MACD

USD/CAD has been trading downside and I found the breakout of the support cluster at the price of 1.3590, which is good sign for the further downside movement.   Due to the breakout of the support cluster and the increasing in the downside movement, I see potential for the further lower prices towards downside references.   Downside objectives are set at 1.3540 and 1.3490 MACD is showing increasing of the downside momentum, which is good sign for the further lower prices.... Key resistance is set at the price of 1.3650  

On Monday, the GBP/USD pair managed to show even lower volatility than the EUR/USD pair, with only 37 pips. Therefore, there is no point in analyzing the movements because there simply weren't any.     The entire day was characterized by absolute flatness, which is not surprising given the complete absence of fundamental and macroeconomic events, as well as the status of a holiday in the US.   The downward trend remains intact, so nothing has changed for the pound and the dollar: the latter should continue to rise. There are currently no trend lines or channels due to the weak movement, but there is no doubt about the downtrend.     If you tried really hard you could find one signal on the 5-minute chart. At the beginning of the European trading session, the pair technically bounced off the range of 1.2351-1.2367 but failed to move down even by 20 pips, which is not surprising considering the overall volatility of 37 pips.   Beginners could have opened a short position based on this signal, but by the start of the US session, the pair hardly moved, so the trade could have been closed practically anywhere with zero profit. Trading tips on   Tuesday: As seen on the 30M chart, the GBP/USD pair continues to trade lower, but in the past few days, we have observed more low-volatility flatness than trending movement. We continue to expect further decline as we believe that the pound has not fallen sufficiently strong yet.   The key levels on the 5M chart are 1.2171-1.2179, 1.2245-1.2260, 1.2351-1.2367, 1.2420, 1.2470, 1.2507-1.2520, 1.2597-1.2616. When the price moves 20 pips in the right direction after opening a trade, a stop loss can be set at breakeven. On Tuesday, there are no important events or reports scheduled in the UK or the US.   We are in for another completely dull day. Volatility may be low again, and there may be a lack of intraday trending movement. Basic rules of the trading system: 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.    

Analyzing Tuesday's trades GBP/USD on 30M chart   On Tuesday, the GBP/USD pair displayed a significant rebound, which is difficult to explain from a fundamental or macroeconomic perspective. In addition, a new descending trendline has formed, which clearly passes through the three recent price peaks.   Thus, despite the British currency's growth, the downtrend persists. There was no macro data or fundamental background in either the UK or the US. Therefore, it is quite difficult for us to explain what caused the dollar's decline. However, technical corrections are still relevant, so the sudden growth shouldn't be that surprising. So far, nothing bad has happened to the downtrend.   The pound may fall as early as Wednesday, especially considering that the pair has already started to fall by the end of Tuesday. Moreover, there will be significant events and reports in the last three days of the week, which may prompt traders to buy the dollar again, regardless of their positions.     Several trading signals were formed on the 5-minute chart on Tuesday. The levels 1.2351 and 1.2367 will be removed from the charts. The levels 1.2307 and 1.2386 have been added, but they were not included in the signal formation process. The first sell signal was near the 1.2351 level. The pair managed to move down by only 15 pips, resulting in a loss when the price settled above the 1.2367 level. This same signal should have been executed using long positions, and the pair subsequently rose to the 1.2420 level and settled above it. The long position should have been closed when the price settled below this level. Immediately after that, short positions should have been opened, which should have been manually closed closer to the evening. As a result, the first trade ended in a loss, but the other two were profitable. Overall, novice traders made a profit. Trading tips on Wednesday: As seen on the 30M chart, the GBP/USD pair is generally moving down, but over the past week, we have seen more of a flat than a trend-driven movement. I expect the pound to fall further since it has not fallen enough yet. Breaking the new trendline may temporarily change market sentiment to bullish. The key levels on the 5M chart are 1.2171-1.2179, 1.2245, 1.2307, 1.2386, 1.2420, 1.2470, 1.2507-1.2520, 1.2597-1.2616. When the price moves 20 pips in the right direction after opening a trade, a stop loss can be set at breakeven. On Wednesday, there are no important events or reports scheduled in the UK, while the US will release the JOLTS report on job openings.   The market will only react to this report if the actual value significantly deviates from the forecast. Basic rules of the trading system: 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.    

Yesterday, several entry signals were made. Let's look at the 5-minute chart to get a picture of what happened. I considered entering the market from the level of 1.2414. A fall and a false breakout generated a buy signal. The price rose by more than 50 pips. In the American session, the pair dropped after the publication of US labor market data, but the bulls still protected 1.2449. After another buy signal, the pair advanced by 65 pips. Short positions at 1.251 brought no desired result.     When to open long positions on GBP/USD In the UK, the manufacturing PMI kept contracting in May although at a slower pace than in April. The pair barely reacted to those results. At the same time, the ISM manufacturing PMI in the US triggered a mass sell-off of the greenback and boosted the pound. Today, GBP/USD will still be in demand. In the American session, data on the US labor market will be in focus. Therefore, buying at current highs will hardly be a good idea. Rather, positions should be opened when a bearish correction occurs.   If the bulls protect 1.2475 support and a false breakout follows, a buy signal will be generated with the target at 1.2543 resistance. An additional buy signal targeting 1.2576 will come after a breakout and consolidation above the mark on disappointing macro data in the US. The most distant target stands at 1.2607 where I will lock in profit. If the price goes toward 1.2506 and there is no bullish activity there, pressure on the pound will increase, and the bears will get a chance to stop yesterday's growth. In such a case, a sell signal will come after protecting 1.2475 and a false breakout. I will buy GBP/USD on a bounce from 1.2449, allowing a correction of 30-35 pips intraday.   When to open short positions on GBP/USD: After triggering a row of bearish Stop Losses yesterday, the bulls will likely build a new uptrend today. That is why bearish activity may only increase near 1.2543 resistance and after a false consolidation above this range. This will generate a sell signal and trigger a small correction to 1.2506 support. A breakout and an upside retest of this range will occur only if US macro data comes upbeat. GBP/USD will face pressure, producing a sell signal targeting 1.2475. The most distant target is still seen at a low of 1.2449 where I will lock in profits.   If GBP/USD goes up and there is no activity at 1.2543, the bull market will continue. I will open short positions after a test of 1.2576 resistance. A false breakout will create a sell entry point. If there is no bearish activity there either, I will sell GBP/USD on a bounce from a high of 1.2607, allowing a bearish correction of 30-35 pips intraday.     Commitments of Traders: The COT report for May 23 shows a decrease in both long and short positions. Last week, the pound was bearish. However, with a drop in both longs and shorts, a shift in trading powers seems minimal. Traders had to close positions fearing the US debt ceiling deal would not be reached. Moreover, recession risks were still weighing on them. They were also concerned about the Bank of England's monetary policy stance. The regulator said it might pause tightening although inflationary pressures in the UK were still high. According to the latest COT report, short non-commercial positions dropped by 7,181 to 57,614, and long non-commercial positions decreased by 8,185 to 69,203. The non-commercial net position fell to 11,059 from 12,593 a week earlier. The weekly price dropped to 1.2425 from 1.2495.       Indicators' signals: Moving averages: Trading is carried out above the 30-day and 50-day moving averages, which indicates a bullish continuation.     Note: The period and prices of moving averages are considered by the author on the H1 (1-hour) chart and differ from the general definition of the classic daily moving averages on the daily D1 chart. Bollinger Bands Support stands at 1.2475, in line with the lower band. Indicators: Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart. Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart. Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9. Bollinger Bands. Period 20 Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements. Long non-commercial positions are the total long position of non-commercial traders. Non-commercial short positions are the total short position of non-commercial traders. Total non-commercial net position is the difference between the short and long positions of non-commercial traders.  

EUR/USD: Yesterday, the euro and other currencies started trading lower, while volatility was weak. The main reason for the change in sentiment was the weak PMIs in the US. The May ISM Services PMI came in at 50.3, down from April's 51.9. The final Services PMI reading was lowered from 55.1 to 54.9. Factory orders increased by 0.4% in April, below the expected range of 0.8-1.1%. Industrial orders excluding transportation decreased by 0.2%. Market expectations for a Federal Reserve rate hike at the June 14th meeting decreased from 25.3% to 21.8%. The S&P 500 stock index declined by 0.20%.       From a technical standpoint, we see the price returning to the range of 1.0692-1.0738, from which unsuccessful breakouts have occurred in both directions over the past week. Take note that the price has not firmly established itself above or below the limits of the range, which complicates the situation since the next breakout could turn out to be false, particularly on the bullish side, as the global trend is bearish.   We acknowledge that resistance at 1.0804 could be tested if there is an upward breakout. The price may even surpass the level with the MACD line acting as a target, which would constitute a deep correction from the decline since May 4th.   Climbing to 1.0804 represents approximately a 38.2% retracement of the downward move since May 4th. However, as long as the price doesn't breach the 1.0738 level, we'll stick to the bearish scenario with 1.0613 as the target.   The Marlin oscillator has already risen enough (removed negative tension) and may now turn into a new downward wave.   On the four-hour chart, the MACD indicator line is gradually flattening out, and the signal line of Marlin is attempting to merge with the neutral zero line.   The trend is neutral and is likely to remain so for another week until the Fed meeting. However, on the 13th, there will be CPI data released, which could further confuse market participants.        

Current up moves in long-duration equities and fixed income came at the expense of a weaker US dollar. A persistent weak US dollar may lead to an upside revival in commodities prices. Inflationary expectations may creep up again due to higher oil/commodities prices. Disinflationary narrative seems premature and may be mispriced.   Market participants have taken a “disinflation ecstasy pill”, bidding up long-duration equities and fixed income in the past two sessions after the latest June US CPI data came in below expectations with the headline print dipped to 3% year-on-year, its slowest rate of growth seen in two years. The core consumer inflation rate (excluding food & energy) also slowed to 4.8% year-on-year from 5.3% recorded in May and dipped below the current Fed Funds rate of 5% to 5.25%. In terms of week-to-date performances as of 13 July, higher beta and long-duration equities outperformed, and the Nasdaq 100 rallied by +3.56%, just 7.7% away from its November 2022 all-time high. Over in the fixed income space, last week’s losses were almost recouped; iShares 20+ Year Treasury Bond exchange-traded fund (ETF) recorded a week-to-date gain of 2.84%, iShares Investment Grade Corporate Bond ETF (+2.61%), and iShares High Yield Corporate Bond ETF (+2.44%). This latest bout of “disinflationary optimism” has revived the “Fed Pivot” narrative where participants are now anticipating that the upcoming July FOMC meeting will likely see the last interest rate hike of 25 basis points (bps) to end this current cycle of monetary policy tightening in the US and negate the current “higher interest rates for a longer period” guidance advocated by Fed officials.   US Dollar Index’s major downtrend was reinforced via a break below 100.95 key support   Fig 1:  US Dollar Index medium-term and major trend as of 14 Jul 2023 (Source: TradingView, click to enlarge chart) The current disinflationary theme play has come at the expense of a weaker US dollar that sank to a 15-month low, the US Dollar Index has tumbled by -2.52% for this week, set for its worst weekly performance since the week of 7 November 2022 as it broke below the key medium-term support of 100.95. Right now, there are second-order effects at play where significant global financial market movements are likely to spiral into the real economy in the months ahead. A weaker US dollar may translate to higher commodities prices as most commodities; physical and paper (futures contracts) are priced in US dollars. This above-mentioned linkage of a weaker US dollar to higher commodities prices seems to be emerging in the financial markets; the week-to-date performance of WTI crude oil futures is up by +4.1% and a broader basket of commodities as measured by the Invesco DB Commodity Index Tracking Fund has rallied by 3.6% for this week.     Inflationary expectations may start to creep up     Fig 2:  WTI crude oil correlation with US 5-YR & 10-YR breakeven inflation rates as of 13 Jul 2023 (Source: TradingView, click to enlarge chart) Commodity prices such as oil have a high degree of direct correlation with forward-looking inflationary expectations. In the past three years, the price actions of WTI crude oil have moved in lock-step with the US Treasury’s 5-year and 10-year breakeven inflation rates (a measurement of inflationary expectations). If WTI crude oil can maintain its current upward trajectory, inflationary expectations may creep higher from this juncture.   Potential upside momentum in commodities may spark another ascend in US CPI       Fig 3: Invesco DB Commodity Index Tracking Fund major trend with US CPI as of 13 Jul 2023 (Source: TradingView, click to enlarge chart) In addition, from a momentum perspective, an imminent trend change may start to take shape for commodities prices after close to one year of downtrend since June 2022 using Invesco DB Commodity Index Tracking Fund (DBC) as a commodities benchmark. The current weekly MACD trend indicator of the DBC has just flashed a bullish crossover signal below its centreline that suggested that the major downtrend of DBC in place since the June 2022 high may have ended which in turn increases the odds of a bullish reversal for commodities prices. A similar MACD bullish crossover observation on the DBC occurred in early June 2020 that spiralled into the real economy where inflationary pressures; headline and core US CPI started their ascend. Therefore, a potential uptick in inflationary expectations coupled with the current positive momentum in commodities prices may put a halt to the current inflationary slowdown trajectory seen in the latest US CPI prints. The ongoing disinflationary narrative may be premature and mispriced at this juncture.

Chinese stimulus hopes fails to lift the FTSE Unilever among the best performers in the index after reporting earnings UK100 not far from all-time highs   It’s been another relatively flat session for equity markets, with investors seemingly having one eye on the Fed and ECB later in the week despite a strong showing in Chinese stocks earlier in the day. They were lifted by the promise of Chinese stimulus following the Politburo meeting this week and some potential relief for the property market. It’s been a tougher re-emergence from zero-Covid than many anticipated, with consumers still seemingly holding back and the property sector still reeling from the previous crackdown. The enthusiasm hasn’t filtered through to Europe and the US though, perhaps due to the lack of detail currently on the stimulus measures, but also the distraction of the central bank meetings over the next 48 hours. Progress on inflation could mean both the Fed and ECB are about to announce their final rate hikes of the tightening cycle; the question is will they acknowledge that or maintain a hawkish position over the rest of the summer? Unilever rallies amid hints at price pressures easing Unilever is among the top performers on the FTSE 100 today, buoyed by a surge in profits in the last quarter. It comes at a challenging time when high inflation is pushing up costs and there is a growing spotlight on producers and supermarkets amid claims of profiteering. What’s more, the cost-of-living crisis is pushing consumers toward cheaper own-brand products which partly contributed to a decline in sales volumes. The company did reassure investors that pressures are easing though which should be good news for households and the share price is also reaping the rewards, up around 5%.     Can the UK100 take the next step? The UK100 has been on a good run over the last few weeks, taking it towards 7,700 where it is now running into some resistance.     This has previously been a very notable area of resistance, most recently in the middle of June, and so overcoming it could be a significant bullish signal for the markets. The index is not trading too far from its all-time highs at this stage and so a break of this could draw attention to a few notable levels. We’ve seen 7,800 and 7,850 provide plenty of support and resistance over the course of this year and so that area stands out on the chart. After that, there are a few more areas where price previously ran into some difficulty ahead of the high just above 8,000. Around these levels, the stochastic and MACD indicators could offer some useful information on how much momentum remains with the rally and whether we’re potentially seeing doubts or profit-taking kicking in.

JOLTS job openings slip to 8.827m (9.465m expected, 9.165m previously) Consumer confidence also falls but the survey is volatile Is last week’s breakout stalling?   As we near the end of the summer, activity will start to pick up again and that may begin this week in the build-up to Friday’s jobs report. With Jackson Hole behind us, and not really living up to the usual hype, the focus now switches to the September central bank meetings and the key data releases that could sway them one way or another as policymakers ask themselves whether they’ve already done enough. From the Fed’s perspective, the week is off to a promising start with the JOLTS job opening report much softer than expected, alongside downward revisions to the previous month. The Fed needs to see a softer labor market to be confident that price pressures aren’t just abating but substantially and sustainably and this report is a move in the right direction. Job openings are now back at levels last seen in the summer of 2021 and not too far from where they were pre-pandemic. Further softness over the next few months looks very plausible which could contribute to a cooler labor market and sustainably lower wage growth. The CB consumer confidence number also suggests households are still wary, although the survey can be quite volatile and correlated with factors such as stock markets and gas prices, as we’ve seen the last couple of months alone.   Breakout to gather pace? Cable had been threatening to break lower throughout August and it finally happened at the end of last week, with the price moving below 1.26 and closing below the 55/89-day simple moving average band.       That could be viewed as a very bearish moving coming soon after a brief 38.2% retracement – July highs to early and mid-August lows – and a repeated test of that support. While it has consolidated a little higher since, that US data did briefly push it lower once more although it has since pared those moves. What’s interesting is the momentum indicators at the bottom as while the pair hasn’t accelerated lower following the breakout in a significant way, the MACD and stochastic look fairly healthy. There’s a lot of economic data this week though from the US that could sway this one way or another.      

Strong run continues Chinese data doesn’t hinder the rally Momentum may be key as price approaches August highs   Oil prices are nudging higher again today, technically on course for a fifth day of gains in six in Brent – six in a row in WTI – although broadly speaking they’re just a little above the middle of what appears to be a newly established range. Brent peaked near $88 a few weeks ago and bottomed around $82 last week as we await more direction on the economy and therefore demand. Data this week has been on the weaker side, although it’s the jobs report tomorrow we’re most interested in. The Chinese PMIs overnight had something for everyone. Manufacturing was unexpectedly improved but still contracting at 49.7 while services were quite the opposite, expanding but at a slower pace than anticipated. All in all, it continues to paint the picture of a sluggish economy that’s showing few signs of bouncing back stronger.   Head and shoulders not meant to be The head and shoulders that formed over the last month appears to have failed before it even completed, with the recent rally taking the price above the peak of the right shoulder.     BCOUSD Daily   While these formations are never perfect, as per the textbook, and it could be argued that a decline from here could still potentially qualify as a second right shoulder, that may be clutching at this point. It’s peaked a dollar above, even if it only looks relatively minor on the chart which suggests to me the previous formation – which is only complete with a break of the neckline – is now null and void. Perhaps I can be persuaded otherwise if the price heads south from here. The question now is how bullish a signal this actually is? Are we going to see a run at this month’s highs? A break above $90? I’m not convinced at this stage. Recent momentum looks quite healthy but which could be a promising sign. But that will only be put to the test as we near the previous highs around $88. If the MACD and stochastic keep making higher highs as the price approaches $88 then that would certainly look more promising.  

Brent rally cools after another strong week Tight market continues to support price No sign of technical divergence near $90 in Brent Oil prices are a little flat today after rallying another 5% last week. Brent hit a new high for 2023 in the process and, despite paring earlier gains today, there still appears to be plenty of momentum in the rally. That there is still plenty of momentum so close to $90 a barrel may suggest we could see a strong push to break above which would represent a big shift in the market dynamic in quite a short period of time. Saudi Arabia and Russia have been managing additional voluntary cuts on a monthly basis and could withdraw them at any point but I can’t imagine they’ll be in any rush and risk sending the price tumbling again.   Can Brent break $90? From a technical perspective, the most striking thing is the MACD and stochastic, both of which are continuing to trend higher alongside price.   Source – OANDA on Trading View When approaching areas of resistance, divergences between price and these momentum indicators can indicate the trend is weakening but so far that isn’t clear. Even on a lower timeframe chart, like the 4-hour, the last rally was matched with higher highs. So despite trading at the highest level this year and near $90, there is still plenty of momentum that could aid a powerful push against this resistance zone.   BCOUSD 4-Hour    

EC downgrades eurozone growth for this year and next Will the ECB be deterred if their forecasts have similar downgrades? EURUSD slips below key support ahead of US inflation data and ECB   The European Commission downgraded its forecasts for the EU this year and next, weighed down by much weaker growth in Germany. The new forecasts won’t come as a major surprise and may even prove overly optimistic over time but they do come days ahead of the next ECB meeting and could tempt some policymakers into voting to pause the tightening cycle. ECB policymakers will obviously be armed with their own forecasts when it comes to the vote but it’s likely their growth expectations will be revised lower on the basis of recent releases. While markets are currently pricing in a pause this week, around 60/40 at the time of writing, I’m probably leaning more toward a final hike before pausing in October. It’s probably easier to justify a hike this week than it may be at the end of next month and I’m not sure there’s enough desire at the ECB to stop at the current rates. Weaker economic readings will probably drive a lively debate and they obviously won’t suggest, if they do hike, that it’s job done, rather more finely balanced. But they can’t ignore the progress in recent months, other economic indicators, and the lag effect of past moves.   A cautious breakout but perhaps still a significant one Recent strength in the US dollar has prompted a breakout against the euro in the last week which may prove to be very significant.   EURUSD Daily Source – OANDA on Trading View   While it continues to trade in a descending channel, the pair has broken below the 200/233-day simple moving average band for the first time since November. It then ran into support around 1.07 which has been a notable level of support in the past and the May low isn’t far below here. The interesting thing is that while the breakout hasn’t been the catalyst for a sharper move lower, yet, the decline isn’t lacking momentum. The MACD and stochastic are continuing to make new lows alongside price. Perhaps the MACD histogram is an exception but even this isn’t particularly clear. A break of the May low could confirm the move and see the sell-off accelerate. But with the US CPI to come on Wednesday and the ECB meeting on Thursday, there may be some apprehension among traders. That may even explain why it’s been more of a cautious breakout until this point.    

UK contracts faster than expected One-off factors largely behind the decline, BoE still expected to hike Major support being tested in cable The UK economy contracted faster than expected in July which is weighing on the pound this morning. GDP fell 0.5%, much faster than the 0.2% contraction that was expected, but as has been the case throughout this year, one-off factors played a big role. Strikes and the weather were largely blamed for the steep decline although some are clearly worried that overall momentum in the economy remains weak. I’m not sure the data will really sway the Bank of England at all next week. Not against the backdrop of such strong wage growth, as was reported yesterday. Markets are now pricing in a rate hike at around 75% which seems overly cautious to me but then, perhaps Bailey’s words last week are continuing to ring in the ears of traders. The Governor and his colleagues indicated the discussion will be more balanced than people seem to think which suggested a hold is very much on the table this month. That seems a little far-fetched at this stage and I think the words are probably intended for a little further down the line in November but then it wouldn’t be the first time the BoE has surprised us. That said, it also wouldn’t be the first time they’ve hinted at something and not followed through.   A pivotal level for cable? Cable has continued to drift lower after today’s GDP figures but there appears to be a little less vigor in the decline which may raise a few questions.     Is the decline of the last couple of months running on fumes? If so, are we going to see a correction or has this been a correction in the broader uptrend? The answer to the second question is that we’ll only know in time, should we see a big move higher from here. On the first question, there are signs that the sell-off is losing momentum. The drop today doesn’t appear to have been backed by moves lower on either the stochastic or the MACD. That in itself doesn’t mean the pair is about to reverse higher. But that it occurs around the 200/233-day simple moving average band and the 50/61.8 Fibonacci retracement zone – March lows to July highs – may suggest it could be early signs of struggles which could continue if tested again. A rotation off here would be interesting as it could signal that the sell-off since July has just been a bullish retracement. In that case, the 55/89-day SMA band above could be very interesting. A move below the 200/233-day SMA band and Fib levels could be a very bearish development, on the other hand, especially if back by momentum. And interesting one to watch over the coming days and weeks.  

Saudi and Russian cuts continue to drive the price higher Could a cooler economy push it back? Momentum indicators continue to support the rally This oil rally has been relentless and I’m not seeing any signs of exhaustion yet. A 15% rally in the space of around three weeks to trade at levels not seen since last November and not far from triple figures, it’s been an impressive move and there could be more to come. Saudi Arabia and Russia have been very effective in squeezing a tight market that much further to create a situation in which oil prices are trading well above the zone they’ve been stuck around for much of the year. You would imagine there’ll be a limit to their ambitions, not to mention their desire to continue the additional voluntary cuts but that may well depend on the demand side over the coming months. They’re committed until the end of the year but if demand softens as those additional cuts expire then the price could cool somewhat. The group has been heavily criticized over the last year for what were labelled unjustified cuts but for the bulk of that time, the price hasn’t risen as much as thought. Is this a sign of cuts going a step too far or will demand weaken to the point of prices pulling back again?   No lack of momentum in the rally The key to this chart after such a powerful rally is the momentum indicators at the bottom and neither the stochastic nor MACD are showing signs of divergence.   BCOUSD Daily Source – OANDA on Trading View That doesn’t mean the price can’t fall or correct lower but it does suggest the rally is healthy, even after such a large move. If the rally does continue, it will be interesting to see whether divergences form on approach to $100. Psychology can often play a role in the markets and that could be the case again. This is also where the price failed last October and November barring a couple of brief moments above. $98 may also be an area of interest having been so at times in the past, although at that point I expect all of the talk will be about whether it can breach triple figures once more, and if so, where next?

Analysis of transactions and tips for trading GBP/USD Further growth became limited because the first test of 1.2176 coincided with the sharp rise of the MACD line from zero. As for its second test, it occurred when the MACD line went into the overbought area, providing a signal to sell. This resulted in a price decrease of over 20 pips. The remarks of Bank of England member Huw Pill did not help pound rally, unlike the soft statements from Fed representatives, which led to an upward movement in the pair towards the end of the US session. However, the price remained within the sideways channel, so sellers have a good chance of returning the market to its lower boundary today. Waiting for data on the UK's unemployment rate and speech by Bank of England member Swati Dhingra.     For long positions: Buy when pound hits 1.2190 (green line on the chart) and take profit at the price of 1.2229 (thicker green line on the chart). Growth will occur after the breakdown of the upper boundary of the sideways channel. However, when buying, the MACD line should be above zero or just starts to rise from it. Pound can also be bought after two consecutive price tests of 1.2157, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2190 and 1.2229. For short positions: Sell when pound reaches 1.2157 (red line on the chart) and take profit at the price of 1.2113. Pressure will increase since the chances of a decline seem much higher than those of a breakout. However, when selling, the MACD line should be below zero or drops down from it. Pound can also be sold after two consecutive price tests of 1.2190, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2157 and 1.2113.   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.  

Analysis of transactions and tips for trading EUR/USD Further growth became limited because the test of 1.0554 coincided with the sharp upward move of the MACD line from zero. After a short period of time, another test took place, but the MACD line went in the overbought area, leading to a signal to sell. This resulted in a price decrease of over 30 pips. The European Central Bank kept interest rates unchanged, announcing a softer approach to future monetary policy based on data that will be received in the future. However, they also did not rule out the possibility of another rate hike, similar to the Federal Reserve. Strong US GDP data for the third quarter did not particularly help dollar. And most likely, today, the empty macroeconomic calendar will give euro bulls the chance for an upward correction.     For long positions: Buy when euro hits 1.0582 (green line on the chart) and take profit at the price of 1.0604. Growth will occur as part of an upward correction, following the update of the weekly low. However, when buying, make sure that the MACD line lies above zero or rising from it. Euro can also be bought after two consecutive price tests of 1.0562, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0582 and 1.0604. For short positions: Sell when euro reaches 1.0562 (red line on the chart) and take profit at the price of 1.0531. Pressure will increase in the event of a breakdown of the important support level of 1.0562, which will lead to a continuation of yesterday's bearish trend. However, when selling, make sure that the MACD line lies under zero or drops down from it. Euro can also be sold after two consecutive price tests of 1.0582, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0562 and 1.0531.  

Analysis of transactions and tips for trading EUR/USD Further decline became limited because the test of 1.0681 coincided with the sharp downward move of the MACD line from zero. This happened even though several Fed representatives hinted at the possible continuation of the rate hike cycle and the lesser chance of a reduction in borrowing costs. Today, CPI data for Germany and retail sales report for the eurozone will come out, but it will not have much impact on the market. Instead, the speech of ECB Executive Board member Philip Lane will generate interest, as well as the speech of Fed Chairman Jerome Powell.     For long positions: Buy when euro hits 1.0700 (green line on the chart) and take profit at the price of 1.0730. Growth will occur after protecting the support at 1.0680. However, when buying, make sure that the MACD line lies above zero or rises from it. Euro can also be bought after two consecutive price tests of 1.0681, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0700 and 1.0730. For short positions: Sell when euro reaches 1.0681 (red line on the chart) and take profit at the price of 1.0656. Pressure will increase after an unsuccessful attempt to hit the daily high, as well as weak data from the eurozone. However, when selling, make sure that the MACD line lies under zero or drops down from it. Euro can also be sold after two consecutive price tests of 1.0700, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0681 and 1.0656.     What's on the chart: Thin green line - entry price at which you can buy EUR/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 EUR/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.

Analysis of transactions and tips for trading GBP/USD The test of 1.2449 took place when the MACD line moved downward from zero, prompting a signal to sell. This resulted in a price decrease of over 50 pips. The sharp decline in UK inflation led to a sell-off in pound in the morning. Then, it intensified after the release of strong retail sales data from the US. The empty macroeconomic calendar today will give pound the chance of continuing its decline in line with yesterday's trend. Meanwhile, the speech of Bank of England MPC member Swati Dhingra will not have much impact to the market.     For long positions: Buy when pound hits 1.2402 (green line on the chart) and take profit at the price of 1.2449 (thicker green line on the chart). Growth will occur as long as the daily low remains protected. When buying, ensure that the MACD line lies above zero or just starts to rise from it. Pound can also be bought after two consecutive price tests of 1.2385, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2402 and 1.2449. For short positions: Sell when pound reaches 1.2385 (red line on the chart) and take profit at the price of 1.2337. Pressure will continue until trading goes below today's high. When selling, ensure that the MACD line lies below zero or drops down from it. Pound can also be sold after two consecutive price tests of 1.2402,, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2385 and 1.2337.     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.  

This article goes over different tools and indicators covering EURCAD, in some cases, cross-pairs can provide trade setups of a different nature as the US Dollar is partially taken out of the equation. Trading in financial markets requires an overview of different types of tools and the same applies to forex trading. Talking points Inflation Rate Overview – European Union and Canada Daily Chart Technical analysis Sentiment Indicators: Commitment of Traders report, and OANDA’s order book. Relative Rotation Graph Inflation Rate Overview – European Union and Canada   Source: Bloomberg Terminal   Inflation Rates globally are declining faster than expected and as global Central banks continue to tread carefully, traders continue to speculate on Central banks’ moves and are sometimes overwhelmed by conflicting central bankers’ comments or analyst’s opinions. Many Market participants are convinced that the recent decline in inflation suggests that Central banks should consider rate cuts, but Central banks still have concerns about inflation returning in any form. The latest CPI report from the EU shows inflation continues to decline reaching 2.4%, close to The European Central Bank (ECB) target of 2%. The current CPI may suggest that the ECB can hold interest rates at its current level but doesn’t warrant any rate cuts. ECB Nagel commented this morning that “Inflation risks are skewed to the upside”. The next CPI release is scheduled for December 19th, 2023, please check the economic calendar and your local time. In Canada, it’s a slightly different story, although the inflation rate is also declining the same as it is globally, it is declining at a slower pace than the EU. The inflation rate currently stands at 3.1%, down from its highs of 8.0% seen in June 2022. Daily Chart Technical analysis   Source: Tradingview.com   EURCAD price broke and closed below an intermediate trendline identified on the above daily timeframe chart, with no pullback to retest the broken level so far. The broken level was also a confluence of Support represented by 3 commonly used Moving average periods, EMA9, MA,9, MA21, and the monthly pivot point at 1.4800 Applying the weekly Stochastic indicator onto the Daily timeframe to smooth the readings suggests that EURCAD may be overbought and shows that %K just crossed below %D along with the break below the intermediate trendline mentioned above. Applying Daily RSI with its default period of 14 shows that RSI is so far in line with price action, however, it is currently neutral near level 50. MACD line crossed below its signal line and the Histogram is also turning bearish.       Sentiment Indicators: Commitment of Traders report, and OANDA’s order book Source: Tradingview.com   The Commitment of Traders report offers insights about positioning changes in the futures market, although delayed, it still helps as a sentiment tool in a trader’s arsenal. Comparing Position levels on the latest COT report shows that Large Speculators on both currencies are favoring long positions, however, it also suggests that the Canadian Dollar is closer to its extreme than the Euro, thus a higher probability of Sentiment change. The above chart is for EURUSD and USDCAD side by side with the COT report applied to both. (COT for Canadian Dollar is inverted, CADUSD) OANDA’s Orderbook Indicator   Source: OANDA.com   Another sentiment tool is the OANDA Orderbook Indicator, the above image reflects an aggregate view of pending entry orders on EURCAD for OANDA’s clients, the data falls under the Retail Traders category. The above image suggests that Retail traders are looking to buy as the price falls and sell as it rises, this is the typical retail trader sentiment and needs to be thought of carefully as Retail Traders can sometimes be in the opposite direction in trendy markets. The order book also reflects price levels that have the highest number of pending orders, these levels can be critical as the price continues to move regardless of direction. It is also important to note that the order book percentages include exit orders such as Stops and limits, we can continue to follow up on position percentage changes. Relative Rotation Graph   Source: Optuma.com   The Relative Rotation graph RRG (A measurement for Momentum and Relative strength) on the daily time frame shows EURUSD, GBPUSD, AUDUSD, and NZDUSD are currently in the Leading Quadrant, with EURUSD leading the pack and CADUSD attempting to catch up from the Improving quadrant. The arrow direction for all pairs except CAD is so far pointing south towards the weakening quadrant.