technical indicators

GBP/USD may start moving upward this week, starting from the level of 1.2344 (closing of the last weekly candle) to 1.2499, which is a historical resistance level (blue dashed line). Upon reaching this price, the pair will climb further to 1.2678, which is an upper fractal (red dashed line).   Comprehensive analysis: Indicator analysis - upward Fibonacci levels - upward Volumes - upward Candlestick analysis - upward Trend analysis - downward Bollinger bands - upward Monthly chart - upward       All these point to an upward movement in GBP/USD. Conclusion: Most likely, the pair will have a bullish trend, with no first lower shadow on the weekly white candle (Monday - upward) and a second upper shadow (Friday - downward).   So during the week, pound will rise from 1.2344 (closing of the last weekly candle) to the historical resistance level at 1.2499 (blue dashed line), and then head to the upper fractal at 1.2678 (red dashed line).   Alternatively, the quote could go up from 1.2344 (closing of last week's candle) to the historical resistance level at 1.2499 (blue dashed line), and then turn around and fall down to the 38.2% retracement level at 1.2342 (red dashed line).  

  Gold shorts certainly worked perfectly on Friday with a $19 drop from the high of the day. Longs at strong support at 1938/34 worked perfectly yesterday as we held above 1930. We wrote: ''Gold remains oversold on the daily chart so a good chance of another bounce from this strong support at 1938/34 to target 1945/47, perhaps as far as first resistance at 1952/57. Take profits on any remaining longs here if you do manage to buy at 1938/34.''   An easy profit of up to 15 points on our longs. However shorts here were stopped above 1960. Note the bullish engulfing candle after we bounced from the 100 day moving average in severely oversold conditions.   Strong resistance at 1963/66 today. Shorts need stops above 1971. A break higher see 1966/63 act as strong support so try to reverse & buy in to a long with stop below 1960, targeting 1975, perhaps as far as strong resistance at 1984/88 for profit taking. Try shorts with stop above 1992.   Silver longs at my buying opportunity at the 38.2% Fibonacci, 100 week & 500 day moving average support at 2280/65 worked perfectly on Friday, after I gave the signal on Thursday, so there was no excuse for missing this trade!   Targets for our longs of 2315 & 2330 were both hit to add to our profits for the week.   I expect strong resistance at 2340/50 again today. Shorts need stops above 2365.   We can try longs again this week at 2280/65 with stops below 2250. However a break below 2250 would be an important longer term sell signal. First target would be 2200/2190.

Analysis of transactions and tips for trading EUR/USD The price test of 1.0719, coinciding with the significant rise of the MACD line from zero, limited the upward potential of the pair. Even so, market players continue to buy in anticipation of further interest rate hikes despite inflation in the eurozone starting to slow down. Clearly, market players do not expect any changes in the European Central Bank's monetary policy.     The empty economic calendar today will push traders to focus on upcoming US labor market data, as growth in unemployment and disappointing non-farm payrolls will convince the Fed to continue its tight approach to monetary policy. Only a pause in the rate hike cycle will weaken dollar demand and lead to a further rise in EUR/USD.     For long positions: Buy when euro hits 1.0780 (green line on the chart) and take profit at the price of 1.0816. Growth could occur. However, when buying, traders should make sure that the MACD line lies above zero or rises from it. Euro can also be bought after two consecutive price tests of 1.0754, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0780 and 1.0816.   For short positions: Sell when euro reaches 1.0754 (red line on the chart) and take profit at the price of 1.0722. Pressure may return amid very good labor market statistics in the US. However, when selling, traders should make sure that the MACD line lies below zero or drops down from it. Euro can also be sold after two consecutive price tests of 1.0780, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0754 and 1.0722.       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. 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.  

GBP/USD edged down on Monday. This is a classic depiction of how the pound is currently being traded. When it rises, the movement is sharp, but when it falls, it only edges down. It can rise even without macroeconomic or fundamental reasons, but it is reluctant to fall, even when there are corresponding causes.     For example, yesterday there was an excellent opportunity for a correction based on pure technicals. The pair could have fallen simply because it was overbought. However, instead of a significant correction, we saw the pair reverse its course by just 30 pips amidst a low-volume trading day. Throughout the day, neither the UK nor the US had any important events or reports. Speaking of trading signals, there was nothing notable about it. The pair did not even come close to any significant levels or lines.   This is probably a good thing because weak movements bordering on a flat can lead to false signals. Traders have been fortunate with the euro, but there simply hasn't been any signal for the pound. COT report: According to the latest report, non-commercial traders closed 5,200 long positions and 4,500 short ones. The net position dropped by 700 but remained bullish. Over the past 9-10 months, the net position has been on the rise despite bearish sentiment. In fact, sentiment is now bullish, but it is a pure formality. The pound is bullish against the greenback in the medium term, but there have been hardly any reasons for that. We assume that a prolonged bear run may soon begin even though COT reports suggest a bullish continuation. However, we can hardly explain why the uptrend should go on.   The pound has gained about 2,300 pips. Therefore, a bearish correction is now needed. Otherwise, a bullish continuation would make no sense even despite the lack of support from fundamental factors. Overall, non-commercial traders hold 52,500 sell positions and 65,000 long ones. We do not see the pair extending growth in the long term. 1H chart of GBP/USD In the 1-hour chart, GBP/USD maintains a bullish bias.   The ascending trend line serves as a buy signal but I believe that further growth of the British currency is groundless. The pound sterling has been climbing for too long and downward corrections are short-lived. Judging by the technical indicators, we have an uptrend. Yet, it is hard to find the reasons which may push it higher. However, it is naturally not advisable to sell the pair without proper signals. The market can sustain the trend even without a "fundamental" basis.   On June 20, trading levels are seen at 1.2349, 1.2429-1.2445, 1.2520, 1.2589, 1.2666, 1.2762, 1.2863, 1.2981-1.2987. The Senkou Span B (1.2494) and Kijun-sen (1.2724) may also generate signals when the price either breaks or bounces off them. A Stop Loss should be placed at the breakeven point when the price goes 20 pips in the right direction. Ichimoku indicator lines can move intraday, which should be taken into account when determining trading signals. There are also support and resistance which can be used for locking in profits.   There are no significant events lined up in the UK, and only a few secondary events in the US. We believe that volatility may edge up today, as the Bank of England's meeting and the UK inflation report will be published later this week. The market may start to anticipate and react to this data in advance.  

GBP/USD extended its downward movement on Tuesday, but in general, it remains stable. After a three-day correction, the pair barely managed to test the critical line without surpassing it. Thus, the uptrend persists ahead of an important inflation report in the UK, the Bank of England's meeting, and two speeches by Jerome Powell in the US Congress.   It is evident that these events will impact market sentiment, but it is currently impossible to determine how exactly. We need to be prepared for any developments. We believe that in the medium term, the pound should fall rather than rise, but the market currently holds a different opinion. We do not see any signs of the upward trend coming to an end. There were several trading signals on Tuesday. Initially, the pair bounced off the level of 1.2762, providing a buy signal. Following this signal, the price moved up by about 26 pips, which was enough to set the stop-loss at breakeven. Subsequently, there was a consolidation below the level of 1.2762, after which the pair dropped to the critical line but failed to surpass it. Consequently, it was advisable to close the short position at that point. The profit amounted to approximately 20 pips. The last buy signal formed quite late, but it could have been attempted. It resulted in an additional profit of 10-20 pips. Since the volatility was relatively low, such a level of profit was acceptable.   COT report: According to the latest report, non-commercial traders closed 5,200 long positions and 4,500 short ones. The net position dropped by 700 but remained bullish. Over the past 9-10 months, the net position has been on the rise despite bearish sentiment. In fact, sentiment is now bullish, but it is a pure formality. The pound is bullish against the greenback in the medium term, but there have been hardly any reasons for that. We assume that a prolonged bear run may soon begin even though COT reports suggest a bullish continuation. However, we can hardly explain why the uptrend should go on. The pound has gained about 2,300 pips. Therefore, a bearish correction is now needed.   Otherwise, a bullish continuation would make no sense even despite the lack of support from fundamental factors. Overall, non-commercial traders hold 52,500 sell positions and 65,000 long ones. We do not see the pair extending growth in the long term. 1H chart of GBP/USD In the 1-hour chart, GBP/USD maintains a bullish bias, although it is correcting at the moment. The ascending trend line serves as a buy signal but I believe that further growth of the British currency is groundless. The pound sterling has been climbing for too long and downward corrections are short-lived (like in the last three days). Judging by the technical indicators, we have an uptrend. It is not advisable to sell the pair without proper signals. The market can sustain the trend even without a "fundamental" basis. On June 21, trading levels are seen at 1.2349, 1.2429-1.2445, 1.2520, 1.2589, 1.2666, 1.2762, 1.2863, 1.2981-1.2987. The Senkou Span B (1.2532) and Kijun-sen (1.2739) may also generate signals when the price either breaks or bounces off them. A Stop Loss should be placed at the breakeven point when the price goes 20 pips in the right direction. Ichimoku indicator lines can move intraday, which should be taken into account when determining trading signals. There are also support and resistance which can be used for locking in profits. On Wednesday, the UK has the most important inflation report, and in the US - Federal Reserve Chairman Jerome Powell's first address to the Congress. Thus, it could be an interesting and volatile day. We think that the fall is more likely, but the pair also maintains a bullish bias and the market can start buying the pound again on any background.  

Yesterday, the pair formed several good signals to enter the market. Let's analyze what happened on the 5-minute chart. In my morning review, I mentioned the level of 1.2726 as a possible entry point. A decline and false breakout at this mark generated a good buy signal. As a result, the pair rose by 15 pips. During the US session, a false breakout and retracement below 1.2753 gave a sell signal. As a result, the pair fell by 25 pips.     COT report: The Commitments of Traders (COT) report for August 15 recorded an increase in both long and short positions. Traders built up positions after the UK GDP report, which was better than economists' expectations. US inflation cooling also had an impact on the balance of power, supporting the pound, as well as persistent core pressure in the UK. Federal Reserve officials will hold their annual Jackson Hole symposium later this week, which could lead to even more strengthening of the British Pound in the short term. The focus will be on Fed Chair Jerome Powell's speech about US monetary policy. As before, the optimal strategy is to buy the pound on dips, as the difference in the policies of the central banks will affect the prospects of the US dollar, putting pressure on it. The latest COT report indicates that long positions of the non-commercial group of traders rose by 7,302 to 90,541, while short positions jumped by 3,334 to 39,553. As a result, the spread between long and short positions narrowed by 607. The weekly closing price dropped to 1.2708 compared to the prior value of 1.2749.     For long positions on GBP/USD: Today, the UK will publish reports on public sector net borrowing and the CBI's industrial trends orders. In the event of weak reports, it would be best to act on a decline and false breakout near the new support level at 1.2751. Just below this level are the bullish moving averages, which will form a good entry point for long positions leading to an upward move targeting the resistance at 1.2783. The pair has not been able to get out of this since August 17. A breakout and a downward retest of this range will form an additional buy signal and will reinforce the pound sterling, allowing it to reach a new high of 1.2812. If the pair goes above this range, it might break towards 1.2847, where I will take profits. If GBP/USD declines and there is no buying activity at 1.2751, especially if the UK publishes weak data, the pair will continue to trade within a sideways channel with the bulls having the upper hand. In this case, only the defense of the 1.2723 area and its false breakout would give a signal for opening long positions. I will open long positions immediately on a rebound from 1.2689, keeping in mind a daily correction of 30-35 pips.   For short positions on GBP/USD: Bearish traders did their best yesterday, but buyers are clearly interested in a lower value of the pound. In the first half of the day, it is important to keep the pair below 1.2783. A breakout of this level will produce a sell signal with a prospect of falling to the support at 1.2751, formed yesterday and where a real battle will unfold. A breakout of this level and its upward retest will create an entry point for short positions with a target of 1.2723. The ultimate target is the low at 1.2689 where I will be locking in profits. If GBP/USD trends upward during the European session and if no selling activity is observed at 1.2783, amid strong UK reports, the bulls will maintain control of the market, and will start an upward correction. In such a scenario, a false breakout near the next resistance at 1.2812 would provide an entry point for going short. If there is no downward movement there, I would sell the pound right on a rebound from 1.2847, keeping in mind an intraday correction of 30-35 pips.     Indicator signals: Moving Averages Trading is taking place above the 30-day and 50-day moving averages, which suggests that GBP/USD will recover. Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.     Bollinger Bands If GBP/USD grows, the indicator's upper border near 1.2780 will serve as resistance. If GBP/USD falls, the indicator's lower border near 1.2735 will serve as support.   Description of indicators: • A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart; • A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart; • MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period; • Bollinger Bands: 20-day period; • 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 represent the total number of long positions opened by non-commercial traders; • Short non-commercial positions represent the total number of short positions opened by non-commercial traders; • The non-commercial net position is the difference between short and long positions of non-commercial traders.  

  Yesterday, the EUR/USD currency pair rose to its moving average line but almost immediately rebounded and began a stronger decline. This decline eloquently demonstrated who currently dominates the market. Traders shouldn't be misled by the movement toward and potentially beyond the moving average – this line is close to the price (due to low volatility) and can touch it almost daily. However, as we can see, the first attempt to rise above the moving average failed. Importantly, this cannot be blamed on strong macroeconomic data for the dollar or the fundamental backdrop. Technically, nothing has changed. The pair updated its local minimum yesterday, meaning the downward trend remains.   Thus, expecting the European currency to fall is the most logical under the current circumstances. As we have repeatedly stated, there have been no reasons for the euro to grow for a long time. The ECB increasingly signals a potential pause in tightening, and some experts do not anticipate more than one rate hike in 2023. This means the ECB rate will remain much lower than the Federal Reserve. Demand for the dollar will increase since, at present, one can earn much more from bank deposits and treasury bonds in the US than from similar instruments in the European Union. Additionally, inflation in the EU is higher, while it has already dropped to 3.2% in the US. Besides, it should be noted that the Federal Reserve can also raise its rate again.   It has far better opportunities for tightening than the European Union. However, we mentioned several months ago that the ECB is constrained in its monetary moves as it needs to consider the interests of all 27 member countries, some of which are economically weak and cannot withstand overly strict monetary policies. Lagarde is unlikely to protect the euro from falling. At this time, the macroeconomic background is irrelevant. It might lift the euro, but we advocate continuing the pair's decline. On Friday, speeches from Christine Lagarde and Jerome Powell are scheduled. If we are mistaken in our assessment of rate changes in the US and EU, the chairpersons of both central banks can convey the true information to the market. However, the symposium in Jackson Hole is not where Lagarde and Powell will be candid and make sensational announcements. However, a few hints might suffice for the market. The Fed's position is now even less critical than the ECB. If the Fed's rate doesn't increase in September, it will in November. On the other hand, if the ECB pauses in September, it will find itself in a much less favorable position since its rate is significantly lower than the Fed. Hence, ultra-hawkish rhetoric is required from Lagarde for the European currency to start growing again. On the 24-hour TF (Time Frame), the price has settled below the Ichimoku cloud, but this isn't the case. We are looking at the Senkou Span B line at the 1.0862 level, and there needs to be a clear and confident consolidation below this level. Nonetheless, we also didn't witness a strong upward recoil after this level was tested, meaning the quote decline might continue at a moderate pace.     The average volatility of the EUR/USD currency pair over the last five trading days as of August 23 is 64 points and is characterized as "average." Consequently, we expect the pair to move between the levels of 1.0794 and 1.0922 on Wednesday. A reversal of the Heiken Ashi indicator upwards will indicate a new upward correction phase. Near Support Levels: S1 – 1.0803 S2 – 1.0742 S3 – 1.0681   Near Resistance Levels: R1 – 1.0864 R2 – 1.0925 R3 – 1.0986   Trading Recommendations: The EUR/USD pair currently maintains a downward trend. For now, staying in short positions with targets at 1.0803 and 1.0794 is advisable until the Heiken Ashi indicator turns upwards. Long positions can be considered if the price consolidates above the moving average, with targets at 1.0986 and 1.1047.   Illustration Explanations: Linear regression channels help determine the current trend. The current trend is strong if both are pointing in the same direction. Moving average line (settings 20.0, smoothed) determines the short-term trend and the direction in which trading should proceed. Murray levels are target levels for movements and corrections. Volatility levels (red lines) are the probable price channel in which the pair will operate over the next day, based on current volatility indicators. CCI Indicator – Its entry into the oversold area (below -250) or the overbought area (above +250) indicates an impending trend reversal in the opposite direction.  

GBP/USD The British pound plummeted by 125 pips on Thursday, immediately overcoming two strong support levels: 1.2666 and 1.2614. The signal line of the Marlin oscillator is declining in negative territory, with 1.2500 as the target - the embedded line of the price channel is open. Overcoming this mark will allow the price to fall to 1.2447.     To extend the decline, the price will need to settle below 1.2447, with the 1.2307 level as the target. Today's Jackson Hole symposium increases the risk of speculative movements. The market will listen to the Fed's head, Jerome Powell, remarks regarding the central bank's monetary policy.     On the four-hour chart, the price has settled below 1.2614, and the Marlin oscillator shows an intention to turn around as it approaches the oversold territory. Possibly, before the speeches of the symposium's key figures, the pound will consolidate.    

Medium-term downtrend phase of AUD/USD has reached an oversold condition with downside momentum easing. Key short-term support to watch will be at 0.6385. Intermediate resistance at 0.6490. The price actions of AUD/USD have been oscillating in a medium-term downtrend phase in place since the 17 July 2023 high which has been reinforced by the bearish breakdown of its former medium-term ascending trendline support from 13 October 2022 low on 9 August 2023. So far, the AUD/USD has plummeted by -530 pips from its 17 July 2023 high to its 17 August 2023 low of 0.6365, and the recent four weeks of decline have led to an oversold condition in terms of price actions     Fig 1:  AUD/USD medium-term trend as of 28 Aug 2023 (Source: TradingView, click to enlarge chart) The daily RSI oscillator of the AUD/USD, a gauge that measures momentum, oversold, and overbought conditions on price actions reached an oversold condition recently on 17 August 2023 and shaped a bullish divergence condition (a higher low) thereafter on last Friday, 25 August. These observations suggest that the downside momentum of the ongoing medium-term downtrend of AUD/USD may have eased which supports a potential imminent minor countertrend/consolidation phase. These positive elements have also occurred at a key support of 0.6385 that coincided with the 10 November 2022 low and the 76.4% Fibonacci retracement of the prior medium-term up move from 13 October 2022 low to 2 February 2023 high.     Fig 2:  AUD/USD minor short-term trend as of 28 Aug 2023 (Source: TradingView, click to enlarge chart) Since its 17 August 2023 low, the price actions of AUD/USD have started to evolve into a minor range configuration with its key short-term pivotal support at 0.6385 and respective minor range resistance at 0.6490 (also the 20-day moving average). A clearance above 0.6490 sees the next resistances coming in at 0.6510 and 0.6600 (5 August/10 August 2023 minor swing highs areas, pull-back resistance of the former medium-term ascending trendline support from 13 October 2022 low & the 50-day moving average). However, failure to hold the 0.6385 key short-term support invalidates the minor countertrend rebound scenario for a continuation of the impulsive down move sequence of the medium-term downtrend phase towards the next supports at 0.6310 and 0.6270 in the first step.

Canadian growth shocker confirms central bank to pause Canada’s economy surprisingly contracted in the second quarter with consumer spending slowing sharply and residential investment collapsing. Together with a cooling labour market, this should ease the Bank of Canada's inflation fears and lead to a no-change decision on 6 Sep. Still, the USD/CAD rally appears overdone, and we expect a correction soon.   We expect a pause this week Ahead of last Friday’s data, analysts were favouring a no-change outcome with just three out of 32 economists surveyed by Bloomberg expecting a 25bp interest rate increase while overnight index swaps suggested the market saw only a 15% chance of a hike. This was despite headline inflation surprising to the upside in July and the BoC signalling at the July policy meeting that it continued to believe inflation would only return to 2% by mid-2025 and that the door remained open to further hikes. The GDP numbers and the manufacturing PMI that we got on Friday have only cemented the no-change expectation. Markets are now pricing little more than a 1% chance of a hike after the economy contracted 0.2% annualised in 2Q versus expectations of a 1.2% increase while 1Q GDP growth was revised down from 3.1% to 2.6%. Consumer spending rose just 1% annualised while residential investment fell 8.2% to post a fifth consecutive substantial contraction. Net trade was also a drag, but there was at least a decent non-residential investment growth figure of 10.3%. Meanwhile, the manufacturing PMI slipped to 48.0 from 49.6 to post its fourth consecutive sub-50 (contraction) reading.   Canadian unemployment and inflation   Given the economy lost jobs in July we completely agree that the BoC will leave rates unchanged this month after having resumed hikes in June and July following a pause since January. Nonetheless, the BoC is likely to leave this as a hawkish hold given that policymakers are yet to be fully convinced they’ve done enough to return inflation sustainably to 2% given the recent stickiness seen. At a bare minimum, we will get a messaging of rates staying “higher for longer”, but given the perilous state of the Canadian property market and signs of spreading weakness globally, we do expect rate cuts to come onto the agenda by March next year.   CAD weakness not justified USD/CAD has rallied 3% since the start of August, broadly in line with the general strengthening in the US dollar, but in contrast with short-term USD:CAD rate differential dynamics. While USD/CAD rose in the past month from 1.32 to 1.36, the USD:CAD two-year swap rate differential was relatively stable in the -50/-40bp range throughout August, and only tightened to -30/-35bp after Canada’s poor 2Q GDP report.   Our short-term valuation model, which includes swap rate differentials as an endogenous variable, shows that USD/CAD is trading more than 2% over its fair value, a rather unusual mis-valuation level for the pair. Incidentally, CFTC data shows that speculators have moved back into bearish positioning on the loonie in recent weeks, with net-shorts now amounting to 9% of open interest.   USD/CAD is overvalued   We don’t expect the BoC to turn the tide for CAD, but the recent weakness in the loonie appears overdone, and technical indicators suggest a rebound is on the cards. We still expect USD/CAD to end the year close to 1.30 as CAD should benefit from the most attractive risk-adjusted carry in the G10, even without any more hikes by the BoC.    

Erased prior two weeks of consecutive losing streaks to trade a current year-to-date closing high of US$86.31 per barrel printed on last Friday, 1 September. Price actions are oscillating within short-term and medium-term uptrend phases. Hourly technical indicators (RSI & Bollinger Bands Bandwidth) are suggesting the risk of an imminent minor pull-back in price actions after last week’s strong upside reversal. Watch the key short-term pivotal resistance at US$87.25 per barrel. This is a follow-up analysis of our prior report, “WTI Oil Technical: Potential bullish reversal to resume medium-term uptrend” published on 21 August 2023. Click here for a recap. The price actions of West Texas Oil (a proxy of WTI crude oil futures) have managed to snap its prior two weeks of consecutive losing streak and cleared above the US$84.90 resistance as highlighted in our previous report. Also, it recorded a weekly gain of +7.35% for the week ended last Friday, 1 September.     Rallied to a 10-month high   Fig 1:  West Texas Oil medium-term trend as of 4 Sep 2023 (Source: TradingView, click to enlarge chart) In addition, last Friday’s bullish momentum has allowed it to surpass its recent medium-term swing high of US$84.92 per barrel printed on 10 August 2023 and notched a current year-to-date closing high of US$86.31 on last Friday, also its highest level since 15 November 2022. In addition, current price actions have managed to trade above their respective 20, 50, and 200-day moving averages which indicates that West Texas Oil is oscillating within short-term and medium-term uptrend phases. Risk of an imminent minor pull-back in price actions Fig 2:  West Texas Oil minor short-term trend as of 4 Sep 2023 (Source: TradingView, click to enlarge chart)   However, the current up move of +10.7% from its 23 August 2023 low of US$78.03 to its 1 September 2023 high of US$86.36 seems overstretched which suggests that the current short-term uptrend phase is due for a potential minor pull-back/setback. Two key technical conditions are advocating this potential minor pull-back/setback scenario for West Texas Oil within its ongoing short to medium-term uptrend phases. Firstly, the hourly RSI oscillator has exploded to an extreme overbought condition of 84.53, its highest level since 2 April 2023. Secondly, the hourly Bollinger Bands Bandwidth (%) has increased to a two-week high which indicates a significant expansion in short-term volatility. An expansion in short-term volatility as indicated by the widening of the hourly Bollinger Bands Bandwidth (%) tends to lead to a normalization of such a heightened level of volatility in the next few trading sessions which supports an imminent potential minor pull-back/setback for price actions. Watch the US$87.25 key short-term pivotal resistance to maintain the potential minor pull-back/setback scenario for West Texas Oil towards the intermediate supports at US$84.90 and US$83.60. However, a clearance above US$87.25 invalidates the minor bearish tone for a continuation of the bullish impulsive up move sequence to see the next resistance at US$89.10 (Fibonacci retracement/extension cluster; 38.2% Fibonacci retracement of the major downtrend from 7 March 2022 high to 4 May 2023 low & 0.618 Fibonacci extension of the medium-term uptrend from 28 June 2023 low to 10 August 2023 high projected to 23 August 2023 low).  

Analysis of transactions and tips for trading GBP/USD The test of 1.2623 on Monday afternoon, coinciding with the drop of the MACD line from zero, prompted a sell signal that should have led to a price decrease. However, the signal only resulted in losses, as the bearish market did not continue. Data on the UK's service and composite PMI lies ahead, and they could lead to a further drop in GBP/USD provided that the reports show a downward revision. This means that market players should be inclined more to short positions, especially in the morning. If sellers do not show activity after updating the monthly lows, it may be appropriate to consider long positions.   For long positions: Buy when pound hits 1.2621 (green line on the chart) and take profit at the price of 1.2671 (thicker green line on the chart). Growth will occur amid very good PMI data. However, 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 1.2570, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2621 and 1.2671. For short positions: Sell when pound reaches 1.2570 (red line on the chart) and take profit at the price of 1.2530. Pressure will increase amid weak statistics. However, 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 1.2621, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2570 and 1.2530.   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.  

COT reports on the British pound show that the sentiment of commercial traders has been changing quite frequently in recent months. The red and green lines, representing the net positions of commercial and non-commercial traders, often intersect and, in most cases, are not far from the zero mark. According to the latest report on the British pound, the non-commercial group closed 10,000 buy contracts and 4,200 short ones. As a result, the net position of non-commercial traders decreased by 5,800 contracts in a week. Since bulls currently don't have the advantage, we believe that the pound will not be able to sustain the upward movement for long . The fundamental backdrop still does not provide a basis for long-term purchases on the pound.   The non-commercial group currently has a total of 58,800 buy contracts and 44,700 sell contracts. Since the COT reports cannot make an accurate forecast of the market's behavior right now, and the fundamentals are practically the same for both currencies, we can only assess the technical picture and economic reports. The technical analysis suggests that we can expect a strong decline, and the economic reports have also been significantly stronger in the United States for quite some time now.   On the 1H chart, GBP/USD is making every effort to correct lower, but the uptrend remains intact. We believe that the British pound doesn't have any good reason to strengthen in the long-term. Therefore, at the very least, we expect the pair to return to the level of 1.2513. However, there are currently no sell signals, so the uptrend is still intact. On Tuesday, there are few reasons for the pair to show volatile movements. We may see a flat phase, a downtrend, or an uptrend (intraday), so we need to purely rely on technical analysis. We expect the pound to consolidate below the trendline, and in that case, we can consider selling while aiming for the Senkou Span B line. A n upward movement is theoretically possible today, but we see no reason for it, so you shouldn't consider buying at the moment. As of January 2, we highlight the following important levels: 1.2215, 1.2269, 1.2349, 1.2429-1.2445, 1.2513, 1.2605-1.2620, 1.2726, 1.2786, 1.2863, 1.2981-1.2987. The Senkou Span B line (1.2646) and the Kijun-sen (1.2753) lines can also be sources of signals. Don't forget to set a breakeven Stop Loss to breakeven if the price has moved in the intended direction by 20 pips. The Ichimoku indicator lines may move during the day, so this should be taken into account when determining trading signals. Today, the UK and the US will release their second estimates of business activity indices in the manufacturing sector for December. These are not significant reports so it is unlikely for traders to react to them. Description of the chart: Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals; The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals; Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals; Yellow lines are trend lines, trend channels, and any other technical patterns; Indicator 1 on the COT charts is the net position size for each category of traders; Indicator 2 on the COT charts is the net position size for the Non-commercial group.  

The bearish trend, a significant aspect of Forex trading, plays a crucial role in shaping investment decisions. This article aims to elucidate the characteristics of the bear market and its implications for traders. Understanding the Downtrend As discussed in our previous articles, a trend represents the direction in which the price of a currency pair is moving. A fundamental trading principle is to align investments with the trend rather than against it. Therefore, comprehending the downtrend is essential. The identification of a downtrend can be facilitated by analyzing charts that reflect past price values. Analyzing the Downtrend In the chart, the descending peaks and troughs, marked in red, signify a downtrend. Connecting the peaks forms a clear trend line. The strength of the trend is proportional to the distance between the peaks, with a larger gap indicating a more robust trend. While charts may not always vividly display trend lines, recognizing a general downward price trend can serve as a signal to temporarily exit the market. Bear Market Dynamics A bear market, synonymous with a downtrend, occurs when prices consistently decline. In the long term, it signifies a bearish market. Adhering to the popular adage "the trend is your friend," in such scenarios, traders usually contemplate selling. Bear markets often exhibit greater volatility compared to bullish trends, attributed to the accompanying unease amid declining prices. Support and Resistance Lines Support and resistance lines denote potential reversal points in the price movement of a currency pair. In a downtrend, support comprises the successive troughs, each lower than the previous one. These levels represent the depths of prior downward movements, acting as points where the price resisted further decline. Conversely, resistance surfaces when there is a visible level at which the price resisted further upward movement. Referring to the "change of poles" principle, if a resistance level is breached, it transforms into a support level. This pivotal moment often prompts seasoned traders to enter the market. Understanding the dynamics of a bear market is crucial for Forex traders. By recognizing the signs of a downtrend, interpreting charts, and comprehending the roles of support and resistance lines, traders can navigate the complexities of bearish markets more adeptly.

Pivot points, an often overlooked technical analysis tool, can be a game-changer in daily Forex trading. Let's delve into what pivot points are, how to calculate them, and practical strategies for incorporating them into your trading routine. Understanding Pivot Points Pivot points are a mathematical formula used to identify support and resistance levels. This objective tool automatically determines potential areas where a currency's price might rise, fall, or stall. Derived from pure mathematical calculations, pivot points rely on historical high, low, and closing prices. Traders primarily apply this indicator in day trading, using weekly or monthly quotes as the basis for calculations. For intraday trading, daily pivot points are commonly utilized. The Pivot Points Formula The formula for pivot points involves essential data points: Closing price (C) Highest price within a period (H) Lowest price within a period (L) The pivotal point (P) is calculated as the arithmetic mean of these values: P = (C + H + L)/3. Further calculations yield resistance and support levels: First Resistance (R1): R1 = 2*P – L Second Resistance (R2): R2 = P + (H – L) Third Resistance (R3): R3 = P + (H – L)*2 Similarly, support levels (S) are determined: First Support (S1): S1 = 2*P – H Second Support (S2): S2 = P – (R1 – S1) Third Support (S3): S3 = P – (H – L)*2 Applying Pivot Points in Practice Various approaches exist for leveraging pivot points in making investment decisions. Traders may customize their use based on individual trading methods. Here are general guidelines to aid in concrete actions: Buying and Selling Zones: Typically, above the pivot points line, traders consider a selling zone, engaging in short positions. Conversely, below this line lies the buying zone, where long positions are common. Viewing pivot points as reversal points, traders anticipate price consolidation. Opening a position occurs when the price drops to the S1 level, with a selling signal when reaching the R1 level. Prices often oscillate between R1 and S1, the first resistance and support levels. Breakout Strategy: Alternatively, traders might opt to open a position after breaking a designated level, anticipating a continuation of the established trend. In this scenario, a sell position is initiated when the price falls below S1, while a buy position is triggered when the price surpasses R1, with the aim of reaching a value close to R2. Pivot points serve as one of the many tools for making investment decisions. Some traders find them invaluable, using them frequently, while others incorporate them as a supportive element alongside decisions driven by other analyses. Every trader should experiment and devise a personalized trading strategy. However, for optimal and reliable results, it is advisable to use this method concurrently with other approaches. Incorporating pivot points into your trading arsenal can provide a valuable edge, helping you navigate the complex landscape of Forex markets more effectively. Remember, while pivot points offer insights, combining them with a diversified strategy enhances your overall trading acumen.