sideways trend

The current situation in the financial markets has been a topic of great interest and speculation. To shed light on this matter, we had the opportunity to speak with an analyst from RoboForex, who provided valuable insights. Starting with the FOMC decision, the US Federal Reserve opted to maintain the interest rate at 5.25% per annum, aligning with expectations. However, the regulator's comments presented a mixed outlook. While it acknowledged the possibility of further interest rate hikes, it is anticipated that any future increases will be more modest, with a shift from 50 basis points to 25 basis points.   The Federal Reserve also indicated its intention to continue reducing the volume of assets on its balance sheet, with potential sales of securities starting in 2024. Despite the neutral nature of the recent statements and decisions, there are concerns about the negative impact on the US capital market due to potential future lending cost increases. The risks of a recession are expected to persist until the end of 2023.   Moving on to the ECB decision, the European Central Bank raised all three interest rates at its recent meeting. The deposit rate increased by 25 basis points to 3.25% per annum, while the key rate and marginal rate were lifted to 4.00% and 4.25% per annum, respectively. The ECB made it clear that its interest rate hike campaign is not yet over, as it aims to bring rates to sufficiently restrictive levels for inflation to reach the target of 2% in the medium term. It is anticipated that there will be at least two more rate hikes of 25 basis points each, followed by a possible pause for data analysis.     FXMAG.COM: Could you please comment on the FOMC decision? The decision of the US Federal Reserve turned out to be as expected. The interest rate was kept at the level of 5.25% per annum. The regulator's comments came out mixed.For example, the Fed believes it is reasonable to consider further interest rate hikes. This means that the pause will probably not last long. There may be one or two rate hikes ahead. The nuance is that the rate increase will be more modest, at 25 basis points and not at 50 bp as before.The Fed will continue to reduce the volume of assets on its balance sheet as announced earlier. Since May this year, the indicator has fallen to 8.4 trillion USD from 8.5 trillion USD. The Committee refuses to reinvest funds generated from matured securities. Sales of securities from the Fed's balance sheet might start in 2024.Locally, all statements and decisions are of a neutral nature. In the medium term, this can have a negative impact on the US capital market due to the possibility of a further increase in the cost of lending. The risks of a recession persist until the end of 2023.   FXMAG.COM: Could you please comment on the ECB decision? The European Central Bank raised all three interest rates at its meeting on Thursday. The deposit rate rose by 25 basis points to 3.25% per annum. The key rate increased to 4.00% per annum, and the marginal rate was lifted to 4.25% per annum.The ECB made it clear in its comments that its unprecedented interest hike campaign is not over yet.As stated by the CB, rates must be brought to levels that will be sufficiently restrictive for a timely return of inflation to the 2% medium-term target. Rates will be kept high for as long as necessary.Everything happened exactly as expected. The ECB will likely further raise the rates at least twice by the same interval of 25 basis points each time. Thereafter, a pause will probably be needed to collect data and analyse it. This will not necessarily indicate that the series of hikes has come to an end, but that the ECB has received signals that its monetary strategy is working.   FXMAG.COM: Could you give as your point of view about how the gold prices would behave in next weeks? Is there a chance that there will be new ATH? Gold is currently not in demand as a safe-haven asset. At the same time, physical demand for the precious metal is low, which does not provide any support for gold.Gold has declined to 1,946 USD per troy ounce. This year's high was recorded on 3 May, when gold was priced at 2,071.30 USD.There are a lot of risks for gold associated with the prospects of the monetary policy of the US Federal Reserve. While investors were expecting a pause in the series of interest rate hikes by the Fed, they now received indications of a probable further tightening of monetary policy. If gold can cope with this statement, it could trigger price increases.The crux of the matter is that the Fed is on the verge of altering its monetary policy stance. Everyone understands that. The question remains about the timing of when the regulator will begin lowering rates. While there is a lot of uncertainty here, there is almost no doubt that this could happen in the next 6-8 months.A shift in the Fed's monetary framework will be a vital support for gold from a long-term perspective. In the medium term, a sideways trend has formed within the range of 1,935-1,985 USD, while a decline is the most likely scenario in the short term.     Visit RoboForex

GBP/USD On Tuesday afternoon, the GBP/USD pair reached the MACD indicator line – the 1.2792 target, afterwards it returned to the 1.2720 support. The price has been moving in a sideways trend on this support for five days now. The Marlin oscillator is still strong, and there could be another attempt to overcome the MACD line.     If the price consolidates below 1.2720, the five-day sideways movement will end, revealing the target at 1.2666, followed by 1.2590 (June 29 low). On the four-hour chart, the oscillator's signal line has moved out of its consolidation by moving downwards, establishing itself in the downtrend territory.     The price consolidating below 1.2720 will confirm its intention to fall, with the 1.2666 level as the target. The MACD line acts as an intermediate support around the 1.2687 mark. It coincides with a series of local extremes from early August, so if the pound plans to show a false downward movement, it might stop at the MACD line.    

Horizontal trends, often referred to as consolidation, describe a stable market situation where prices neither exhibit a clear upward nor downward trend. This article delves into the significance of horizontal trends, exploring their characteristics and implications for traders. Recognizing Sideways Trends Consolidation, characterized by a balance between price peaks and troughs, differs in investment strategy from both downward and upward trends. Thus, understanding how to identify horizontal trends becomes crucial for traders. Key Elements of Sideways Trends Horizontal trends, also known as sideways or ranging trends, have distinctive features clearly visible on price charts. The longevity of prices staying in such a pattern makes recognizing this trend crucial for traders. Identifying Horizontal Trends To identify a horizontal trend, historical data spanning two to three weeks is necessary. This allows the identification of at least two maximum and two minimum values of the currency pair's price. If these points are at or near the same level, a sideways trend is assumed. Confirmation occurs when a subsequent peak or trough appears within the previously identified range. Strength of the Trend The strength of a horizontal trend is determined by two factors: the number of peaks/troughs within the range and the significant distance between them. A robust trend is indicated by numerous maximum or minimum points, along with substantial time intervals between peak and trough values. Occurrence of Consolidation Sideways trends commonly occur in two scenarios. Firstly, as a short-term pause within either an upward or downward trend. Secondly, it can manifest as an extended transitional phase between an upward and downward trend, signaling a potential change in price direction. Potential Outcomes of Sideways Trends The future course of a sideways trend depends on price behavior. Stability prevails when prices do not surpass support or resistance lines. The emergence of a higher peak or lower trough likely signals the beginning of a bullish or bearish market, depending on the direction of change. Strategies During Sideways Trends Consider various scenarios based on breakout direction and your market position. In an upward breakout, indicating a trend change, consider buying if you don't have an open position. If a downward breakout occurs during consolidation, signaling a price decline below the line, decide to sell if you have open positions. If a price drop is observed, it could signify the start or continuation of a downward trend, prompting caution or staying out of the market if you haven't initiated positions. Navigating sideways trends requires a keen understanding of consolidation patterns. Traders must recognize the signs, interpret price movements, and make informed decisions during horizontal market phases to enhance their success in Forex trading.

ECB leaves rates on hold Lagarde still eyeing summer rate cut EURUSD consolidating after correction The European Central Bank left interest rates on hold on Thursday and claimed inflation is progressing towards its target while giving no clear guidance on when interest rates will start falling. We came into the new year with markets pricing in a March rate cut and that is now looking increasingly difficult. Even with a late pivot – which was always likely the strategy of the central bank – policymakers would have to signal that a rate cut is a live possibility over the next six weeks in appearances made between meetings. That’s not impossible but it’s arguably not particularly transparent. The data is unlikely to surprise to that degree. President Christine Lagarde and some colleagues have previously indicated a rate cut in summer may be appropriate but investors are not convinced we’ll have to wait that long. Lagarde stuck with that today while suggesting demand was weaker, as is the economy, and inflation is falling. Perhaps this is her way of leaving the door slightly ajar for March or maybe the usual lack of clear guidance has left everyone desperately looking for something that isn’t there. I get the feeling Lagarde and her colleagues wanted to give absolutely nothing away today, instead opting for an array of vague, uninformative statements that buy them six more weeks before they may have to say or do something. A bullish correction or sideways continuation?   The euro has drifted lower after the announcement and press conference but it hasn’t broken out of the range it’s traded in over the last week or so. EURUSD Daily Source – OANDA The correction we’ve seen since the turn of the year appears to be running on fumes but there’s still a question of whether this is just that, and will turn higher and look to break the highs, or just a continuation of the longer term sideways trend. There are some important support levels between 1.07 and 1.0850 which could tell us which is the case.