US session

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

Yen in focus as it falls to multiyear lows   After 6 days of declines, European markets managed to break their recent losing streak yesterday, closing marginally higher after a day when the direction could have gone either way. The catalyst for the recovery off the day's lows was a strong US session which was driven by two sets of strong US economic numbers. US consumer confidence for June hit its highest levels in 17 months, while new home sales jumped by 12.2%, the highest number in over a year. If the US economy is starting to struggle then there is little evidence of that in yesterday's numbers, which in turn helped drive a strong finish for US markets, led by the Nasdaq 100.     Yesterday's resilience came in spite of another slide in crude oil prices, which have continued to suffer under the weight of concerns about a slowing global economy and a drop in demand over the second half of the year. The increased stridency of hawkish central bank rhetoric coming out of Sintra in Portugal at the ECB central bank conference, when it comes to future rate hikes is helping to drive yields higher, yet stock markets appear unfazed.     Yesterday we heard from several ECB governing council members, including President Christine Lagarde pushing back against the idea of rate cuts in 2024, as well as signalling a commitment to another rate hike at the July meeting. This seems set in stone now, although this week's June flash CPI number might cast some doubts as to whether the rate hikes might continue beyond July. Today's speaker slate at Sintra could well create more headlines with the likes of Bank of England Governor Andrew Bailey, Bank of Japan governor Kazuo Ueda, Fed chair Jay Powell and Christine Lagarde speaking on a panel discussing monetary policy.     Of particular interest will be any comments from Governor Ueda given the declinesseen in the Japanese yen over the past few days, seeing it sink to 15-year lows against the euro, as well as 8-year lows against the pound, and record lows against the Swiss franc in the last 24 hours. We've already heard from Japanese Finance Minister Suzuki in the last couple of days warning that excessive movements in the yen might prompt an appropriate response. While yen traders are focussing on the 145.00 area against the US dollar it can't have escaped their attention that their currency is getting hit even harder away from the spotlight of the greenback. If a response is coming it could well come soon.     Staying with currencies the Australian dollar plunged overnight after headline CPI slowed sharply on May from 6.8% to 5.6%, well below forecasts of 6.1%, and with the RBA meeting next week this slowdown could prompt the central bank to re-pause the pace of the current rate hiking cycle.   After the European close we also get the latest results from the US bank stress tests, which couldn't be more timely given recent events in March, however they aren't likely to offer much insight into what took place, as the US regional banks were not covered under the various scenarios, as they were considered too small and not systemically important enough. This was a major oversight, as recent experience in Europe has taught us, and particularly in Spain over 10 years ago, where a large cohort of Spanish Cajas nearly brought the economy to its knees and resulted in a banking bailout. Just because a bank is small doesn't mean it won't cause a financial meltdown if its troubles spread. The tests also had a rather big flaw in them in that they didn't factor a sharp rise in interest rates into any of the scenarios, the very scenario that started the dominos tumbling with the collapse of SVB.     EUR/USD – holding above the 50-day SMA and support at the 1.0870/80 area. We have resistance back at last week's high just above the 1.1000 level, with the main resistance at the April highs at 1.1095. Below 1.0850 signals a move towards 1.0780.     GBP/USD – a positive session yesterday holding above the lows of last week, and support at the 1.2680/90 area. Below 1.2670 could see a move towards the 50-day SMA. Still on course for a move towards the 1.3000 area but needs to clear 1.2850.      EUR/GBP – appears to be building up to move higher but needs to move through the 0.8630/40 area. The main support is at last week's low at the 0.8515/20 area. A move through 0.8640 could see a move towards 0.8680. While below the 0.8630 area the bias remains for a return to the recent lows.     USD/JPY – continues to edge higher towards the 145.00 area. We have support at the 142.50 area, which was the 61.8% retracement of the 151.95/127.20 down move. A fall below this support area could see a deeper fall towards 140.20/30.      FTSE100 is expected to open 19 points higher at 7,480     DAX is expected to open 45 points higher at 15,892     CAC40 is expected to open 25 points higher at 7,240       By Michael Hewson (Chief Market Analyst at CMC Markets UK)  

Europe set for lower open after strong US session, China trade disappoints   By Michael Hewson (Chief Market Analyst at CMC Markets UK)   It was a rather subdued start to the trading week in Europe yesterday with little in the way of positive drivers although we managed to hold on most of the rebound that we saw on Friday in the wake of the July jobs report out of the US. US markets on the other hand enjoyed a much more robust start to the week, ending a 4-day decline and reversing the losses of the previous two sessions, as bargain hunters returned.   The focus this week is on Thursday's inflation numbers from the US, which could show that prices edged up in July, however it is the numbers out of China tomorrow which might be more instructive in respect of longer-term trends for prices, if headline CPI follows the PPI numbers into deflation.       Earlier this morning the latest China trade numbers for July continued to point to weak economic activity and subdued domestic demand. The last 2 months of Q2 saw sharp declines in exports, with a -12.4% fall in June. There was little let-up in this morning's July numbers with a bigger than expected decline of -14.5%, the worst performance since February 2020, with global demand remaining weak. Imports have been little better, with negative numbers every month this year, and July has been no different with a decline of -12.4%, an even worse performance from June's -6.8%, with all sectors of the economy showing weakness. With numbers this poor it surely can't be too long before Chinese policymakers take further steps to support their economy with further easing measures, however, there appears to be some reluctance to do so at any scale for the moment, due to concerns over capital outflows.     Today's European market open was set to be a modestly positive one, until the release of the China trade numbers, however we now look set for a slightly lower open, with the only data of note the final German CPI numbers for July which are set to show that headline inflation slowed modestly to 6.5% from 6.8% in June.   It's also set to be another important week for the pound ahead of Q2 GDP numberswhich are due on Friday. Before that we got a decent insight into UK retail sales spending earlier this morning with the release of two important insights into consumer behaviour in July.   The BRC retail sales numbers for July showed that like for like sales slowed during the month, rising 1.8%, well below the 3-month average of 3.3%. Food sales performed particularly well, but at the expense of online sales of non-food items like clothes which showed a sharp slowdown.     It is clear that consumers are spending their money much more carefully and spending only when necessary, as Bank of England rate hikes continue to bite on incomes. With some consumers approaching a cliff edge as their fixed rate terms come up for expiry, they may well be saving more in order to mitigate the impact of an impending sharp rise in mortgage costs. That said in a separate survey from Barclaycard, spending on entertainment saw a big boost of 15.8% even as clothing sales declined.     Bars, pubs, and clubs saw a pickup in spending as did the entertainment sector as Taylor Swift did for July, what Beyonce did for May. The release of a big slate of summer films may also have offered a boost with the latest Indiana Jones film, along with Mission Impossible Dead Reckoning, Barbie and Oppenheimer prompting people to venture out given the wetter weather during the month.       EUR/USD – not much in the way of price action yesterday although the euro managed to hold onto most of the rally off last week's lows just above the 1.0900 area. We currently have resistance at the 1.1050 area which we need to break to have any chance of revisiting the July peaks at 1.1150.     GBP/USD – another solid day yesterday after the rebound off the 1.2620 area last week. We need to see a move back above the 1.2800 area to ensure this rally has legs. Below 1.2600 targets 1.2400. Resistance at the 1.2830 area as well as 1.3000.         EUR/GBP – struggling to rally beyond the 0.8650 area but we need to see a move below the 0.8580 area to signal a short-term top might be in and see a return to the 0.8530 area. Also have resistance at the 100-day SMA at 0.8680.     USD/JPY – failed just below the 144.00 area last week but has rebounded from the 141.50 area. While below the 144.00 area the risk is for a move towards the 140.70 area. Main resistance remains at the previous peaks at 145.00.       FTSE100 is expected to open 8 points lower at 7,546     DAX is expected to open 16 points lower at 15,936     CAC40 is expected to open unchanged at 7,319      

Analyzing Monday's trades: GBP/USD on 30M chart     The GBP/USD pair tried to extend its upward movement on Monday, but this was in the absence of influential economic releases so it failed. In addition to that, the US reports from Friday were not weak enough for the dollar to fall further on Monday. Sterling does not have any reason to rise, and the USD does not have any reason to fall either. If it starts a corrective movement, it should be weak and slow. If the pound surges, it may indicate the resumption of the global uptrend, which, from our perspective, is completely illogical. Therefore, we are expecting a correction, followed by a decline. This week, there will be very few important events. The only noteworthy ones are the UK's GDP report for the second quarter and the US inflation report.   GBP/USD on 5M chart   On Monday, several trading signals were formed on the 5-minute chart. The break below the level of 1.2748 occurred overnight, but traders could have opened a short position once the European session started, as the price had not moved far from the formation point by that time. The pound fell by about 20 pips, so the Stop Loss should have been set to breakeven. The second buy signal was formed at the beginning of the US session, around the same level. In this case, the pair moved 25 pips in the right direction. That's what beginners could have gained on Monday. It was a low-volatility day for the pound. Trading tips on Tuesday: On the 30-minute chart, the GBP/USD pair broke the short-term downtrend. Now, the pound may correct higher, but we shouldn't expect a strong uptrend. We expect the pound to fall, as we still believe it is overbought and unreasonably expensive. The key levels on the 5M chart are 1.2538, 1.2597-1.2605, 1.2653, 1.2688, 1.2748, 1.2791-1.2801, 1.2848-1.2860, 1.2913, 1.2981-1.2993, 1.3043. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Monday, there are no important events or reports lined up in the US and the UK, so we should brace ourselves for another low-volatility day with no trends. The pair may continue its slow upward movement within the corrective phase.     Basic trading rules: 1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.   2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.   3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.   4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.   5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.   6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.     How to read charts: Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them. Red lines are channels or trend lines that display the current trend and show which direction is better to trade. MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines. Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement. Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.      

Analysis of GBP/USD 5M   On Friday, GBP/USD, unlike EUR/USD, snapped higher. Volatility was slightly higher than for the euro, but it doesn't matter, as the pair has been trading in a flat for several weeks. This is evident on all timeframes, so the macroeconomic and fundamental backdrop is currently taking a back seat. To be precise, there was no fundamental backdrop last week, and most reports did not support the British pound. Therefore, the pair could have extended the decline that began a month and a half ago, but the market clearly took a break, so we did not see any interesting movements. The UK released its retail sales report, which doesn't require much discussion. The pair dipped lower as sales undershot forecasts. In the second half of the day, the market received a technical signal to grow, so by the end of the day, the pound had offset all morning losses. As already mentioned, one trading signal was formed. At the beginning of the US session, the price rebounded from the area of 1.2693-1.2700, and the pair rose by 30 pips. Traders could earn these 30 pips since there were no more signals until the end of the day. Therefore, the deal had to be closed manually. At least, the loss on the EUR/USD pair was offset. COT report:     According to the latest report, the non-commercial group of traders opened 7,300 long positions and 3,300 short ones. Thus, the net position of non-commercial traders increased by 4,000 positions in a week. The net position has been steadily growing over the past 11 months as well as the pound sterling. Now, the net position has advanced markedly. This is why the pair will hardly maintain its bullish momentum. I believe that a long and protracted downward movement should begin. COT reports signal a slight growth of the British currency but it will not be able to rise in the long term.   There are no drivers for opening new long positions. Slowly, sell signals are emerging on the 4-hour and 24-hour charts. The British currency has already grown by a total of 2,800 pips, from its absolute lows reached last year, which is a significant increase. Without a downward correction, the continuation of the uptrend will be illogical. However, there has been no logic in the pair's movements for quite some time. The market perceives the fundamental background one-sidedly, ignoring any data in favor of the dollar. The Non-commercial group of traders has a total of 90,500 long positions and 39,500 short ones. I remain skeptical about the long-term growth of the pound sterling, and the market has recently begun to pay attention to short positions.   Analysis of GBP/USD 1H On the 1H chart, the pound/dollar pair continues to trade within a sideways channel. The channel has slightly expanded, so the flat hasn't ended. The lines of the Ichimoku indicator are currently weak, but from time to time they still work well with the market. Due to the flat, we have recorded the last values of the Senkou Span B and Kijun-sen lines. However, false and inaccurate signals can still form around them. The pair reached the upper band of the channel on Thursday, so now we can expect the pound to fall. On August 21, traders should pay attention to the following key levels: 1.2520, 1.2605-1.2620, 1.2693, 1.2786, 1.2863, 1.2981-1.2987, 1.3050. The Senkou Span B (1.2807) and Kijun-sen (1.2700) lines can also be sources of signals, e.g. rebounds and breakout of these levels and lines. It is recommended to set the Stop Loss orders at the breakeven level when the price moves in the right direction by 20 pips. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are support and resistance levels that can be used to lock in profits. On Monday, no important events or reports lined up in the UK or the US. Thus, traders will have nothing to react to, so we will probably see weak and mixed up movements.   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. Read more: https://www.instaforex.eu/forex_analysis/352147 Read more: https://www.instaforex.eu/forex_analysis/352147 Read more: https://www.instaforex.eu/forex_analysis/352147 Read more: https://www.instaforex.eu/forex_analysis/352147  

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 1.0870 as a possible entry point. Growth and false breakout of this level generated a sell signal, and the pair fell by more than 60 pips. During the US session, safeguarding the support level at 1.0808 and weak US data produced a buy signal. As a result, EUR/USD managed to compensate for all morning losses and rose by more than 50 pips.   For long positions on EUR/USD: Softer-than-expected preliminary US PMI data exerted downward pressure on the dollar and the euro strengthened in the second half of the day. Obviously, there's a lot of market manipulation, making the situation increasingly tense before the Jackson Hole symposium. Yesterday's data made it clear: if the Federal Reserve continues its tight policy stance, the economic situation will only worsen. This has further confused market participants, who were expecting hawkish statements from Fed Chair Jerome Powell. In the absence of EU reports in the first half of the day, I expect EUR/USD to trade within the channel. Therefore, it is advisable to trade on a dip following a false breakout near the low of 1.0849, which is in line with the bullish moving averages. An immediate resistance target is set at 1.0889, formed on Tuesday.   A breakout and a downward test of this range will strengthen demand for the euro, suggesting a bullish correction around 1.0928. The ultimate target is found at 1.0958, where I will be locking in profits. If EUR/USD declines and bulls are idle at 1.0849, the bear market will persist. Only a false breakout around the next support at 1.0827 will signal to buy the euro. I will initiate long positions immediately on a rebound from the low of 1.0804, aiming for an upward correction of 30-35 pips within the day.   For short positions on EUR/USD: The sellers lost all their advantage yesterday and now they need to start from the beginning. Today, to maintain the bearish momentum, sellers will have to assert their strength at the new resistance of 1.0889. The pair may test this level soon. The absence of economic reports will help the bears with a false breakout of this level and will lead to another descent towards the 1.0849 support. However, only a breakout below this range, followed by an upward retest, will generate another sell signal, paving the way to the low of 1.0827, where I expect big buyers to emerge in hopes of building the lower band of the new ascending channel. The ultimate target is seen at 1.0804, where I will be locking in profits. If EUR/USD moves upward during the European session and lacks bearish activity at 1.0889, the bulls may try to re-enter the market. In such a scenario, I would go short only when the price tests the new resistance at 1.0928 that was formed yesterday. Selling at this point is possible only after a failed consolidation. I will initiate short positions immediately on a rebound from the high of 1.0958, considering a downward correction of 30-35 pips within the day.     COT report: The COT (Commitment of Traders) report for August 15 shows a notable increase in long positions and a drop in short positions. These figures already factor in the crucial US inflation data, which brought back some buyers to the market. The Federal Reserve meeting minutes released last week also indicated that not all committee members are aligned with the idea of raising interest rates to combat inflation. This keeps the chances of the euro's recovery alive, especially following the Jackson Hole symposium happening later this week where Federal Reserve Chairman Jerome Powell is scheduled to speak. His address might shed light on the central bank's future policy direction. It is important to note that the recent decline in the euro seems to be appealing to traders. The optimal medium-term strategy under current conditions remains buying risk assets on a dip. The COT report highlights that non-commercial long positions increased by 4,418 to stand at 232,466, while non-commercial short positions decreased by 5,634 to 72,603. Consequently, the spread between long and short positions surged by 1,125. The closing price was lower, settling at 1.0922 compared to 1.0981 the previous week.     Indicator signals: Moving averages: Trading is taking place around the 30-day and 50-day moving averages, indicating market uncertainty. 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 EUR/USD declines, the indicator's lower border near 1.0825 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.