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Currency Pairs Market Analysis

Solid ECN

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The price of North American Crude Oil is correcting within the uptrend around 93.32.

Since the beginning of the year, the United States has been actively trying to influence OPEC+, persuading it to increase oil production and thereby reduce fuel prices on the world market. Still, the cartel ignores these requirements, forcing the American authorities to reduce national strategic reserves to the lowest level since 1985 of 453.1M barrels. It, in turn, puts pressure on energy carriers: since the beginning of summer, prices have already fallen by more than 20 dollars, but yesterday, the alliance members again stressed that they could correct their dynamics with their intervention. Thus, the head of the Ministry of Energy of Saudi Arabia, Salman bin Abdul-Aziz Al Saud, confirmed that OPEC+ would begin developing a new agreement soon, under which the group intends to reduce production, which will normalize the current situation by reducing volatility. Also, the likely positive decision on the "nuclear deal" with Iran and the entry of cheap oil into the market remains a key factor. Thus, Saudi Arabia once again made it clear that the oil quotes and its supply are under full control, and in case of unforeseen circumstances, the organization is ready to intervene immediately.

Investors perceived this situation with a clear positive, and in the first two days of trading during the week, Crude Oil quotes increased by 8 dollars, reaching 93 again.

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On the weekly chart of the asset, the price left the limits of the local downwards channel, having consolidated above the resistance line. Technical indicators confirm the high probability of continued corrective growth: fast EMAs on the Alligator indicator began to actively approach the signal line, narrowing the range of fluctuations, and the AO oscillator histogram is forming new upward bars, approaching the transition level.

Resistance levels: 96, 102.37 | Support levels: 91.33, 85.3​


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USDCAD - A fall is possible.

On the weekly chart, the downward correctional wave of the higher level 4 develops, within which the wave (C) of 4 forms. Now, = the third wave 3 of (C) is developing, within which the first entry wave of the lower level (i) of i of 3 has formed, and a local correction is ending as the wave (ii) of i of 3.

If the assumption is correct, after the end of the correction, the USDCAD pair will fall to the area of 1.201 – 1.1426. In this scenario, critical stop loss level is 1.3224.

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GBPUSD - Traders are confident in the acceleration of the pace of rate hikes by the Bank of England

A regular meeting of the Bank of England is scheduled for September 15, at which the issue of further tightening monetary policy will be discussed. Judging by the dynamics of futures, traders expect an increase in interest rates to at least 75.0 basis points from the current 50 points, but a 100 basis point increase is not ruled out. These options became more actively discussed after the price of natural gas on the London Intercontinental Exchange reached 3.1 dollars per thousand cubic meters, which makes imports much more expensive and increases the burden on consumers.

The US dollar retreated somewhat from its highs and is trading at 108.600 in the USD Index. Investors reacted weakly to yesterday's data on durable goods orders, which remained in June, although basic orders rose slightly, adding 0.3%. The US housing market is still experiencing some difficulties, as evidenced by yesterday's data on the index of pending sales: the index fell by 1.0% in July, which indicates a large number of pending transactions.

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The trading instrument is moving within the global downward channel, falling towards the support line. Technical indicators reversed and gave a sell signal: the range of fluctuations of the EMA on the Alligator indicator continues to expand in the direction of decline, and the histogram of the AO oscillator forms downward bars in the sell zone.

Resistance levels: 1.1883, 1.2219 | Support levels: 1.1717, 1.1452​


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USDJPY - US economy downturn continues in Q2

The price index for corporate goods and services remained at 2.1% YoY, slightly inferior to the 2.2% that analysts forecasted. This morning, data on the core consumer price index in Tokyo in August were published, according to which inflation rose in annual terms to 2.6% from 2.3% earlier. Full inflation-adjusted for fuel and food rose to 2.9% from 2.5% previously. As a rule, prices in Tokyo are very often close to the general value throughout the country, and the fact that it did not exceed 3.0% is a positive signal that allows the Bank of Japan to implement its policy of negative rates for some time.

The US economy remains in recession. It was confirmed by yesterday's data, according to which the Q2 gross domestic product (GDP) fell by 0.6%, slightly better than the analysts' forecast of –0.8%. The negative dynamics are due to a drop in the volume of private investment in inventories and consolidated capital and in spending by the federal and local governments. On the other hand, the number of initial applications for unemployment benefits decreased to 243K from 245K a week earlier, which led to an adjustment in the total number of citizens receiving payments from the state to 1.415M from 1.434M a week earlier.

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The trading instrument moves within the global uptrend, forming the Head and shoulders pattern. Technical indicators maintain a weakening buy signal: indicator Alligator's EMA oscillation range has begun to narrow, and the histogram of the AO oscillator is forming bars above the transition level.

Resistance levels: 137.45, 139.45 | Support levels: 136.15, 132.85​


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EURUSD - The head of the US Federal Reserve supported the preservation of the "hawkish" course of monetary policy

The European economy is slowing down amid reports from representatives of PJSC Gazprom about stopping the gas pumping from August 31 to September 2 due to technical work on the turbine of the Nord Stream gas pipeline. Experts doubt that infrastructure repairs will last only a few days, considering the scenario of a complete blocking of Russian energy supplies, which, in turn, will push gas prices to new record levels. Thus, according to data at the close of trading on Friday, a thousand cubic meters on the London Intercontinental Exchange (ICE) cost $3,507, a maximum over the past 26 years.

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Also, the quotes of the EURUSD pair are under serious pressure from the dynamics of the US dollar, which set another all-time high, exceeding 109.2 in the USD Index. The reason for such strong growth was the reaction of the markets to the statements made by the head of the US Federal Reserve, Jerome Powell, during his speech at the annual economic symposium in Jackson Hole. The official noted the need to adjust the interest rate to achieve the main goal – reducing inflation and acknowledged that restoring price stability will take time and tough actions from the financial authorities. Powell added that the regulator plans to bring the rate to a stable level (2.25–2.5%), at which it will be held for some time, and investors, assuming that this level can be reached this year, have stepped up their activities.

The trading instrument is kept within the global downwards channel, falling towards the support line.

Resistance levels: 1, 1.0322 | Support levels: 0.988, 0.9660​


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AUDUSD - The trading instrument develops a "bearish" momentum​

Today, the Australian Bureau of Statistics reported an increase in retail sales index in monthly terms by 1.3% compared to 0.2% last month and experts' forecasts of 0.3%, while the dynamics in annual terms consolidated around 16.5%. Department store sales increased the most, adding 3.8% or 67.7M dollars, while analysts estimate that sales in clothing grew by 3.3%, food by 1.2%, and cafes and restaurants — by 1.8%. The only segment that showed negative dynamics was the sale of household goods, which decreased by 1.1% or 68.8M dollars. Building permit statistics are expected to be published tomorrow, and analysts suggest that the figure will fall by another 2.0% according to the global trend.

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On the daily chart of the asset, the price is correcting, completing the formation of the head and shoulders reversal pattern. Technical indicators are preparing for a new reversal and have given a sell signal: fast EMAs on the Alligator indicator crossed the signal line downwards, and the AO oscillator histogram forms downward bars in the sell zone.

Resistance levels: 0.6927, 0.705 | Support levels: 0.6806, 0.6681​


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EURUSD - A fall is possible​

On the daily chart, the downward wave of the higher level C of (B) develops, within which the fifth wave v of (C) forms. Now, the fifth wave of the lower level v of C is forming, within which the wave (v) of v of C is developing.

If the assumption is correct, the EURUSD pair will fall to the area of 0.98 – 0.97. In this scenario, critical stop loss level is 1.008.

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USDCAD - A fall is possible.​

On the weekly chart, the downward correctional wave of the higher level 4 develops, within which the wave (C) of 4 forms. Now, the third wave 3 of (C) is developing, within which the first entry wave of the lower level (i) of i of 3 has formed, and a local correction has ended as the wave (ii) of i of 3.

If the assumption is correct, the USDCAD pair will fall to the area of 1.2374 – 1.201. In this scenario, critical stop loss level is 1.3224.

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AUDUSD - A fall is possible.

On the daily chart, the first wave of the higher level (1) of C ended, and a downward correction forms as the wave (2) of C, within which the wave C of (2) develops. Now, the third wave of the lower level iii of C has formed, a correction has formed as the fourth wave iv of C, and the fifth wave v of C is developing, within which the local correction (ii) of v has developed and the wave (iii) of v is developing.

If the assumption is correct, the AUDUSD pair will fall to the area of 0.66 – 0.645. In this scenario, critical stop loss level is 0.701.
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Solid ECN

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EURUSD - inflation in the EU has set another record​


The European currency is resisting the growth of the dollar, trading around the 1.0014 mark after the publication of a block of macroeconomic data yesterday.

Thus, consumer prices in the EU in August added 0.5%, which led to an increase in the annual inflation rate to 9.1% from 8.9% (food and energy prices rose the most), while local inflation in countries bloc increased almost everywhere: in Italy, it reached 8.4% from 7.9% a month earlier, and in France, the figure fell to 5.8% instead of 6.1%. Rising consumer prices will require European Central Bank (ECB) officials to continue their "hawkish" policy, and already at the meeting on September 8, the interest rate could be raised immediately by 1.00%.

The American currency in yesterday's trading again renewed the annual maximum around 109.100 in the USD Index after the President of the Federal Reserve Bank of New York, John Williams, in his statement, clarified the "restrictive level of stability" of the interest rate announced by the head of the US Federal Reserve, Jerome Powell. That mark is in the 3.5% region, well above the current rate, Williams said, but experts are now evaluating the likelihood that the agency will want to reach that level in one step at its next meeting on September 21, putting significant pressure on the US economy, which and so is going through a recession.

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The trading instrument is kept within the global downward channel, correcting towards the resistance line. Technical indicators maintain a stable sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram forms downward bars in the sell zone.

Resistance levels: 1.0095, 1.0321 | Support levels: 0.9940, 0.9753​


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USDJPY - Growth is possible

On the daily chart, the third wave of the higher level 3 develops, within which the third wave of the lower level iii of 3 formed, and a downward correction ended as the fourth wave iv of 3. Now, the fifth wave v of 3 is developing, within which the first wave of the lower level (i) of v has formed.

If the assumption is correct, after the end of the local correction (ii) of v, the USD/JPY pair will grow to the area of 145 – 150. In this scenario, critical stop loss level is 131.7.

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EURUSD - A fall is possible.

On the daily chart, the downward wave of the higher level C of (B) develops, within which the fifth wave v of (C) forms. Now, the fifth wave of the lower level v of C is developing, within which the wave (v) of v of C is forming.

If the assumption is correct, the EURUSD pair will fall to the area of 0.98 – 0.97. In this scenario, critical stop loss level is 1.0082.

eurusd.png


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USDJPY - Growth is possible.

On the daily chart, the third wave of the higher level 3 develops, within which the third wave of the lower level iii of 3 formed and a downward correction ended as the fourth wave iv of 3. Now, the fifth wave v of 3 is forming, within which the first wave of the lower level (i) of v has developed.

If the assumption is correct, after the end of the local correction (ii) of v the USDJPY pair will grow to the area of 145 – 150. In this scenario, critical stop loss level is 135.

usdjpy.png


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AUDUSD - A fall is possible.​

On the daily chart, the first wave of the higher level (1) of C ended and a downward correction develops as the wave (2) of C, within which the wave C of (2) forms. Now, the third wave of the lower level iii of C has formed, a correction has developed as the fourth wave iv of C, and the fifth wave v of C is forming, within which the wave (iii) of v is developing.

If the assumption is correct, the AUDUSD pair will fall to the area of 0.66 – 0.645. In this scenario, critical stop loss level is 0.701.

audusd.png
 

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NZDUSD - A fall is possible.​

On the daily chart, the upward wave of the higher level (А) of B formed, and a downward correction develops as the wave (B) of B. Now, the wave C of (B) is forming, within which a local correction has ended as the fourth wave of the lower level iv of C and the fifth wave v of C is developing.

If the assumption is correct, the NZDUSD pair will fall to the area of 0.58 – 0.5474. In this scenario, critical stop loss level is 0.6259.

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USDCAD - A fall is possible

On the weekly chart the downward correctional wave of the higher level 4 develops, within which the wave (C) of 4 forms. Now, the first wave of the lower level 1 of (C) has formed, a local correction has ended as the wave 2 of (C), and the third wave 3 of (C) has started.

If the assumption is correct, the USDCAD pair will fall to the area of 1.2374 – 1.201. In this scenario, critical stop loss level is 1.3224.

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USDCHF - A fall is possible.​

On the daily chart, the downward fifth wave of the higher level 5 develops, within which the first wave (1) of 5 forms. Now, the first wave of the lower level 1 of (1) has formed, and a local correction has ended as the second wave 2 of (1), within which the wave c of 2 has developed.

If the assumption is correct, the USDCHF pair will fall within the wave 3 of (1) to the area of 0.92 – 0.8916. In this scenario, critical stop loss level is 0.9889.

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GBPUSD - quotes have renewed the minimum of 2020​

Members of the US Federal Reserve are unanimous in their opinion that the main interest rate should be further increased, and already at the September meeting, the value can be adjusted immediately by 75 basis points and brought to 3.75 – 4% next year. The regulator's policy implies a reduction in the balance sheet and a tightening of monetary policy to control record inflation and bring it to a neutral indicator of 2% YoY. The US swaps in the market place an 80% chance of a 75 bps rate hike, and the market is pricing hawkish rhetoric from the financial authorities ahead of time.

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The long-term downtrend for the GBPUSD instrument is likely to continue, and for this, the “bears” need to break the 2020 low at 1.144. After consolidation below it, the next sales target will be 1.13; if it is held, an upward correction with the targets 1.1695 and 1.1770 will begin.

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The medium-term trend remains downward. Last week the traders broke through the target zone 2 (1.1572–1.1536), and the next sell target is zone 3 (1.1212–1.1176), while the key resistance is shifting to 1.1801–1.1765. If reached, it will be possible to consider new short positions with the first target at the current week's low of around 1.1410.

Resistance levels: 1.1695, 1.1768 | Support levels: 1.144, 1.13​


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EURUSD - Market awaiting ECB interest rate decision​

Thus, the Q2 EU economy increased by 0.8%, which exceeded the forecasted 0.6%: gross domestic product (GDP) growth amounted to 4.1% YoY compared to 5.4% in the previous period. Nevertheless, it was higher than preliminary estimates of 3.9%, allowing the European Central Bank to continue tightening monetary policy parameters without fear of a possible recession. At the moment, analysts expect an interest rate hike of 75 basis points from 0.5% to 1.25%, but this forecast was made without considering yesterday's GDP data, which means that the agency can act more aggressively by adjusting the value by 100 basis points.

The American currency did not stay at absolute highs for a long time, and by the end of yesterday's trading fell below 110 in the USD Index and is now trading around 109.7. The main reason for the negative dynamics of the asset was the disappointment of investors in mortgage interest rates: the indicator almost reached an absolute maximum of 6%, amounting to 5.94%, and against this background, demand for mortgages in the United States fell to a minimum in 22 years. The index of the number of mortgage applications fell to 258.1 points from 705.6 points at the beginning of the year, and the downward trend continues.

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The trading instrument is moving toward the support line within the global downward channel. Technical indicators keep a stable sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram forms downward bars in the sell zone.

Resistance levels: 1.007, 1.037 | Support levels: 0.9862, 0.965

 

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USDJPY - Yen is holding near record lows

The pressure on the yen continues to come from the prospect of the Bank of Japan maintaining an ultra-loose monetary policy, while the US Federal Reserve intends to continue its aggressive approach in raising interest rates to fight inflation that has reached forty-year highs, while leaving recession risks moderate. Representatives of the American regulator are likely to correct the value by 75 basis points already at the September meeting. In addition, investors drew attention to the speech of Japanese Finance Minister Sunichi Suzuki, who expressed concern about the unilateral sharp fall in the national currency and announced his readiness to intervene in the markets if the situation requires it. However, official comments were not enough to win back the fall of the yen against the background of the active strengthening of the dollar.

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Bollinger Bands in D1 chart show stable growth. The price range is expanding; however, it fails to catch the development of "bullish" sentiments. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, being in the overbought area for a long time, shows a tendency to decrease, reflecting the risks of the US dollar being overbought in the ultra-short term.

Resistance levels: 145, 146, 147 | Support levels: 143.68, 142.5, 141.5, 140.78

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