downward correction

Forex Analysis & Reviews: Technical Analysis of Daily Price Movement of S&P 500 Index, Monday May 29, 2023   With the price movement in the channel that dips upwards and the two Moving Averages which are still in Golden Cross condition on the daily chart, we can see that Buyers are still dominating the S&P 500 index so that in the next few days #SPX has the potential to appreciate an upward rally up to penetrate above the level of 4216.17 and if this level is successfully broken above then the SPX still has the potential to go to the upper line of the bullish channel and/or the level of 4324.96 but please also pay attention if there is a downward correction which is indicated by the appearance of deviations between price movements and the MACD indicator because if a correction occurs If it breaks below the level of 4070.35 then all scenarios of a rally up above that have been described previously will become invalid.        

There will be limited macro data on Monday, but the fact that there will be some is already a good sign. Mondays often lack both fundamental news and macroeconomics, which negatively affects the nature of movements and volatility. Tomorrow, business activity indices in the service sectors will be published in the European Union, the United Kingdom, and the United States.   We cannot say that these are extravagant data, especially since they will be the second estimates for May. In other words, the market is already familiar with the preliminary estimates. The business activity index in the UK and the ISM index in the US can be considered somewhat important.   However, unexpected values or deviations from forecasts are needed to trigger a market reaction. Without such influence, there won't be much impact on traders' sentiment.     There will be limited macro data on Monday, but the fact that there will be some is already a good sign. Mondays often lack both fundamental news and macroeconomics, which negatively affects the nature of movements and volatility. Tomorrow, business activity indices in the service sectors will be published in the European Union, the United Kingdom, and the United States.   We cannot say that these are extravagant data, especially since they will be the second estimates for May.   In other words, the market is already familiar with the preliminary estimates. The business activity index in the UK and the ISM index in the US can be considered somewhat important. However, unexpected values or deviations from forecasts are needed to trigger a market reaction. Without such influence, there won't be much impact on traders' sentiment.     Analysis of fundamental events: No significant fundamental events are scheduled for Monday. Both currency pairs corrected downwards on Friday, but the short-term upward trends are still intact. However, in the medium-term, a further decline in the euro and the pound is more likely. We believe it is advisable to pay attention to higher charts at the moment. In our weekend articles, we extensively discussed the key points to watch for in the coming week. We recommend reviewing those articles.     General conclusions: Monday will have few important events, but some of the reports may influence market sentiment and consequently affect the movement of major currency pairs. It is crucial to understand the medium-term direction of the euro and the pound this week.   As we have mentioned before, a short-term upward trend has formed, but a downward trend still persists in the longer term. Therefore, the battle between bulls and bears this week will not only be interesting but also significant. Basic trading rules: 1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal. 2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored. 3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading. 4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.   5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel. 6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.   How to read charts: Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them. Red lines are channels or trend lines that display the current trend and show which direction is better to trade. MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross.   This indicator is better to be used in combination with trend channels or trend lines. Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement. Beginners should remember that every trade cannot be profitable.   The development of a reliable strategy and money management are the key to success in trading over a long period of time.  

Forex Analysis & Reviews: GBP/USD: trading plan for the US session on June 13 (analysis of morning deals). The pound climbed above 1.2553. In my morning forecast, I highlighted the level of 1.2553 and recommended making trading decisions based on it. Let's look at the 5-minute chart and analyze what happened there. The breakout and subsequent retest from above to below 1.2553 provided a buy signal, resulting in an upward movement of 18 pips. The technical picture has stayed the same for the second half of the day.       To open long positions on GBP/USD, the following conditions are required: As long as trading continues above 1.2553, further growth in GBP/USD can be expected. Buyers will particularly show themselves after news of a decrease in inflation in the US, leading to a surge in the pound to monthly highs of around 1.2596. Having another entry point around 1.2553 would be desirable, so protecting this level remains a priority task for the bulls. A breakout and retest from above to below 1.2596, similar to what I discussed earlier, will provide an additional signal to open long positions, strengthening the presence of bulls with a movement towards 1.2636, reinforcing the upward trend.   The ultimate target will be the area of 1.2674, where I will take profit. In the scenario of a pound decline towards 1.2553 and a lack of activity from buyers, pressure on the pair will return. The persistence of high inflation in the US will also limit the upside potential of the pair. In that case, I will postpone market entry until the support at 1.2516 is reached. I will only open long positions there on a false breakout.   I plan to buy GBP/USD on a rebound from 1.2479, targeting a 30-35 pip correction within the day. To open short positions on GBP/USD, the following conditions are required: Sellers were unable to show anything after the news that the unemployment rate in the UK dropped to a record 3.8%, which puts pressure on the Bank of England to continue raising rates. All hope now lies with strong inflation in the US, which will help defend 1.2596.   I will only open short positions after GBP/USD rises to monthly highs, forming a false breakout. This will allow a downward move towards support at 1.2553, which acted as resistance earlier in the morning. A breakout and retest from below to above this range will restore the chances of a downward correction and provide a signal to open short positions with a decline toward 1.2516. The ultimate target remains the minimum of 1.2479, where I will take profit.   In the case of further growth in GBP/USD and a lack of activity at 1.2596, which seems likely, buyers will continue to dominate. In that case, I will postpone selling until the resistance at 1.2636 is tested. A false breakout there will be an entry point for short positions. I plan to sell GBP/USD on a rebound from the May high of around 1.2674, but only with the expectation of a downward correction of 25-30 pips within the day.     The COT (Commitment of Traders) report for June 6th showed a reduction in both short and long positions. The pound has risen significantly recently. This indicates that many market participants continue to bet on an increase in interest rates by the Bank of England. Recent forecasts and expectations that the UK economy will avoid a recession this year also contribute to the demand for risk assets. We have paused the cycle of interest rate hikes by the Federal Reserve ahead, which will also support GBP/USD buyers.   The latest COT report states that short non-commercial positions decreased by 4,056 to 52,579, while long non-commercial positions fell by 5,257 to 65,063. This led to a slight decrease in the non-commercial net position to 12,454 from 13,235 the previous week. The weekly price rose to 1.2434 from 1.2398.     Indicator signals: Moving averages Trading is conducted above the 30-day and 50-day moving averages, indicating further growth in the pair. Note: The author considers the period and prices of the moving averages on the hourly chart (H1), which differ from the general definition of classical daily moving averages on the daily chart (D1).   Bollinger Bands In case of a decline, the lower boundary of the indicator, around 1.2479, will act as support. Description of Indicators: • Moving Average: Determines the current trend by smoothing volatility and noise. Period 50. Marked in yellow on the chart. • Moving Average: Determines the current trend by smoothing volatility and noise. Period 30. Marked in green on the chart. • MACD Indicator (Moving Average Convergence/Divergence): Fast EMA period 12, Slow EMA period 26, SMA period 9. • Bollinger Bands: Period 20. • Non-commercial traders: Speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements. • Long non-commercial positions represent the total long open position of non-commercial traders. • Short non-commercial positions represent the total short open position of non-commercial traders. • The net non-commercial position is the difference between non-commercial traders' short and long positions.      

Analysis of transactions and tips for trading GBP/USD The price test of 1.2795 on Monday afternoon, coinciding with the significant drop of the MACD line from zero, limited the downward potential of the pair. The empty economic calendar today may fuel pressure on pound, leading to a more significant downward correction. For long positions: Buy when pound hits 1.2795 (green line on the chart) and take profit at the price of 1.2840 (thicker green line on the chart). Growth could occur after a breakdown of 1.2795. However, when buying, traders should make sure that the MACD line lies above zero or rises from it.   Pound can also be bought after two consecutive price tests of 1.2768, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2795 and 1.2840. For short positions: Sell when pound reaches 1.2768 (red line on the chart) and take profit at the price of 1.2728. Pressure may return in the event of inactivity at the highs. However, when selling, traders should make sure that the MACD line lies below zero or drops down from it. Pound can also be sold after two consecutive price tests of 1.2795, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2768 and 1.2728. What's on the chart: Thin green line - entry price at which you can buy GBP/USD Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely. Thin red line - entry price at which you can sell GBP/USD Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely. MACD line- it is important to be guided by overbought and oversold areas when entering the market Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decision based on the current market situation is an inherently losing strategy for an intraday trader.   Read more: https://www.instaforex.com/forex_analysis/346532

The GBP/USD currency pair continued to trade with minimal volatility on Tuesday. The chart below clearly shows the volatility values over the past 30 days. The average value has decreased significantly in recent months. It should be understood that 90 points represent two days at 120 points and three days at 70 points. Trading the pair during these "three days at 70" would be extremely inconvenient and difficult.   The British pound has minimally corrected towards the moving average line but has not formed any signals around it. It continues to rise, but its prospects are still highly uncertain due to having already risen by 2500 points and still needing help to correct properly. As we can see, last week, the Bank of England raised the interest rate by 0.5%, but the pound did not show any growth afterward.       In other words, the British currency, which in 2023 takes any opportunity to rise, refuses to do so when it receives the strongest growth factor! Perhaps the market has already priced in all the Bank of England rate hikes? Its key rate has already risen to 5%, so how many more tightening measures can be objectively expected?   How many of them have the market not yet "discounted"? We did not expect such a strong rate hike from the Bank of England, but even in this case, the essence of the matter remains the same. The Bank of England is still close to completing its tightening cycle. Let's remind ourselves that the US dollar started to decline at the first signs of inflation slowing down. In other words, the market has already factored in almost all future rate hikes by the Federal Reserve in advance. We expect something similar from the British pound at the moment. In the 24-hour timeframe, it is evident that there are almost no corrections within the current upward trend. Occasionally, the pair retraces from its local highs by 10-20%, no more.   Therefore, we still believe that the pound is overbought and has risen too strongly, and we expect a decline. The Chief Economist of the Bank of England may surprise the market. There will be a few fundamental events in the UK this week. Today, the Chief Economist of the Bank of England, Hugh Pill, will deliver a speech, and it will be one of the first appearances by a representative of the British regulator after the regulator raised the rate for the thirteenth consecutive time. Thus, Pill's speech has the potential to be very interesting, but it should be noted that he may very well avoid discussing monetary policy. Therefore, it will all depend on what Mr. Pill communicates.   Naturally, the market will await new information on how much more monetary policy tightening is planned in the UK. Jerome Powell's speech should generate less interest among traders, as the head of the Federal Reserve has been speaking quite frequently lately, and the market more or less understands what to expect from the Fed in the upcoming meetings.   The following can be expected: a rate hike of 0.25% is almost guaranteed in July, and then by the end of the year, at most, one more hike can be expected. Inflation in the US is declining at the highest rates, so raising the rate to 5.75% would be excessive. However, the Federal Reserve is in a hurry to suppress inflation and return to normalcy.   And at the moment, the dollar is hardly reacting to all the efforts of the Fed. It has been falling for almost ten months in a row. Thus, overall, the situation remains the same. The pound may continue to rise, but it has long been due for a downward correction of at least 500-600 points. The average volatility of the GBP/USD pair over the past five trading days is 81 points.   For the pound/dollar pair, this value is considered "average." Therefore, on Wednesday, June 28th, we expect movements within a range limited by the levels of 1.2649 and 1.2811. A reversal of the Heiken Ashi indicator downwards will signal a new downward movement phase.