Alligator's MAs

Yesterday, the pound showed impressive growth. Similarly, the euro also showed significant gains. Considering that there was no macro data from the UK, unlike the eurozone, it is more accurate to say that the pound followed the euro. However, this growth contradicted all the macro data.   After all, eurozone inflation slowed down significantly more than expected, while employment in the United States increased substantially more than anticipated. So, the dollar should have extended its growth. But the market went in a different direction, and the formal reason for this was the minutes of the European Central Bank's governing council meeting, which mentioned the possibility of more interest rate hikes. However, the meeting itself took place before there were even rough forecasts for the current inflation.   Just a couple of days ago, several ECB officials explicitly stated that the cycle of interest rate hikes may have come to an end. So, the rise of the euro and, along with it, the pound, goes against common sense. Unless we consider the excessive overbought condition of the dollar, which became the main reason why European currencies increased.   However, there is a high probability that today everything will return to the values at the start of yesterday's trading. Employment data clearly suggests that the content of the US Department of Labor report will be slightly better than expected. In particular, unemployment, which was expected to increase from 3.4% to 3.5%, may well remain unchanged. But if unemployment does increase, the dollar may continue to lose its positions, primarily due to the persistent overbought condition.       During the intense upward movement, the GBP/USD pair jumped above the 1.2500 level. This served as the primary signal of the pound's recovery process relative to the recent corrective move. Due to the sharp price change, on the four-hour chart, the RSI reached the overbought zone, which indicates that long positions are overheated in the intraday period. On the four-hour period, the Alligator's MAs are headed upwards.   This indicates a shift in trading interests. Outlook In this situation, the sharp price change from the day before is a signal of the pound's overbought conditions in the intraday and short-term periods. The target level is set at 1.2550, around which the upward cycle slowed down, which reduced the volume of long positions and resulted in a stagnation. We can assume that the process of the pound's recovery will be temporarily interrupted by a pullback.   However, if the price remains stable above 1.2550, speculators may ignore the technical signal of overbought conditions. In this case, the pair can rise towards the peak of the medium-term trend. The complex indicator analysis unveiled that in the short-term and intraday periods, points to the pound' recovery process.  

As expected, the market continues to move sideways. Technically, the pound has dipped, but the scale of the movement is so insignificant that it can be categorized as symbolic. The stagnation is mainly due to the empty economic calendar and the lack of any significant news capable of influencing market participants' sentiment.   It is difficult to say anything about today's news because we don't know what can happen. However, as I mentioned, the economic calendar remains empty. It seems that today we will continue to witness a purely symbolic weakening of the pound. The GBP/USD pair has slowed down its upward cycle around the 1.2850 level, which points to the decline in the volume of long positions. This has led to a pullback, which, considering the overbought status of the British currency, is considered a justified move in the market.   On the four-hour chart, the RSI has left the overbought territory when the pair reversed its course, which could serve as a stage for force realignment. On the same chart, the Alligator's MAs are headed upwards, which reflects the upward cycle. Outlook: The pullback is still relevant, but it does not disrupt the rhythmic component of the uptrend.   If this persists, the price could move towards the 1.2700 level. Regarding the bullish scenario, we will receive a technical signal for the continuation of the medium-term trend once the price stays above the 1.2850 level. In terms of the complex indicator analysis, we see that in the short-term and intraday periods, technical indicators suggest a pullback. In the mid-term period, indicators are reflecting an uptrend.  

It's not surprising that the market is simply stagnant. Not only is the economic calendar completely empty, but traders are also focused on a few other things, quite detached from the global economy. However, this cannot go on forever.   Especially since macro data will be published today. And we're not talking about some insignificant data, but about durable goods orders in the United States, which are expected to fall by 0.9%. This means that consumer activity is somewhat declining. Following that, inflation will continue to slow down. So this could prove to be disadvantageous for the dollar today, and the greenback may depreciate.     The GBP/USD pair has once again rebounded from the support level of 1.2700. However, there have been no significant changes on the trading chart, and the quote is still around the low end of the corrective cycle. On the four-hour chart, the RSI technical indicator is hovering along the 50 midline, indicating a flat.   On the same time frame, the Alligator's MAs are headed downwards. This is a residual signal from the corrective move. Outlook: The sideways movement between 1.2700 and 1.2750 can serve as a consolidation phase, during which sharp price changes are possible. The most optimal tactic would be a breakout strategy based on the range.   In terms of the complex indicator analysis, we see that in the short-term and intraday period, technical indicators are giving mixed signals due to the flat phase. In the medium-term, the indicators are pointing to an upward cycle.  

The market hardly reacts to final data on PMIs as they mostly coincide with preliminary estimates. Any significant trading movements usually occur during the release of the preliminary estimates. By the time the final data is published, the market has already taken these indicators into account. Furthermore, the preliminary estimates are released simultaneously for all indexes, while the final data is released at different times.   For example, today, only the manufacturing PMIs are slated for release, which have the lowest value among all business activity indexes. In other words, even if today's data differs from the preliminary estimates, which is possible, the market response will be relatively moderate, and so we shouldn't expect any significant movements. The preliminary estimate of the UK manufacturing PMI already revealed a decline from 47.1 points to 46.2 points.   The US PMI also fell from 48.4 points to 46.3 points. Therefore, the preliminary estimate already indicated a noticeable decline in the state of the industry. The GBP/USD pair has slowed down its downward cycle around the 1.2600 level, where a reversal occurred amid the weakening of the dollar positions.       As a result, the price returned above the 1.2700 level. On the four-hour chart, the RSI indicated the possibility of a price reversal when reaching oversold territory. On the same time frame, the Alligator's MAs reversed, indicating a slowdown in the downward cycle. Outlook In order to raise the volume of long positions, the quote needs to stay above the 1.2750 level. In this case, there may be a subsequent stage of recovery in the value of the British pound relative to the recent corrective move.   As for a subsequent downward move, falling below the 1.0650 level could easily reignite short positions. This will result in updating the local low of the corrective cycle. The complex indicator analysis unveiled that in the short-term period, technical indicators are pointing to a bearish bias from the 1.2700 level. In the intraday period, there is a primary signal of the end of the corrective phase. In the mid-term, the indicators are pointing to an uptrend.  

The pound traded higher on Monday. And even though the growth was hardly impressive, it was still tangible. This is in the absence of influential economic releases and generally impersonal results from the Jackson Hole symposium. In general, all this growth can be seen as a blatant rebound after the pair sharply fell at the beginning of the previous week. Speaking of today, the only thing worth paying attention to is the number of job openings in the United States, which is expected to fall by 12,000.   There are two possible explanations for this figure. Firstly, there are no more available workers in the job market, and employers can't find new employees required for business expansion and development. The second explanation is that businesses are swiftly creating enough new jobs to meet the labor market's needs. As we can see, both explanations are diametrically opposed to each other. Therefore, we shouldn't expect this report to have an impact on the market. In general, this report typically goes unnoticed. So, the market situation will generally remain unchanged.     During a technical pullback, the GBP/USD pair returned to the lower band of the 1.2650/1.2800 sideways channel. Afterwards, it traded near the base of the bearish cycle. On the four-hour chart, the RSI is moving in the lower area of the indicator, thus reflecting bearish sentiment among traders. On the same time frame, the Alligator's MAs are headed downwards, which is consistent with the current movement. The MAs are not intertwined. Outlook Falling below the 1.2650 level may favorably impact the volume of short positions. However, a downtrend will only start once the price stays below the 1.2550 mark. The bullish scenario will come into play if the price holds firm above the 1.2650 level. In this case, the pair will move sideways again. The complex indicator analysis points to a pullback in the short-term and intraday periods.

Industrial output in the eurozone fell more than expected, as total production dropped 1.1% on month in September, while forecasts were for output to be down 0.8% on month. However, this report did not lead to any noticeable movements in the foreign exchange market. Investors were clearly waiting for US data, the forecasts for which also carried a negative tone, as they intended to extend the dollar selloff. However, the annual trend in retail sales slowed from 4.1% y/y in September to 2.5% y/y in October, whereas a slowdown from 3.8% to 2.1% was expected. So not only were the actual reports better, but the previous results were also revised for the better. Afterwards, a full-fledged rebound started, and the dollar was able to improve its position. The only thing we can highlight for today is the initial jobless claims in the United States. The total number is expected to increase by 8,000. The changes are extremely insignificant and are unlikely to have a serious impact on the current situation. Considering that the rebound is not yet complete, we expect the dollar to gradually rise further.   The EUR/USD pair has entered a retracement phase due to the high overbought levels. The level of 1.0900 acts as resistance, and we observed a decline in the volume of long positions near this area. On the four-hour chart, the RSI downwardly crossed the 70 line. This technical signal indicates that the euro's overbought conditions have started to ease, given that a retracement phase is being formed. On the same time frame, the Alligator's MAs are headed upwards. The signal corresponds to the upward cycle, ignoring the ongoing retracement. Outlook The ongoing retracement persists, which is why traders are considering a scenario with the pair moving towards the level of 1.0800. The succeeding movement will depend on the price's behavior near this level—whether sellers can keep the quotes below it or if the level will act as support. The complex indicator analysis points to the retracement phase in the short-term and intraday periods.  

Unlike the euro, the pound has returned to the levels it was at before the release of preliminary inflation data in the eurozone. This is somewhat logical due to the fact that the data mounted pressure on the euro, while there were no economic reports or news from the UK. Today, the situation is quite similar. The economic calendar is basically empty, and only European Central Bank President Christine Lagarde's speech can affect the market. Primarily, it will affect the euro.   The impact on the pound will be significantly less noticeable. The question is, where will all this lead? Most likely, Lagarde will take note of the slowdown in inflation and maybe even suggest the possibility of a rate cut. Of course, she will not mention any specific timing. But it could be clear that she is already starting to make a hint in December. The euro will fall further, pulling the pound along with it. However, the decline in the British currency will be much less pronounced and possibly short-term.   Last Friday, the GBP/USD pair managed to recover relative to the recent corrective move. A s a result, the quote returned to the area of the resistance level of 1.2700. On the four-hour chart, the RSI technical indicator is hovering in the upper area of 50/70, thus reflecting bullish sentiment among traders. On the same chart, the Alligator's MAs are headed upwards, which corresponds to the upward cycle. Outlook The EUR/USD kicks off the new week with a decrease in the volume of long positions, accompanied by a rebound from the level of 1.2700. In this case, hitting the 1.2700 mark indicates a prevailing bullish sentiment. In perspective, this could extend the upward cycle in case the pair tests last week's high. The bearish scenario will come into play in case the pair trades sideways between the levels of 1.2600/1.2700. Comprehensive indicator analysis indicates a downward cycle in the short term due to the rebound. Meanwhile, the bullish sentiment remains in force in the intraday and medium-term periods.   Read more: https://www.instaforex.eu/forex_analysis/362129