Thread: InstaForex Wave Analysis

Technical analysis of EUR/USD for Nov 21, 2017





There is no Economic Data will be released when the European market opens, but the US will release the Economic Data, such as Existing Home Sales, so, amid the reports, EUR/USD will move in a low to medium volatility during this day.


TODAY'S TECHNICAL LEVEL:
Breakout BUY Level: 1.1801.
Strong Resistance:1.1794.
Original Resistance: 1.1782.
Inner Sell Area: 1.1770.
Target Inner Area: 1.1742.
Inner Buy Area: 1.1715.
Original Support: 1.1703.
Strong Support: 1.1691.
Breakout SELL Level: 1.1684.


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*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.


Analysis are provided byInstaForex.

The growth potential of the pound is limited


The British pound declined against the US dollar following the release of a report, which indicated that the UK government in October this year was forced to borrow more money compared to the same period last year.


This is directly related to the acceleration of inflation, which led to an increase in the costs of debt servicing.


According to the official report of the National Bureau of Statistics, the net borrowing of the UK public sector in October 2017 had amounted to 8 billion British pounds, which is 0.5 billion pounds higher than it was in October of last year. Economists had expected that borrowings would amount to £7.5 billion.





In case the GBPUSD pair drops to catch hold of the resistance at 1.3260, pressure on the British pound would only increase in the near future, which will lead to the renewal of 1.3180 and 1.3140.


Data on the balance of foreign trade will positively affect the overall GDP of Switzerland for the 3rd quarter of this year. As noted in the report, the surplus increased due to the weakening of the Swiss franc in October this year, which had a positive impact on the foreign trade balance.


Therefore, the positive balance of foreign trade in October 2017 amounted to 2.4 billion francs, while exports grew by 2.3% compared to the same period in 2016.


The Australian dollar rose against the US dollar following a speech by the Governor of the Reserve Bank of Australia. Let me remind you that the morning minutes of the RBA, which were prepared after the last meeting, had a negative impact on the Australian dollar.


Philip Lowe said that at the moment there is no special reason to raise interest rates in the near future, and it will be more appropriate to keep rates low for quite a long time.


The growth of the Australian dollar could also occur due to the fact that some major players were afraid of hints from the RBA's governor about the possibility of further lowering of rates. However, Lowe said that in case of further improvement in the economic situation, the increase in rates is more likely than its decrease. According to the head of the RBA, in the economy of Australia there are unused capacities, while restrained growth of wages continues to subdue inflation.


As for the technical picture of the AUDUSD pair, after going beyond the large support level of 0.7630, the pressure on the Australian dollar increased, which led to the renewal of new large levels of 0.7530 with the formation of the forecast for the exit at 0.7500, where a significant profit taking on short positions will occur.


*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.


Analysis are provided byInstaForex.

The preparation for Brexit allocated 3 billion pounds


The EURUSD pair spent the first half of Wednesday in a narrow lateral channel, while traders were preparing for the release of the Federal Reserve's minutes.


Data on the US economy hurt the upward momentum of the US dollar.


According to the report, the number of Americans who applied for unemployment benefits for the first time has declined. This indicates a recovery of the labor market after the autumn hurricanes.


According to the US Department of Labor, the number of initial claims for unemployment benefits for the week from 12 to 18 of November fell by 13,000 and amounted to 239,000. Economists had expected the number of new applications last week to be 240,000.


A good report on the labor market was offset by weak data on orders for durable goods in the US, which fell in October, much worse than economists predicted.


Such data indicates that Americans are making less expensive purchases, which will negatively affect US manufacturers.


According to the US Department of Commerce, orders for durable goods in October 2017 decreased by 1.2% compared to the previous month, amounting to 236 billion US dollars. In September, orders rose by 2.2%. Economists predicted an increase in orders by 0.2%.





As for the technical picture of the EUR/USD pair, only a breakout of the 1.1755-60 range would lead to a larger upward wave in the trading instrument with an update of 1.1800 and a monthly peak output in the area of 1.1860. If the Fed's report contains something interesting about the prospect of tightening monetary policy in December of this year, the demand for the US dollar may rise, which will lead to a return towards the region of large levels of support at 1.1680 and 1.1640.


The British pound strengthened its position against the US dollar following the speech of the Ministry of Finance in the UK. Hammond said that the ministry is preparing for any possible outcome of Brexit, and that the preparation allocated 3 billion pounds.


Furthermore, the economic forecast was lowered, according to which the GDP of the UK for 2017 will grow by only 1.5%, and not by 2%, as predicted earlier. Forecast GDP growth of 1.4% in 2018 and 1.3% in 2019. As Hammond noted, lowering growth forecasts is due to weak labor productivity.


*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.


Analysis are provided byInstaForex.

Euro does not have enough momentum


The euro returned to the high of the day following the release of upbeat data for Germany and the eurozone as a whole, indicating a resurgence of economic growth in the 3rd quarter of this year.


According to the data, Germany's economy in the third quarter of this year has expanded due to growth in exports and investments of companies. The report of the National Bureau of Statistics of Germany Destatis says that the gross domestic product in the third quarter of 2017 increased by 0.8% compared to the previous quarter. Compared to the same period in 2016, GDP grew by 3.3%.


Germany's exports in the third quarter grew by 1.7% compared to the previous quarter, while investments increased by 1.5%.


The Manufacturing PMI in Germany also increased significantly, reaching 62.5 points, better than the forecasts of economists, who expected growth to reach 60.4 points.


The sentiment in the manufacturing sector of France rose in November. According to the report of the National Bureau of Statistics of France, Insee, the composite index of purchasing managers in France rose to 60.1 points in November, compared to 57.4 points in October. The Bureau of Statistics also pointed out that the broader indicator of confidence increased by two points in November, to 111 points.


The euro zone's purchasing managers index can also provide good support to the European economy, which will lead to an increase in demand for the European currency at the end of the year.


According to the research company IHS Markit, the index of supply managers in November 2017 rose to 57.5 points from 56.0 points in October.





Minutes of the ECB did not lead to a new wave of growth in the euro.


The report indicates that the ECB management at the meeting in October had differed on the timing of the completion of the quantitative easing program. However, it agreed to assess the impact of the program of buying corporate bonds. It should be noted that the European Central Bank announced that it is extending the program of bond purchasing until September 2018. However, since December of this year, the volume of monthly purchases will be reduced to 30 billion euros from 60 billion euros earlier.


As a result of the Thanksgiving holiday in the US, market volatility remains low. The technical picture remained without significant changes.


Buyers of risky assets are prepared to enter new monthly highs. However, in order for this to happen it is necessary to break through a large resistance of 1.1840, which may lead to an increase in long positions and an update to levels like 1.1880 and 1.1910.


*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.


Analysis are provided byInstaForex.

AUD/USD testing major resistance, time to start selling


The price is testing major resistance at 0.7629 (Fibonacci retracement, horizontal overlap resistance, channel resistance, Fibonacci extension) and we expect to see a strong drop from this level to push the price down to at least 0.7537 support (Fibonacci extension, horizontal swing low support).


Stochastic (55,3,1) is seeing strong resistance at 96% where we expect a corresponding reaction off. Correlation analysis: NZDUSD is similarly expecting a strong drop.


Sell below 0.7629. Stop loss isat 0.7670. Take profit is at 0.7537





*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.


Analysis are provided byInstaForex.

Technical analysis of EUR/USD for Nov 28, 2017





When the European market opens, some Economic Data will be released such as German GfK Consumer Climate, Private Loans y/y, M3 Money Supply y/y, and German Import Prices m/m. The US will release the Economic Data, too, such as Richmond Manufacturing Index, CB Consumer Confidence, S&P/CS Composite-20 HPI y/y, HPI m/m, Prelim Wholesale Inventories m/m, and Goods Trade Balance, so, amid the reports, EUR/USD will move in a low to medium volatility during this day.


TODAY'S TECHNICAL LEVEL:
Breakout BUY Level: 1.1962.
Strong Resistance:1.1955.
Original Resistance: 1.1944.
Inner Sell Area: 1.1933.
Target Inner Area: 1.1905.
Inner Buy Area: 1.1877.
Original Support: 1.1866.
Strong Support: 1.1855.
Breakout SELL Level: 1.1848


*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.


Analysis are provided byInstaForex.

Stress tests and forecast for world economic growth


The euro continued to decline against the US dollar on Tuesday, November 28, despite good data on lending to private eurozone companies.


According to the report, lending in October rose, indicating the recovery of the eurozone economy.


According to the European Central Bank, lending to private sector non-financial companies in October this year had increased by 2.9% compared to the same period last year. Household lending increased by 2.7% compared to the same period of the previous year. The monetary aggregate M3 in October this year increased by 5%.





Data on the optimism of German consumers slightly supported the euro during the afternoon. According to the report of the German institute GfK, the leading index of consumer sentiment remained unchanged in December compared to November and amounted to 10.7 points. Economists had expected that the index would rise to 10.8 points in December. As stated in the report, the sentiments of German households remain at a high level, as well as expectations about the future.


On Tuesday, the Organization for Economic Cooperation and Development released a report, which raised forecasts for the growth of the world economy for the next year. This happened due to a good rate of growth in the US and the euro area.


According to the data, for this year, forecasts have been raised to 2.2% for the US economy and 2.4% for the euro area economy. In 2018, it is expected that the US economy will grow by 2.5%, and the eurozone - by 2.1%. Without any changes, forecasts for the growth of China's economy remained unchanged, but the data for Canada was revised downwards.


The OECD expects the world economy to grow by 3.6% this year, while in September it was forecasting an increase of 3.5%. In 2018, world growth should be at the level of 3.7%.


The British pound declined after the release of stress tests from the Bank of England.


Stress tests of the Bank of England were conducted at Barclays, HSBC, Lloyds Banking Group, Standard Chartered. It must be noted that back in 2016, Barclays and RBS failed stress tests, but then increased their capital.


The report shows that the Bank of England decided to raise the requirements for the capital buffer to 1% by the end of 2018 from 0.5% at present. This is done primarily in order to protect the banks of the UK from the adverse effects on the part of Brexit. The Bank of England also said that the current scenario of stress tests implies risks that may be associated with Brexit, and therefore the British banking system will continue to support the economy in the event of an unorganized Brexit.


*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.


Analysis are provided byInstaForex.

Daily analysis of GBP/USD for December 01, 2017


The pair remains following a bullish structure above the 200 SMA at H1 chart and looks forward to testing the 1.3541 level, amid USD weakness against the Pound. Corrective moves might happen in the short-term, with the nearest target placed around the 200 SMA and the 1.3303 level. MACD indicator remains in the negative territory, favoring to the downside.





H1 chart's resistance levels: 1.3440 / 1.3541
H1 chart's support levels: 1.3303 / 1.3244


Trading recommendations for today: Based on the H1 chart, buy (long) orders only if the GBP/USD pair breaks a bullish candlestick; the resistance level is at 1.3440, take profit is at 1.3541 and stop loss is at 1.3337.


*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.


Analysis are provided byInstaForex.

The dollar weakens against the backdrop of political threats


Adjusted data on US GDP in the third quarter were better than expected, the growth rate was revised to 3.3%, and by all means, the US economy is recovering successfully. This is despite the fact that the Congress has not yet approved the draft of the tax reform.


However, the main factor of positive growth is not so much the growth of the economy as the growing consumer activity. According to the updated data, in the third quarter, the personal consumption expenditure index was 1.4%, and not 1.3%, as previously reported. This was released the day after the data on personal incomes in October also outperformed forecasts, with growth at 0.4% against expectations of 0.3%.


The market reacted positively to the reports, while the data on business activity in the manufacturing sector released by ISM on Friday made it possible to revise the forecast for US GDP in the fourth quarter to reach 3.5%, reflecting generally confidently positive expectations.


At the same time, it should be noted that the positive dynamics of consumer activity is not due to fundamental changes. The simplest calculations show that the growth of expenses is not based on revenue growth, but on the growth of lending, which in turn reflects certain hopes associated with the future tax reform. The growth of expenses in terms of the potentially able-bodied population is growing steadily, while personal savings are falling and have already reached the pre-crisis level of 10 years ago.





Thus, a certain revival of the consumer sector is associated with hopes for a reduction in tax pressure. If, however, the approval of the reform program in the Congress faces difficulties, then in this case one can expect a sharp decline in consumer activity and an increase in deflationary expectations.


The grounds for such fears are: On Friday, the Senate postponed the vote on the tax reform, the stumbling block was the report of the Tax Committee, from which it follows that the reform will not lead to filling the budget and the deficit will remain at the level of at least $1 trillion in a 10-year perspective. The economic analysis of the tax reform plan by the Minister of Finance Mnuchin has not yet been released. Therefore, the financial effect of the reforms may not be the same as the government represents. Before the markets closed on Friday, the final vote in the Congress did not take place, which ultimately contributed to the depreciation of the dollar.


Another reason for the fall of the dollar is that former adviser to Donald Trump, Michael Flynn, who was accused earlier of providing false information to the FBI, is prepared to testify against Donald Trump. If this news is confirmed, the opponents of Trump will have good reasons for initiating the impeachment procedure, which will automatically put an end to the tax reform program.


This scenario can lead to a rapid reduction in inflation expectations and will call into question the possibility of the Fed to implement the outlined plan for the growth rate in 2018, and the dollar will drop sharply against the yen and the euro. Fears remain hypothetical, but the dollar is losing momentum.


On Monday, the dynamics of the dollar will be determined. First of all, by political news related to the passage of the tax plan through the Congress and the development of the situation with Flynn. Acceptance of the tax plan is of fundamental importance in the light of approaching the date of December 8. Namely, before this date, the law on financing state institutions due to borrowing is in force.


On Tuesday, the ISM report on business activity in the services sector will be published, after a rapid growth in August-October, a slight slowdown is expected, but the level of PMI will remain high and can support the dollar.


In general, the dollar remains the favorite, and any positive news can contribute to a new wave of buying. However, one must assume that the probability of a smooth phased solution of all the issues at the beginning of this week is not very high, and therefore the growth of the euro to 1.20 appears quite certain.


*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.


Analysis are provided byInstaForex.

Pound is selected from the politics


Over the past two weeks, the British pound added 2% versus the US dollar and more than 1% versus the euro, against a background of lower political risks. Popular newspaper, like The Times, reported that London and Brussels managed to agree on the amount of compensation for the divorce, as well as on the issue of the Irish border. It seems like investors are satisfied that Theresa May is paying for a mild Brexit loss of government members. The market will closely follow the phrasing from the table of her talks with Jean-Claude Juncker and Michel Barnier, in order to understand whether it is worth selling due to the fact on initial rumors of buying.


Weekly dynamics of the pound





Source: Bloomberg.
Positive news from Brexit, the problems of promoting tax reform in the United States, as well as the surfaced story of Russia's interference in the US presidential election, helped the GBP/USD pair to rise to a two-month high. The rate of the sterling, weighted by trade, jumped altogether to a peak record in the last six months. At the same time, some people are concerned that Britain's GDP is growing much slower than its US and European counterparts. Investors win back political risk and are ready to turn a blind eye to the long-term pessimistic prospects of the UK economy in order to obtain immediate benefits. Therefore, Credit Agricole believes that the hopes for progress on Brexit will push the GBP/USD pair to 1.4, near which it traded in the first half of 2016.


Commerzbank, on the contrary, is confident that investors are already sold on the factor of positive rhetoric of Brussels at the EU summit in mid-December. If they do not get what they expected, we should prepare for a selling of the sterling. On the other hand, if everything goes according to plan, then it's unlikely that the GBP/USD pair will sharply strengthen. In such circumstances, market attention can shift to macroeconomic data and not related to it, the continuation of the cycle of normalization of the monetary policy of the Bank of England. In this regard, the pound is able to respond sensitively to the release of data on business activity in the services sector, scheduled for December 5. The index of purchasing managers in the manufacturing sector has already pleased the fans of sterling. The figures from the largest sector of the economy of the UK is awaited.


The alignment of forces in the analyzed pair will be influenced by events in the United States. The Senate passed a tax reform project with 51 votes to 49, but now both chambers of Congress are required to find a compromise on the timing of its implementation and on other issues. The dollar could not benefit from the "bullish" news, as uncertainty persists. At the same time, the willingness of former National Security Adviser Michael Flynn to cooperate with the FBI can cast a shadow on the US president, which will negatively affect the USD index.


Technically, updating the November, and then the autumn peak, activates the AB = CD pattern with a target of 127.2%. It corresponds to 1.385. However, we should not rule out a retest of the upper limit of the range of the previous consolidation of 1.304-1.332.


GBP/USD, daily chart





Analysis are provided byInstaForex.