replied that relaxing restriction would depend on emerging data about how effectively the vaccine stops virus transmission. These comments from UK PM raised the local currency, British Pound, to economic recovery and pushed the pair GBP/USD in early trading hours. However, the strength of the U.S. dollar due to the Federal Reserve’s decision in the January monetary policy meeting added pressure on the currency pair. It dragged GBP/USD to the downside.


Daily Technical Levels

Support Resistance

1.3647 1.3783

1.3560 1.3832

1.3511 1.3918

Pivot point: 1.3696

GBP/USD– Trading Tip

A day before, the GBP/USD pair traded bullish after violating the narrow trading range of 1.3680 – 1.3670. It placed a high of around 1.3753 level, and it later reversed back to trade between the same trading range of 1.3696 – 1.3646. The GBP/USD may find support around the 1.3647 level, and violation of this level can extend selling bias until 1.3610. Approaching the 2-hour timeframe, the GBP/USD is holding below 10 and 20 periods EMA, and it may extend the selling trend today. Let’s consider taking a sell trade until 1.3645 and 1.361 level.  

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.108 after placing a high of 104.197 and a low of 103.579. The USD/JPY pair rose and reached its nine-day highest level on the back of the U.S. dollar’s broad-based strength. 

The currency pair USD/JPY touched its highest since January 19 and surpassed 104 level on Wednesday as the greenback became strong on board. The currency pair preserved its bullish momentum as the U.S. Dollar Index that measures the greenback’s value against the basket of six major currencies rose to a weekly top at 90.62 on Wednesday and boosted the safe-haven U.S. dollar. The strength in the U.S. dollar then ultimately pushed the currency pair USD/JPY on the upside.

The risk-averse market sentiment was confirmed by the declining S&P 500 futures that lost more than 1% on the day. Wall Street’s main indexes also started the day in negative territory and supported the U.S. dollar and USD/JPY pair. On the data front, at 18:30 GMT, the Core Durable Goods Orders for December advanced to 0.7% against the estimated 0.5% and supported the U.S. dollar, and added further gains in the USD/JPY pair. In December, the Durable Goods Orders plunged to 0.2% against the estimated 1.0% and weighed on the U.S. dollar. Nevertheless, investors largely ignored the data as the focus was solely on the FOMC’s policy announcement.

The first policy meeting under Joe Biden’s presidency had all the investors’ focus, and that kept driving the whole market on Wednesday. The Federal Reserve Chairman Jerome Powell made clear that the U.S. Central bank was nowhere near exiting massive support for the economy during the ongoing coronavirus pandemic. The Federal Reserve officials kept the benchmark interest rates unchanged near zero and flagged a moderating U.S. recovery in a statement released by FOMC for the January meeting. The bank repeated that it would maintain its bond-buying program at the current pace of $120 billion of purchases per month until substantial further progress towards its employment and inflation goals. 

After this announcement, the Yields on U.S. 10-year Treasury notes hovered just above 1%, and the U.S. dollar held its gains while the S&P 500 closed 2.6%, down from its steepest drop since October amid growing concerns that stocks have become overvalued. FOMC said in a statement that the pace of the recovery in economic activity and employment has moderated in months, with weaknesses concentrated in the sectors most adversely affected by the pandemic. Central Bank also said that the path for the economy would depend significantly not just on the coronavirus but also on vaccination progress. There was no macroeconomic data from Japan to be released on Wednesday, so the pair USD/JPY continued following the developments made in the U.S. front and continued rising on the day.


Daily Technical Levels

Support Resistance

103.49 103.77

103.38 103.94

103.20 104.05

Pivot point: 103.66

USD/JPY – Trading Tips

The USD/JPY pair is trading with a bullish bias at 104.350, and violation of this level is likely to lead the USD/JPY pair until the 104.745 level. On the lower side, the USD/JPY may find support at the 104.198 level. We can expect USDJPY to bounce off upon the 104.198 level today. On the 4 hour timeframe, the USDJPY pair is likely to close a doji candle below 104.368 level. If this happens, we may see a bearish correction in the USD/JPY pair. Good luck! 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 28 – Bitcoin Strong Bounce off the 30K level, Altcoins Reversals Followed

The crypto sector ended up almost completely in the red, though most cryptos barely lost any value. Bitcoin is currently trading for $31,200, representing a decrease of 1.13% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 0.95% on the day, while LTC lost 2.06% of its value.

The crypto sector ended up almost completely in the red, though most cryptos barely lost any value. Bitcoin is currently trading for $31,200, representing a decrease of 1.13% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 0.95% on the day, while LTC lost 2.06% of its value.

The crypto sector ended up almost completely in the red, though most cryptos barely lost any value. Bitcoin is currently trading for $31,200, representing a decrease of 1.13% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 0.95% on the day, while LTC lost 2.06% of its value.

Daily Crypto Sector Heat Map

Zero Collateral Dai gained 828.50% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by QuadrantProtocol’s 327.68% and 3x Long Dogecoin Token’s 137.80% gain. On the other hand, EveryCoin lost 89.97%, making it the most prominent daily loser. It is followed by Zugacoin’s loss of 79.94% and TokenPay’s loss of 50.46%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance decreased slightly from when we last reported, currently 62.9%. This represents a 0.2% decrease from our previous report.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has decreased very slightly since we last reported, with its current value being $924.75 billion. This represents a $10.78 billion decrease when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

 

After another day of its price moving towards the downside, Bitcoin attempted a rally towards the $32,350 mark. After its price establishing strong support at the $30,000 level, the largest cryptocurrency by market cap started surging. There is a strong chance that BTC will pass the $32,350 level if the hourly candle ends up above the 21-hour EMA.

Scott Minerd, the CIO of investment services firm Guggenheim, said that the institutional demand is insufficient to keep BTC above $30,000. Many analysts agree with this short-term assessment, while almost all of them are bullish in the long-term.

BTC/USD 1-hour chart

Bitcoin’s daily overview is mostly neutral (with some hints of bearishness), while its weekly and monthly overviews are tilted towards the buy-side. On the other hand, its 4-hour time-frame is completely bearish.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is above its 50-period EMA and its 21-period EMA
  • Price is slightly above its middle Bollinger band
  • RSI is neutral (56.39)
  • Volume is above average

Key levels to the upside:          Key levels to the downside:

1: $32,350                             1: $30,072

2: $34,627                             2: $30,000

3: $37,445                             3: $27,960

Ethereum

The second-largest cryptocurrency by market cap spent the day testing the $1,211 level multiple times. After the support level held up on various occasions, ETH bulls entered the market and started pushing its price up. However, it is still uncertain whether this push towards the upside will end as another lower high and a continuation of the downtrend, or a break from the trend.

Ethereum’s immediate downside is guarded by the 21-hour and 50-hour EMAs, while its first major resistance level is the $1,350 mark, as well as the descending line that connects ETH’s recent lower highs.

ETH/USD 1-hour Chart

Ethereum’s technicals on the daily, weekly, and monthly time-frames are tilted towards the buy-side but also show some neutrality. Its 4-hour overview, however, is slightly bearish.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is above both its 50-period and its 21-period EMA
  • Price at its top Bollinger band
  • RSI is neutral (57.04)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $1,350                               1: $1,211

2: $1,420                               2: $1,183.85

3: $1,440                               3: $1047.6

Litecoin

Litecoin managed to break out from its downtrend after breaking the $128.4 mark. What’s surprising is that such a strong trend was broken by just average volume. LTC found support in the 21-hour EMA, which currently stands right below the price level.

Litecoin has a zone of heavy resistance straight above it (above $130). It is very unlikely that it can “survive” without a major boost in volume, especially in these market conditions.

LTC/USD 1-hour Chart

Litecoin’s daily overview is mostly neutral (with some hints of bearishness), while its weekly and monthly overviews are tilted towards the buy-side. On the other hand, its 4-hour time-frame is completely bearish.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is above both its 50-period EMA and its 21-period EMA
  • Price at its top Bollinger band
  • RSI is neutral (58.51)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $142.1                               1: $128.42

2: $161.5                               2: $120

3: $181.3                               3: $114.75

Categories
Forex Daily Topic Forex System Design

Trading System design -Creating Your Strategy with Tradingview’s Pine Script – Part 1

As promised, in this article, we will go through the steps to create a custom strategy, from the initial idea to the implementation of signals, stops, and targets.

As promised, in this article, we will go through the steps to create a custom strategy, from the initial idea to the implementation of signals, stops, and targets.

As promised, in this article, we will go through the steps to create a custom strategy, from the initial idea to the implementation of signals, stops, and targets.

The skeleton of a trading Strategy

To create a strategy programmatically is relatively simple. We need to define the Parameters and the trade rules first, followed by the position sizing algorithm, the entry commands, and the stop-loss and take-profit settings.

Visualizing the idea

Human beings are visual. We may think our trading idea is fantastic, but translating it into code may not be straightforward. It is much easier to detect the errors if we see our rules depicted on a chart.

With the parameter declarations and trade rules, we can create an indicator first, so we can see how it appears. After we are happy with the visual 

The idea

For our example, we will use a simple yet quite exciting indicator called Stochastic RSI, which applies the Stochastic study to the RSI values. This operation smoothes the RSI, and it reveals much better the turning points on mean-reverting markets, such as in Forex. Let’s see how it behaves as a naked strategy.

Diving into the process

First, you need to open an account with Tradingview. Once we are in, we create a new layout.

Then we open the Pine Editor.

It appears in the bottom left of your layout. Click on it… and it shows with a basic skeleton code.

The Stochastic RSI code.

As said, to create the Stochastic RSI indicator, we will make the RSI and then apply the stochastic algorithm to it.

1 study(title="Stochastic-RSI", format=format.price, overlay = false)

This first line declares the code to be a study, called Stochastic-RSI.  

format = format.price is used for selecting the formatting of output as prices in the study function.

Overlay = false means we desire the RSI lines to appear in a separate section. If it were a moving average to be plotted with the prices, overlay should be set to true.

RSIlength = input(14, "RSI-Length", minval=1)

We define the RSI length as an input parameter called RSI-Length.

src = input(close, title="RSI Source")

The variable src will collect the input values on every bar. The default is the bar close, but it may be modified by other values such as (o+c)/2.

myrsi = rsi(src, RSIlength)

This line creates the variable myrsi that stores the time series of the rsi.

This completes the calculation of the RSI. 

smooth_K = input(3, "K", minval=1)
smooth_D = input(3, "D", minval=1)

These two lines create the smoothing values of the stochastic %K and %D. Since it comes from input, they can be changed at will.

Stochlength = input(14, "Stochastic Length", minval=1)

This code defined the variable lengthStoch, computed from the input parameter.

k = sma(stoch(rsi1, rsi1, rsi1, Stochlength), smooth_K)
d = sma(k, smooth_D)

These two lines completes the calculation of the stochastic rsi.

plot(k, "K", color=color.white) - Plot a white k line 
plot(d, "D", color=color.red) - Plot a red d line.

To end this study, we will plot the overbought and oversold limits of 80 and 20, filling the mid-band with a distinctive color.

t0 = hline(80, "Upper Band", color=color.maroon)
t1 = hline(20, "Lower Band", color=color.maroon)
fill(t0, t1, color=color.purple, transp=80, title="Background")

The complete code ends as:

 

// This source code is subject to the terms of 
// the Mozilla Public License 2.0 at https://mozilla.org/MPL/2.0/
// © forex-academy
//@version=4
study(title="Stochastic-RSI", format=format.price, overlay = false)

RSIlength = input(14, "RSI-Length", minval=1)
src = input(close, title="RSI Source")
myrsi = rsi(src, RSIlength)

smooth_K = input(3, "K", minval=1)
smooth_D = input(3, "D", minval=1)
Stochlength = input(14, "Stochastic Length", minval=1)

k = sma(stoch(myrsi, myrsi, myrsi, Stochlength), smooth_K)
d = sma(k, smooth_D)

plot(k, "K", color=color.white)
plot(d, "D", color=color.red)

t0 = hline(80, "Upper Band", color=color.maroon)
t1 = hline(20, "Lower Band", color=color.maroon)
fill(t0, t1, color=color.teal, transp=80, title="Background")

This code is shown in our layout as

Stay tuned for the second part of this article, where we will evolve the Stochastic RSI into a viable strategy.

 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 27 – Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) Price Analysis

The crypto sector ended up either slightly red or slightly green, with only rare exceptions making significant moves to either side. Bitcoin is currently trading for $31,679, representing an increase of 0.51% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 1.61% on the day, while LTC lost 3.33% of its value.

Daily Crypto Sector Heat Map

Coupon Chain gained 74575.19% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by YVS.Finance’s 683.5% and Chonk’s 198.23% gain. On the other hand, Narwhale.finance lost 72.98%, making it the most prominent daily loser. It is followed by 3X Short Matic Token’s loss of 67.68% and MangoChain’s loss of 66.24%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance increased slightly from when we last reported, currently 63.1%. This represents a 0.2% increase from our previous report.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has decreased very slightly since we last reported, with its current value being $935.58 billion. This represents a $0.96 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

After a day of attempting to break out of its slightly descending channel, Bitcoin has returned to the downtrend. The largest cryptocurrency by market cap tried to regain the $32,350 level but failed in doing so. This created a strong sell-wall above its current price of just below $32,000.

Bitcoin’s immediate upside is guarded by the 21-hour and 50-hour EMAs, as well as the 32,350 level. Its downside, however, is a free-fall until the zone above $30,000.

BTC/USD 1-hour chart

Bitcoin’s daily overview is mostly neutral (with some hints of bearishness), while its weekly and monthly overviews are slightly bullish. On the other hand, its 4-hour time-frame is completely bearish.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is slightly below its 50-period EMA and its 21-period EMA
  • Price is slightly under its middle Bollinger band
  • RSI is neutral (46.41)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $32,350                             1: $30,072

2: $34,627                             2: $30,000

3: $37,445                             3: $27,960

Ethereum

The second-largest cryptocurrency by market cap returned to mirroring Bitcoin’s movement after entering its consolidation phase. Ethereum has, after failing to break the $1,350 level, returned to its slightly-downwards movement. The zone just above the $1,300 level mentioned yesterday was also broken, meaning that ETH is now trading between $1,211 to the downside and $1,350 to the upside.

Ethereum’s immediate upside is guarded by the 21-hour and 50-hour EMAs, as well as the $1,350 level. Its first major support level is sitting at $1,211.

ETH/USD 1-hour Chart

Ethereum’s technicals on the daily, weekly, and monthly time-frames are tilted towards the buy-side, but all have neutral oscillators. Its 4-hour overview, however, is completely neutral.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is slightly below both its 50-period and its 21-period EMA
  • Price slightly below its middle Bollinger band
  • RSI is neutral (46.02)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $1,350                               1: $1,211

2: $1,420                               2: $1,183.85

3: $1,440                               3: $1047.6

Litecoin

Litecoin has seemingly created a double bottom formation after hitting and staying above the $128.4 level twice. This may be a bullish signal for LTC traders, but the move needs to be accompanied by at least a slight increase in volume.

Despite creating a double bottom, LTC will have a hard time moving past the 21-hour and 50-hour EMAs, as they seem to be its immediate resistance levels. On the other hand, its $128.4 support level is holding up well for now, making it very uncertain where LTC will go in the short-term.

LTC/USD 1-hour Chart

Litecoin’s daily overview is mostly neutral (with some hints of bearishness), while its weekly and monthly overviews are slightly bullish. On the other hand, its 4-hour time-frame is completely bearish.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is below both its 50-period EMA and its 21-period EMA
  • Price slightly below its middle Bollinger band
  • RSI is neutral (41.89)
  • Volume is slightly below average

Key levels to the upside:          Key levels to the downside:

1: $142.1                               1: $128.42

2: $161.5                               2: $120

3: $181.3                               3: $114.75

Categories
Forex Market Analysis

Daily F.X. Analysis, January 27 – Top Trade Setups In Forex – Big Day, Fed Rate Ahead! 

On the news front, the eyes will remain on the FOMC Statement and Federal Funds Rate, which is not expected to change the interest rate. Still, it will help us understand U.S. economic situation and policymakers’ stance on it. Besides, the Durable Goods Orders m/m from the U.S. will also remain in highlights.

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD closed at 1.21595 after placing a high of 1.21756 and a low of 1.21076. The EUR/USD pair edged higher on Tuesday as the U.S. Dollar Index (DXY) dropped and the risk appetite in the market witnessed a major turnaround. After a mixed start on the session, the European equities embarked upon a recovery mode and brought back the market’s risk sentiment. The pan-European benchmark, the Euro Stoxx 50, rallied by 1% and lifted the overall market mood. Whereas, the safe-haven U.S. dollar came under pressure after a rise in European equities and come back of risk sentiment that ultimately added gains in the currency pair EUR/USD on Tuesday.

In the early Asian trading session, the main currency pair EUR/USD extended its previous day’s bearish sentiment and fell below 1.2108, on the back of the U.S. dollar’s strength gathered by the risk-off market mood driven by the deadlock over U.S. fiscal stimulus and the renewed US-China tensions over the South China Sea.

On Tuesday, China said that it would conduct military exercises in the South China Sea this week, just days after complaining that a U.S. aircraft carrier group has sailed through the disputed waters. These rising tensions between the world’s two largest economies raised the safe-haven appeal in early trading hours on Tuesday. They lifted the greenback that ultimately dragged the currency pair EUR/USD on the downside.

 However, during early European trading hours, the risk-sentiment started to come back as the positive shift in the tone of the news flow on the coronavirus front. Moderna and Pfizer announced that they were looking into coronavirus booster shots that would specifically target building immunity to variants of the virus, such as that discovered in South Africa a few weeks ago. 

Furthermore, Johnson & Johnson’s CFO has said earlier that they expect to release COVID-19 vaccine trial data next week. The company was very optimistic that they will be releasing a very robust data set. The J&J’s vaccine has been advertised as a game-changer in the vaccination race as it would only require one shot to acquire full immunity. This vaccine-related optimism helped risk sentiment in the market and supported riskier assets like EUR/USD pair on Tuesday.

On the data front, there was no macroeconomic data released from the European side. In contrast, from the U.S. side, at 19:00 GMT, the Housing Price Index from the U.S. for November rose to 1.0% against the forecasted 0.9% and supported the U.S. dollar that capped further upside in the EUR/USD pair. 

The S&P/CS Composite -20 HPI for the year also rose to 9.1% against the forecasted 8.8% and supported the U.S. dollar. At 19:59 GMT, the Richmond Manufacturing Index for January declined to 14 against the forecasted 18 and weighed on the U.S. dollar that added gains in the EUR/USD pair. At 20:00 GMT, the C.B. Consumer Confidence in January rose to 89.3 against the forecasted 88.9 and supported the U.S. dollar and limited further gains in the EUR/USD pair on Tuesday.


Daily Technical Levels

Support   Resistance

1.2108     1.2177

1.2077     1.2215

1.2039    1.2245

Pivot Point: 1.2146

EUR/USD– Trading Tip

The EUR/USD pair is trading at 1.2156, facing immediate resistance at 1.2165 level. The EUR/USD has entered the overbought zone on the hourly timeframe, suggesting odds of bearish correction in the pair. On the lower side, the pair is likely to complete 38.2% Fibonacci retracement at 1.2150 and 61.8% Fibonacci retracement at 1.2134. Selling bias seems strong.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.37363 after placing a high of 1.37443 and a low of 1.36092. GBP/USD pair rebounded on Tuesday during early European trading hours after falling below 1.36100 level. The GBP/USD pair’s comeback was due to the recovered risk appetite in the market and Britain’s strong job report.

However, despite the strong macroeconomic data from Great Britain, the GBP/USD pair benefited from the broad U.S. dollar’s weakness on Tuesday as investors focused more on the U.S. Federal Reserve’s upcoming decision. The risk appetite took a significant turn during the early European trading hours after a downbeat Asa Pacific session. It weighed on the safe-haven U.S. dollar that ultimately lifted the GBP/USD pair on Tuesday. U.S. stocks were high, European equities erased most of Monday’s losses, the crude oil market was also high, and bond yields were rising on both sides of the Atlantic. 

The reason behind the turnaround of the risk sentiment was the positive vaccine news, as Moderna and Pfizer announced last night that they were starting investigating a booster vaccine shot that will come between 6-12 months after the second doses and will provide immunity against the new variants of coronavirus like the one emerged in South Africa in the past few days. Meanwhile, the Johnson & Johnson CFO also said on Tuesday that they expect to release the trail data for their coronavirus vaccine next week. They were very optimistic that the data will be robust and have claimed that their vaccine will be a game-changer in the vaccine race as it will provide full immunity in a single shot.

The rising risk sentiment in the market helped the risk perceived GBP/USD currency pair gain traction and rose to post gains for the day. On the data front, at 19:00 GMT, the Housing Price Index from the U.S. for November surged to 1.0% against the projected 0.9% and supported the U.S. dollar, and capped further upside in the GBP/USD pair. The S&P/CS Composite -20 HPI for the year also surged to 9.1% against the projected 8.8% and supported the U.S. dollar. At 19:59 GMT, the Richmond Manufacturing Index for January decreased to 14 against the projected 18 and weighed on the U.S. dollar, which ultimately added more GBP/USD pair gains. At 20:00 GMT, the C.B. Consumer Confidence in January surged to 89.3 against the projected 88.9 and supported the U.S. dollar that capped further bullish momentum in GBP/USD pair.

From the Britain side, at 12:00 GMT, the Average Earnings Index for the quarter raised to 3.6% against the estimated 2.9% and supported the British pound that pushed the pair GBP/USD even higher on board. For December, the Claimant Count Change declined to 7.0K against the forecasted 47.5K and supported Sterling, which ultimately added more GBP/USD pair gains. In December, the Unemployment Rate from Britain also dropped to 5.0%against the forecasted 5.1% and supported British Pound that lifted the bullish sentiment in GBP/USD pair. AT 16:00 GMT, the CBI Realized Sales in January dropped to -50 against the estimated -32 and weighed on British Pound and capped further upside in GBP/USD pair on Tuesday.

Another reason that could also be attributed to the rising prices of GBP/USD pair on Tuesday was UK PM Boris Johnson’s latest announcement about new travel instructions. The incoming passengers in the U.K. will need to self-fund a quarantine for ten days in a hotel. The new policy was a part of a government strategy to prevent foreign strains of the virus from entering the U.K. This also helped British Pound gain strength and support the GBP/USD pair’s upward momentum on Tuesday.


Daily Technical Levels

Support   Resistance

1.3641     1.3717

1.3607     1.3759

1.3565     1.3794

Pivot Point: 1.3683

GBP/USD– Trading Tip

On Wednesday, the GBP/USD pair continues trading with a bullish bias at 1.3733 level after violating the symmetric triangle pattern. The GBP/USD pair is trading with a bullish bias on the two-hourly timeframes, facing immediate resistance at 1.3749 area. A bullish breakout of this level is expected to trigger further buying trends until the 1.3807 mark. Today, we can expect to enter a buy position over 1.3749 and selling below the same. 

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.617 after placing a high of 103.826 and a low of 103.553. After rising for two consecutive sessions, the USD/JPY pair dropped on Tuesday despite the market’s rising risk-on market sentiment. The U.S. Dollar Index (DXY), which measures the value of the greenback against the basket of six major currencies, was up on Tuesday by 0.2% at 90.547 level and supported the U.S. dollar. The safe-haven greenback gained in early trading hours of the day as the rising tensions between the U.S. and China over the South China Sea prompted the risk-off mood. 

On Tuesday, China said that it would conduct military exercises in the South China Sea later this week. This announcement came in just days after they had complained that a U.S. aircraft carrier group has sailed through the disputed waters. This helped the Japanese Yen gain traction due to its safe-haven nature and weighed on the USD/JPY pair. 

The US-China relation also came under headlines after Chinese President Xi Jinping warned against the new cold war. On Monday, Xi warned global leaders against starting a “new Cold War” and urged unity in the face of the coronavirus pandemic. He said that building small cliques or starting a new Cold War to reject, threaten or intimidate others will only push the world into division.

The words appeared to be aimed at U.S. President Joe Biden’s plans to revitalize global alliances to counter China’s growing influence. These comments added to the tensions between China and the U.S. and raised the need for safe-haven that ultimately supported the safe-haven Japanese Yen and dragged the pair USD/JPY on the downside. However, the market’s risk sentiment came back during early European trading hours after positive news from vaccine makers came into the market. Moderna and Pfizer announced that they have started working on the booster shots of vaccines that will provide full immunity even against the new variants of the coronavirus like the one that emerged in South Africa. Meanwhile, the Johnson & Johnson CFO also announced that they would release their vaccine data next week, and they were very optimistic that it will be robust data. J&J has claimed that their vaccine will provide full immunity in a single shot, and if the data suggested so, it would be a game-changer in the vaccine race so far.

The rising risk sentiment in the market could not lift the USD/JPY pair, and the pair continued moving in the bearish trend for the day.

On the data front, at 19:00 GMT, the Housing Price Index from the U.S. for November advanced to 1.0% against the anticipated 0.9% and supported the U.S. dollar that capped further losses in the USD/JPY pair. The S&P/CS Composite -20 HPI for the year also advanced to 9.1% against the anticipated 8.8% and supported the U.S. dollar. At 19:59 GMT, the Richmond Manufacturing Index for January fell to 14 against the anticipated 18 and weighed on the U.S. dollar, adding more losses in the USD/JPY pair. At 20:00 GMT, the C.B. Consumer Confidence in January advanced to 89.3 against the anticipated 88.9 and supported U.S. dollar.

From the Japanese side, at 04:50 GMT, the SPPI for the year in December came in as -0.4% against the predicted -0.6% and supported Japanese Yen that added further downside momentum in the USD/JPY pair. At 10:00 GMT, the BOJ Core CPI for the year dropped to -0.3% against the expected -0.1% and weighed on the Japanese Yen.

Furthermore, the losses in USD/JPY were also capped after the announcement from the U.S. President Joe Biden on Tuesday. He said that the U.S. would accelerate the delivery of coronavirus vaccines across the country as his administration plans to buy 200 million more doses of the Pfizer-BioNTech and Moderna vaccines. However, Biden also warned that even with more Americans set to be inoculated sooner than previously anticipated due to additional doses, the pandemic would continue to worsen before it gets better. 

According to the Johns Hopkins University data, the number of confirmed coronavirus cases worldwide has passed 100 million just over a year since the first cases of the mysterious new illness was reported in the Chinese city of Wuhan. This weighed on market sentiment and supported the safe-haven Japanese Yen that ultimately added the USD/JPY pair’s losses on Tuesday.


Daily Technical Levels

Support   Resistance

103.62     103.89

103.50     104.06

103.34     104.17

Pivot point: 103.78

USD/JPY – Trading Tips

On Wednesday, the USD/JPY continues to trade sideways inside a broad trading range of 103.900 – 103.560. The USD/JPY has formed a symmetrical triangle pattern on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. The 50 periods EMA supports the bullish trend, and we may have odds of taking a buying trade over the 103.570 level today. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 26 – Top Trade Setups In Forex – C.B. Consumer Confidence Ahead! 

Investor’s eyes will stay on the Claimant Count Change and Unemployment Rate data from the U.K. as it’s likely to drive market movements during the European session. Later on, the C.B. Consumer Confidence from the U.S. will focus on the New York session today.

Investor’s eyes will stay on the Claimant Count Change and Unemployment Rate data from the U.K. as it’s likely to drive market movements during the European session. Later on, the C.B. Consumer Confidence from the U.S. will focus on the New York session today.

Investor’s eyes will stay on the Claimant Count Change and Unemployment Rate data from the U.K. as it’s likely to drive market movements during the European session. Later on, the C.B. Consumer Confidence from the U.S. will focus on the New York session today.

Economic Events to Watch Today  

  

EUR/USD – Daily Analysis

The EUR/USD closed at 1.21415 after placing a high of 1.21831 and a low of 1.21158. After rising for two consecutive sessions, the EUR/USD pair dropped on Monday as the common currency remained under pressure due to the slow pace of coronavirus vaccination roll out in Europe. The slow distribution of vaccines and the new manufacturing issues lagged the COVID-19 vaccination rollout in the old continent. After Pfizer told the E.U. that retooling in its Belgian plant would cause a delay, AstraZeneca made a similar announcement on Friday. The bloc has a substantial deal with the British pharmaceutical, and the European regulator was set to approve it on Friday.

Apart from the vaccine delays, the fears of new coronavirus variants were also of concern and could trigger another nationwide lockdown in France, the Eurozone’s second-largest economy. Berlin has also announced to extend its restrictions through mid-February. On the other hand, the safe-haven U.S. dollar was on the back foot across the board due to U.S. President Joe Biden pushing his $1.9 trillion relief program. Simultaneously, moderate Senators were pushing back against approving new expenditure only a month after they approved $900 billion of funds. However, Democrats were set to ram through the package via a reconciliation that would relieve them of the need to receive Republicans’ support.

Another option is to quickly approve the coronavirus-related funds and delaying the other aspects of the suggested package, such as a hike to the minimum wage. These options also kept the prospects of package delivery in the act and kept weighing on the U.S. dollar that ultimately capped further downside in the EUR/USD pair. On the data front, at 14:00 GMT, the German IFO Business Climate dropped to 90.1 against the forecasted 91.5 and weighed on Euro. At 19:00 GMT, the Belgian NBB Business Climate dropped to -7.5 against the expected -8.0 and supported Euro.

It seems like the German Business Climate went down because of the issues mentioned above, as the lockdown restrictions have badly disturbed the business community and weighed on the common currency that dragged the EUR/USD prices on the downside. Meanwhile, equity markets have posted healthy gains over the last few weeks on bets coronavirus vaccines will start to reduce infection rates worldwide and on a stronger U.S. economic recovery under President Joe Biden. 

However, the vaccine rollout has been uneven, with relatively rapid progress in the U.K. but a much slower rollout in France. AstraZeneca warned of further delays to deliveries of its vaccines in Europe on Friday due to production blockage at one of its manufacturing partners. Over the weekend, Italy threatened legal action against both Astra and Pfizer over delivery delays. On Sunday, France has announced to impose a third lockdown that was already under a national 12-hour curfew. All these developments turned the European futures red and weighed on risk sentiment that ultimately dragged the EUR/USD pair on the downside.

On Monday, ECB President Christine Lagarde said that Climate Change could create short-term volatility in output and inflation through extreme weather events and, if left unaddressed, can have long-lasting effects on growth and inflation. ECB announced on Monday that it was creating a team of around 10 ECB employees, reporting directly to Lagarde to set the central bank’s agenda on climate-related topics.

On Monday, the ECB Chief Economist Philip Lane said that the European Central bank primarily focused on bank credit conditions ad bond yields when assessing if financing conditions were favorable. He added that naturally, the focus on credit conditions in the banking system on one side and the bond market on the other side was consistent with the main methods used by central banks in steering financial conditions. On Tuesday, the Federal Reserve will meet for its first monetary policy meeting, and the decision of the meeting will be handed down on the next day. EUR/USD pair traders will keep an eye on Fed’s decision for future impetus.


Daily Technical Levels

Support   Resistance

1.2163       1.2173

1.2158       1.2178

1.2153       1.2183

Pivot Point: 1.2168

EUR/USD– Trading Tip

The EUR/USD pair’s technical side has turned bearish as it trades below the support level of 1.2133 level. Formation of the bearish engulfing candle on the hourly timeframe can extend selling bias until the support level of 1.2115 area. Whereas, further selling trend can lead the EUR/USD pair towards the support level of 1.2090 mark. Selling bias seems to dominate the EUR/USD pair today.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.36757 after placing a high of 1.37232 and a low of 1.36485. The GBP/USD pair struggled to advance on Monday amid the concerns over the coronavirus pandemic that worsened and raised the safe-haven appeal. The US Centers for Disease Control and Prevention reviewed data that suggested the U.K. coronavirus variant actually may be deadlier than other variants. A British report found that the variant was associated with a higher death rate than other variants. But the United Kingdom’s chief scientist Patrick Vallance has stressed to reporters that the evidence was not yet strong. 

Previous research has shown that the variant was more contagious than the previous form of coronavirus. But scientists did not believe it was more deadly as it began spreading in the U.K. last fall. Several separate analysis from British researchers found that the patients infected with the variant have a higher risk of severe disease and death. However, U.K. scientists insisted that these researches have several limitations and that more research was needed to confirm these findings.

These reports raised concerns for economic recovery as the threats of new variants could mean new and stricter restrictions throughout the globe. That raised the risk-off market sentiment that ultimately weighed on the risk perceived GBP/USD pair on Monday.

The British Pound advanced last week against its major rival currencies due to a combination of higher market sentiment and hopes for Britain ramping up its coronavirus vaccination scheme. However, the coronavirus pandemic continued to weigh heavily on the British Pound outlook due to the new variant and its association with the mortality rate. As a result, the U.K. government indicated that the current lockdown could last for quite some time as infection rates remain high in the country. These coronavirus fears continued weighing on the British Pound on Monday and dragged the GBP/USD pair on the downside in the absence of any macroeconomic data from both sides.

On the U.S. side, the safe-haven U.S. dollar was strong on Monday as investors were hesitant to sell it as global coronavirus pandemic fears boosted the appetite for safer assets. The greenback’s strength also weighed on GBP/USD pair and extended its losses on the day. However, the GBP/USD pair’s losses started to reverse in the late session on Monday, and the currency pair ended its day with zero loss or gained as it was closed at the same level it began its day with. The reversal in GBP/USD pair in late trading hours came in due to some good news from the U.K. side. 

The U.K. saw a sustained weakness in the infections and the death toll on Monday as the country reported the lowest cases since mid-December on that day. The British Health Secretary Matt Hancock praised the latest measures to flash early positive signs while conveying heavy vaccination and lockdown success. However, the overall sentiment remained depressing as the delayed U.S. coronavirus aid package and AstraZeneca and Pfizer vaccine delivery raised fears for global economic recovery.


Daily Technical Levels

Support   Resistance

1.3677       1.3694

1.3668       1.3700

1.3661       1.3710

Pivot Point: 1.3684

GBP/USD– Trading Tip

The GBP/USD pair continues trading with a bullish bias after violating the narrow trading range of 1.3680 – 1.3670. On the upper side, the GBP/USD may face resistance at 1.3736 level now, as the pair may form a triple top pattern here. At the same time, the support continues to hold around 1.3697 level. On the 2 hour timeframe, the GBP/USD has formed a symmetric triangle pattern, which is likely to provide resistance at 1.3701 along with support at 1.3613 level. Today, we can expect a choppy session in the Cable pair.   

USD/JPY – Daily Analysis

The USD/JPY closed at 103.756 after placing a high of 103.934 and a low of 103.670. USD/JPY pair extended its gains on Monday however remained depressive due to the risk-off market sentiment.

The demand for the greenback of risk-aversion pushed the USD/JPY pair to a daily high near 104 level. However, the U.S. treasury yields came under pressure with the yield on benchmark 10-year note down to 1.03% weighed by the news that U.S. President Biden’s stimulus plan faces opposition from Republican and Democrat lawmakers.

The $1.9 trillion stimulus package proposed by Biden is expected to get pass by the House of Representatives that is led by Democrats backing Biden. Still, the bill could face rejection at Senate as many senators were reluctant to pass another massive amount for spending just after a month of releasing $900 billion. However, Democrats were set to push through the package via a settlement that would relieve them of the need to receive Republicans’ support. Another option is to rapidly support the coronavirus-related funds and postpone the other suggested package features, such as a hike to the minimum wage.

Furthermore, the Federal Reserve monthly rate decision followed by Fed Chair Jerome Powell’s news conference is set to deliver later this week. Rates are projected to remain flat at a near-zero level that has stood there for almost a year now due to the coronavirus pandemic crisis. However, Powell’s words will be inspected for even the smallest signal of when recovery is likely expected, and as well as a narrowing of stimulus measures.

Over the past fortnight, Powell has claimed that tapering of stimulus measures will not happen anytime soon. Still, bond traders have completely ignored him and continued pushing yields higher in the hope of proving the Fed chief wrong that ultimately supported the U.S. dollar and raised the USD/JPY pair on Monday. 


Daily Technical Levels

Support   Resistance

103.77       103.82

103.74       103.86

103.71       103.88

Pivot Point: 103.80

USD/JPY – Trading Tips

The safe-haven pair USD/JPY continues to trade sideways inside a broad trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. The 50 periods EMA supports the bullish trend, and we may have odds of taking a buying trade over the 103.570 level today. Good luck! 

Categories
Forex Daily Topic Forex System Design

Trading System design – A Summary of your Best Options to Code your Strategy

In our latest article, we have seen that manually backtesting our strategy is cumbersome if performed correctly. Also, It is usually subjected to errors and the interpretation of the trader. Therefore, a basic knowledge of trading algorithm development and computer coding is a desirable task for any trader. The good news is, nowadays, there are many easy ways to do it since high-level languages are very close to natural language.

In our latest article, we have seen that manually backtesting our strategy is cumbersome if performed correctly. Also, It is usually subjected to errors and the interpretation of the trader. Therefore, a basic knowledge of trading algorithm development and computer coding is a desirable task for any trader. The good news is, nowadays, there are many easy ways to do it since high-level languages are very close to natural language.

In our latest article, we have seen that manually backtesting our strategy is cumbersome if performed correctly. Also, It is usually subjected to errors and the interpretation of the trader. Therefore, a basic knowledge of trading algorithm development and computer coding is a desirable task for any trader. The good news is, nowadays, there are many easy ways to do it since high-level languages are very close to natural language.

High-level languages to quickly build your Forex strategies.

MetaQuotes Language (MQL4/5) 

In this respect, the primary language we could think of to build your strategy in Forex is MetaQuotes Language 4 (MQL4). This language is a specialized subset of C++ , holding an extensive built-in library of indicators and trading signals.

Spending your time and efforts to master MQL4/5 is worthwhile because Metatrader 4 includes a suitable trading strategy tester and optimizer.

If you are new to programming, you could start by analyzing and modifying existing free-available EA’s. Starting with simple strategies is excellent because they will be easier to understand and change. Also, in trading, simple usually is much better than complex.

Python

Python is the reference language for data science. Its popularity and its extensive library on data science are well-known. What is less known is, Python also has comprehensive packages dedicated to trading.

As an example, you can have a look at this list taken from Open Source Python frameworks:

With Python, you can go as easy as backtest your strategy with three simple lines of code using the fastquant package.

from fastquant import backtest, get_stock_data
jfc = get_stock_data("JFC", "2018-01-01", "2019-01-01")
backtest('smac', jfc, fast_period=15, slow_period=40)

source: Backtest Your Trading Strategy with Only 3 Lines of Python

Of course, first, you have to create the code for your strategy.

Market Data 

For backtesting purposes, you will need to download your historical market data with the necessary timeframe. The file, in CSV or Excel format, can be easily read by your Python code.

If, later on, you are going to apply your EA live, you will need a real-time streaming data feed. If this is the case, you will need to create an interface to your broker through an MT5 TradeStation (MT4 is not equipped with it).

Easylanguage and Tradestation / Multicharts

Tradestation and Multicharts are dedicated high-level trade stations. Easylanguage, a specialized subset of Pascal, was developed by the Tradestation team to create indicators and trading signals. Both platforms are terrific places to develop trading algorithms, and backtesting is straightforward.

Easylanguage, as its name indicates, was designed to make it as close to natural language as possible. The ample set of its built-in library makes coding simple, so the developer’s primary focus is the trading algorithm.

As this example, please read the code of an adjustable weighting percent blended moving average.

inputs: period1(50),period(20),factor(0.5);

variables: slow(0),fast(0), blended(0), var1(0), var2(0);

slow= average(close,period1);
fast= average(close,period2);

var1 = factor;

if var1<0 then var1=0;
if var1>1 then var1=1;

var2= 1-factor;
blended= (slow*var1)+(fast*var2);

plot1(blended,"blended");

 

You will see it is relatively easy to understand and follow. Anyway, it would be best if you dedicated some time to really master the language, to avoid or at least minimize coding errors.

Pine Script and Tradingview

Pine script is another specialized language to easily program your own studies and trading strategies if you have an account on Tradingview (which you may open for free). As in the case of Easylanguage, Pinescript is designed to be easily understood. 

Pine studies are used to display indicator information and graphs on a chart. It is preceded by the study() declaration. If you wished to create a strategy for backtesting, you have to use the strategy() declaration.

As with other languages, the best way to begin is by reading other people’s code and modifying it for your own purposes.

Coding strategies in pine script is similar to Easylanguage or MQL5. You create a code taking in mind that it will cycle on each bar in the chosen timeframe. 

We took this example of a MACD indicator from the Pine script quick start guide:

//@version=4

study("MACD")

fast = 12, slow = 26
fastMA = ema(close, fast)
slowMA = ema(close, slow)

macd = fastMA - slowMA
signal = sma(macd, 9)

plot(macd, color=color.blue)
plot(signal, color=color.orange)

Backtesting in Pine script is easy. But, there is no way to perform automated optimization. You will have to do it manually. You should go to the performance summary and the list of trades to find the causes of the lack of performance, apply parameter changes, and see if you get any improvement of that adjustment.

In our next article, we will go through the steps to develop a strategy using the Pine script.

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 26 – Blood on the Streets: Crypto Market in the Red

The crypto sector ended up almost completely in the red as most cryptocurrencies pulled back to lower levels. Bitcoin is currently trading for $31,575, representing a decrease of 5.26% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 7.24% on the day, while LTC lost 6.79% of its value.

The crypto sector ended up almost completely in the red as most cryptocurrencies pulled back to lower levels. Bitcoin is currently trading for $31,575, representing a decrease of 5.26% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 7.24% on the day, while LTC lost 6.79% of its value.

The crypto sector ended up almost completely in the red as most cryptocurrencies pulled back to lower levels. Bitcoin is currently trading for $31,575, representing a decrease of 5.26% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 7.24% on the day, while LTC lost 6.79% of its value.

Daily Crypto Sector Heat Map

EveryCoin gained 501.69% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by BBYS’s 280.04% and X Infinity’s 255.24% gain. On the other hand, ARTH lost 61.58%, making it the most prominent daily loser. It is followed by Typhoon Cash’s loss of 44.07% and Aventus’s loss of 40.31%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance increased slightly from when we last reported, with its value currently being 62.9%. This represents a 0.2% increase from our previous report.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has decreased greatly since we last reported, with its current value being $936.54 billion. This represents a $54.92billion decrease when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin’s gains in the past two days were taken away when bears took over the market after BTC failed to break the $34,627 mark. The cryptocurrency declined to the $32,350 level but quickly lost hold of it as well. BTC is currently hovering right above the $31,000 mark.

Bitcoin’s 1-hour RSI is getting dangerously close to the oversold territory, while its volume is descending, indicating a possible price stagnation or a direction reversal.

BTC/USD 1-hour chart

Bitcoin’s daily overview is completely neutral, while its weekly and monthly overviews are completely bullish. On the other hand, the 4-hour time-frame is completely bearish.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is below its 50-period EMA and its 21-period EMA
  • Price is close to its bottom Bollinger band
  • RSI is near the oversold area (31.21)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $32,350                             1: $30,072

2: $34,627                             2: $30,000

3: $37,445                             3: $27,960

Ethereum

The second-largest cryptocurrency by market cap spent the day retracing after posting a new all-time high at $1,477.30. ETH tested many levels but ultimately fell below the previous all-time high, and then the $1,420 and $1,350 levels as well. It is currently consolidating just above $1,300.

Ethereum seemingly created a zone of support just above the $1,300 level, which is holding up for 10 hours now. If this support holds long enough for BTC to change its price direction (or at least enter a sideways trading period), we may see ETH bulls reentering the market once again.

ETH/USD 1-hour Chart

Ethereum’s technicals on all time-frames are slightly tilted towards the buy-side, with its oscillators taking a more neutral stance.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is below both its 50-period and its 21-period EMA
  • Price near its bottom Bollinger band
  • RSI is very close to being oversold (39.73)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $1,350                               1: $1,211

2: $1,420                               2: $1,183.85

3: $1,440                               3: $1047.6

Litecoin

Litecoin has lost all of the gains it made yesterday, and then some. The eighth-largest cryptocurrency by market cap failed to pass the zone just under $150, which triggered a pullback and a dip below the $142.1 support (now resistance) level. On top of that, LTC also fell below the trading range it was in for the previous four days (excluding yesterday’s push).

LTC/USD 1-hour Chart

Litecoin’s short-term and long-term overviews have opposing stances: while its 4-hour and overviews show a slight tilt towards the sell-side, its weekly and monthly overviews are slightly bullish.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is below its 50-period EMA and its 21-period EMA
  • Price slightly above its bottom Bollinger band
  • RSI is close to being in the oversold territory (33.05)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $142.1                               1: $128.42

2: $161.5                               2: $120

3: $181.3                               3: $114.75

Categories
Forex Elliott Wave Forex Market Analysis

USDCHF: Examine These Three Charts Before Taking any Trade

 

 

 

Last week, the USDCHF pair developed a sideways movement pattern that looks like an inverted head and shoulder pattern. However, the primary mid-term trend remains dominated by bearish sentiment. Examine with us these three charts to help you foresee the pair’s potential movements in the coming sessions.

Inverted Head and Shoulder Pattern?

The USDCHF pair illustrated in the following 12-hour chart seems to develop a sideways formation after the accelerated decline observed during the second half of November 2020. After easing from the psychological support of 0.89, the price began to consolidate in a range between 0.8917 and 0.8757.

In the previous chart, the USDCHF seems to be forming an inverse head and shoulder (iH&S) pattern, suggesting a likely bullish reversal movement. According to chartist analysis, the iH&S formation will be confirmed if the price breaks and closes above the neckline located at 0.89171. 

For this reversal scenario, the invalidation level is located below the head, which holds its lowest level at 0.87576, corresponding to the low touched last January 06th.

Elliott Wave View Suggests Exhaustion

The big picture of the USDCHF pair exposed in its daily chart reveals the incomplete bearish impulsive sequence of Minute degree labeled in black, suggesting a limited decline.

As illustrated in the last chart, the USDCHF began a downward impulsive sequence of Minute degree on March 23rd when the price found fresh sellers at 0.99017. The price action reveals the completion of its third extended wave bearish move, which found support at 0.89986 in late August 2020, starting to advance mostly sideways in its wave ((iv)) in black. 

Once the sideways corrective formation corresponding to the fourth wave in black finished, the pair began to continue its declines in the wave ((v)) of Minute degree, which currently seems developing its wave (iv) of Minuette degree identified in blue. 

On the other hand, the timing and momentum oscillator reveals that the bearish pressure still controls the price action. In this context, the price would see a further decline, confirming Elliott Wave’s outlook of a pending fifth wave of Minuette degree.

This bearish continuation scenario’s invalidation level stays at 0.8979, which corresponds to the end of wave (i).

Price Action Reveals Indecision

The USDCHF pair in its daily chart unfolded in the bellow chart shows an indecision candle corresponding to the last Friday’s session, leaving a narrow body and long-tailed candlestick pattern. This market context carries us to expect a pause in the downward movement developed in previous trading sessions.

The confirmation of the bearish scenario will occur if the price closes below the LOD at 0.88385. Conversely, a reversal signal could be established by a Monday 25th session’s close if it exceeds Friday’s high of 0.88662.

In summary, the USDCHF pair develops a sideways formation that looks like an incomplete inverse head and shoulders pattern suggesting the potential bullish reversal sequence if the price soars above the neckline located at 0.89171. However, the Elliott wave outlook suggests further declines, corresponding to a possible wave (v) of Minuette degree labeled in blue. In this context, the price action reveals the indecision of the next direction. If the price decides to continue its decline, the USDCHF could re-test January’s 06 low zone.

Categories
Forex Market Analysis

Daily F.X. Analysis, January 25 – Top Trade Setups In Forex – ECB President Lagarde in Limelight! 

On the news front, eyes will remain on the ECB President Lagarde Speaks and German Ifo Business Climate figures from the Eurozone. President Lagarde is due to participate in a virtual panel discussion titled “Restoring Economic Growth” at Davos 2021.

On the news front, eyes will remain on the ECB President Lagarde Speaks and German Ifo Business Climate figures from the Eurozone. President Lagarde is due to participate in a virtual panel discussion titled “Restoring Economic Growth” at Davos 2021.

On the news front, eyes will remain on the ECB President Lagarde Speaks and German Ifo Business Climate figures from the Eurozone. President Lagarde is due to participate in a virtual panel discussion titled “Restoring Economic Growth” at Davos 2021.

Economic Events to Watch Today  

  


 

EUR/USD – Daily Analysis

 EUR/USD pair was closed at 1.21707 after placing a high of 1.21893 and a low of 1.21513. The EUR/USD tried to break above the strong resistance level of 1.2200 on Friday but failed as the U.S. dollar strength and the worsened pandemic situation around the bloc added pressure on the single currency Euro.

The U.S. dollar was strong across the board as investors were worried about the chances that President Joe Biden’s $1.9 trillion stimulus proposal failed to gain traction. Hopes have raised that the package’s final deal could be smaller or just be dragged, and this supported the local currency U.S. dollar, which ultimately capped further upside in the EUR.USD pair on Friday.

Meanwhile, the U.S. dollar was also strong due to better than expected macroeconomic data release on Friday. At 19:45 GMT, the Flash Manufacturing PMI rose to 59.1 against the forecasted 56.6 and supported the U.S. dollar, and capped further gains in EUR/USD pair. The Flash Services PMI also rose to 57.5 against the forecasted 53.3 and supported the U.S. dollar. At 20:00 GMT, the Existing Home Sales also rose to 6.76M against the forecasted 6.55M and supported the U.S. dollar, and limited the upward momentum in EUR/USD pair. From the European side, at 13:15 GMT, the French Flash Services PMI dropped to 46.5 against the predicted 48.3 and weighed on Euro. The French Flash Manufacturing PMI raised to 51.5 against the expected 50.6 and supported Euro that added further gains in EUR/USD pair. At 13:30 GMT, the German Flash Manufacturing PMI remained flat at 57.0. The German Flash Services PMI raised to 46.8 against the forecasted 45.1 and supported Euro that ultimately provided additional gains to EUR/USD pair. At 14:00 GMT, the Flash Manufacturing PMI remained flat with the expectations of 54.7. The Flash Services PMI raised to 45.0 against the projected 44.4 and supported Euro and pushed the EUR/USD pair higher. 

Meanwhile, the EUR/USD pair hit its highest in the week on Friday, but the day’s gains were small as the European leaders showed frustration about the slow vaccination pace. The new mutants of coronavirus raised fresh concerns in the European Union as the governments considered imposing stricter border controls and banning non-essential travel.

The European Central Bank chief Christine Lagarde warned that the pandemic still poses severe risks to the Eurozone economy as concerns grow about new variants and sluggish vaccination campaigns. While many countries were struggling to reduce the number of infections, the emergence of more contagious virus variants first discovered in the U.K. and South Africa has added to nervousness. 

However, one factor that helped the common currency in this depressing environment to stay strong onboard was European Central Bank’s latest decision. ECB said that risks remain tilted to the downside, but they were less pronounced. The President of ECB also emphasized the need for more monetary support while the policy remained unchanged. 


Daily Technical Levels

Support   Resistance

1.2127       1.2190

1.2086       1.2214

1.2063       1.2254

Pivot point: 1.2150

EUR/USD– Trading Tip

The EUR/USD continues trading bullish at 1.2173 level and holding right above the 1.2158 support mark. Over this level, the EUR/USD has chances of bullish trend continuation until 1.2220 level. The pair has recently closed candles over 1.2158, and the continuation of the upward trend seems very likely as the 50 periods EMA supports the pair. On the higher side, the EUR/USD may find a target around 1.2220 level.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.36816 after a high of 1.37358 and a low of 1.36354. After rising for three consecutive days, the GBP/USD pair dropped on Friday as the coronavirus pandemic hit the country hard and raised concerns for economic recovery as the lockdown restrictions extended. 

The GBP/USD pair also fell on Friday amid the broad-based strength of the greenback triggered by the rising U.S. Treasury yields and the stronger than expected macroeconomic data. The U.S. dollar was also strong as the market’s investors shifted their focus from Joe Biden’s $1.9 trillion massive stimulus package and rather ignored its prospects.

The GBP/USD pair saw selling pressure on Friday as the death toll around the country rose to an alarming level amid the coronavirus’s new variant. According to a rolling analysis by Oxford University, until Thursday, the U.K. had the highest per capita daily death toll of any other country globally, around twice that of the United States.

Given this state, the British government extended the nationwide lockdown till July 17 and also decided to quarantine travelers from high-risk coronavirus countries for at least 10-days as it failed to curb the rising number of coronavirus variant infections. Meanwhile, Britain’s hospitals were also struggling under an ever-growing flow of patients. In the extended lockdown situation, the economic concerns raised rapidly and weighed on the Sterling that ultimately dragged the currency pair GBP/USD on the downside.

Furthermore, on Friday, a U.K. report was released that stated a realistic possibility that the new U.K. variant had a higher mortality rate than other variants. While the data was not decisive but UK PM Boris Johnson said that there was some evidence that the new variant may be connected with a higher degree of mortality. This news added concerns about economic recovery and weighed on the British Pound that added GBP/SD pair losses.

On the data front, at 19:45 GMT, the Flash Manufacturing PMI advanced to 59.1 against the projected 56.6 and supported the U.S. dollar that dragged the GBP/USD pair even on the downside. The Flash Services PMI also advanced to 57.5 against the projected 53.3 and supported the U.S. dollar. At 20:00 GMT, the Existing Home Sales also advanced to 6.76M against the projected 6.55M and supported the U.S. dollar and added GBP/USD pair losses.

From Britain’s side, at 05:01 GMT, the GfK Consumer Confidence for January dropped to -28 against the expected -30 and supported British Pound that capped further downward momentum in GBP/USD pair. At 14:30 GMT, the Flash Manufacturing PMI for January dropped to 52.9 against the forecasted 53.5 and weighed on the British Pound, ultimately pushing the pair GBP/USD lower. The Flash Manufacturing PMI also dropped to 38.8 against the expected 45.2 and weighed on British Pound and added GBP/USD pair losses.


Daily Technical Levels

Support   Resistance

1.3676      1.3763

1.3624      1.3798

1.3589      1.3850

Pivot Point: 1.3711

GBP/USD– Trading Tip

The GBP/USD pair continues trading with a bullish bias after violating the narrow trading range of 1.3680 – 1.3670. On the higher side, the GBP/USD may find resistance at 1.3736 level now, as the pair may form a triple top pattern here. At the same time, the support continues to hold around 1.3697 level. Bullish bias dominates. 

USD/JPY – Daily Analysis

The USD/JPY closed at 103.769 after placing a high of 103.884 and a low of 103.446. After falling for two consecutive sessions, the USD/JPY pair rose on Friday amid the broad-based U.S. dollar strength; however, the sentiment remained depressing as the pandemic raised concerns for the economic recovery. The U.S. Dollar Index that measures the value of the greenback against the basket of six currencies was up by 0.1% on Friday to 90.243 level and supported the U.S. dollar that ultimately added gains in the currency pair USD/JPY.

The U.S. dollar was also high onboard on Friday as the U.S. Treasury yields also rose on the day amid the idea of greater borrowing to fund the additional stimulus proposed by Joe Biden for %1.9 trillion as it could raise the inflation and change the Federal Reserve’s ultra-loose monetary stance. This supported the risk-on market sentiment that ultimately supported the USD/JPY pair as traders were prepared to buy riskier currencies on the idea of quicker than previously expected global economic recovery after the additional stimulus to the economy.

However, these hopes deteriorated after the new variants of coronavirus from the U.K. and South Africa raised global economic concerns in the market. According to a report released on Friday from the U.K., there was a convincing possibility that the new variant of coronavirus in Britain had a higher death rate than other variants. While the data was not conclusive, but UK PM Boris Johnson said that there was some evidence that the new variant may be related to a higher degree of mortality.

This prompted U.S. President Joe Biden to reinstate a ban on most non-US citizens entering the country from Brazil and the U.K., where more transmissible variants of the coronavirus have emerged recently months. According to public health officials, the U.S. also added South Africa to the restricted list as the concerning variant has already spread beyond South Africa. Arrivals from Ireland and 26 countries in Europe were also banned to protect the people of the U.S. as it has already faced the pandemic on an extreme level.

The Centers for Disease Control and Prevention said that these measures were taken to protect Americans and reduce the risks of these variants spreading and worsening the current pandemic that already affected about 25 million Americans. These developments raised the global economic recovery concerns and added in the risk-off market sentiment that ultimately capped further upside in the USD/JPY pair.

On the data front, at 19:45 GMT, the Flash Manufacturing PMI increased to 59.1 against the anticipated 56.6 and supported the U.S. dollar that added in the upward momentum of the USD/JPY pair. The Flash Services PMI also increased to 57.5 against the anticipated 53.3 and supported the U.S. dollar. At 20:00 GMT, the Existing Home Sales also increased to 6.76M against the anticipated 6.55M and supported the U.S. dollar that pushed the USD/JPY pair higher.

At 04:30 GMT, National Core CPI for the year from Japan came in as -1.0% against the projected -1.1% and supported Japanese Yen. At 05:30 GMT, the Flash Manufacturing PMI dropped to 49.7 against the forecasted 50.1 and weighed on the Japanese Yen, supporting the upward momentum in the USD/JPY pair on Friday.


Daily Technical Levels

Support   Resistance

103.33      103.67

103.16      103.84

102.99      104.01

Pivot point: 103.50

USD/JPY – Trading Tips

On Monday, the safe-haven pair USD/JPY continues to trade sideways inside a broad trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. The 50 periods EMA supports the bullish trend, and we may have odds of taking a buying trade over the 103.570 level today. Good luck! 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 25 – Ethereum Reaches a new All-Time High: What’s Next?

The crypto sector ended up mostly in the green as altcoins pushed up (while Bitcoin remained mostly stable). Several cryptocurrencies reached new all-time highs, including Ethereum and Aave. Bitcoin is currently trading for $33,335, representing an increase of 1/59% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 7.93% on the day, while LTC gained 2.12% of its value.

The crypto sector ended up mostly in the green as altcoins pushed up (while Bitcoin remained mostly stable). Several cryptocurrencies reached new all-time highs, including Ethereum and Aave. Bitcoin is currently trading for $33,335, representing an increase of 1/59% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 7.93% on the day, while LTC gained 2.12% of its value.

The crypto sector ended up mostly in the green as altcoins pushed up (while Bitcoin remained mostly stable). Several cryptocurrencies reached new all-time highs, including Ethereum and Aave. Bitcoin is currently trading for $33,335, representing an increase of 1/59% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 7.93% on the day, while LTC gained 2.12% of its value.

Daily Crypto Sector Heat Map

Foglory Coin gained 389.19% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by Unifty’s 187.19% and MileVerse’s 160.11% gain. On the other hand, EveryCoin lost 76.45%, making it the most prominent daily loser. It is followed by Zloadr’s loss of 62.48% and FUTUREXCRYPTO’s loss of 54.1%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance dropped further from when we last reported, with its value currently being 62.7%. This represents a 2.1% decrease from our previous report.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has increased greatly since we last reported, with its current value being $991.66 14.56 billion. This represents a $77.10 billion increase when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the weekend with its price slowly descending towards the $30,000 mark until a new surge of buyers changed the price direction. BTC has bounced from the $30,900 level and pushed up past the $33,250 level. Its price is currently consolidating in the $33,400 zone.

Bitcoin’s upside is guarded not only by the $34,627 level but the recent high of $33,865. Traders will have to be careful when taking long positions on BTC and will have to devote most of the time checking the order flow to properly gauge the resistance levels.

BTC/USD 1-hour chart

Bitcoin’s 4-hour and weekly overviews are bullish and show some signs of neutrality or bearishness, while its monthly overview is completely bullish. On the other hand, its daily time-frame is pretty neutral.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is slightly above its 50-period EMA and its 21-period EMA
  • Price is close to its top Bollinger band
  • RSI is near the overbought area (64.47)
  • Volume is slightly below average

Key levels to the upside:          Key levels to the downside:

1: $34,627                             1: $32,350

2: $37,445                             2: $30,072

3: $38,000                             3: $27,960

Ethereum

The second-largest cryptocurrency by market cap “decoupled” from Bitcoin and pushed up, surging to its all-time highs and briefly creating a new one at $1,477.3. Ether is currently fighting to stay above $140 and enter the price discovery mode yet again.

Ethereum has quite a lot of support levels right beneath its current price, most notably the $1,440, $1,420, and $1,350 levels. Its upside levels past the all-time high will, however, have to be determined by drawing Fib retracement levels.

ETH/USD 1-hour Chart

Ethereum’s technicals on the 4-hour, daily, and weekly time-frames are bullish and show some signs of neutrality or bearishness, while its monthly overview is completely bullish.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is above both its 50-period and its 21-period EMA
  • Price near its top Bollinger band
  • RSI is very close to being overbought (68.27)
  • Volume is above average

Key levels to the upside:          Key levels to the downside:

1: $1,440                               1: $1,420

2: $1,477.3                            2: $1,350

3: $1,500                               3: $1,211

Litecoin

Litecoin’s weekend went without much price fluctuation, with LTC moving between $133 and $143.5. However, LTC bulls managed to push past the $142.1 level and bring its price to $145, where it is now consolidating. Litecoin’s volume also surged during the price increase.

Litecoin traders will have to pay attention to several factors, including LTC technicals, Bitcoin price movement as well as Ethereum price movement.

LTC/USD 1-hour Chart

Litecoin’s overviews on all time-frames are bullish, with its 4-hour, daily, and weekly time-frames having some signs of neutrality, while its monthly overview is completely bullish.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is slightly above its 50-period EMA and its 21-period EMA
  • Price slightly above its middle Bollinger band
  • RSI is neutral (63.36)
  • Volume is slightly above average

Key levels to the upside:          Key levels to the downside:

1: $161.5                               1: $142.1

2: $181.3                               2: $128.42

3: $186.3                               3: $120

Categories
Forex Videos

Forex Fear of Missing Out! (FOMO) Don’t Make This Basic Mistake!

https://youtu.be/H2wlrVrDo4M

https://youtu.be/H2wlrVrDo4M


Fear of Missing Out (FOMO). What is it? 

Thank you for joining this forex academy educational video.

In this session, we will be looking at the fear of missing out or f o m o.  What is it, and how does it affect trading?

The fear of missing out is a psychological aspect of trading any financial asset.  In fact, it is so deeply rooted in our psyche that it affects the way humans think about many aspects of our lives, and sometimes it’s so powerful that it blinds us to all reasonable thinking and can end up causing us to make rash decisions, which are ill-thought out, and untimely.

The fear of missing out has been with us for centuries, but it was only in 1996 that a research paper written by a marketing strategist, Dr. Dan Herman, entitled the piece ‘the fear of missing out.’

Although people can deal with the fear of missing out on social events, such as parties, or perhaps a sale where they missed a good bargain, when it encroaches into one’s financial trading ability and adversely affects decision-making, it can then become extremely expensive if not recognised and handled correctly.

A good example of FOMO is the recent bull run on bitcoin, especially bitcoin to the USD, and other crypto assets, with one broker, EToro, reporting 380,000 new accounts opened since the beginning of January 2021, and where much of the exponential growth in bitcoin / US dollar trading can be attributed to retail traders jumping on the bandwagon during the timeframe of this incredible rise in bitcoin value and where this is down to the fear of missing out.

While bitcoin was trading at 42,000 dollars and whereby institutional and professional traders were focusing on technical analysis, where analysis suggested that price was peaking, the fear of missing out traders were still piling in and buying bitcoin on CFD’s and physical exchanges at levels shown here at position A, and where the subsequent tanking to $30K wiped out accounts and where billions were lost to retail FOMO investors who bought close to or at the top of the market. 

Traders should always ask themselves if they are making their trading decisions based on sound technical and fundamental analysis, including market sentiment, or are they looking blindly, trading under FOMO pressure, looking to ride a trend wave which may be peaking or bottoming out and about to reverse? 

Here is an example of a bull run from September 2020 to January 2021 for cable, which has risen 10,000 pips and where many traders will have been buying at the top of the market because they thought there would be a continuation perhaps to 1.400 or higher, now that the United Kingdom has left the European Union with a free trade deal in place

 

 

…and many traders who thought that the EU and UK would never reach an agreement would have sold at the bottom of the bear run, which topped out at 1.3475 and gone short at 1.2700 for fear of missing out on the bear run.

Trends do not have to be in their hundreds or thousands of pips or points before a trader is worried they are missing out and jump onto one. It could be just a dozen or so pips or points. The important thing is to remember that one’s decision-making must be based on strong technical analysis while factoring in market sentiment and fundamental analysis, which may be lagging behind the market move. They should factor in the possibility of price action stalling at any point or consolidating and use relevant stops in order not to blow their accounts on a single trade. And where traders must realise that f o m o has no place in their trading armoury, which must also consist of a trading style which has consistently been providing winning trades.

Categories
Forex Daily Topic Forex System Design

Trading System design – Manual Backtesting your Trade Idea

Trading System design – Manual Backtesting your Trade Idea

Trading System design – Manual Backtesting your Trade Idea

We have a potential trading idea, and we would like to see if it is worthwhile. Is it really critical to code it? No. But very convenient? Yes.

Manual historical backtesting

There is no need to code the strategy to do an initial validation test. All we have to do is pick a chart, go back in time and start performing trades manually. But how to do it properly?

  1.  Use a trading log spreadsheet, as the one forex.academy provides.
  2. Thoroughly describe the methodology, including the rules for entry, stop-loss, and take-profit settings. 
  3. Use a standard 1 unit trade size ( 1 lot, for example) in all the trades.

Once the rules of the game have been set, we position the chart, start moving the action one bar at a time, and trade the chart’s right side. It is critical to take all the signals the strategy offers. Cherrypicking spoils the test.

Market Condition

The financial markets move in phases. We should think it has two main phases and three directions.

 

 

The two main phases are impulses and corrections.

The three movements are Upward (Bullish), downward (bearish), and sideways (consolidations).

Bear and bull directions are mostly similar in the Forex market because currencies are traded in pairs, so the quote currency’s bear market is the base currency’s bull market and vice-versa. 

With commodities, precious metals, and cryptocurrencies against fiat, this does not hold.

To properly test your strategy, you should apply it in all market directions and phases. Even better is performing a different evaluation for each market state. That way, your evaluation will tell you in which market conditions it works best and in which is not acceptable to apply it; thus, you could create a complementary rule to filter out the market phases in which the strategy fails.

Different markets

You must apply the strategy to all markets you intend to trade using it. As with the market conditions, you should test each market separately. After having all markets tested, you will find useful information regarding how markets the strategy works best and the correlations among markets when using it. That applies, of course, if you use the same timeframes and periods in all markets, which is advisable.

If you do it as said, you can also perform the summation of all markers date by date and assess the overall performance, its main parameters, and system quality.

Pros & Cons of manually backtesting 


 

  • No programming skills are required.
  • It helps you perceive how a real market evolves trade by trade.
  • You will find the potential logic errors, such as stop-loss wrongly set, take profits too close to the opening, thus 
  • You will be able to correct most of the gross mistakes of the strategy.

 

 

  • Cherrypicking. Discipline is key. If you start cherrypicking, you no longer are testing your original idea.
  • Most people doing manual backtesting do not properly trade all phases and markets. Not always thoroughly test all markets and their conditions, as it would require a lot of time. Thus the test is incomplete.
  • Time-consuming. A complete manual backtest takes much longer than a computer-generated backtest.
  • Awkward optimization. Optimization is also tricky and time-consuming. That is so because a parameter change would need another backtesting.

Final words

Manual backtesting allows us to have a first impression of how a new trade idea would fare in real trading, but a thoroughly manual backtest and optimization are time-consuming. Therefore, serious traders should start developing basic programming skills to automate both processes.

Categories
Forex Market Analysis

Daily F.X. Analysis, January 22 – Top Trade Setups In Forex – Manufacturing & Services PMI Ahead!  

On the news front, eyes will remain on the Manufacturing PMI and Services PMI figures from the Eurozone, U.K., and the United States. Almost all of the economic figures are expected to perform poorly than in previous months. Price action will depend upon any surprise changes in the PMI figures.

On the news front, eyes will remain on the Manufacturing PMI and Services PMI figures from the Eurozone, U.K., and the United States. Almost all of the economic figures are expected to perform poorly than in previous months. Price action will depend upon any surprise changes in the PMI figures.

On the news front, eyes will remain on the Manufacturing PMI and Services PMI figures from the Eurozone, U.K., and the United States. Almost all of the economic figures are expected to perform poorly than in previous months. Price action will depend upon any surprise changes in the PMI figures.

Economic Events to Watch Today  

  

EUR/USD – Daily Analysis

UR/USD pair was closed at 1.21671 after placing a high of 1.21728 and a low of 1.21022. Despite the rising fears of the Eurozone falling into recession due to the damage caused by pandemic across the bloc, as warned by the European Central Bank President Christin Lagarde, the Euro rose against the U.S. dollar to a one-week high.

On Thursday, the European Central Bank President Christine Lagarde said that the coronavirus pandemic was still posing serious risks to the eurozone economy as lockdowns were tightened across the region. She added that the start of vaccination campaigns across the euro area was an important milestone in resolving the ongoing health crisis. Nonetheless, the pandemic continued to pose serious risks to public health and the euro area and the global economies.

In many of the European nations, the New Year began with stricter social restrictions and national lockdowns. This week, Germany extended a national lockdown until February 14, and the Netherlands announced that there would be a curfew starting from next week. France also chose to intensify its curfew hours earlier this month, while Portugal decided to close schools from Friday.

According to the European Centre for Disease Prevention and Control, Europe has reported more than 16 million coronavirus infections, with more than 400,000 deaths so far. Lagarde said that it was ready to update its policies whenever necessary amid the economic uncertainty. She added that ECB’s main policy target was to achieve an inflation rate close to 2%. 

Meanwhile, at its policy meeting on Thursday, ECB kept its interest rates and its huge stimulus program unchanged. The main refinancing operations remained flat at 0.00%, the marginal lending facility at 0.25%, and the deposit facility at -0.50%. The Governing Council has also decided to continue the purchases under the pandemic emergency purchase program (PEPP) with a total of 1850 billion euros until at least the end of March 2022.

In December, the bank estimated a GDP rate of 3.9% for 2021 and 2.1% for 2022. However, according to ECB, there were doubts over how the euro area will cope this year after a 7.3% GDP drop last year. ECB also signaled it might not need the full extent of its emergency purchase program to support the recovery. However, chances for an increase in the program were also mentioned to ensure the euro area economy remains well-financed. These comments from Lagarde failed to reverse the upward momentum of the EUR/USD pair on Thursday.

On the data front, at 19:30 GMT, the Consumer Confidence from Europe for January dropped to -16 against the expected -15 and weighed on Euro that capped further upside in EUR/USD pair. From the U.S. side, at 18:30 GMT, the Philly Fed Manufacturing Index for January rose to 26.5 against the forecasted 11.2 and supported the U.S. dollar that limited the upward momentum in EUR/USD pair. The Unemployment Claims from last week were decreased to 900K from the forecasted 930K and supported U.S. dollar. 

For December, the Building Permits rose to 1.71M against the forecasted 1.60M and supported the U.S. dollar. From December, the Housing Starts also rose to 1.67M against the forecasted 1.56M and supported the U.S. dollar that also weighed on the rising EUR/USD prices.

Despite strong macroeconomic data from the U.S., the greenback remained on the back foot on Thursday. It declined almost 0.2% against its rival currencies amid the rising hopes for a further stimulus package under Joe Biden’s administration. This weakness of the U.S. dollar also supported the EUR/USD pair’s rising prices on Thursday.

Furthermore, the U.S. recorded the death toll from coronavirus above 400,000, and it was expecting about 500,000 deaths from the pandemic by mid-February. This alarming situation prompted Joe Biden to sign orders to intensify the vaccination program that ultimately added to the market’s risk sentiment and supported the risk perceived EUR/USD pair on Thursday.


Daily Technical Levels

Support   Resistance

1.2006      1.2091

1.2039      1.2106

1.2058      1.2139

Pivot Point: 1.2062

EUR/USD– Trading Tip

The EUR/USD is trading with a bullish bias at 1.2128 level. The EUR/USD is holding right below 50 periods EMA on the hourly timeframe, extending the EUR/USD pair’s resistance. On the lower side, the support level continues to hold around 1.2120 and 1.2062 level. The MACD and RSI are suggesting a mixed bias for the EUR/USD pair. Buying can be seen over 1.2115.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.37332 after placing a high of 1.37456 and a low of 1.36469. GBP/USD pair rose to its highest since May 2018 on Thursday amid broad-based U.S. dollar weakness and a rising appetite for risk. The GBP/USD pair rose for 3rd consecutive session on Thursday as the global appetite for risk was raised, with Joe Biden sworn in as 46th President of the United States. Another reason behind the rising GBP/USD prices was the weaker U.S. dollar driven by the rising hopes for a massive stimulus package under Biden’s administration.

The new President is expected to announce a $1.9 trillion stimulus package to help the American economy survive through the ongoing coronavirus pandemic that has cost more than 400,000 American lives. Markets were confident that the stimulus package would boost the global economic situation and, in turn, will also push the risk-sensitive Pound higher.

 Moreover, the British Pound was already strong onboard due to Bank of England’s governor Andrew Bailey who expected a pronounced recovery in Britain’s economy as vaccination against coronavirus is underway. On Thursday, the Bank of England released the credit conditions survey that indicated an increase in the mortgage payment default rates at the beginning of 2021 as the pandemic’s economic impact hit the households. This weighed a little over British Pound and capped further upside in GBP/USD pair on Thursday.


Daily Technical Levels

Support   Resistance

1.3622      1.3717

1.3576      1.3764

1.3528      1.3811

Pivot Point: 1.3670

GBP/USD– Trading Tip

The GBP/USD pair continues trading sideways between a narrow trading range of 1.3740 – 1.3703 level. On the lower side, a bearish breakout of 1.3703 level can extend the selling trend until the next support level of 1.3679 level. Conversely, a bullish crossover of 1.3740 can extend buying trend until the 1.3775 level. Let’s keep our eyes on the 1.3700 level today.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.489 after placing a high of 103.666 and a low of 103.325. The currency pair USD/JPY remained under consolidation and posted small losses as the U.S. dollar remained weak throughout the day. The main driver of currency pair USD/JPY on Thursday remained the rising hopes for massive stimulus from the new President of the U.S. and the latest growth outlook from the Bank of Japan.

The Bank of Japan kept its monetary policy steady on Thursday, upgraded its economic forecast for the next fiscal year, and warned of escalating risks to the outlook as new coronavirus emergency measures threatened to disrupt a fragile recovery.

Bank of Japan maintained its targets under yield curve control at -0.1% for short-term interest rates and around 0% for 10-year bond yields. The Governor of BOJ Haruhiko Kuroda said that the board had discussed the bank’s review of its policy tools due in March, though he also dropped a few hints on the outcome.

In the fresh quarterly projections, the Bank of Japan upgraded next fiscal year’s growth forecast to a 3.9% expansion from a 3.6% gain seen three months ago based on hopes the government’s huge spending package will soften the blow from the pandemic. This projection raised the Japanese Yen that ultimately weighed on the USD/JPY pair on Thursday.

However, BOJ offered a depressing view on consumption and warned that services spending would remain under strong downward pressure due to the fresh state of emergency measures taken this month. Kuroda said that the risk of Japan sliding back into deflation was not high and signaled the BOJ had offered sufficient stimulus, for now, to ease the blow from COVID-19.

On the data front, at 18:30 GMT, the Philly Fed Manufacturing Index for January advanced to 26.5 against the anticipated 11.2 and supported the U.S. dollar. The Unemployment Claims from last week fell to 900K from the anticipated 930K and supported the U.S. dollar that capped further downside in the USD/JPY pair. For December, the Building Permits advanced to 1.71M against the anticipated 1.60M and supported the U.S. dollar. The Housing Starts from December also advanced to 1.67M against the anticipated 1.56M and supported the U.S. dollar and limited USD/JPY pair losses.

From Japan, at 04:50 GMT, the Trade Balance from December dropped to 0.48T against the expected 0.70T and weighed on the Japanese Yen that limited the downfall in the USD/JPY pair on Thursday. Despite the stronger than expected macroeconomic data from the U.S., the greenback fell by 0.2% against the basket of six currencies and weighed on the USD/JPY pair as the hopes for a massive stimulus package from Democratic President Joe Biden increased.

Joe Biden is expected to announce a $1.9 trillion coronavirus relief package that will ultimately weigh on the local currency. Furthermore, the rising death cases from coronavirus in the U.S. also weighed on the U.S. dollar as the death toll surpassed 400,000 and raised fears. The weakness of the U.S. dollar dragged the USD/JPY prices on the downside on Thursday.


Daily Technical Levels

Support   Resistance

103.53      104.16

103.31      104.56

102.91      104.78

Pivot Point: 103.94

USD/JPY – Trading Tips

On Friday, the USD/JPY continues to trade sideways inside a wide trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. The 50 periods EMA supports the bullish trend, and we may have odds of taking a buying trade over the 103.570 level today. Good luck! 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 22 – Bitcoin Briefly Drops Below $30K; Market Sees Blood on the Streets

The crypto sector ended up almost completely in the red as Bitcoin’s drop below $30,000 (at one point) led the market down. Bitcoin is currently trading for $31,730, representing a decrease of 8.41% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 11.29% on the day, while LTC lost 4.76% of its value.

The crypto sector ended up almost completely in the red as Bitcoin’s drop below $30,000 (at one point) led the market down. Bitcoin is currently trading for $31,730, representing a decrease of 8.41% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 11.29% on the day, while LTC lost 4.76% of its value.

The crypto sector ended up almost completely in the red as Bitcoin’s drop below $30,000 (at one point) led the market down. Bitcoin is currently trading for $31,730, representing a decrease of 8.41% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 11.29% on the day, while LTC lost 4.76% of its value.

Daily Crypto Sector Heat Map

EveryCoin gained 734.83% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by Vox.Finance’s 132.94% and DACC’s 129.86% gain. On the other hand, PegsShares lost 99.20%, making it the most prominent daily loser. It is followed by Mithril Share’s loss of 75.17% and Chimpion’s loss of 59.53%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance stayed at the same spot as when we last reported, with its value currently being 64.8%.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has decreased greatly since we last reported, with its current value being $914.56 billion. This represents a $10.97 billion decrease when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

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Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has had a horrible day as bears took over the market. Its price dropped to as low as $28,800, but found support in its 50-day EMA. The downturn, however, means that the largest-cryptocurrency by market cap fell out of its triangle formation, most likely spelling a start of a short-term downtrend or sideways trading phase.

Bitcoin is very unpredictable at the moment, but traders could find an opportunity in looking for drastic volume increases and “catch the wave” of buyers or sellers (while taking into account all the support and resistance levels).

BTC/USD 1-hour chart

Bitcoin’s weekly and monthly time-frames are bullish but show some signs of neutrality or bearishness. On the other hand, its 4-hour and daily time-frames are completely bearish.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is slightly below its 50-period EMA and at its 21-period EMA
  • Price is at its middle Bollinger band
  • RSI is neutral after returning from being oversold (48.04)
  • Volume is above average

Key levels to the upside:          Key levels to the downside:

1: $32,350                             1: $30,072

2: $34,627                             2: $30,000

3: $37,445                             3: $27,960

Ethereum

The second-largest cryptocurrency by market cap followed Bitcoin’s direction, but with slightly less intensity. Ether’s price dropped below the $1,211 and $1,183.85 levels and found support in the $1,047.6 level. However, the bounce that came after the bulls came into the market was insufficient to break the $1,183.85 level, and Ethereum’s price is now trading just below it.

The $1,183.85 level could be considered a pivot point, and ETH’s short-term price direction will greatly depend on whether bulls manage to break this resistance.

ETH/USD 1-hour Chart

Ethereum’s technicals are still mostly tilted towards the buy-side, with its longer time-frames (weekly and monthly) being completely bullish, while its daily time frame’s oscillators are pointing to the sell-side. On the other hand, its 4-hour time-frame is completely bearish.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is below its 50-period and at its 21-period EMA
  • Price is at its middle Bollinger band
  • RSI is neutral (45.02)
  • Volume is above average

Key levels to the upside:          Key levels to the downside:

1: $1,183.85                          1: $1047.5

2: $1,211                              2: $960.5

3: $1,350                             3: $932.5

Litecoin

Litecoin’s movement in the past 24 hours much resembled Ethereum, with its price dropping below the $142.1 level and finding support slightly below the $128.4 level. While its push up did not reach the now-resistance level of $142.1, Litcoin did find support in the 21-hour EMA.

Litecoin’s volume increase in recent hours is negligible compared to the increase that Bitcoin and Ethereum saw. This may indicate less intensity in the moves to come, regardless of the price direction.

LTC/USD 1-hour Chart

Litecoin’s weekly and monthly time-frames are completely bullish and but show no signs of neutrality or bearishness. On the other hand, its 4-hour and daily time-frames are completely bearish.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is slightly below its 50-period EMA and slightly above its 21-period EMA
  • Price slightly above its middle Bollinger band
  • RSI is neutral (51.31)
  • Volume is slightly above average

Key levels to the upside:          Key levels to the downside:

1: $142.1                               1: $128.42

2: $161.5                               2: $120

3: $181.3                               3: $114.75

Categories
Crypto Videos

Bitcoin is a Possible Reserve Currency – Former Canadian Prime Minister Says!

https://youtu.be/W8tMiwtcORo

https://youtu.be/W8tMiwtcORo


Bitcoin is a Possible Reserve Currency – Former Canadian Prime Minister 

Stephen Harper, a former prime minister of Canada, says there may be a place for Bitcoin as well as central bank digital currencies as part of a basket of reserve currencies that may replace the dollar.

In an interview with the investment service, Cambridge House’s Jay Martin Harper stated the possibility of the US dollar being completely replaced could only come from a large currency such as the Euro or Chinese Yuan. He expressed his doubts when it comes to either of them being a viable alternative currency given the uncertainty over the value of the Euro in the long term and the “arbitrary measures” that the Chinese government would take when it comes to guiding the value of the Yuan:

“It’s very hard to see what the alternative is to the US dollar as the world’s major reserve currency. Other than possible candidates such as gold, Bitcoin, a whole basket of things… I think you’ll see the sheer number of things that people use as reserves will certainly expand, but the US dollar will still be the bulk of it.”

The former prime minister then added that he thought central bank digital currencies were to some degree “inevitable,” but that they would likely be subject to monetary policy around the world. Harper stated his concern about central banks becoming “some kind of a general banker” rather than just a financial monitor that they currently are:

“Ultimately, if you have a digital currency that will be used by the central bank to control inflation and create a stable currency as well as priceability, then this digital currency is just a straightforward evolution of the marketplace,” Harper stated. “But if it is part of a series of what I consider as wild experiments as to the role of central banking… Well, then it worries me a lot.”

Stephen Harper served as the prime minister of Canada for nine years, from 2006 until 2015. Cryptocurrency and blockchain adoption in Canada has started expanding significantly since his departure, with the country getting its first regulated crypto exchange in Sept. 

Categories
Crypto Videos

Canada’s First Public BTC Fund Grows 900% Passing 1 Billion Dollars!

https://youtu.be/rC-f4NfsCEE

https://youtu.be/rC-f4NfsCEE


Canada’s first public BTC fund grows 900% as it passes the $1 billion milestone

Canadian regulated digital asset manager 3iQ has passed another massive milestone of its public Bitcoin fund. 

On Jan 14, 3iQ’s Bitcoin Fund hit the $1 billion mark, as the company announced the news on Twitter. The new milestone shows QBTC’s parabolic growth after 3iQ originally launched the fund in April 2020. QBTC is up 900% from its previous milestone of $100 million recorded in Oct 2020.

As previously reported, 3iQ’s BTC fund is the first public Bitcoin fund in Canada that got listed on a major stock exchange, the Toronto Stock Exchange. Gemini, a firm owned by the Winklevoss brothers, provides custody services for 3iQ’s QBTC fund.

QBTC.U is currently trading at $48.63, up 330% from the $11 price it was trading for when it got listed in April.

3iQ is one of the largest cryptocurrency firms in Canada. In Jan 2018, 3iQ reportedly became the first cryptocurrency fund regulated by the Ontario Securities Commission as well as the Canadian Securities Administrators. Two years after that, in Feb 2020, 3iQ partnered with the blockchain startup Mavennet to launch a stablecoin that would be pegged to the Canadian dollar. This stablecoin would be regulated by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

3iQ’s former senior executive Shaun Cumby is currently the CEO of Arxnovum, a company that filed an application with OSC for a Bitcoin exchange-traded fund on Jan 11, 2021. Winklevoss’ Gemini will also provide its custody for the Arxnovum’s Bitcoin ETF.

Categories
Forex Market Analysis

Daily F.X. Analysis, January 21 – Top Trade Setups In Forex – ECB Policy Ready to Play! 

The market’s news is likely to offer high impact events from the U.S., while the major focus will remain on the Philly Fed Manufacturing Index and Unemployment Claims. U.S. dollar may exhibit mixed bias until the release of these events as Philly fed manufacturing is expected to perform badly, and the Jobless claims are likely to perform well.

The market’s news is likely to offer high impact events from the U.S., while the major focus will remain on the Philly Fed Manufacturing Index and Unemployment Claims. U.S. dollar may exhibit mixed bias until the release of these events as Philly fed manufacturing is expected to perform badly, and the Jobless claims are likely to perform well.

The market’s news is likely to offer high impact events from the U.S., while the major focus will remain on the Philly Fed Manufacturing Index and Unemployment Claims. U.S. dollar may exhibit mixed bias until the release of these events as Philly fed manufacturing is expected to perform badly, and the Jobless claims are likely to perform well.

Economic Events to Watch Today  

 

 

EUR/USD – Daily Analysis

The EUR/USD continues to trade higher at the 1.2160 level, and a bullish breakout can extend buying trend until the 1.2229 level. The market trading sentiment still represents positive performance on the day as the positive environment around the Asia-Pacific stocks. All-time high upticks in the S&P 500 Futures highlight the risk-on mood, which was being supported by optimism over a potential vaccine/treatment for the highly infectious coronavirus. 

Meanwhile, the increasing hopes over more U.S. stimulus package under Joe Biden’s presidency also played its major role in supporting the market trading sentiment. The hopes of further U.S. stimulus package sparked after the Biden entered the White House, without any losses, which could be considered as one of the major reason behind the latest positive mood in the market,

In response, the broad-based U.S. declined to stop its long bearish bias and remained bearish on the day. The dip in the greenback was further sparked by the optimism over vaccines’ rollout for the highly contagious coronavirus disease, which eroded demand for safe-haven currencies. Therefore, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. The U.S. Dollar Index that measures the dollar versus a bucket of other currencies dropped by 0.19% to 90.300 by 11:26 PM ET (4:26 AM GMT).

As per the report, the Secretary of the Treasury nominee Janet Yellen urged Congress to “act big” on the Coronavirus relief program and shouldn’t worry about debt through her Senate confirmation hearing. These positive remarks helped the market trading bias to stay bid. 


Daily Technical Levels

Support   Resistance

1.2006     1.2091

1.2039     1.2106

1.2058     1.2139

Pivot Point: 1.2062

EUR/USD– Trading Tip

The EUR/USD is trading with a bullish bias at 1.2128 level. The EUR/USD is holding right below 50 periods EMA on the hourly timeframe, extending the EUR/USD pair’s resistance. On the lower side, the support level continues to hold around 1.2120 and 1.2062 level. The MACD and RSI are suggesting a mixed bias for the EUR/USD pair. Buying can be seen over 1.2115.

GBP/USD – Daily Analysis

The GBP/USD continues to hold its bullish tone through the first half of the day as the pair ran into the weekly highs around the 1.3710 mark. It’s mostly due to the weaker U.S. dollar. The trader hopes for further U.S. fiscal incentive immediately intensified after the U.S. Treasury Secretary candidate Janet Yellen urged lawmakers to act high on the COVID-19 relief package and not bother too much regarding debt. The remarks of Yellen were was seen as one of the critical factors that weakened the safe-haven U.S. dollar and added to the GBPUSD gains. 

Besides this, the dollar losses bolstered by the confidence over the rollout of COVID-19 vaccines, which confer some further support to the GBP/USD pair. The U.S. failed to stop its long bearish bias and remained bearish on the day. The losses in the U.S. dollar were further sparked by the optimism over vaccines’ rollout for the highly contagious coronavirus disease, which eroded demand for safe-haven currencies. Therefore, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. The U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped by 0.19% to 90.300 by 11:26 PM ET (4:26 AM GMT).

Conversely, the anxieties regarding increasing COVID-19 cases and economically-painful hard lockdowns in the U.K. keep questioning the pair’s upside impulse. The U.K. coronavirus strain has been discovered in at least 60 countries so far, as per the WHO report. The Kingdom announced 33,355 fresh virus cases and 1,610 deaths on the day. Globally, the number of cases has exceeded 96 million, prompting the pair’s upside momentum. Besides, the reports of likely shortage of vaccine in New York and postponement of Pfizer’s vaccine to Canada also seems to question the Sterling bullish bias.


Daily Technical Levels

Support   Resistance

1.3555     1.3722

1.3445     1.3781

1.3387     1.3890

Pivot Point: 1.3613

GBP/USD– Trading Tip

The GBP/USD is also heading north amid a weaker dollar, as it trades at a 1.3655 level. Continuation of an upward trend can lead the Cable towards the next target area of 1.3700 level. At the same time, the Cable may find support at 1.3628 level today. On the higher side, the bullish breakout of 1.3701 level can extend buying trend until 1.3736. The GBP/USD is supported by 10 and 20 periods EMA on the two-hourly timeframes, suggesting further buying in the pair. Let’s consider trading bullish over 1.3715 level today. 

USD/JPY – Daily Analysis

Today in the early European trading session, the USD/JPY currency pair failed to stop its previous-session selling bias and remained depressed around two-weeks low around below 103.5 level as the U.S. dollar faced some follow-through selling pressure, which, in turn, was seen as one of the key factors that exerting downside pressure on the USD/JPY currency pair. The bearish bias surrounding the U.S. dollar was mainly sponsored by the increasing optimism over the massive U.S. stimulus measures under the newly inaugurated Joe Biden administration, which undermined demand for safe-haven currencies. 

Simultaneously, the prevalent risk-on environment undermined the Japanese yen and helped the currency pair limit deeper losses. Meanwhile, the dovish comments by the BoJ Governor, Haruhiko Kuroda, added further burden on the JPY and extended some additional support to the USD/JPY currency pair to halt its bearish rally. Currently, the USD/JPY currency pair is currently trading at 103.47 and consolidating in the range between 103.33 – 103.67.

Conversely, the equity market’s positive performance weakened the Japanese yen and helped the currency pair limit its deeper losses. Also capping the currency pair’s losses could be the dovish comments by the BoJ Governor, Haruhiko Kuroda, which further weighed on the JPY and extended some support to the USD/JPY pair to stop its bearish rally. As per the latest report, Kuroda repeated that the BoJ observes the coronavirus’s impact very closely and will not hesitate to ease further if needed. The Japanese central bank updated its GDP target for the fiscal year 2020 to -5.6% from the previous projection of -5.5%.

On the different page, the concerns about rising COVID-19 deaths and re-imposing the economically-painful hard lockdowns keep challenging the upbeat market mood, which could change the currency pair’s direction.

Looking forward, the market traders will keep their eyes on updates from the Biden administration. Meanwhile, the European Central Bank’s (ECB) monetary policy and U.S. Unemployment Claims will also be key to watch. In addition to this, the risk catalyst like geopolitics and the virus woes will not lose their importance.


Daily Technical Levels

Support   Resistance

103.53     104.16

103.31     104.56

102.91     104.78

Pivot Point: 103.94

USD/JPY – Trading Tips

The USD/JPY continues to trade sideways in between a wide trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. The 50 periods EMA supports the bullish trend, and we may have odds of taking a buying trade over the 103.570 level today. Good luck! 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 21 – BTC in a Triangle Formation – What do the Analysts Say?

The crypto sector was split between slight gainers and slight losers, but overall lost some value as the market cap dropped below $1 trillion. Bitcoin is currently trading for $34,644, representing a decrease of 2.39% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 4.12% on the day, while LTC lost 5.41% of its value.

The crypto sector was split between slight gainers and slight losers, but overall lost some value as the market cap dropped below $1 trillion. Bitcoin is currently trading for $34,644, representing a decrease of 2.39% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 4.12% on the day, while LTC lost 5.41% of its value.

The crypto sector was split between slight gainers and slight losers, but overall lost some value as the market cap dropped below $1 trillion. Bitcoin is currently trading for $34,644, representing a decrease of 2.39% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 4.12% on the day, while LTC lost 5.41% of its value.

Daily Crypto Sector Heat Map

Cocos-BCX gained 107983.76% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by HAPY Coin’s 383.49% and Vox.Finance’s 371.42% gain. On the other hand, PegsShares lost 59.35%, making it the most prominent daily loser. It is followed by KIMCHI.finance’s loss of 44.21% and EveryCoin’s loss of 34.88%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved down slightly since our last report as altcoins started to outperform, with its value currently being 64.8%. This value represents a 0.1% difference to the downside when compared to the previously reported value.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has decreased slightly since we last reported, with its current value being $955.53 billion. This represents a $69 billion decrease when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

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_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin’s daily time-frame shows that the cryptocurrency is still contained within the triangle formation, which will be a major determinant in BTC’s future price movement. If we zoom in to the hourly time-frame, we can see that BTC moved down, broke the $34,627, and pushed towards the downside, but got instantly stopped by the triangle formation’s bottom line.

While Bitcoin’s short-term overview seems slightly bearish, many analysts call for a push towards $60,000 before any major pullback. However, judging by the current trading session, BTC has a higher chance of breaking the triangle formation to the downside at the moment.

BTC/USD 1-hour chart

Bitcoin’s weekly and monthly time-frames are completely bullish and show no signs of bearishness. On the other hand, its daily time-frame oscillators point to “sell” while the rest of the overview is still bullish, and its 4-hour time-frame is completely bearish.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is slightly below both its 50-period EMA and its 21-period EMA
  • Price is slightly below its middle Bollinger band
  • RSI is neutral (44.21)
  • Volume is average (low)

Key levels to the upside:          Key levels to the downside:

1: $37,445                             1: $34,627

2: $40,000                             2: $32,350

3: $42,000                             3: $27,960

Ethereum

The second-largest cryptocurrency by market cap went into retracement mode after creating a new all-time high of $1,440 two days ago. Ether’s price moved in a straight descending pattern at first but then bounced back up and tried to retest the $1,350 level. As time passed, it was more and more evident that ETH failed to break $1,350 to the upside and that its price is now contained between $1,350 to the upside and $1,211 to the downside.

Ether’s current upside is heavily guarded, not only by the $1,350 level but also by the 21-hour and 50-hour EMAs.

ETH/USD 1-hour Chart

Ethereum’s technicals on all time-frames are bullish, but only its daily time-frame shows no signs of neutrality or bearishness. The rest of the time-frames (4-hour, weekly, and monthly) have their oscillators pointing to a neutral or bearish stance.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is slightly below its 50-period and its 21-period EMA
  • Price is slightly below its middle Bollinger band
  • RSI is neutral (44.30)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $1,350                               1: $1,211

2: $1,420                               2: $1,183.85

3: $1,440                              3: $1047.5

Litecoin

Litecoin spent the day trading on very low volume compared to the previous days, with its price contesting the $142.1 level twice. At the moment, LTC traders can face two scenarios, one being LTC falling below $142.1 level and pushing towards $128.4, and the second one being that LTC acts on the double bottom it created and pushes up to regain some of the lost value.

LTC/USD 1-hour Chart

Litecoin’s technicals are pretty split, with its 4-hour and daily indicators showing almost complete bearish sentiment and its weekly and monthly overviews showing complete bullishness.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is slightly below both its 50-period EMA and its 21-period EMA
  • Price between its middle and bottom Bollinger band
  • RSI is neutral (41.78)
  • Volume is below average

Key levels to the upside:          Key levels to the downside:

1: $161.5                               1: $142.1

2: $181.3                               2: $128.42

3: $186.3                               3: $114.75

Categories
Forex Market Analysis

Daily F.X. Analysis, January 20 – Top Trade Setups In Forex – Economic Sentiment Under Spotlight!

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 important to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today.

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 important to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today.

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 important to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today.

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

Today in the Asian trading session, the EUR/USD currency pair extended its previous-day bullish streak and refreshed daily tops around the 1.2150 regions. However, the prevalent bullish bias around the currency pair was mainly tied to the weaker U.S. dollar. The prevalent upbeat market mood was seen as one of the key factors undermining the safe-haven U.S. dollar. However, the global risk sentiment was being supported by the increasing prospects of massive fiscal spending in the U.S. Across the pond, the buying interest around the currency pair got an additional boost from the better-than-expected German ZEW Economic Sentiment Index. On the bearish side, the escalating concerns over the COVID-19 cases and economically-painful extended lockdown restrictions keep questioning the currency pair’s upside momentum. As of writing, the EUR/USD currency pair is currently trading at 1.2153 and consolidating in the range between 1.2124 – 1.2158.

The market trading sentiment managed to extend its previous-day positive performance and remained supportive during the Asian trading session on the day. However, the reason could be tied to the higher prospects of massive fiscal spending in the U.S. As per the latest report, the Secretary of the Treasury nominee Janet Yellen recently pushed Congress to “act big” on COVID- 19 relief and not worry too much about debt during her Senate confirmation hearing before the Senate Finance Committee. These positive comments helped the market trading sentiment to stay bid. The latest upticks in the equity market could also be attributed to the low number of negatives factors from the economic calendar. The prevalent upbeat market mood was seen as one of the key factors that undermining the safe-haven greenback.

Across the pond, the buying interest around the currency pair got an additional boost from the better-than-expected German ZEW Economic Sentiment Index. At the data front, the German ZEW Economic Sentiment Index climbed to 61.8 in January compared to 60.0 expected and 55.0 previous. Meanwhile, the gauge for the broader Eurozone surprisingly improved to 58.3 during the reported month against 45.5 forecasted.

On the bearish side, the concerns about rising COVID-19 cases and economically-painful hard lockdowns keep challenging the pair’s upside momentum. As per the latest report, the death toll from the coronavirus in the U.S. crossed to 401,000, and the number of cases in the country exceeded 24 million as of January 20. In addition to this, the World Health Organization (WHO) said that the U.K. coronavirus strain had been detected in at least 60 countries so far. The Kingdom reported 33,355 new virus cases and 1,610 deaths on the day. Globally, the number of cases has topped 96 million. Also questioning the pair’s upside momentum could be the reports of likely shortage of vaccine in New York and postponement of Pfizer’s vaccine to Canada.


Daily Technical Levels

Support   Resistance

1.2006     1.2091

1.2039     1.2106

1.2058     1.2139

Pivot Point: 1.2072

EUR/USD– Trading Tip

The EUR/USD is trading with a bullish bias at 1.2145 level. The pair has recently crossed over 50 periods of EMA on the hourly timeframe, suggesting chances of an upward movement in the market. Continuation of a bullish trend can lead the EUR/USD price towards the 1.2178 level. At the same time, support continues to hold around 1.2150 today. The bullish bias is likely to dominate the market.

GBP/USD – Daily Analysis

Today in the early European trading session, the GBP/USD currency pair maintained its bid tone through the first half of the Asian session and hit the weekly highs around above the mid-1.3600 level amid a softer tone surrounding the U.S. dollar. The market hopes for additional U.S. fiscal stimulus instantly escalated after the U.S. Treasury Secretary nominee Janet Yellen pushed lawmakers to act big on the COVID-19 relief package and not worry too much about debt, which in turn, was seen as one of the key factors that weakened the safe-haven U.S. dollar and contributed to the currency pair gains. Apart from this, the greenback losses were further bolstered by the optimism over the rollout of COVID-19 vaccines, which lend some additional support to the currency pair. Across the ocean, the buying interest around the cable currency pair picked up further pace following the release of hotter-than-expected U.K. consumer inflation figures. 

On the contrary, the concerns about the highly contagious coronavirus disease and the imposition of fresh travel restrictions in the U.K. could cap the GBP/USD currency pair’s upside momentum. At a particular time, the GBP/USD currency pair is currently trading at 1.3668 and consolidating in the range between 1.3627 – 1.3675.

The combination of positive factors has helped the GBP/USD currency pair catch sharp, fresh bids on the day. Be its optimism over the rollout of vaccines for the highly infectious coronavirus disease or the rising prospects of massive fiscal spending in the U.S., not the forget upbeat economics data, these all factors positively impact the market trading sentiment. 

Across the ocean, the buying interest around the cable currency pair picked up further pace following the release of hotter-than-expected U.K. consumer inflation figures. The headline CPI increased more-than-expected at the data front and arrived at a 0.6% YoY rate in December. Meanwhile, the core CPI (excluding food and energy items) also exceeded consensus estimations.

Alternatively, the concerns about rising COVID-19 cases and economically-painful hard lockdowns in the U.K. keep challenging the pair’s upside momentum. As per the latest report from World Health Organization (WHO), the U.K. coronavirus strain has been detected in at least 60 countries so far. The Kingdom reported 33,355 new virus cases and 1,610 deaths on the day. Globally, the number of cases has topped 96 million. Also questioning the pair’s upside momentum could be the reports of likely shortage of vaccine in New York and postponement of Pfizer’s vaccine to Canada.


Daily Technical Levels

Support   Resistance

1.3555      1.3722

1.3445      1.3781

1.3387      1.3890

Pivot Point: 1.3613

GBP/USD– Trading Tip

The GBP/USD is also heading north amid a weaker dollar, as it trades at a 1.3655 level. Continuation of an upward trend can lead the Cable towards the next target area of 1.3700 level. At the same time, the Cable may find support at 1.3628 level today.

USD/JPY – Daily Analysis

During Wednesday’s early European trading session, the USD/JPY currency pair failed to stop its previous-session bearish bias and came under some renewed selling pressure low around 103.13 level mainly due to the broad-based U.S. dollar weakness. The market hopes for additional U.S. fiscal stimulus increased after the U.S. Treasury Secretary nominee Janet Yellen advised lawmakers to act big on the COVID-19 relief package while stating that the benefits of increased spending are greater than the costs associated with a higher debt burden, which in turn, boosted the market trading sentiment and weakened the safe-haven U.S. dollar. 

Apart from this, the greenback losses were further bolstered by the cautious sentiment ahead of President-elect Joe Biden’s inaugural ceremony on the day. On the different page, the upbeat market sentiment weakened the safe-haven Japanese yen, which, in turn, was seen as one of the leading factors that helped the USD/JPY currency pair to limit its deeper losses. Currently, the USD/CHF currency pair is currently trading at 103.77 and consolidating in the range between 103.72 – 103.94.

The market trading sentiment was representing positive performance on the day as the bullish appearance of Asia-Pacific stocks and upticks of the S&P 500 Futures tend to highlight the risk-on mood supported by optimism over a potential vaccine/treatment for the highly infectious coronavirus. Besides this, the increasing prospects of massive fiscal spending in the U.S. also played its major role in underpinning the market trading sentiment. The market hopes for additional U.S. fiscal stimulus increased further after the U.S. Treasury Secretary nominee Janet Yellen’s confirmation hearing before the Senate Finance Committee on Tuesday. 

As in result, the broad-based U.S. failed to gain any bid and remained pessimistic on the day. Apart from this, the losses in the U.S. dollar were further sparked by the optimism over the rollout of vaccines for the highly contagious coronavirus disease. In addition to this, the cautious sentiment ahead of President-elect Joe Biden’s inaugural ceremony also exerted downside pressure on the greenback. Hence, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. Meanwhile, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped by 0.11% to 90.365 by 9:17 PM ET (2:17 AM GMT)—moving on, the intensifying hopes for more aggressive U.S. fiscal spending under Biden’s presidency continuously providing support to the U.S. Treasury bond yields, which could help the U.S. dollar to limit any meaningful downside.

Conversely, the positive performance around the equity market was slightly unaffected by the concerns about rising COVID-19 deaths and the re-imposing of the economically-painful hard lockdowns, which keep fueling the worries over the global economic recovery. As per the latest report, the death cases from the COVID in the U.S. crossed to 401,000, and the number of cases in the country exceeded 24 million as of January 20. In addition to this, the World Health Organization (WHO) said that the U.K. coronavirus strain had been detected in at least 60 countries so far. The Kingdom reported 33,355 new virus cases and 1,610 deaths on the day. Globally, the number of cases has topped 96 million. Also questioning the pair’s upside momentum could be the reports of likely shortage of vaccine in New York and postponement of Pfizer’s vaccine to Canada.


Daily Technical Levels

Support   Resistance

103.53     104.16

103.31     104.56

102.91     104.78

Pivot Point: 103.94

USD/JPY – Trading Tips

The USD/JPY continues to trade sideways in between a wide trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. The 50 periods EMA supports the bullish trend, and we may have odds of taking a buying trade over the 103.570 level today. Good luck! 

Categories
Forex Daily Topic Forex Fundamental Analysis

GBP/AUD Global Macro Analysis – Part 1 & 2

Introduction

Introduction

Introduction

This analysis will look into endogenous factors that influence economic growth both in the UK and Australia. We will also analyze the exogenous factors that impact the exchange rate of the GBP/AUD pair.

Ranking Scale

We will conduct correlation analysis, which we will use to rank the endogenous and exogenous factors on a scale of -10 to 10.

In ranking the endogenous factors, we will conduct a correlation analysis against the GDP growth rate. If the score is negative, the endogenous factor has resulted in depreciation of either the GBP of the AUD. Conversely, if the score is positive, then the factor has resulted in an appreciation of the local currency.

When the exogenous analysis is negative, the factor has resulted in a decline of the GBP/AUD exchange rate. If the score is positive, then the factor has led to an increase in the exchange rate.

Summary – GBP Endogenous Analysis

A -15 score indicates that the Pound has depreciated since the starting of 2020.

Summary – AUD Endogenous Analysis

A score of -8 indicates that the Australian dollar has depreciated as well since the beginning of 2020.

Indicator Score Total State Comment
Australia Employment Rate -3 10 61.2% in October The employment rate hit 20-year lows during the pandemic. It’s expected to continue recovery as the economy recovers
Australia Core Consumer Prices 2 10 117.49 in Q3 2020 The inflation rate still lower than Q1, but the demand is increasing in the economy
Australia Manufacturing Production -3 10 Q3 projected to drop by 3.5% Q2 dropped by 6.2%. Production expected to improve in Q3 as business operation resume some normalcy
Australia Business Confidence 6 10 NAB business confidence was 12 in November It’s the highest level since April 2018. This shows that businesses are highly optimistic about their future operations
Australia Consumer Spending -3 10 Was 253.648 billion AUD in Q3 2020 Q3 levels still lower than Q1 domestic expenditure. Expected to increase further when the economy recovers to pre-pandemic levels
Australia Construction Output -3 10 Q3 output dropped by 2.6% Q3 drop caused by a reduction in residential and non-residential construction, engineering, and building works
Australia Government Budget Value -4 10 a budget deficit of 10.974 billion AUD in October The government budget deficit is improving. This shows that the revenue stream is improving as businesses resume operations
TOTAL SCORE -8
  1. Australia Employment Rate

This indicator shows the number of working-age Australians who are employed during a particular period. As an indicator of growth in the labor market, the employment rate shows if the economy is adding or shedding jobs. Thus, it is used to show periods of economic growth and contractions.

The Australian labor market has been recovering from the coronavirus pandemic shocks when the employment rate hit a 20-year low of 58.2%. In October 2020, Australia had an employment rate of 61.2%, up from 60.4% in September. However, it is still lower than January’s 62.6%. Australia’s employment rate has a score of -3.

  1. Australia Trimmed Mean Consumer Prices

This indicator is also called core consumer prices. It measures the price changes of goods and services that are frequently purchased by Australian households. The computation of the trimmed mean consumer prices excludes goods and services whose prices are volatile.

In Q3 2020, the core consumer prices in Australia rose to 117.49 from 117.04 in Q2. Q3 levels are also higher than the 117.17 points recorded in Q1. This shows that the economy is recovering since an increase in prices implies an increase in domestic demand for goods and services. We assign a score of 2.

  1. Australia Manufacturing Production

This indicator shows the YoY change in the value of output from the manufacturing sector. The Australian economy is heavily dependent on industrial production; hence, manufacturing production changes provides invaluable insights into the domestic economic growth. It also shows how the economy is recovering from the impact of COVID-19.

In Q2 2020, the YoY manufacturing production in Australia dropped by 6.2%, compared to 2.7% growth in Q1. Q3 YoY manufacturing production is expected to drop by 3.5%. Consequently, Australian manufacturing production has a score of -3.

  1. Australia Business Confidence

Business confidence in Australia is measured by conducting a monthly survey of about 600 businesses. They include small, medium, and large companies operating in non-agricultural sectors. The survey gauges the businesses’ expectations in terms of profitability, trading volume, and employees. The index is derived by considering the percentage of respondents who have good and very good expectations and those who have a bad and very bad outlook.

In November 2020, the NAB business confidence increased to 12 from 3 in October, which has been the highest since April 2018. Australia’s business confidence has a score of 6.

  1. Australia Consumer Spending

The indicator records the quarterly change in the value of goods and services consumed by domestic households. It includes expenditure by non-profit organizations that provide goods and services to Australian households and the value of backyard productions.

In Q3 of 2020, consumer spending in Australia rose to AUD 253.648 billion from AUD 235.131 billion in Q2. Although it’s lower than Q1 expenditure, domestic demand in the economy is rebounding from the slump of COVID-19. Consequently, Australian consumer spending has a score of -3.

  1. Australia Construction Output

This indicator shows the quarterly change in the value of construction work in Australia. The total value involves both private and public sector building and engineering work.

In the third quarter of 2020, Australia’s construction output dropped by 2.6% from a 0.5% growth in Q2. This drop was caused by output drop in residential and non-residential construction, engineering, and building works. Thus, we assign a score of -3.

  1. Australia Government Budget Value

The government budget value measures whether the Australian government has a budget surplus or deficit. A budget surplus implies that the government’s expenditure is less than its revenue. Similarly, a budget deficit means that the government spends more than it collects in terms of revenue.

In October 2020, Australia had a budget deficit of AUD 10.974 billion, up from a deficit of 33.613 billion in September. We assign a score of -4.

In the next article, you can find the Exogenous analysis of the GBP/AUD currency pair and also our forecast on its price movement in the near future. Cheers.

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 20 – ETH Reaches a New All-Time High; Crypto Sector in the Red

The crypto sector ended up mostly in the red as altcoins started retracing after their moves to the upside. Bitcoin is currently trading for $35,776, representing a decrease of 2.1% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 3.28% on the day, while LTC lost 3.44% of its value.

The crypto sector ended up mostly in the red as altcoins started retracing after their moves to the upside. Bitcoin is currently trading for $35,776, representing a decrease of 2.1% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 3.28% on the day, while LTC lost 3.44% of its value.

The crypto sector ended up mostly in the red as altcoins started retracing after their moves to the upside. Bitcoin is currently trading for $35,776, representing a decrease of 2.1% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 3.28% on the day, while LTC lost 3.44% of its value.

Daily Crypto Sector Heat Map

Folder Protocol gained 813.46% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by Global Gaming’s 198.29% and Benchmark Protocol’s 159.89% gain. On the other hand, 3XT TOKEN lost 85.20%, making it the most prominent daily loser. It is followed by Ether Kingdoms Token’s loss of 61.70% and Matrix AI Network’s loss of 52.48%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved down since our last report as altcoins started to outperform, with its value currently being 64.9%. This value represents a 0.7% difference to the downside when compared to the previously reported value.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has decreased slightly since we last reported, with its current value being $1.024 trillion. This represents a $10 billion decrease when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin’s daily time-frame shows us that the largest cryptocurrency by market cap is still contained within the triangle formation (purple). Any break of the current sideways movement may contest the triangle as well. On the other hand, BTC on the 1-hour time-frame is bouncing between the $34,627 support and the $37,445 resistance level for the past five days.

Bitcoin’s price will soon have to break the sideways trading pattern and contest the triangle formation. If BTC bulls or bears manage to break the triangle formation, we could see a large move in the same direction.

BTC/USD 1-hour chart

Bitcoin’s short-term (4-hour and daily) technicals are slightly tilted towards the sell-side but still show a hint of neutrality or bullishness. Its weekly and monthly technicals are exactly the opposite, as they are slightly bullish but show some bearishness alongside it.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is slightly below both its 50-period EMA and its 21-period EMA
  • Price is slightly below its middle Bollinger band
  • RSI is neutral (44.32)
  • Volume is average (low)

Key levels to the upside:          Key levels to the downside:

1: $37,445                             1: $34,627

2: $40,000                             2: $32,350

3: $42,000                             3: $27,960

Ethereum

The second-largest cryptocurrency by market cap took advantage of the “altcoin season” as money moved from Bitcoin and onto other altcoins. Ever since Ether’s price bounced from the $1,211 level on Jan 18, we could see bulls coming to the market in larger numbers. This made the $1,350 level fall, and ETH finally set a new all-time high of $1,440. While the new ATH is just $20 away from its previous one, this is considered a testament to Ethereum’s upside potential.

Ether couldn’t position itself above the $1,420 (previous ATH) and fell below as it started retracing. Its price is now testing the $1,350 level but will most likely stay above it.


ETH/USD 1-hour Chart

Ethereum’s technicals on all time-frames are tilted towards the buy-side, but all show a hint of bearishness in the oscillator department.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is above its 50-period and at its 21-period EMA
  • Price is slightly below its middle Bollinger band
  • RSI is neutral (50.69)
  • Volume is above average

Key levels to the upside:          Key levels to the downside:

1: $1,420                               1: $1,350

2: $1,440                               2: $1,211

3: $1,450                               3: $1,183.85

Litecoin

Litecoin spent the day retracing from the recent $166.2 high after bulls reached exhaustion. LTC was trying to push towards the $180 levels and contest the 2021 highs but failed to do so as bulls spent too much strength in the $160 area, where the cryptocurrency faced heavy resistance.

Litecoin is now having a downward trajectory and has failed to break the 50-hour moving average in an attempt to break it. LTC traders may look for a trade after the cryptocurrency finishes testing the $142.1 level.

LTC/USD 1-hour Chart

Litecoin’s technicals on the 4-hour and monthly time-frames are completely bullish and show no neutrality or bearishness. On the other hand, its daily and weekly overviews show some form of bearishness.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is below both its 50-period EMA and its 21-period EMA
  • Price sightly below its middle Bollinger band
  • RSI is neutral (44.85)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $161.5                               1: $142.1

2: $181.3                               2: $128.42

3: $186.3                               3: $114.75

Categories
Forex Market Analysis

Daily F.X. Analysis, January 19 – Top Trade Setups In Forex – Economic Sentiment Under Spotlight!

The eyes will remain on the European German ZEW Economic Sentiment data and the Current Account figures from Europe on the news front. All of the figures are expected to have a mixed impact, which may put sideways in the single currency Euro. Besides this, the eyes will stay on the German Final CPI figures.

The eyes will remain on the European German ZEW Economic Sentiment data and the Current Account figures from Europe on the news front. All of the figures are expected to have a mixed impact, which may put sideways in the single currency Euro. Besides this, the eyes will stay on the German Final CPI figures.

The eyes will remain on the European German ZEW Economic Sentiment data and the Current Account figures from Europe on the news front. All of the figures are expected to have a mixed impact, which may put sideways in the single currency Euro. Besides this, the eyes will stay on the German Final CPI figures.

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

Today in the Asian trading session, the EUR/USD currency pair successfully extended its overnight bullish streak and remained supportive around just below 1.2100 level of upbeat market trading that weighed on the U.S. dollar. The U.S. dollar weakness was seen as one of the key factors that pushed the currency pair higher. However, the sentiment around the equity market was being supported by the expectations of additional fiscal stimulus. It should be noted that the U.S. President-elect Joe Biden is ready to take Office on January 20, pushing for the $1.9 trillion stimulus package already planned last week. Meanwhile, the cautious sentiment ahead of the Biden government’s inauguration and the coronavirus (COVID-19) worried added further weakness to the greenback and contributed to the currency pair gains. Across the Atlantic, the Eurozone finance ministers’ latest push for financial support for their economies to boost the post-pandemic recovery plans also played its major role in underpinning the EUR/USD currency pair. 

The escalating concerns over the COVID-19 cases and economically-painful hard lockdowns keep questioning the pair’s upside momentum on the bearish side. As of writing, the EUR/USD currency pair is currently trading at 1.2087 and consolidating in the range between 52.17 – 52.49. The market trading sentiment managed to erase its previous-day losses and turned positive during the Asian trading session on the day. However, the reason could be attributed to the high expectations of additional fiscal stimulus. It is worth recalling that the U.S. President-elect Joe Biden is ready to take Office on January 20, pushing for the $1.9 trillion stimulus package already outlined last week. In the meantime, the Treasury Secretary nominee Janet Yellen is expected to push the government to “act big” with its next coronavirus relief package when she testifies before the Senate later on Tuesday. This latest optimism put a bid under risk assets and weighed over the safe-haven U.S. dollar. 

On the bearish side, the concerns about rising COVID-19 cases and economically-painful hard lockdowns keep challenging the upbeat market performance, which was seen as the key factor that kept the lid on any additional gains the currency pair. As per the latest report, the COVID-19 cases in Europe, the U.S., and the U.K. decreased somewhat but still not satisfactory as the strains are spreading faster, which in turn cause fresh activity restrictions. Moving ahead, the market traders will keep their eyes on the German ZEW survey, which is due to release later in the day. Meanwhile, the covid updates and any additional stimulus hint will also be key to watch.


Daily Technical Levels

Support   Resistance

1.2006      1.2091

1.2039      1.2106

1.2058      1.2139

Pivot Point: 1.2072

EUR/USD– Trading Tip

The EUR/USD is trading over 1.2064 support level, and closing of bullish engulfing candles over the same level supports the chances of

bullish correction until the 1.2115 level. On the lower side, the bearish breakout of the 1.2065 level can drive the selling trend until the support level of 1.2005. The 50 EMA and MACD suggest the pair is oversold and should reverse back slightly before exhibiting selling bias.

GBP/USD – Daily Analysis

The GBP/USD currency pair failed to stop its previous session bearish bias and drew some offers around the 1.3535 level mainly due to the prevalent cautious mood, which underpinned the U.S. dollar and contributed to the currency pair losses. The optimism over the rollout of COVID-19 vaccines helps the currency pair to limit its deeper losses along with capping the losses could be the latest report by U.K. vaccine deployment minister Nadhim Zahawi that everyone will be granted a vaccine by September. Currently, the GBP/USD currency pair is currently trading at 1.3537 and consolidating in the range between the 1.3524 – 1.3602.

Despite the on-going optimism about a potential treatment/vaccine and U.S. coronavirus (COVID-19) stimulus bill, the market risk mood failed to stop its previous negative performance and stay bearish during the European session amid growing market concerns over the potential economic fallout from the continuous rise in new COVID-19. The worries were further fueled by Friday’s disappointing U.S. monthly Retail Sales figures for December. 

At the USD front, the broad-based U.S. dollar extended its early-day gaining streak and remained bullish during the European session on the day as investors still preferring to invest in the safe-haven assets in the wake of the risk-off market sentiment. However, the U.S. dollar gains were seen as one of the key factors that kept the currency pair lower. 

The currency pair was further pressured across the ocean by the imposition of fresh restrictions in the U.K. On the other hand, the optimism over the rollout of COVID-19 vaccines failed to give any meaningful support to the currency pair. The market traders will keep their eyes on the BOE Gov Bailey Speaks along with the Candian Housing Starts data. In the meantime, the coronavirus saga developments could play a key role in influencing the market risk sentiment and the USD price dynamics. 


Daily Technical Levels

Support   Resistance

1.3555      1.3722

1.3445      1.3781

1.3387      1.3890

Pivot Point: 1.3613

GBP/USD– Trading Tip

The GBP/USD pair trades have bounced off over the support level of 1.3534 level, and it’s likely to face resistance at the support become resistance level of 1.3617 level. Bullish crossover of this level can extend buying trend until 1.3697 area. On the lower side, the violation of the 1.3534 support level can extend the selling trend until the 1.3457 level. The MACD and RSI are in support of buying; thus, we should consider buying over 1.3617 and selling below the same.   

USD/JPY – Daily Analysis

The USD/JPY currency pair failed to stop its previous-day declining streak and remained depressed near 103.70 level mainly due to the worsening coronavirus (COVID-19) woes in the U.S., Europe, and some of the notable Asian nations like Japan, which fuel doubts over the global economic recovery and weighs on the market trading sentiment. In that way, the prevalent cautious sentiment benefitted the safe-haven Japanese yen and was seen as one of the key factors that exerting pressure on the USD/JPY currency pair. 

In contrast to this, the broad-based U.S. dollar strength, backed by the market risk-off tone, has become the key factor that helps the currency pair limit its deeper losses. Meanwhile, the coronavirus (COVID-19) vaccine’s positive developments help the market trading sentiment limit its deeper losses, which might change the currency pair’s direction. As of writing, the USD/JPY currency pair is currently trading at 103.77 and consolidating in the range between 103.69 – 103.93.

Despite the optimism about a potential treatment/vaccine, the market risk mood failed to stop its previous negative performance and stay bearish during the European session amid growing market concerns over the potential economic fallout from the continuous rise in new COVID-19. These worries were further fueled by Friday’s disappointing U.S. monthly Retail Sales figures for December. At the data front, the core retail sales declined 1.4% month-on-month in December, which was higher than the 0.1% contraction in forecasts and the 1.3% contraction recorded in November. Simultaneously, the Producer Price Index (PPI) increased 0.3% month on month in December, while retail sales declined 0.7% MoM in the same month. 

At the coronavirus front, the coronavirus (COVID-19) resurgence in Europe and the U.S. is still not showing any sign of slowing down, which keeps fueling the doubts over the economic recovery as the authorities in the U.S. and Europe keep imposing back to back restrictions over activities in efforts to control the spread of the virus. This, in turn, exerted downside pressure on the market risk tone and contributed to currency pair losses.

The traders will focus on the BOE Gov Bailey Speaks, and the Candian Housing Starts data. In the meantime, the coronavirus saga developments could play a key role in influencing the market risk sentiment and the USD price dynamics. 


Daily Technical Levels

Support   Resistance

103.53      104.16

103.31      104.56

102.91      104.78

Pivot Point: 103.94

USD/JPY – Trading Tips

The USD/JPY continues to trade sideways in between a wide trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. The 50 periods EMA supports the bullish trend, and we may have odds of taking a buying trade over the 103.570 level today. Good luck! 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 19 – Ether Breaks $1,300; Litecoin Skyrockets

The crypto sector was mostly green, with altcoins attempting to push up and reduce Bitcoin’s market dominance. Bitcoin is currently trading for $36,423, representing an increase of 3.85% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 9.89% on the day, while LTC gained 13.38% of its value.

The crypto sector was mostly green, with altcoins attempting to push up and reduce Bitcoin’s market dominance. Bitcoin is currently trading for $36,423, representing an increase of 3.85% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 9.89% on the day, while LTC gained 13.38% of its value.

The crypto sector was mostly green, with altcoins attempting to push up and reduce Bitcoin’s market dominance. Bitcoin is currently trading for $36,423, representing an increase of 3.85% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 9.89% on the day, while LTC gained 13.38% of its value.

Daily Crypto Sector Heat Map

4THPILLAR TECHNOLOGIES gained 441.52% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by CryptoAds Marketplace’s 221.1% and YAMv2’s 181.43% gain. On the other hand, CY Finance lost 66.83%, making it the most prominent daily loser. It is followed by Basiscoin Share’s loss of 39.38% and Trading Membership Community’s loss of 37.1%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved down since our last report, with its value currently being 65.6%. This value represents a 0.5% difference to the downside when compared to the previously reported value.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has returned above the $1 trillion mark since we last reported, with its current value being $1.034 trillion. This represents a $41.3 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

_______________________________________________________________________

Bitcoin

Bitcoin spent the day mostly trading sideways, bound by the $34,627 to the downside and $37,445 to the upside. The price hopped between these levels and created a higher high higher low pattern, which later on broke after BTC couldn’t pass its immediate resistance level.

Bitcoin’s price has created a triangle pattern on the daily chart, and breaking this triangle to the upside or downside will determine the short-term price direction.

BTC/USD 1-hour chart

Bitcoin’s technicals on all time-frames show a slight bullish tilt, with its oscillators pointing towards the sell-side.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is at both its 50-period EMA and its 21-period EMA
  • Price is at its middle Bollinger band
  • RSI is neutral (49.56)
  • Volume is average (low)

Key levels to the upside:          Key levels to the downside:

1: $37,445                             1: $34,627

2: $40,000                             2: $32,350

3: $42,000                             3: $27,960

Ethereum

Unlike Bitcoin, Ethereum has spent the day first slowly preparing for a move and then explosively pushing to the upside. The second-largest cryptocurrency by market cap has, after confirming its position above the $1,211 level, shot up towards the $1,350 level, which it was not able to break. With the volume descending after that move, ETH will most likely not be able to break $1,350 unless a new wave of bulls comes into the market.

ETH/USD 1-hour Chart

Ethereum’s 4-hour, daily, and monthly technicals are completely bullish and show no signs of neutrality or bearishness. On the other hand, its weekly overview shows some neutrality.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is above both its 50-period and its 21-period EMA
  • Price is at its top Bollinger band
  • RSI has just left the overbought area (67.24)
  • Volume has spiked up in the recent hours

Key levels to the upside:          Key levels to the downside:

1: $1,350                               1: $1,211

2: $1,420                               2: $1,183.85

3: $1,450                               3: $1,060.5

Litecoin

Litecoin was one of the largest daily gainers after its price suddenly shot up from $141 all the way up to $160 in just one hourly candle. While it seemed at first like the retracement will eat away the gains LTC made, the cryptocurrency made another push towards the upside and stopped just below the $161.55 resistance level.

Litcoin’s descending volume and price movement, as well as the number of sell orders near the $161.55 level, will most likely be enough to keep LTC below the resistance level for now.

LTC/USD 1-hour Chart

Litecoin’s technicals on the 4-hour, daily, and weekly time-frame are completely bullish, while its monthly technicals are slightly more neutral.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is above both its 50-period EMA and its 21-period EMA
  • Price close to its top Bollinger band
  • RSI is neutral (66.70)
  • Volume is above average

Key levels to the upside:          Key levels to the downside:

1: $161.5                               1: $142.1

2: $181.3                               2: $128.42

3: $186.3                               3: $114.75

Categories
Forex Videos

The DOW Jones Is Getting Ready To Drop!

https://youtu.be/MTrdWd2gI2I

https://youtu.be/MTrdWd2gI2I


Dow Jones 30 Industrial index pulls from historic highs. Where next?

 Thank you for joining this forex academy educational video.

In this session, we will be looking at the potential directional bias for the United States Dow Jones 30 industrial index, which has recently hit a historic high.

On the 6th of January 2021, the United States capitol riot shocked the world. The United States Congress insurrection was carried out by a mob of Donald Trump’s supporters in an attempt to overturn his defeat of the 2020 presidential election.

While the world’s media focused on the attack of the most advanced political system in the world, which was viewed by billions of people across the globe in utter shock and disbelief, and where 5 souls, including a police officer, lost their lives in the riot, the Dow Jones 30 industrial index, in a somewhat unexpected move, aggressively turned bid, and subsequently went on to reach an all-time record high around the 31,200 level.

The bull run has largely been a continuation of the 18,000 low reversal in March when the pandemic began to bite the US economy and caused the shock collapse from its recent 29,500 record-breaking pre-pandemic high.

Much of the pre-pandemic record-breaking high on us stock indices, including the Dow Jones 30, can be attributed to the Trump administration’s policies of low taxation for corporations and less red tape for them. Indeed, had it not been for the pandemic, President Trump may well have gone down as one of the best presidents ever in terms of revitalising the United States economy, where it also so reached a record number of US citizens in employment.

However, with Trump and the republican party on the way out, and with Biden and democratic about to take office on the 20th of January, 2021, the incredible amounts of money which have been thrown at the US economy to prop it up during the pandemic from the coffers of the United States treasury department,  must be repaid,  and where president-elect, Joe Biden has made it quite clear, during his campaigning, that he intends to raise corporate taxation in order to find some of the money, and where he will also reverse policies of the previous government,  such as low red tape requirements for businesses.

In which case, there is an obvious conflict, whereby one government’s policies caused Dow Jones to be at a record high and where the incoming party is about to reverse the policies which caused the record run, which will likely cause pressure on those businesses, which will have less profit due to higher taxation, in which case the stock market should reverse its winning streak? So why the continued bull run on stocks?

This can largely be put down to positioning.  Where hedge funds, banks, investors, and other financial institutions are preparing themselves for a potential future shock by driving stock indices higher before any such new legislation will cause a likely negative impact on stocks.

Quite often, investors will position themselves for future shocks by driving an asset higher, in anticipation of a future correction lower, – or the other way – which on a fundamental economic basis, in this scenario, should be the way forward if such policies of higher taxation were introduced. More tax equals less profit, equals lower dividends for investors, and lower corporate valuation.

We still have a few days to go and until the inauguration, and then there is the Donald Trump impeachment, which may cause a delay in the democratic party’s policy implementation, and, as shown here on the daily chart for the Dow Jones 30 index, it is still in a confirmed bull trend, in which case traders will be looking for breaches of the support and resistance lines as shown here, while eagerly waiting for any new policy changes by the incoming Democratic administration.

One thing is certain, there will be continued volatility in the financial markets as the fallout from the pandemic continues to cause turbulence and where recent data confirms higher unemployment and less consumer spending in the USA, which are more possible reasons for the fall in the index from its recent high, and worries about the change in government and policies. 

Categories
Forex Videos

Biden Shows His Cards – This Is How The Market Is Preparing To React!

https://youtu.be/IVvDckE_dRg

https://youtu.be/IVvDckE_dRg


Biden shows his cards, markets are rattled! – where next for the US Dollar?

Thank you for joining this forex academy educational video.

On Thursday the 14th of January, president-elect Joe Biden addressed the US nation and said that ‘’the $600 already appropriated is simply not enough’’. 

He carried on by saying that the new democrat government would issue another round of $1,400, on top of.the $600 payments, thus showing his hand with regard to the 15 million adult dependants relying on these stimulus checks.  This segment of the Covid relief package runs to 1.9 trillion dollars. 

With yet many more millions of Americans, including migrants, who have slipped the net with regard to relief packages, the wranglers about entitlement will go on as long as the pandemic continues to run rife throughout the United States.  With some young adults purchasing new cars with the extra cash, and others boasting of savings of $13,000 from the relief payments, it is hardly surprising that there will be continued frictions between the two parties, let alone the public and pressure groups, which will only go to show that this is not a one-size-fits-all policy.

Markets saw volatility following the comments with the dollar index shown here on the daily time frame, recovering from its low of 89.15, in the dollar-weighted average against the pound, the Euro, the yen, Swiss franc Canadian dollar, and Australian and New Zealand dollars. 

Although the rot stopped on the 6th of January, dollar strength has been conforming to this support line, on the 1-hour chart, which was bolstered by Joe Biden’s comments on the 14th , to the point where we have a high of 90.80 at the time of writing.

While the bull run on the US dollar may be partially down to Joe Biden’s covid relief policy,  there are other factors to consider, including the buy the rumour sell the fact trading phenomenon, where market participants were largely expecting the incoming President to instigate a larger relief package and especially now that the democrats are in control in Congress, thus making it more easily to be able to get through new policies.

Other things to consider, as shown here on the daily cable chart, where the pound to US Dollar pair remains in a bull run, although it has topped out at the 1.37 exchange rate, having achieved the high due to the success of the UK and EU signing a post Brexit free trade deal,  which has been giving the pair a lift, but where the United Kingdom is currently in a tier 4 lockdown due to the increasing covid transmission rate.

 

 Here we can see a daily chart of the euro US dollar pair,  which is by volume the largest traded component  on a weighted basis of the dollar index,  and where we can see CIA Here. 

This is a daily chart of the euro US dollar pair, which by weighted volume is the largest component of the US dollar index. Therefore, it is more likely to be a larger contributing factor to the directional bias of the dollar index.  

Here we have a classic bull run, followed by a period of consolidation, with a continuation bull run, to a high of 1.23, during the beginning of 2021, and where price action has breached the bull run’s resistance line as highlighted and is falling back to just below 1.21 at the time of writing. This is lending itself to the general strength of the US dollar when simultaneously combined with the actions of cable.

And so, although Joe Biden’s covid relief stimulus package would appear to be a pivotal point in the acceleration in the US dollar strength, there are other things to consider, such as multi-month highs, as shown with cable and the Eurodollar pair.  

We also have to factor in the fact that the dollar index failed to breach the 89.00 key level, where the previous high going back to the beginning of the pandemic was 103.00, a hefty grabbing for the dollar, and where traders will always be eying the tops and bottoms of huge moves while looking for turning points.

Traders always expect volatility when there is a change of president, and even more so when there is a change in party, such as in this case where are the outgoing republicans will be replaced by the Democratic party’s polities. The next stage will be waiting to see if the outgoing party’s policies are replaced and, if so, what this might mean for the financial markets.  

Categories
Forex Fundamental Analysis

GBP/NZD Global Macro Analysis – Part 3

GBP/NZD Exogenous Analysis The UK and New Zealand Current Account Differential The current account differential between the UK and NZ is the value of the subtraction of the NZ current account balance and the UK’s current account. For the GBP/NZD pair, if the current account differential is positive, it means that the UK has a […]

GBP/NZD Exogenous Analysis The UK and New Zealand Current Account Differential The current account differential between the UK and NZ is the value of the subtraction of the NZ current account balance and the UK’s current account. For the GBP/NZD pair, if the current account differential is positive, it means that the UK has a […]

GBP/NZD Exogenous Analysis

  1. The UK and New Zealand Current Account Differential

The current account differential between the UK and NZ is the value of the subtraction of the NZ current account balance and the UK’s current account. For the GBP/NZD pair, if the current account differential is positive, it means that the UK has a higher current account balance than NZ. Thus, the price of the GBP/NZD pair will increase. Conversely, if the differential is negative, NZ has a higher current account balance than the UK. Theoretically, this means that traders would be bullish on the NZD; hence, the GBP/NZD pair price would drop.

In Q3 2020, NZ had a current account deficit of $2.48 billion while the UK a deficit of $20.97 billion. This means that the current account differential is -$18.49 billion. Thus, we assign a score of -5.

  1. The interest rate differential between the UK and New Zealand

The interest rate differential for the GBP/NZD pair is the difference between the UK and NZ’s interest rate. Carry traders and investors would direct their money to the currency, which offers higher interest rates. Therefore, if the interest rate differential for the GBP/NZD pair is positive, it means that the UK offers a higher interest rate than NZ. Hence, traders will be bullish on the GBP/NZD pair. Conversely, if the interest rate differential is negative, it means that NZ has a higher interest rate than the UK. This means that traders would be bearish on the GBP/NZD pair.

In 2020, the Reserve Bank of New Zealand cut its official cash rate from 1% to 0.1%, while the BOE cut the interest rate from 0.75% to 0.1%. In this case, the interest rate differential is 0%. Thus, we assign a score of 0.

  1. The differential in GDP growth rate between the UK and New Zealand

This differential shows which economy is expanding faster between the NZ economy and the UK economy. Comparing domestic economies using their GDP growth rates is more effective than using absolute GDP figures since they vary in size.

If the GDP growth rate differential is negative, the NZ economy is growing faster than the UK economy. This would result in a bearish trend for the GBP/NZD pair. Conversely, the pair will have a bullish trend if the differential is positive since it would mean that the UK economy is expanding more than the NZ economy.

The first three quarters of 2020 saw the NZ economy expand by 0.4% and the UK contract by 5.8%. In this case, the GDP growth rate differential is -6.2%. Hence, the score of -4.

Conclusion

Indicator Score Total State Comment
The UK and New Zealand Current Account Differential -5 10 A differential of – $18.49 NZ has a lower current account deficit than the UK.
The interest rate differential between the UK and New Zealand 0 10 0.00% The 0% interest rate differential is expected to persist in the short-term. That’s because neither the RBNZ and the BOE have scheduled changes in the monetary policy
The differential in GDP growth rate between the UK and New Zealand -4 10 -6.20% New Zealand’s economy expanded by 0.4% in the first three quarters of 2020, while the UK contracted by 5.8%
TOTAL SCORE -9

GBP/NZD exogenous factors have a cumulative score of -9. It means we should expect a continued downtrend in the pair for the short term.

In the above image, we can see that this pair’s weekly chart trading below the 200-period MA for the first time since August 2019. Cheers.

Categories
Forex Fundamental Analysis

GBP/NZD Global Macro Analysis – Part 1 & 2

Introduction In this analysis, we will analyze endogenous factors that influence both the UK and New Zealand economies. The analysis will also include exogenous factors that impact the exchange rate between the GBP and the NZD. Ranking Scale We’ll rank the endogenous and exogenous factors on a scale from -10 to +10. The score of […]

Introduction In this analysis, we will analyze endogenous factors that influence both the UK and New Zealand economies. The analysis will also include exogenous factors that impact the exchange rate between the GBP and the NZD. Ranking Scale We’ll rank the endogenous and exogenous factors on a scale from -10 to +10. The score of […]

Introduction

In this analysis, we will analyze endogenous factors that influence both the UK and New Zealand economies. The analysis will also include exogenous factors that impact the exchange rate between the GBP and the NZD.

Ranking Scale

We’ll rank the endogenous and exogenous factors on a scale from -10 to +10.

The score of the endogenous factors will be determined from correlation analysis between the GDP growth rate. If the score is negative, the endogenous factor had a devaluing effect on the domestic currency. Conversely, if the score is positive, the factor led to the appreciation of the domestic currency.

Similarly, we’ll do a correlation analysis between the exogenous factors and the GBP/NZD exchange rate. If the correlation is negative, the factor results in a drop in the exchange rate. If positive, then the exogenous factor increases the exchange rate.

Summary – GBP Endogenous Analysis

A -15 score on Pound’s Endogenous Analysis indicates that this currency has depreciated since the beginning of 2020.

Summary – NZD Endogenous Analysis

A positive 5 indicates that the New Zealand dollar has appreciated since the beginning of this year.

Indicator Score Total State Comment
New Zealand Employment Rate -7 10 66.4% in Q3 2020 The NZ labor market is yet to recover from the economic disruptions of the pandemic
New Zealand Core Consumer Prices 1 10 1054 points in Q3 2020 From Q1 to Q3, inflation has increased by 1 point
New Zealand Industrial Production 5 10 A 3.1% increase in Q3 The NZ industrial sector is rebounding from a 12.1% drop in Q2.
New Zealand Business Confidence 7 10 Was 9.4 in November November showed the first positive reading in ANZ business confidence since August 2018
New Zealand Consumer Spending 5 10 Q3 spending was 41.335 billion NZD. Q3 consumer spending was the highest recorded in 2020. This shows that the domestic demand has recovered beyond the pre-pandemic period
New Zealand Construction Output -4 10 Q2 output dropped by 24.2% The worst decline in construction output in about 18 years. It’s bound to increase as COVID-19 restrictions ease
New Zealand Government Budget Value -2 10 2020 projected deficit of 4.5 billion NZD This would be a drop from a surplus of 7.5 billion NZD in 2019. Attributed to the increase in government spending during the pandemic
TOTAL SCORE 5
  1. New Zealand Employment Rate

The employment rate shows the growth in New Zealand’s labor market. The change in the labor market shows how the economy is performing – especially in the coronavirus pandemic. The labor market shows if the economy is churning out new jobs or if jobs are lost. Thus, the growth of the labor market is a leading indicator of economic growth.

In Q3 2020, New Zealand’s employment rate dropped to 66.4% from 67.1% in Q2 and 67.7% in Q1. This shows that the labor market is yet to recover from the economic shocks of the pandemic. The New Zealand employment rate has a score of -7.

  1. New Zealand Core Consumer Prices

This indicator samples the price changes in a basket of the most commonly purchased goods and services by households. The price changes represent the rate of inflation in the overall economy. Note that the computation of the core consumer prices excludes goods and services whose prices tend to be volatile. It helps avoid seasonal distortions in the index.

In Q3 of 2020, the core consumer prices in New Zealand rose to 1054 points from 1048 in Q2. The index had only increased by 1 point in 2020. Thus, we assign a score of 1.

  1. New Zealand Industrial Production

Industrial production in New Zealand refers to the YoY change in total manufacturing sales. It measures the YoY change in sales volume in the manufacturing sector. A survey of 13 industries across the manufacturing sector is surveyed to derive the YoY manufacturing sales data for the whole sector. Some of these industries include; petroleum and coal products, metal products, machinery, equipment and furniture, and food and beverage. Naturally, expansion in industrial production corresponds to the expansion of the economy.

New Zealand manufacturing sales rose by 3.1% in Q3 2020 from a drop of 12.1%. This is the largest YoY increase in manufacturing sales in three years. It shows that the economy is rebounding. We assign a score of 5.

  1. New Zealand Business Confidence

NZ business confidence is a survey of about 700 businesses. They are polled to establish their expectations about the future business operating environment and economic growth in general. Some aspects surveyed include; activity outlook, employment prospects, capacity utilization, and investment decisions.

In December 2020, the NZ ANZ business confidence rose to 9.4 from -6.9 in November. This shows an increased optimism in NZ businesses since it is the first positive reading since August 2018. Thus, we assign a score of 7.

  1. New Zealand Consumer Spending

This measures the value of the quarterly consumer expenditure in NZ. Changes in consumer expenditure go hand in hand with domestic demand changes in the economy, which drive GDP growth.

In Q3 2020, the NZ consumer spending increased to NZD 41.335 billion from NZD 35.197 billion in Q2. More so, the Q3 consumer spending is more than the NZD 40.04 billion recorded in Q1. Consequently, the NZ consumer spending has a score of 5.

  1. New Zealand Construction Output

This indicator shows the overall change in the value of all construction work done by contractors in NZ. It compares the YoY quarterly change, which helps to show if the economy is expanding or contracting.

In Q2 2020, the NZ construction output dropped by 24.2% compared to the 4.1% drop in Q2. This is the worst drop in over 18 years. Thus, we assign a score of -4.

  1. New Zealand Government Budget Value

This is the difference between the revenues that the NZ government collects and the amount it spends. Deficits arise if the revenues are less than expenditures, while surplus occurs when the revenues exceed expenditure.

In 2019, the NZ government had a budget surplus of NZD 7.5 billion. In 2020, it was projected that the budget would hit a deficit of NZD 4.5 billion. This is due to increased government expenditure to alleviate the pandemic’s economic shocks while revenues have been depressed due to nationwide shutdowns. Thus, we assign a score of -2.

For the exogenous analysis of both of these currencies, you can check our very next article. In case of any queries, let us know in the comments below. Cheers.

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Forex Course

209. Inter Market Analysis At A Glance

Introduction

Introduction

Introduction

Internet analysis is referred to as a method leveraged to analyze markets by assessing the correlation between various categories of assets. This means that the ups and downs happening in one market may or may not impact the other markets. Therefore, a thorough study of their relationships is beneficial to the trader.

Understanding The Basics Of Intermarket Analysis

It works with multiple financial markets and asset classes related to each other to identify strengths or weaknesses. Rather than assessing the asset classes or financial markets individually, Inter-market analysis evaluates different correlated asset classes or financial markets like bonds, stocks, commodities, and currencies. Such analysis expands on looking at each market or asset individually while comparing them with each other.

Correlation Of Intermarket Analysis

Performing an Intermarket analysis is simple as you would need access to only data. And there is no dearth of data in today’s time; you can find them broadly and access them for free. Charting programs and spreadsheets are other things that you need for this analysis. Here you will compare one variable with another in a different data set.

In this analysis, a positive correlation can move up to +10, signifying a positive and ideal correlation between two data sets. Additionally, in a negative or inverse correlation, the value can go as down as -1.0. When the reading comes close to the zero lines, it will reflect that there lacks a discernible correlation among the two samples.

An ideal correlation between two variables for an extended time period is very uncommon. However, analysts generally agree that reading maintained below the -0.7 level or above +0.7 level is quite prominent. This level depicts around a 70% correlation. Moreover, when the correlation changes from positive to negative, it indicates an unstable relationship, which is not ideal for trading.

Please take the quiz below to know if you have got the concepts right. Cheers!

[wp_quiz id=”102178″]
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Forex Market Analysis

Daily F.X. Analysis, January 18 – Top Trade Setups In Forex – Martin Luther King Day! 

The market may offer thin trading volume and volatility on the back of a holiday in the U.S. The U.S. banks will be closed in observance of Martin Luther King Day. However, the German Buba report will be in focus today to predict price action.

The market may offer thin trading volume and volatility on the back of a holiday in the U.S. The U.S. banks will be closed in observance of Martin Luther King Day. However, the German Buba report will be in focus today to predict price action.

The market may offer thin trading volume and volatility on the back of a holiday in the U.S. The U.S. banks will be closed in observance of Martin Luther King Day. However, the German Buba report will be in focus today to predict price action.

Economic Events to Watch Today  


 

EUR/USD – Daily Analysis

During Monday’s early European trading hours, the EUR/USD currency pair failed to stop its previous session losing streak and remained sideways around the 1.2071 mark due to the sluggish market sentiment underpinned the safe-haven U.S. dollar and contributed to the currency pair gains. Besides this, the selling bias around the currency pair could also be attributed to the rising COVID-19 and stricter activity restrictions in Europe, raising doubts about the European economies and pushing the shared currency down. Conversely, the EUR/USD currency pair’s declines were rather unaffected by the latest reports suggesting that Prime Minister Giuseppe Conte faces a confidence vote in the lower house. Currently, the EUR/USD currency pair is currently trading at 1.2075 and consolidating in the range between the 1.2065 – 1.2086.

The global equity market failed to stop its previous session’s bearish performance and remained sluggish during the early European session as concerns about the potential economic fallout from the Covid-19 surge remain on the cards. These concerns were triggered after Friday’s disappointing U.S. monthly Retail Sales data. At the data front, the core retail sales declined 1.4% month-on-month in December, which was higher than the 0.1% contraction in forecasts and the 1.3% contraction recorded in November. Meanwhile, the Producer Price Index (PPI) increased 0.3% month on month in December, while retail sales declined by 0.7% in the same month.

The equity market losses could also be tied to the prevalent cautious mood ahead of U.S. President-elect Joe Biden’s first day of duty and initially negative signals for taxpayers and Canadian oil companies. In that way, the bearish tone around the equity markets was seen as one of the key factors that helped the safe-haven U.S. dollar.

Daily Technical Levels

Support   Resistance

1.2148     1.2178

1.2129     1.2189

1.2118     1.2208

Pivot Point: 1.2159

EUR/USD– Trading Tip

The EUR/USD is trading over the 1.2065 support level, and the closing of Doji candles above the same level supports the chances of

bullish correction until the 1.2115 level. On the lower side, a bearish breakout of 1.2065 can extend the selling trend until the support level of 1.2005. The 50 EMA and MACD suggest the pair is oversold and should reverse back a bit before exhibiting selling bias.

GBP/USD – Daily Analysis

The GBP/USD currency pair failed to maintain its overnight bullish bias and drew some offers around the 1.3680 level mainly due to the downbeat market trading mood, which underpinned the U.S. dollar bullish and contributed to the currency pair losses.

At the USD front, the broad-based U.S. dollar managed to extend its early-day gaining streak and remained bullish during the European session on the day as investors still prefer to invest in the safe-haven wake of the risk-off market sentiment. The U.S. dollar has been supported by the Democrat victories in the runoff Senate elections in Georgia earlier in the month, which saw a surge in U.S. yields as Democrats got control of Congress. The U.S. dollar gains were seen as one of the key factors that kept the currency pair lower. The U.S. Dollar Index that tracks the greenback against a bucket of other currencies rose by 0.05% to 90.800 by 10:46 AM ET.

At home, the wave of the coronavirus and tighter travel restrictions in Europe keep fueling the doubts over economic recovery as back-to-back lockdown restrictions negatively affect economic activities. The latest report suggests the total novel coronavirus cases of 23,653,919 yesterday against 23,440,774 in the previous report on January 16.

Besides this, the selling bias around the currency pair could also be associated with the ever-rising numbers of COVID-19 and tougher lockdown restrictions in the U.K., which keep raising doubts over the economic recovery. In contrast to this, the latest reports suggest that the Bank of England (BOE) will keep the interest rates unchanged until 2024 to avoid negative rates, which helped the currency pair limit its losses. Also capping the losses could be the latest optimism around the coronavirus better situation in the U.K. 


Daily Technical Levels

Support   Resistance

1.3555     1.3722

1.3445     1.3781

1.3387     1.3890

Pivot Point: 1.3613

GBP/USD– Trading Tip

The GBP/USD pair also trades sideways between a narrow trading range of 1.3549 – 1.3452. On the higher side, a bullish breakout of 1.3549 level can extend the buying trend until the next resistance area of 1.3628 and 1.3698. Conversely, a bearish breakout of 1.3549 support level can extend the selling trend until 1.3455 and 1.3346. 

USD/JPY – Daily Analysis

The USD/JPY currency pair successfully maintained its bullish bias and took steps near mid- 103.00 regions largely due to the market’s downbeat mode and a big rally in the U.S. bond yield retained the U.S. dollar bullish and added to the currency pair accruals. Nevertheless, the market trading opinion was being pressed by the ever-rising figures of COVID-19 and stricter lockdown restrictions that keep fueling doubts over the global economy’s recovery. 

Meanwhile, the equity markets’ slumps were further bolstered by the renewed Sino-US tussle, which extended some support to the safe-haven Japanese yen and capped the upside for the USD/JPY currency pair. Conversely, the optimism about a potential treatment/vaccine and U.S. coronavirus (COVID-19) stimulus bill keeps challenging the market risk-off mood, which might change the direction for the USD/JPY currency pair. Currently, the USD/JPY currency pair is currently trading at 103.78 and consolidating in the range between 103.70 – 103.85.

The market trading sentiment failed to stop its early-day negative performance and remained pessimistic during the Asian trading session. The downfall was completely sponsored by the fears of intensifying coronavirus (COVID-19) conditions throughout the world, which keeps fueling the doubts over the global economic recovery from COVID-19. As per the latest report, France recently imposed a new nationwide lockdown, while German Chancellor Merkel is considering toughening the German lockdown. Apart from this, nearly 22M people are currently under strict lockdown conditions in China’s Hebei province. This happened right after the country posted the largest number of new Covid-19 infections in over 5-months on Wednesday. 

At the USD front, the broad-based U.S. dollar managed to extend its early-day gaining streak and remained bullish during the European session on the day as investors still prefer to invest in the safe-haven securities back of the risk-off market sentiment. The greenback has been supported by the Democrat victories in the runoff Senate elections in Georgia earlier in the month, which saw a surge in U.S. yields as Democrats got control of Congress. The U.S. dollar gains were seen as one of the key factors that kept the currency pair lower. The U.S. Dollar Index that tracks the greenback against a bucket of other currencies rose by 0.05% to 90.800 by 10:46 AM ET.

At home, the wave of the coronavirus and tighter travel restrictions in Europe keep fueling the doubts over economic recovery as back-to-back lockdown restrictions negatively affect economic activities. The latest report suggests the total novel coronavirus cases of 23,653,919 yesterday against 23,440,774 in the previous report on January 16.


Daily Technical Levels

Support   Resistance

103.53     104.16

103.31     104.56

102.91     104.78

Pivot Point: 103.94

USD/JPY – Trading Tips

The safe-haven currency pair USD/JPY slipped to trade at 104.054 level amid increased demand for safe-haven assets. The USD/JPY has formed an upward channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.340 level. The 50 periods EMA supports the bullish trend, and we may have odds of taking a buying trade over the 103.570 level today. Good luck! 

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Forex Videos

Forex Tips For Newbie Traders!

https://youtu.be/1hOFFmjkMV8

https://youtu.be/1hOFFmjkMV8


cool tips for newbie traders

Thank you for joining this forex academy educational video. 

In this session, we will be looking at how to stack the odds in the favour of consistent winning trades with a cool tip for newbie traders.

The number of retail traders who lose all of their deposited trading funds within the first 6 months is scary.

In the United Kingdom, retail brokers are required to have a financial health warning on the front page of their website.  This is one that we picked at random from a well-known UK retail broker. 

CFD’s are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investors’ accounts lose money when trading CFDs with this provider.  You should consider how CFDs work and whether you can afford to take the high risk of losing your money.

Some brokers put the figure at over 80% but let’s not split hairs. This is still a worrying trend.  It must be worrying because governments have forced brokers to put the warning on these sites.

One of the biggest areas that new traders full down is because of a lack of knowledge about how the money markets, and where they lack consistency regarding the setting up and implementation of trades, and most of all; a total disregard for stop losses and their correct implementation and the setup of leverage which falls under risk management, perhaps the most important aspects of trading. 

One of the best ways to mitigate the risk of losing trades is to use a trading criteria checklist.

Here are some ideas about what you might put on that checklist.  The idea is that it is an assistant to help you in the early days on a trade by trade basis to make sure that you have everything in place to help to stack the odds of winning trades in your favor.

Before you do anything, you want to have adopted a trading style or plan and where you have consistently made money on a demo account before trying it with real money.

 

Is the market trending?

Does it have support and resistance?

Are all of your indicators confirming your trade entry?

Consider using a scrolling vertical line, which might help you cast your eyes down to all of the indicators rather than just focusing on price action and potentially missing something.

Set a tight stop loss for each trade, and don’t risk blowing your account balance on one single.  Trade spread the risk over several trades to give yourself a chance of making more money than you lose.

 You should aim for a minimum of a 2 to 1 risk to reward ratio.  That is to say, you want to win twice the amount that you are prepared to lose on each trade.  This will help to keep your account balance in a healthy state.

Decide your preferred time of day to trade.  Try not to trade at the end of a 1-hour time frame if you are an intraday trader.  These can often be the impetus or a change in the direction of trends, and you need to ascertain if this is the case on a trade by trade basis.  Try not to trade at the end of a one-time zone and the beginning of a new one because, often, you will find the different time zone traders have different sentiment with regard to a particular currency pair, and this may be the impetus for a change in direction.

Don’t tread over economic data releases, especially if these are marked as hi-impact, which can often cause extreme market volatility.  Wait until a trend has been identified after the release.

These are just a few ideas which you could put onto your trading criteria checklist.  Print one-off and keep it beside you and meticulously go through it every time before you pull the trigger on a trade.  Eventually, these things will become like second nature, but until they do treat the checklist like a friendly assistant.

 One of the biggest barriers to successful trading in the currency markets is a lack of consistency in one’s approach.  Something like this will go a long way to helping new traders to consistently make the right decisions on a trade by trade basis, and this will stack the odds in their favor.

 

Categories
Forex Elliott Wave Forex Technical Analysis

Three Things you Ought to Know Before Buying EURUSD

The EURUSD eased the last trading week, losing 1.18%, leaving away from the yearly high at 1.23495 reached on last January 06th. The common currency accumulates losses by 1.14% (YTD), which, added to other market conditions commented in our current analysis, carries us to expect further declines in the following trading sessions.  

The EURUSD eased the last trading week, losing 1.18%, leaving away from the yearly high at 1.23495 reached on last January 06th. The common currency accumulates losses by 1.14% (YTD), which, added to other market conditions commented in our current analysis, carries us to expect further declines in the following trading sessions.  

The EURUSD eased the last trading week, losing 1.18%, leaving away from the yearly high at 1.23495 reached on last January 06th. The common currency accumulates losses by 1.14% (YTD), which, added to other market conditions commented in our current analysis, carries us to expect further declines in the following trading sessions.  

1. Retail Traders Seems to Look for Long Positions

Retail traders tend to place their trades against the primary trend, remaining on the wrong side on most occasions. Regarding this market participant behavior context, retail traders reduced their short positions from 79.77% reached last January 06th to 44% last Friday’s session, as the EURUSD pair accelerated its decline. 

Source: myfxbook.com

Retail traders’ increasing positioning to the long-side carries us to sustain the prospect for further declines in the following trading sessions.

2. The Price Violated its Short-Term Upward Trendline

The big picture of EURUSD illustrated in its daily chart reveals the violation of the secondary trendline plotted in green, corresponding to the last rally developed by the common currency since November 04th from the 1.16025 level, which found resistance on January 06th at 1.23495. This market context leads us to observe that the price could develop a correction proportional to the last rally.

In this regard, the Dow Theory view suggests that EURUSD’s corrective move depth might lie between 33% (1.21030) and 66% (1.18565). Moreover, the price could find support in the long-term upward trendline plotted in blue.

3. Timing and Momentum Oscillator Supports the Elliott Wave View.

The intraday Elliott wave view for the EURUSD pair exposed in the next 4-hour chart shows the completion of an ending diagonal pattern corresponding to wave (v) of Minuette degree labeled in blue and its bearish reaction after its finalization.

Once the common currency topped at 1.23495, the price developed an intraday corrective move subdivided into five internal segments of Subminuette degree identified in green. This five-wave sequence of lesser degree carries us to expect the progress in a potential zigzag pattern (5-3-5). 

On the other hand, the timing and momentum oscillator lead us to observe the first downward sequence’s exhaustion corresponding to wave (a) in blue. In consequence, the common currency should develop a corrective rally corresponding to wave (b). This upward move could hit the zone between 1.21576 and 1.22523.

Once the EURUSD completes its wave (b) in blue, the price action should start its bearish wave (c), which follows an internal structure subdivided into five waves. In this context, the bearish scenario’s invalidation level can be found at the end of wave (v) at 1.23495.

What’s Next?

According to Myfxbook.com’s Community Outlook, 56% of retail EURUSD traders are positioned to the long side. Likewise, the violation of a short-term upward trendline carries to expect further declines in the common currency for the coming trading sessions. Nevertheless, the EURUSD could be at the end of the first segment of a corrective formation. In this context, the price could develop an upward bounce that could reach the zone between 1.21579 and 1.22523. After the bounce conclusion, the common currency could find fresh sellers expecting to join a new downward sequence corresponding to wave (c).

If you are interested in finding trading opportunities using the Elliott Wave Principle, follow our Forex.Academy Educational Section.

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Forex Videos

Market volatility continues into 2021, where next for Cable?

https://youtu.be/V1gF-10QUsw

https://youtu.be/V1gF-10QUsw

 


Market volatility continues into 2021, where next for Cable?

 

Thank you for joining this forex academy educational video.

In this session, we will be taking a look at how the pound is faring against the United States dollar as the UK leaves the European Union to go on its own way as an independent trading nation once again.

In this daily chart for cable, we can see a general trend higher from the 12th of May 2020, which culminated in a peak of 1.3700 at position A, which coincides with a future free trade agreement being announced between the United Kingdom and the European Union, which was generally seen by the market as going to happen, and which fuelled the bull rally as played out on the chart.

The pullback to the current level at 1.3558, at the time of writing, was to be expected, on the basis many traders work on the principle of buy the rumor and sell the fact, in which case we might naturally expect to see some traders exiting their long trades due to profit-taking, and a fear of a collapse due to this common market practice of buying the rumor and selling the fact. But the sell-off has been fairly muted, only flattening out to the current exchange rate.  

The real test here will be whether there is a move higher from position B to a retest of the 1.3700 line, which would then likely cause a push above it on towards 1.3800 and beyond, or a move lower towards the support line when longer-term institutional traders will be looking for the support line to breach, or price action to bounce higher and perhaps a retest of the 1.3700 figure from there.

Things to factor in are the extremely high rate of covid infections spreading through the United Kingdom and causing further lockdowns and loss of productivity within the UK, where long-term effects of this on the economy are not good.  The markets have been buoyed by the measures put in place by the government to protect businesses and inject money into the system.

We also have to consider a new United States president will be inaugurated in a couple of week’s time, and what effect this has on the United States dollar as he begins to introduce new legislation to raise income tax and increase red tape for businesses as he has pledged to do.

The recent pullback in the pound against the dollar has largely been a result of all of these factors and a slight improvement in US dollar sentiment. 

 Expect extreme volatility as we move in towards the middle part of January, especially around the time of the inauguration on the 20th of January.

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 18 – Bitcoin Drops During the Weekend, ETH Remains Strong

The crypto sector spent the weekend in a mostly descending fashion, with BTC continuing its short-term downtrend. Bitcoin is currently trading for $35,258, representing an increase of 0.14% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 0.39% on the day, while LTC lost 0.46% of its value.

The crypto sector spent the weekend in a mostly descending fashion, with BTC continuing its short-term downtrend. Bitcoin is currently trading for $35,258, representing an increase of 0.14% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 0.39% on the day, while LTC lost 0.46% of its value.

The crypto sector spent the weekend in a mostly descending fashion, with BTC continuing its short-term downtrend. Bitcoin is currently trading for $35,258, representing an increase of 0.14% compared to yesterday’s value. Meanwhile, Ethereum’s price has decreased by 0.39% on the day, while LTC lost 0.46% of its value.

Daily Crypto Sector Heat Map

Astosch gained 285.95% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by ALL BEST ICO’s 273.67% and Yeld Finance’s 264.65% gain. On the other hand, Bestay lost 87%, making it the most prominent daily loser. It is followed by Zugacoin’s loss of 85.51% and VKF Platform’s loss of 77.77%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved down since our last report, with its value currently being 66.1%. This value represents a 2.3% difference to the downside when compared to the previously reported value.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has dropped below the $1 trillion mark since we last reported, with its current value being $993.33 billion. This represents a $43.67 billion decrease when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin spent the weekend following the downtrend it started on Jan 14, with its price slowly declining from a high of $39,600 to a low of $33,833. During the downtrend, the price has contested and broken the $36,640 level to the downside and looks like it will contest the $33,200 level in the near future. BTC is currently trading at a little above $35,000, representing a weekly loss of 6.09% and a monthly gain of 29.87%.

Bitcoin’s price has responded well to the 21-day moving average and found very strong support there. Staying above this level will be crucial if BTC wants to turn to the upside.

BTC/USD 1-hour chart

Bitcoin’s technicals on the daily, weekly, and monthly time-frame are completely bullish and show no neutral or bearish signs. On the other hand, its 4-hour overview is completely bearish.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is slightly below its 50-period EMA and its 21-period EMA
  • Price is slightly below its middle Bollinger band
  • RSI is neutral (43.00)
  • Volume is descending

Key levels to the upside:          Key levels to the downside:

1: $36,640                             1: $33,200

2: $40,000                             2: $30,640

3: $42,000                             3: $27,960

Ethereum

Unlike Bitcoin, Ethereum’s weekend was not spent in a downfall. The second-largest cryptocurrency by market cap headed towards the $1,300 level but failed to break it, which prompted a weekend of sideways trading. While ETH did break the $1,211 level to the downside, the $1,183.85 level held up. Ether is currently trading in a very narrow range, bound by the aforementioned levels.

ETH’s short-term movement will greatly depend on two factors: Bitcoin’s volatility and Ether itself, breaking its immediate support or resistance levels.

ETH/USD 1-hour Chart

Ethereum’s technicals all time-frames are tilted towards the buy-side, with the 4-hour, daily, and weekly overviews fully pointing towards the buy-side. Its monthly overview, however, has oscillators pointing towards neutrality.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is slightly below its 50-period and its 21-period EMA
  • Price is between its middle and bottom Bollinger band
  • RSI is neutral (43.72)
  • Volume is slightly below average

Key levels to the upside:          Key levels to the downside:

1: $1,211                               1: $1,183.85

2: $1,255                               2: $1,060.5

3: $1,350                               3: $1,047.5

Litecoin

Litecoin mirrored Bitcoin’s movements over the weekend, stepping into a downtrend that started on Jan 14, after Litecoin couldn’t push its price to $160. The price is currently fighting for the $142.1 level, which it has recently broken to the downside.

While Litecoin’s movements seem to mirror Bitcoin’s, its volume remains stable despite Bitcoin’s volume dropping. At the moment, LTC might be a better choice for people that want to be less affected by Bitcoin’s volatility.

LTC/USD 1-hour Chart

Litecoin’s technicals on the daily, weekly, and monthly time-frame are completely bullish and show no neutral or bearish signs (though they are slightly less bullish than Bitcoin’s overviews). On the other hand, its 4-hour overview is completely bearish.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is slightly below its 50-period EMA and its 21-period EMA
  • Price close to its bottom Bollinger band
  • RSI is neutral (42.47)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $142.1                               1: $128.42

2: $161.5                               2: $114.75

3: $181.3                               3: $97.8

Categories
Forex Elliott Wave Forex Market Analysis

Why GBPJPY Plummeted in Friday’s Session?

The GBPJPY cross declined on Friday trading session dragged 0.70% after the price surpassed the psychological barrier of 142, being the highest level reached since early September 2020.

The GBPJPY cross declined on Friday trading session dragged 0.70% after the price surpassed the psychological barrier of 142, being the highest level reached since early September 2020.

The GBPJPY cross declined on Friday trading session dragged 0.70% after the price surpassed the psychological barrier of 142, being the highest level reached since early September 2020.

Technical Overview

The GBPJPY cross drops over 100 pips on the last trading session of the week, accumulating a modest advance of 0.02% (YTD) since the yearly opening.

On the fundamental side, the industrial production in the United Kingdom eased 4.7% (YoY) in November 2020, informed the Office for National Statistics on Friday. The reading is worse than the decline of 4.2% expected by analysts. Likewise, both coronavirus lockdown and the Brexit uncertainty contributed to the decline in the industrial output.

Source: TradingEconomics.com

On the other hand, the doubts in the fourth quarter 2020 earnings season kick-off and the elected U.S. President Biden’s stimulus plan seem not enough to keep fueling the stock market participants’ euphoric sentiment. This context looks fading the record highs in the stock market, boosting the risk-off bias pushing lower the GBPJPY cross.

The big-picture illustrated in the next daily chart shows the price action moving in the extreme bullish sentiment where the cross ended the Friday session unveiling a bearish engulfing pattern, which carries to expect further declines in the coming trading sessions.

Finally, the piercing below the yearly opening level at 140.779 suggests potential declines during the first quarter of 2021.

Technical Outlook

Our previous analysis saw the progress in a complex correction identified as a double-three pattern (3-3-3). Nevertheless, the corrective rally suggests that the GBPJPY moves in a triple-three formation (3-3-3-3-3), which looks in its terminal stage.

The following 4-hour chart shows the completion of a triple-three pattern of Minute degree labeled in black, which moves inside a wave B of Minor degree identified in green since the cross found support at 133.040 touched in last September 22nd.

The internal structure of wave ((z)) in black shows its last corrective leg corresponding to wave (c) in blue, developing an ending diagonal pattern, which seems finished its wave v of Subminuette degree labeled in green. The breakdown of the guideline that connects the end of waves ii with iv carries to support the ending diagonal pattern’s finalization.

On the other hand, the timing indicator exposes the intraday oversold (see the yellow circle), which leads to the conclusion that the GBPJPY cross should develop an upward retracement as a flag pattern before continuing with its potential further decline.

In summary, the GBPJPY cross plummeted in last Friday’s session dragged by the completion of an ending diagonal pattern, which belongs to wave ((z)) of a triple-three formation, where its upper degree sequence corresponds to wave B of Minor degree. Although the news media continue supporting hopes in the stimulus plan for the U.S. economy, the Elliott wave structure showed by the cross unveils a different story.

According to the Elliott wave theory, the price should develop a downward wave C of Minor degree. The timing oscillator also suggests an intraday upward consolidation likely as a flag pattern before continuing its drops.

If you are interested in expanding your knowledge about the Elliott wave theory from the basics to advanced, visit our Forex.Academy Educational Section.

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 15 – Bitcoin Retraces After Hitting $40k; Ethereum Contests $1.2k

The crypto sector was mostly stable in the past 24 hours, as most cryptocurrencies were trying to find their top or retraced slightly. Bitcoin is currently trading for $37,766, representing a decrease of 0.42% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 5.98% on the day, while LTC gained 0.33% of its value.

The crypto sector was mostly stable in the past 24 hours, as most cryptocurrencies were trying to find their top or retraced slightly. Bitcoin is currently trading for $37,766, representing a decrease of 0.42% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 5.98% on the day, while LTC gained 0.33% of its value.

The crypto sector was mostly stable in the past 24 hours, as most cryptocurrencies were trying to find their top or retraced slightly. Bitcoin is currently trading for $37,766, representing a decrease of 0.42% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 5.98% on the day, while LTC gained 0.33% of its value.

Daily Crypto Sector Heat Map

FastSwap gained 244.13% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by HedgeTrade’s 225.26% and Capital.Finance’s 145.48% gain. On the other hand, Zugacoin lost 87.51%, making it the most prominent daily loser. It is followed by Roti Bank Coin’s loss of 77.52% and BitiPro Exchange Token’s loss of 74.35%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved down slightly since our last report, with its value currently being 68.4%. This value represents a 0.6% difference to the downside when compared to the previously reported value.

Weekly Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has made negligible gains since we last reported, with its current value being $1.037 trillion. This represents a $5 billion increase when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has ended its uptrend by hitting a high of $40,112 yesterday, prompting a slight pullback. The pullback was, just like the price increase, happening on low volume and had the same intensity as well. The only differentiating factor was its direction. The move to the downside ended with BTC’s price hitting the 50-hour moving average and pushing up.

Bitcoin has a couple of strong resistance lines to the upside, one being the immediate 21-hour EMA, and then the $40,000 and ultimately $42,000 levels. On the other hand, its support is guarded by the 50-hour EMA and the $36,640 level.

BTC/USD 1-hour chart

Bitcoin’s technicals on the daily and monthly time-frame are overall bullish but have oscillators pointing to the sell-side. On the other hand, its 4-hour and weekly overviews are completely bullish.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is between its 50-period EMA and its 21-period EMA
  • Price is slightly below its middle Bollinger band
  • RSI is neutral (50.19)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $40,000                             1: $36,640

2: $42,000                             2: $33,200

3: $43,600                             3: $30,640

Ethereum

Ethereum’s push to the upside has, just like with Bitcoin, seemingly ended. However, its pullback hasn’t started at all, as its price kept fluctuating between the recently $1,183.85 support level and the recent high. Trading in such a narrow range is not sustainable, and ETH will break either to the upside or downside very soon.

ETH traders can finally catch a nice trade as the cryptocurrency has (at least a bit) moved in a different manner than Bitcoin. Ether’s upside is guarded by the heavy resistance zone slightly below $1,300 as well as the $1,350 level. Its downside has smaller support levels, some of them being $1,211, $1,183.85, as well as the 21-hour and 50-hour EMAs.

ETH/USD 1-hour Chart

Ethereum’s technicals on the 4-hour and daily time-frames are overall bullish but have oscillators pointing to the sell-side. On the other hand, its weekly and monthly overviews are completely bullish.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is above its 50-period and at its 21-period EMA
  • Price is near its top Bollinger band
  • RSI is neutral (61.37)
  • Volume is slightly below average

Key levels to the upside:          Key levels to the downside:

1: $1,255                               1: $1,211

2: $1,350                               2: $1,183.85

3: $1,419                               3: $1,060.5

Litecoin

Litecoin continued trading within its range, bound by $142.1 to the downside and $161.5 to the upside. Its price is now also between the 21-hour and the 50-hour EMAs, which have proven to be strong support and resistance levels, especially when paired with low trading volume.

Litecoin is currently mirroring the direction of Bitcoin’s moves, but with much less intensity. This makes it a very unattractive trading pair at the moment.

LTC/USD 1-hour Chart

Litecoin’s technicals on all time-frames are completely bullish and without any signs of neutrality.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is slightly above its 50-period EMA and at its 21-period EMA
  • Price at its middle Bollinger band
  • RSI is neutral (53.10)
  • Volume is descending

Key levels to the upside:          Key levels to the downside:

1: $161.5                               1: $142.1

2: $181.3                               2: $128.42

3: $186.3                               3: $114.75

Categories
Forex Market Analysis

Daily F.X. Analysis, January 15 – Top Trade Setups In Forex – U.S. Retail sales in Focus!

On the news front, it’s going to be a busy Friday as the U.K. economy is due to release its GDP figures, which are expected to perform negatively, and this may add selling pressure on the Sterling. Later during the U.S. session, the U.S. retail sales may drive further price action in the dollar related pairs.

On the news front, it’s going to be a busy Friday as the U.K. economy is due to release its GDP figures, which are expected to perform negatively, and this may add selling pressure on the Sterling. Later during the U.S. session, the U.S. retail sales may drive further price action in the dollar related pairs.

On the news front, it’s going to be a busy Friday as the U.K. economy is due to release its GDP figures, which are expected to perform negatively, and this may add selling pressure on the Sterling. Later during the U.S. session, the U.S. retail sales may drive further price action in the dollar related pairs.

Economic Events to Watch Today  

EUR/USD – Daily Analysis

During Friday’s early Asian trading hours, the EUR/USD currency pair failed to stop its overnight losing streak and still trades in a sideways manner around below the 1.2150 marks due to the risk-off market sentiment underpinned the U.S. dollar and contributed to the currency pair gains. Besides this, the selling bias around the currency pair could also be attributed to the ever-increasing COVID-19 and tougher lockdown restrictions in the U.K. and Europe, which raised further doubts over the European economies and pushed the shared currency down. The declines in the EUR/USD currency pair were unaffected by the latest positive announcement from U.S. President-elect Joe Biden regarding the stimulus package. Currently, the EUR/USD currency pair is currently trading at 1.2144 and consolidating in the range between the 1.2143 – 1.2163. Moving on, the market traders seem reluctant to place any strong position ahead of European Trade Balance and French Final CPI m/m.

Besides, the new wave of the coronavirus in the U.K. and resulting in tighter travel restrictions in Europe and the U.K. keep fueling the fears over slower economic recovery as back to back lockdown restrictions tend to have an instant negative effect on economic activities, which in turn, added bearish pressure around the currency pair. As per the latest report, France recently introduced a new nationwide lockdown, while German Chancellor Merkel reportedly wants to toughen the German lockdown. Apart from this, approximately 22M people are currently under strict lockdown conditions in China’s Hebei province. This happened right after the country posted the largest number of new Covid-19 infections in over 5-months on Wednesday. This, in turn, exerted downside eight on the market risk tone and contributed to U.S. dollar gains.

As in result, the broad-based U.S. dollar managed to stop its overnight losses and edged higher during the Asian session on the day amid risk-off market sentiment. However, the U.S. dollar bullish bias was rather unaffected by the worsening coronavirus (COVID-19) conditions in the U.S., or U.S. stimulus talks progress, which tend to undermine the U.S. currency. However, the gains in the U.S. dollar kept the currency pair lower. 

Looking forward, the market players will keep their eyes on the release of U.S. Core Retail Sales m/m along with Retail Sales m/m. The French Final CPI m/ma and Trade Balance will also be closely followed. Meanwhile, the UK GDP m/m and Goods Trade Balance are also expected to release later on the day. Across the ocean, the updates surrounding the Sino-US tussle and virus woes could not lose their importance on the day.


Daily Technical Levels

Support   Resistance

1.2148      1.2178

1.2129      1.2189

1.2118      1.2208

Pivot Point: 1.2159

EUR/USD– Trading Tip

On Friday, the market’s technical side remains mostly unchanged as the EUR/USD continues to gain support at the 1.2136 level, and breaking of this can trigger an additional dip until 1.2105 and 1.2065 level. On the upside, the EUR/USD pair may find resistance at the 1.2170 level, and a bullish breakout of this level can extend the buying trend to 1.2220. The RSI and MACD have shifted their selling trends; therefore, we may see further sell-off upon the bearish breakout of 1.2136 level today.

GBP/USD – Daily Analysis

The GBP/USD During Friday’s early Asian trading session, the GBP/USD currency pair failed to maintain its overnight bullish bias and drew some offers around the 1.3680 level mainly due to the downbeat market trading mood, which underpinned the U.S. dollar bullish and contributed to the currency pair losses. Besides this, the selling bias around the currency pair could also be associated with the ever-rising numbers of COVID-19 and tougher lockdown restrictions in the U.K., which keep raising doubts over the economic recovery. In contrast to this, the latest reports suggest that the Bank of England (BOE) will keep the interest rates unchanged at least until 2024 to avoid negative rates, which helped the currency pair limit its losses. Also capping the losses could be the latest optimism around the coronavirus better situation in the U.K. Currently, the GBP/USD currency pair is currently trading at 1.3687 and consolidating in the range between the 1.3675 – 1.3699. Moving on, the market traders seem reluctant to place any strong position ahead of UK GDP m/m and Goods Trade Balance data.

Despite the ongoing optimism about a potential treatment/vaccine and U.S. coronavirus (COVID-19) stimulus bill, the market risk mood failed to stop its previous bearish performance and remained red amid growing market worries over the potential economic byproduct from the continuous rise in new COVID-19. The ongoing downfall around the equity market was completely sponsored by the fears of intensifying coronavirus (COVID-19) conditions throughout the world, which keeps fueling the doubts over the global economic recovery from COVID-19. 

Besides the virus woes, the reason for the bearish trading sentiment could also be associated with the long-lasting US-China tussle, which is continuously picking pace after U.S. President Donald Trump imposed new sanctions on Chinese officials and companies. All these events have been weighing on the market trading sentiment and were seen as major factors that kept the U.S. dollar prices higher.

As in result, the broad-based U.S. dollar managed to stop its overnight losses and edged higher during the Asian session on the day amid fresh risk-off market sentiment. However, the U.S. dollar gains were relatively unaffected by the worsening coronavirus (COVID-19) conditions in the U.S., or U.S. stimulus talks progress, which tend to undermine the U.S. currency. The U.S. President-elect Joe Biden recently revealed a much-anticipated coronavirus stimulus plan and promised to deliver $2,000 in stimulus cheques to Americans, infrastructure spending, social equity, and a potential minimum wage of $15 per hour. Unfortunately, Biden’s stimulus talk has failed to inject volatility in the forex markets so far. However, the gains in the U.S. dollar kept the currency pair lower. 


Daily Technical Levels

Support   Resistance

1.3555      1.3722

1.3445      1.3781

1.3387      1.3890

Pivot Point: 1.3613

GBP/USD– Trading Tip

The GBP/USD pair also trades sideways between a narrow trading range of 1.3703 – 1.3632. On the higher side, a bullish breakout of 1.3703 level can extend the buying trend until the next resistance area of 1.3744 and 1.3786. Conversely, a bearish breakout of 1.3632 support level can extend the selling trend until 1.3550. 

USD/JPY – Daily Analysis

During Friday’s early European trading session, the USD/JPY currency pair succeeded to maintain its bullish bias and to take rounds around above mid- 103.00 regions mainly due to the market’s downbeat mood and a strong rally in the U.S. bond yield, which kept the U.S. dollar bullish and contributed to the currency pair gains. However, the market trading sentiment was being pressured by the ever-rising numbers of COVID-19 and stricter lockdown restrictions throughout the world, which keeps fueling doubts over the global economy’s recovery. Meanwhile, the equity markets’ slumps were further bolstered by the renewed Sino-US tussle, which extended some support to the safe-haven Japanese yen and capped the upside for the USD/JPY currency pair. Conversely, the optimism about a potential treatment/vaccine and U.S. coronavirus (COVID-19) stimulus bill keeps challenging the market risk-off mood, which might change the direction for the USD/JPY currency pair. Currently, the USD/JPY currency pair is currently trading at 103.78 and consolidating in the range between 103.70 – 103.85.

The market trading sentiment failed to stop its early-day negative performance and remained pessimistic during the Asian trading session. The downfall was completely sponsored by the fears of intensifying coronavirus (COVID-19) conditions throughout the world, which keeps fueling the doubts over the global economic recovery from COVID-19. As per the latest report, France recently imposed a new nationwide lockdown, while German Chancellor Merkel is considering toughening the German lockdown. Apart from this, nearly 22M people are currently under strict lockdown conditions in China’s Hebei province. This happened right after the country posted the largest number of new Covid-19 infections in over 5-months on Wednesday. 

Besides the virus woes, the reason for the bearish trading sentiment could also be associated with the long-lasting US-China tussle, which is still not showing any sign of slowing down. The reason could be associated with the reports suggesting that the Trump administration is imposing sanctions on officials and companies for alleged misdeeds in the South China Sea and imposing an investment ban on 9 more Chinese firms with alleged ties to the Chinese military, including planemaker Comac and phone maker Xiaomi (OTC: XIACF) Corp. However, all these factors have been weighing on the market trading sentiment, which was seen as major factors that kept the U.S. dollar prices higher.

As in result, the broad-based U.S. dollar managed to extend its early-day gains and remained bullish on the day amid prevalent risk-off market sentiment. However, the gains in the U.S. dollar were rather unaffected by the U.S. stimulus progress, which tends to undermine the U.S. currency. It is worth noting that the U.S. President-elect Joe Biden promised to deliver $2,000 in stimulus cheques to Americans, infrastructure spending, social equity, and a potential minimum wage of $15 per hour. Unfortunately, this positive talk has failed to inject volatility in the forex markets so far. Notably, the gains in the U.S. dollar could be short-lived or temporary as the Fed Chairman Jerome Powell said that the time to raise the interest rates is no time soon. However, the ongoing bullish bias around the greenback kept the currency pair higher.

Looking forward, the market players will keep their eyes on the release of U.S. Core Retail Sales m/m along with Retail Sales m/m. Apart from this, the French Final CPI m/ma and Trade Balance will also be closely followed. At home, the UK GDP m/m and Goods Trade Balance are also expected to release later on the day. Across the ocean, the updates surrounding the Sino-US tussle and virus woes could not lose their importance on the day.


Daily Technical Levels

Support   Resistance

103.53      104.16

103.31      104.56

102.91      104.78

Pivot Point: 103.94

USD/JPY – Trading Tips

The safe-haven currency pair USD/JPY slipped to trade at 104.054 level amid increased demand for safe-haven assets. The USD/JPY has formed an upward channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.340 level. The 50 periods EMA supports the bullish trend, and we may have odds of taking a buying trade over the 103.570 level today. Good luck! 

Categories
Crypto Videos

Bitcoin Price Dump Shakes Investors!

https://youtu.be/EqE4lQmtsm4

https://youtu.be/EqE4lQmtsm4

Bitcoin price dump! was the writing on the wall?

Thank you for joining this Forex Academy educational video.

In this session, we will be looking at the recent bitcoin US dollar price dump and what might have been the possible contributing factors.

In this daily chart of bitcoin to the US dollar, we can see a steady bull run, as highlighted in section A, with a critical area of support on the $10 k line, which lends itself nicely for a price action move up to the resistance line, which was breached in section B, which coincides with the all-time high of around $19.5K from 2017, and where eventually price reaches the key $20K figure, and from there on over the Christmas period and into the new year, we see exponential growth, where bitcoin skyrockets to $42k.
With market analysts and investors talking up the value of bitcoin from anywhere in the region of $30 to 40K and even 140k, it’s hardly surprising that euphoria crept in and where everybody was buying, especially in the CFDs market.
This was a gold rush in all but name. And one has to ask oneself a question; when assets are being talked up by investors, or even talked down, what are the real motives behind this? Are they simply looking for a market reaction in favour of their own investment strategy, for example? This is a question for another day.
Getting back to the issue, was the writing on the wall all for a price collapse? Yes, it was, and for a number of reasons:
Firstly, when a market is moving steadily as in a trend, it is less likely to see extreme volatility unless there are fundamental reasons behind it. And because bitcoin is essentially a speculative instrument, fundamentals can be set aside in favour of a trending market.

The problem with this, as highlighted here, is that this is unchartered territory. We are looking at a $20,000 price increase in just a few days, which is almost unheard of. Technical analysis becomes difficult to gauge, and professional traders don’t know where to get in on the trend or place stops. Many are forced into buying for fear of missing out, and this is extremely dangerous.

Certainly, the writing was on the wall when on the 4th of January, we see a $6K price range move on this bearish daily candlestick. However, volatility continued with the bulls regaining control taking bitcoin to a record high of around $42,000.
Professional traders will know from history that a correction was on the cards, and with the UK FCA warning retail traders about the potential of losing all of their money trading bitcoin assets, it very likely contributed to price action hitting a brick wall all and to the collapsed….

Of around $12K in 24 hours. Many investors and retail traders were still buying well above $40,000, while the price was tanking, causing billions of dollars to be wiped off of the price, and where billions were lost in margin calls, with accounts being liquidated, because of the massive move lower.
Bitcoin should have a health warning on it, buyer beware, and with more and more weekend traders getting involved in this market, which operates 7 days a week, and where these part-time traders in there are spare rooms have a punt, with many losing their cash deposits, it is not a surprise that the FCA have banned retail traders from trading cryptocurrencies in the UK from the 6th of January this year, and where the EU are now calling for tighter regulation in this space.
Weekend bitcoin traders will be licking their wounds. But let’s not forget that a lot of people are still in the money and sitting back waiting to see if the price steadies itself and then continues to move higher, or if it will continue to slide.
Advice on this one would be too to look at trends on lower time frames…..

Such as this one-hour chart, while looking for support and resistance lines, and pick out trends that are set by big money investors, such as institutional traders, where they typically operate Monday to Friday. Be ultra-cautious when going long during aggressive rallies and around huge candlesticks, especially the bearish ones, as highlighted, which represents an overall move of $4000 dollars. They spell out danger. And set tight stop losses.

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 14 – Bitcoin Records Double-Digit Gains as it Passes $38K; Crypto Market in the Green

The crypto sector ended up almost completely in the green as Bitcoin recorded double-digit gains and pulled the rest of the market up. Bitcoin is currently trading for $38,222, representing an increase of 11.05% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 9.00% on the day, while LTC gained 6.48% of its value.

The crypto sector ended up almost completely in the green as Bitcoin recorded double-digit gains and pulled the rest of the market up. Bitcoin is currently trading for $38,222, representing an increase of 11.05% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 9.00% on the day, while LTC gained 6.48% of its value.

The crypto sector ended up almost completely in the green as Bitcoin recorded double-digit gains and pulled the rest of the market up. Bitcoin is currently trading for $38,222, representing an increase of 11.05% compared to yesterday’s value. Meanwhile, Ethereum’s price has increased by 9.00% on the day, while LTC gained 6.48% of its value.

Daily Crypto Sector Heat Map

Simbcoin gained 366.72% in the past 24 hours, making it the most prominent daily crypto gainer by far. It is followed by Penta’s 229.88% and DEX’s 187.13% gain. On the other hand, Daiquilibrium lost 88.91%, making it the most prominent daily loser. It is followed by Dynamic Supply Tracker’s loss of 80.15% and Dynamic Supply’s loss of 63.83%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s market dominance has moved up slightly since our last report, with its value currently being 69%. This value represents a 0.4% difference to the upside when compared to the previously reported value.

Daily Crypto Market Cap Chart

The cryptocurrency sector’s market capitalization has made significant gains since we last reported, with its current value being $1.032 trillion. This represents an $88.3 billion increase when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin had started changing its price direction on Jan 13, when it started to slowly push towards the upside. The largest cryptocurrency by market cap managed to pass the $36,640 level and reach as high as $38,789 before pulling back slightly. This steady price increase was followed by average (or even slightly descending) volume.

The pullback BTC went into after hitting the recent high was quickly stopped by the 21-hour and 50-hour EMAs, changing the overall stance from an expected downturn to uncertainty.

BTC/USD 1-hour chart

Bitcoin’s technicals on the 4-hour, daily and monthly time-frame are overall bullish, with oscillators pointing to the sell-side. On the other hand, its weekly overview is completely bullish.

BTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Price is above both its 50-period EMA and its 21-period EMA
  • Price is between its middle and top Bollinger band
  • RSI is neutral (62.38)
  • Volume is average

Key levels to the upside:          Key levels to the downside:

1: $40,000                             1: $36,640

2: $42,000                             2: $33,200

3: $43,600                             3: $30,640

Ethereum

Ethereum’s period of heavy correlation with Bitcoin has continued as its price slowly gained momentum towards the upside. Ether managed to push its price to the $1,183.85 level but couldn’t quite break it. This caused a minor pullback, which ended very quickly.

Ethereum’s 21-hour and 50-hour EMAs play a significant role in determining its price direction and should be considered by the traders at all times. On top of that, any ETH trader should pay attention to BTC’s movements, as those ultimately determine the price direction of most cryptocurrencies.

ETH/USD 1-hour Chart

Ethereum’s technicals on the daily and weekly time-frame are currently completely bullish, while its 4-hour and monthly overviews show some signs of neutrality.

ETH/USD 1-day Technicals

Technical Factors (1-hour Chart):

  • Price is above both its 50-period and its 21-period EMA
  • Price is near its top Bollinger band
  • RSI is neutral (64.19)
  • Volume is slightly below average

Key levels to the upside:          Key levels to the downside:

1: $1,183.85                          1: $1,060.5

2: $1,211                               2: $1,047.5

3: $1,226.5                            3: $992

Litecoin

While Litecoin did follow Bitcoin’s price direction, it did so with much less conviction and intensity. Its price managed to pass the $142.1 level to the upside and establish its price above it but failed to move into the upper half of the trading range bound by $142.1 to the downside and $161.5 to the upside.

Litecoin currently has a very nicely-built support zone, while its upside is quite open. If Bitcoin’s price remains the same, traders can expect LTC to try to push towards or even contest the $161.5 level.

LTC/USD 1-hour Chart

Litecoin’s technicals on the shorter time-frames (4-hour, daily, and weekly) show overall tilt to the buy-side with hints of neutrality. Its monthly time-frame, however, is completely bullish.

LTC/USD 1-day Technicals

Technical factors (1-hour Chart):

  • Its price is slightly above its 50-period EMA and its 21-period EMA
  • Price slightly above its middle Bollinger band
  • RSI is neutral (57.08)
  • Volume is descending

Key levels to the upside:          Key levels to the downside:

1: $161.5                               1: $142.1

2: $181.3                               2: $128.42

3: $186.3                               3: $114.75

Categories
Forex Fundamental Analysis

GBP/CHF Global Macro Analysis – Part 3

GBP/CHF Exogenous Analysis The UK and Switzerland Current Account Differential A country’s current account shows the sum of its net exports, net secondary income, and net primary income. In this case, the current account differential is the difference between the UK’s current account balance and Switzerland. In international trade, when a country has a current […]

GBP/CHF Exogenous Analysis The UK and Switzerland Current Account Differential A country’s current account shows the sum of its net exports, net secondary income, and net primary income. In this case, the current account differential is the difference between the UK’s current account balance and Switzerland. In international trade, when a country has a current […]

GBP/CHF Exogenous Analysis

  1. The UK and Switzerland Current Account Differential

A country’s current account shows the sum of its net exports, net secondary income, and net primary income. In this case, the current account differential is the difference between the UK’s current account balance and Switzerland.

In international trade, when a country has a current account surplus, it means the value of its exports is higher than imports. Thus, its domestic currency is in higher demand in the forex market. Therefore, if the current account differential is positive, it implies that the UK has a higher current account than Switzerland. We can then expect that the price of the GBP/CHF pair will increase. Conversely, a negative differential would mean that Switzerland has a higher current account than the UK. In this case, the price of the GBP/CHF pair is expected to drop.

Switzerland had a current account surplus of $10.11 billion in the third quarter of 2020, while the UK had a $20.97 billion deficit. The current account differential is -$31.08 billion. Hence a score of -7.

  1. The interest rate differential between the UK and Switzerland

Interest rate differential is the swiss interest rate subtracted from the interest rate in the UK. Forex carry traders use a pair’s interest rate differential to establish whether to buy or short the pair. For GBP/CHF, if the interest rate differential is positive, it means that the UK’s interest rate is higher than in Switzerland. This makes traders and investors go long on the pair; hence, a bullish trend.

Conversely, if the interest rate differential is negative, it means that Switzerland’s interest rate is higher than in the UK. Thus, forex traders will short the GBP/CHF pair; hence, a bearish trend.

The Swiss National Bank has maintained the interest rate at -0.75%, while the UK’s interest rate is 0.1%. Therefore, the GBP/CHF interest rate differential is 0.85%. It has a score of 3.

  1. The differential in GDP growth rate between the UK and Switzerland

GDP growth rate differential is the difference between the economic growth in the UK and Switzerland. A negative differential means that the UK’s economy is expanding faster than that of Switzerland. Consequently, the GBP/CHF pair will adopt a bullish trend. Conversely, if the GDP growth rate differential is negative, the swiss economy is growing faster than that of the UK. Hence, the GBP/CHF pair will adopt a bearish trend.

The UK economy has contracted by 5.8% in the first three quarters of 2020, while the swiss economy has contracted by 1.5%. That means the GDP growth rate differential is -4.3%. We assign a score of -3.

Conclusion

Indicator Score Total State Comment
The UK and Switzerland Current Account Differential -7 10 A differential of – $31.08 Switzerland has a $10.11 billion current account surplus, while the UK has a deficit of $20.97 billion
The interest rate differential between the UK and Switzerland 3 10 0.85% The differential is expected to remain at 0.85% all through 2021
The differential in GDP growth rate between the UK and Switzerland -3 10 -4.30% Switzerland’s economy contracted by 1.5% in the first three quarters of 2020 while the UK by 5.8%
TOTAL SCORE -7

The exogenous analysis of the GBP/CHF pair has a cumulative score of -7. Thus, we can expect a short-term downtrend in the pair.

In technical analysis, GBP/CHF’s weekly price is seen bouncing off from the upper Bollinger band.

We hope you find this analysis informative. Let us know if you have any questions in the comments below. Cheers.

Categories
Forex Fundamental Analysis

GBP/CHF Global Macro Analysis – Part 1 & 2

Introduction The global macro analysis of the GBP/CHF currency pair will involve analysing endogenous and exogenous factors. Endogenous factors drive the domestic GDP growth in the UK and Switzerland. Exogenous factors influence the exchange rate for the currency pair. Ranking Scale The analysis will rank the endogenous and exogenous factors on a scale from -10 […]

Introduction The global macro analysis of the GBP/CHF currency pair will involve analysing endogenous and exogenous factors. Endogenous factors drive the domestic GDP growth in the UK and Switzerland. Exogenous factors influence the exchange rate for the currency pair. Ranking Scale The analysis will rank the endogenous and exogenous factors on a scale from -10 […]

Introduction

The global macro analysis of the GBP/CHF currency pair will involve analysing endogenous and exogenous factors. Endogenous factors drive the domestic GDP growth in the UK and Switzerland. Exogenous factors influence the exchange rate for the currency pair.

Ranking Scale

The analysis will rank the endogenous and exogenous factors on a scale from -10 to +10. The score for endogenous factors will be determined from a correlation analysis with the domestic GDP growth rate. If the score is negative, it means that the endogenous factor has led to the domestic currency depreciation. If positive, it has caused the appreciation of the domestic currency.

The exogenous analysis score is from a correlation analysis with the exchange rate for the GBP/CHF pair. When the score is negative, traders can expect the bearish trend for the pair. If positive, then the pair is expected to have a bullish trend.

Summary – GBP Endogenous Analysis

A -15 score implies that GBP has depreciated since the beginning of 2020.

Summary – CHF Endogenous Analysis

A score of 3 implies that CHF has partially appreciated since the beginning of this year.

Indicator Score Total State Comment
Switzerland Employment Rate -3 10 79.7% in Q3 2020 Slightly below the 80.4% recorded in Q1.
Switzerland Core Consumer Prices 4 10 100.82 points in November Inflation, as measured by the core consumer prices, rose by 0.28 points from January to November
Switzerland Manufacturing Production -2 10 4.7% decrease in Q3 2020 The YoY swiss manufacturing production is recovering
Switzerland Business Confidence 3 10 103.5 in November Swiss KOF Economic Barometer dropped in October and November. The majority of the consecutive drop was driven by private consumption
Switzerland Consumer Spending 5 10 Q3 spending was 91.929 billion CHF Q3 had the highest consumer spending compared to Q1 and Q2.
Switzerland Construction Output -2 10 A 0.4% drop in Q3 2020 Q3 output recovered from the 5% drop in Q2 but is still lower than the 3.1% growth in Q1
Switzerland Government Budget Value -2 10 An expected deficit of 2.2 billion CHF in 2020 Switzerland had a surplus of 8.1 billion CHF in 2019. The projected deficit is on account of aggressive government stimulus program and decreases in revenue due to COVID-19
TOTAL SCORE 3
  1. Switzerland Employment Rate

The Swiss employment rate measures the quarterly change in the percentage of the labour force that is employed. Changes in the number of people employed in the economy are a leading indicator of economic growth. When the economy is expanding, businesses create more job opportunities; hence, higher employment rate. Conversely, a shrinking economy leads to job cuts, which result in a lower employment rate.

In 2020 Q3, the Switzerland employment rate rose to 79.7% from the 6-year lows of 79.1%. Although the Q3 employment rate is lower than the 80.4% recorded in Q1, it shows that the Swiss economy is recovering from the economic shocks of COBID-19. The swiss employment rate scores -3.

  1. Switzerland Core Consumer Prices

Core consumer prices measure the rate of inflation by monitoring the price changes of only a select basket of goods and services. Consumer products with volatile prices are excluded. The rate of inflation is a leading indicator of economic growth. That’s because when inflation rises, it means domestic demand is on the rise, too, hence a higher GDP growth rate. Similarly, a decrease in the inflation rate means domestic demand is depressed, which may be followed by a contracting economy.

In November 2020, the swiss core consumer prices dropped to 100.82 points from 100.89 points in October. However, it is still higher than 100.54 points recorded in January. It has a score of 4.

  1. Switzerland Manufacturing Production

This measures the YoY change in the value of output from the swiss manufacturing sector. This sector plays a significant role in the Swiss economy. Therefore, growth in manufacturing production is accompanied by growth in the labour market and, consequently, the domestic economy’s expansion.

In Q3 of 2020, the YoY swiss manufacturing production dropped by 4.7%. That’s an improvement from the 9.6% drop in Q2. We assign a score of -2.

  1. Switzerland Business Confidence

The KOF Swiss Economic Institute compiles this index. It measures company managers’ optimism based on their perspective of the economy and the growth prospects of their businesses. The business that is surveyed are drawn from multiple sectors in the economy and contains 219 different variables.

In November 2020, the Swiss KOF Economic Barometer dropped to 103.5 from 106.3 in October. This marks the send consecutive month of a drop in the swiss business confidence. Notably, the drop in the index is primarily driven by the manufacturing sector and private consumption. Swiss business confidence has a score of 3.

  1. Switzerland Consumer Spending

This is the value of the total consumption by Swiss households. Domestic consumption is a primary driver of GDP growth. More so, it also an indicator of the performance in the labour market. With a higher rate of employment, disposable income increases, which increases consumer spending.

Swiss consumer spending increased to CHF 91.929 billion in the third quarter of 2020, which is the highest recorded compared to CHF 89.79 billion in Q1 and CHF 82.03 billion in Q2. It has a score of 5.

  1. Switzerland Construction Output

This indicator measures the percentage change in the value paid for construction work in Switzerland. The construction work includes building and engineering works done by public and private companies. Typically, when construction work increases, it is expected to be accompanied by an increase in the employment rate and economic growth.

In the third quarter of 2020, the YoY swiss construction output dropped by 0.4%. That is an improvement compared to the 5% drop in Q2 but still less than the 3.1% growth recorded in Q1. It has a score of -2.

  1. Switzerland General Government Budget Value

This represents the difference between the revenues received by the Swiss government and its expenditures. Government expenditure includes all transfer payments and purchases of goods and services. The general government budget value shows if the Swiss government has a surplus or a deficit. Too much deficit means that the economy is probably not responding to expansionary fiscal policies.

In 2019, the Swiss government had a budget surplus of CHF 8.097 billion. In 2020, the general government budget was expected to hit a deficit of CHF 2.2 billion. This deficit is primarily driven by a significant drop in revenue collection due to COVID-19. It has a score of -2.

In the very next article, you can find the Exogenous analysis of the GBP/CHF currency pair, so make sure to check that out. Cheers.

Categories
Forex Daily Topic Forex System Design

Trading System design – Basic Concepts

In previous articles, we explained the importance of a plan to succeed in Forex and described its general features. In this article, we will describe the concepts that need to be considered when designing a trading system.

In previous articles, we explained the importance of a plan to succeed in Forex and described its general features. In this article, we will describe the concepts that need to be considered when designing a trading system.

In previous articles, we explained the importance of a plan to succeed in Forex and described its general features. In this article, we will describe the concepts that need to be considered when designing a trading system.

A trading strategy is what most traders call a trading system, but it is not. A trading strategy is just a set of loose rules discretionary traders use to trade. A trading system is a set of closed rules used to systematically trade the market, usually through a computer EA, although a disciplined trader could also use it.

Traders, especially novice traders, get emotional and lose money because their emotions interfere and stop making rational decisions in the battle’s heat. Thus, the first thing to avoid is discretionary trading. Please read the article Know the Two Systems Operating inside Your Head. That’s why what we aim to create is a trading system that should be systematically traded.

Price imbalances

There are plenty of criteria to find these imbalances. There are two visual clues we can think of. The first one is a rubber band. The rubber band idea describes the price as if it was a rubber band or spring. When it moves far away from equilibrium, we expect the force to pull it to its center to increase and eventually drive it back to equilibrium.

The second visual clue is looking at the price moving in waves. Since there are numerous traders, their goals set in different timeframes, we can expect waves of different periods and amplitudes. A trend form when the combination of different waves are in sync, and chaotic moves occur when waves desync.

The main idea of a trading system is to find imbalances in the price and profit from it. Essentially, it takes the form of “buy low and sell high,” “sell high to buy back low,” or its variants “buy high sell higher,” “sell low, sell lower.”

The Effect of timeframes and a portfolio in the trading results

In their book Active portfolio management, Grinold and Kahn described the fundamental law of active management. The formula has two variables: The manager’s skill (IC) and the number of investments performed (N).

We could think of IR ( Information Coefficient) as a quality index of the results.

If we analyze the equation, we see that IC measures a trader’s ability to produce profits, since if N is constant, IR grows if IC grows.

But, if we keep the IC constant, we see that IR grows with the number of trades (N).

This explains that a portfolio of assets will be more profitable than only one asset. It also explains why shorter trading timeframes would produce higher results. Of course, with very short timeframes, the trading costs would eat a growing portion of the profits, so there is a limit to how short we could go.

Diversification

Diversification is a key concept to reduce the overall risk in trading. The idea is simple. Let’s say we have a long position the EURUSD with an overall dollar risk of 10 pips. If the dollar moves up and drives the pair southwards, we lose $100 on every lot. If we have an equivalent long position on the USDJPY, we will cover the risk on the EURUSD with the gains on the USDJPY, driving it to zero or, even, being positive overall.

If the assets are uncorrelated and the risk on each trade is similar on all trades, the overall basket’s risk will less than 50% of the sum of all open trades risk.

The profitability rule

Two parameters define the profitability of a system: the percent winners and the reward risk ratio.

The formula that tells the minimum percent winners (P) required with a determined reward/risk ratio (Rwr) for the system to be profitable is:

P > 1 / (1+Rwr) 

Conversely, below is the formula of the minimum reward/risk ratio needed with a determined percent winners figure on a profitable system:

Rwr > (1-P)/P

If you play with the second formula, you will see that at reward/risk ratios below one, the system should grant winners higher than 50 percent. Furthermore, Systems with high reward risk ratios would need less than 50% winners to be profitable.

The conclusion is we must look for systems with high reward/risk ratios to protect us from periods of low winner’s percent.

Assessing the quality of a trading system

There are several methods to measure the quality of a trading system. We propose the use of Van Tharp’s SQN, which is a variation of the chi-square test, a well-known method to evaluate the goodness of a sample against a random distribution. The SQN test is a Chi-square test that is capped to 100 samples so that the length of the sample does not modify its value.

  SQN = 10 x E / STD(E)

Where E is the expected profit on each trade, which is the sum of all profits divided by the number of trades, and the denominator is the standard deviation of E.

But if the sample is less than 100 instead of 10, the multiplier is the square root of N, the number of trades.

SQN = √N x E / STD(E)

Systems below 1 are bad. systems of 1.5 to 2 average, and from 2 to 3 good and over 3 excellent.

Elements of a Trading System

We can decompose a trading system into its several elements, although not all of them need to be present.  We have already discussed this, but let’s describe its basic elements.

A Setup: The setup is a market state where we think there is an imbalance in the price, or a condition we expect can be resolved with a price move, for example, the price reaching a top or a bottom of a channel.

A permissioning filter: This forbids trading under specific market conditions: Low volume, extreme volatility, particular hours or days.

Entries: This the stage that times the market. It can be a breakout, a candlestick pattern, or an indicator signal.

Stop-loss: This defined an invalidation level, under which the trade is likely no longer profitable. This level will limit our losses and save our capital for further trades.

Take-profit: It defines our planned profit. It may be set using support/resistance levels or any other sign the current trade movement is over, such as a reversal signal or the crossover of averages.

Re-entry rule: You may also consider this rule in your findings. For instance, a market failing to do something, for example, continue moving up, may signify it will move down. Thus, you could stop and reverse instead of close the position. Also, if you got out of a position, you could consider re-entry if the market flags a continuation of the previous movement. That way, you could tight your stops keeping most of your profits and reenter instead of loose stops, which may eat a large portion of your hard-earned profits if the market does not recover.

Categories
Forex Course

207. The Affects Of Stock Market On The Foreign Exchange Market

Introduction

Introduction

Introduction

The impact of the stock market on the flow of the forex market is quite significant. In fact, the foreign exchange market reflects the performance of the stock market. For instance, when the US stock market with Dow Jones, or NASDAQ, S&P 500 on the upward showing gains, the similar is likely to happen to the USD pairs in the foreign exchange market.

Rising Stock Market’s Impact

When the stock market is booming, investors from around the world will run to invest their money in the rising stocks of the nation as they are looking to obtain higher returns on the investment. With more investors demanding the currency, its value will increase significantly.

This is because if the investors want to put the money on, say, the US market, they have to convert their local currency into the US dollar. This significantly raises the demand for the dollar, hence makes the forex market perform better.

Falling Stock Market’s Impact

If the stock market is performing badly, the investors are likely to take their money out. This means that the investors will convert the currency back into the domestic ones or invest in some other country or asset. Subsequently, this will decrease the value of the concerned currency. This is something that all economies do in terms of investments.

Decision Making Based On Stock Market’s Performance 

Foreign exchange traders can leverage this information to assess the situation and predict the market. If you assess the stock of a particular currency and witness that they are moving up, then evaluate it against the currency, you will be able to make a prediction.

An increasing stock market will be influencing a boost in the value of the currency of the country. So you can base your trading decision on the same. At the same time, when the stock market is performing inadequately, you can sell the currency of that country. This is because the value of the currency will be falling in the market.

This correlation between the stock market and the foreign market can alter based on the global financial marketplace condition. The financial landscape is interconnected to different elements. Policies of central banks, political events, changes in the environment, everything affects how the trades are performed worldwide. The reason why stock influence forex is because stock includes companies that drive the economy of the country.

We hope you find this course article informative. Please let us know if you have any questions in the comments below. Cheers.

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