Daily Market Analysis From Forexmart

Hot forecast for GBP/USD on 18/05/2022

The correction that began on Monday ended quite quickly. It was supposed that at best, Federal Reserve Chairman Jerome Powell's words would stop it, but in fact, it happened long before that. Namely, at the very opening of the US trading session. The fact is that US macroeconomic reports suddenly turned out to be noticeably better than forecasts. And instead of slowing down the main indicators, they accelerated each other.

The growth rate of retail sales increased from 7.3% to 8.2%, although they expected a decrease from 6.9% to 4.2%. That is, not only did the new data turn out to be significantly higher than the forecast, but also the previous ones were revised up. Unlike industrial production, whose previous results were revised from 5.5% to 5.4%. But its growth rate accelerated to 6.4%, instead of slowing down to 2.0%. And judging by these data, the American economy is doing just great. Especially when you consider that the data were published for April.

Retail Sales (United States):

But if macroeconomic statistics have completed the corrective movement, then Powell's words indicate the resumption of the trend for the strengthening of the dollar. Despite the recent slowdown in inflation, Powell did not say a word about the possibility of any revision of plans to raise interest rates. Powell once again stated that the central bank will raise the refinancing rate until inflation falls to target levels. That is, up to 2.0%. Given that it is now above 8.0%, then at least until the end of this year, during each meeting of the Federal Open Market Committee, the refinancing rate will be raised by at least 0.25%. So by the end of the year, it is likely to be above 2.00%. But in general, there is nothing new in this, and Powell only confirmed the previously announced plans, regarding the implementation of which there were some doubts. Powell dispelled them.

But if Powell's words were not enough to immediately start the process of strengthening the dollar, then British inflation coped with this task perfectly, which rose from 7.0% to 9.0%. And this is the biggest value in more than forty years. But the Bank of England has recently assured everyone that in April, and the data were published for this month, inflation will peak, after which it will gradually decline. That's just according to the forecasts of the British central bank, it should have reached the level of 7.2%. But the reality turned out to be noticeably worse. And there is no doubt that such a high level of inflation will have an extremely negative impact on the economy of the United Kingdom. Yes, it already does. As a result, after a small local rebound, the market returned to the long-familiar trend of strengthening the US dollar.

The GBPUSD currency pair formed a correction by more than 300 points, eventually returning the quote to the level of 1.2500. The subsequent price slowdown indicates an overheating of long positions.

The RSI H4 technical instrument entered the overbought zone during the acceleration. This signal confirms the overheating of long positions in the short term.

The moving MA lines on the Alligator H4 indicator are directed upwards, which corresponds to a corrective move in the market. The Alligator D1 indicator still signals a downward trend in the medium term. The moving MA lines are directed down.

Expectations and prospects:

Price stagnation within the level of 1.2500 signals the process of accumulation of trading forces. It will end soon and lead to subsequent price spikes.

If we assume that the correction is coming to an end, then keeping the price below the 1.2420 mark will lead to a full-fledged rebound of the price from the 1.2500 level. This step, in turn, will restart short positions.

An alternative scenario sees the current slump as an opportunity for a realignment of trading forces that would remove the overbought status from the pound. In this case, keeping the price above 1.2520 in a four-hour period allows for the subsequent formation of a corrective move.

Complex indicator analysis has a buy signal in the short-term and intraday periods due to the correction. Indicators in the medium term give a sell signal due to the main trend.

 

Tips for beginner traders in EUR/USD and GBP/USD on May 19, 2022

Economic calendar for May 19

Today, of interest, there are only claims for unemployment benefits in the United States, where they are predicted to decrease in their volume. This is a positive factor for the US labor market.

Statistics details:

The volume of continuing claims for benefits may be reduced from 1.343 million to 1.320 million.

The volume of initial claims for benefits may be reduced from 203,000 to 200,000.

Time targeting

US Jobless Claims - 12:30 UTC

Trading plan for EUR/USD on May 19

In this situation, only a stable holding of the price below the level of 1.0500 can indicate a signal about the completion of the correction. Otherwise, the scenario of variable turbulence within the boundaries of 1.0500/1.0600 will still be relevant on the market.

Trading plan for GBP/USD on May 19

The subsequent increase in the volume of short positions is expected at the time of holding the price below the value of 1.2300 in a four-hour period. This move may lead to further weakening of the pound in the direction of the local bottom on May 13 at 1.2155.

An alternative scenario will be considered by traders if the price returns to the resistance level. So the correction will have a second chance for a prolongation.

 

US stocks closed lower, Dow Jones down 0.75%

At the close of the New York Stock Exchange, the Dow Jones fell 0.75% to hit a 52-week low, the S&P 500 fell 0.58% and the NASDAQ Composite index shed 0.26%.

UnitedHealth Group Incorporated was the top performer in the Dow Jones Index today, up 7.17 points or 1.52% to close at 478.55. Boeing Co rose 1.62 points (1.29%) to close at 127.14. Home Depot Inc rose 0.90% or 2.58 points to close at 287.76.

The losers were shares of Cisco Systems Inc, which lost 6.64 points or 13.73% to end the session at 41.72. The Travelers Companies Inc was up 2.88% or 5.02 points to close at 169.30 while Walmart Inc was down 2.74% or 3.36 points to close at 119. .07.

Leading gainers among the S&P 500 index components in today's trading were Synopsys Inc, which rose 10.25% to 300.52, MarketAxess Holdings Inc, which gained 7.10% to close at 267.94, and shares of General Holdings Inc, which rose 6.62% to end the session at 223.69.

The biggest losers were Under Armor Inc C, which shed 15.76% to close at 8.18.

Leading gainers among the components of the NASDAQ Composite in today's trading were NeuroMetrix Inc, which rose 76.28% to hit 5.50, VivoPower International PLC, which gained 47.64% to close at 1.58, and shares of Neuroone Medical Technologies Corp, which rose 29.57% to end the session at 0.79.

The biggest losers were Bright Green Corp, which shed 67.35% to close at 15.70. Shares of Visionary Education Technology Holdings Group Inc lost 39.00% and ended the session at 3.05. Quotes of Molecular Data Inc decreased in price by 27.50% to 0.10.

On the New York Stock Exchange, the number of securities that rose in price (1645) exceeded the number of those that closed in the red (1538), while quotes of 108 shares remained virtually unchanged. On the NASDAQ stock exchange, 2069 companies rose in price, 1679 fell, and 235 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 5.20% to 29.35.

Gold futures for June delivery added 1.29%, or 23.46, to hit $1.00 a troy ounce. In other commodities, WTI July futures rose 1.78%, or 1.90, to $108.94 a barrel. Brent futures for July delivery rose 1.94%, or 2.12, to $111.23 a barrel.

Meanwhile, in the Forex market, EUR/USD rose 1.14% to 1.06, while USD/JPY shed 0.35% to hit 127.78.

Futures on the USD index fell 0.93% to 102.89.

 

Tips for beginner traders in EUR/USD and GBP/USD on May 20, 2022

Economic calendar for May 20

UK retail sales dropped by 4.9% YoY in April replacing 1.3% growth in March. Analysts assumed a decline of 7.2%. The discrepancy in the forecasts delayed the rapid weakening of the pound sterling.

Trading plan for EUR/USD on May 20

In this situation, a price rebound from the border of 1.0600 is possible, which will lead to a reverse move towards the level of 1.0500. This movement can form a flat.

An elongated correction scenario will be considered by traders if the price holds above 1.0636 in a four-hour period.

Trading plan for GBP/USD on May 20

The subsequent increase in the volume of short positions is expected at the time of holding the price below the value of 1.2300 in a four-hour period. This move may lead to further weakening of the pound towards the May 13 local bottom at 1.2155.

An alternative scenario will be considered by traders if the price returns to the resistance level. So the correction will have a second chance for a prolongation.

 

Aussie and Kiwi skyrocket. Commodity currencies rise and US dollar tumbles

Commodity currencies grow sharply at the beginning of the week. The Australian and New Zealand dollars were supported by a surge in risk appetite.

In anticipation of the end of the lockdown in China's largest financial center, Shanghai, the demand for stocks rose.

Quarantine restrictions have been in effect in the city of 25 million people since the end of March. Most of them are expected to be lifted by June 1.

At the same time, optimism about global economic growth triggered a surge in high-risk commodity currencies. For example, the Australian and New Zealand dollars rose to their highest levels in weeks.

The Aussie jumped by 0.7% this morning to 70.92 cents.

Meanwhile, the New Zealand dollar soared 1.1% to its highest since May 5 at 64.62 cents.

The Australian and New Zealand dollars managed to recoup some of the losses suffered this quarter. Both currencies have had the worst performance among the Group of Ten since April.

The Aussie and Kiwi have been under pressure from the strong US dollar over the past few weeks. Amid aggressive rate hikes in the US, the greenback index rose to a new 20-year high of 105,010 this month.

However, at the beginning of the new working week, the US currency is trading at 2% below the record level amid the return of appetite for risky assets.On Monday morning, its rate fell by 0.1% from Friday's close to 102.790 points.

By the end of last week, the US dollar showed the first decrease in 7 weeks. The weakness of the greenback allowed the Aussie to make its first weekly rise since the end of March.

Since the beginning of the week, the Aussie has received a little boost from the center-left Labor Party's victory in Australia's federal election on Saturday.

The good news for the Australian currency is that this is the first change of government in almost 10 years. The bad news is that the new government is unlikely to change the pace of interest rate hikes in Australia.

A fresh comment from Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent adds to the pessimism about monetary policy.

On Monday morning, the official hinted at a gradual reduction in the Australian Central Bank's balance sheet for this and the coming year:

– This year's asset reduction plan calls for only $4 billion in bond redemptions, and we expect the figure to rise to $13 billion in 2023.

This abundance of funding indicates that the target money rates will remain low for a few years.

As for the monetary policy of the Reserve Bank of New Zealand, the base interest rate may rise as early as this week.

Markets are now expecting the RBNZ to raise the rate on Wednesday by 50 bps to 2%. The regulator's hawkish scenario adds momentum to the NZD/USD pair, which is now at a 3-week peak.

Thanks to the return of risk sentiment to the stock markets the AUD/USD pair is also showing great movements. It is firmly above the 21-day moving average this morning.

Bulls need to close above this level to continue the uptrend in the AUD/USD pair because this level coincides with the resistance line of the downtrend.

If the Aussie dollar continues to be in demand in the near future, it might lead it to test the high of 0.7135 from May 6.

If the AUD/USD does not manage to keep above the 21-day moving average by the end of the day, bears will return to the market and pull the Aussie back to Friday's low of 0.7002.

 

Tips for beginner traders in EUR/USD and GBP/USD on May 24, 2022

Economic calendar for May 24
Preliminary data on business activity indices for May in Europe, Britain, and the United States will be published today. A widespread decline in indicators is expected, which may lead to variable fluctuations in the market.

Time targeting

Business activity indices in the EU - 08:00 UTC

Business activity indices in Britain - 08:30 UTC

Business activity indices in the US - 13:45 UTC

Trading plan for EUR/USD on May 24
In this situation, overheating of long positions can lead to a pullback, while the upward interest will still prevail in the market. The next round of growth is expected after the price holds above the 1.0700 mark.

An alternative scenario will be considered by traders in case the price returns below the 1.0600 mark in a four-hour period. In this case, a signal of completion of the corrective move may occur.

Trading plan for GBP/USD on May 24
The previously passed level of 1.2500 currently plays the role of a support in case of a pullback in the market. The subsequent increase in the volume of long positions is expected at the time of holding the price above 1.2600. In this case, buyers will have the possibility of further growth towards the level of 1.2700.

If the pullback drags on, and the quote needs to stay below the level of 1.2500, the first signal of the completion of the corrective move may appear.

 

Analysis and trading tips for GBP/USD on May 26

Analysis of transactions in the GBP / USD pair

GBP/USD reaching 1.2545 prompted a buy signal in the market, which led to a 10 pip increase as the MACD line was just starting to move above zero. However, the quote turned down immediately after and retested 1.2545, forming a sell signal. This time, it provoked a 25-pip decrease in the pair and reached 1.2518, where movement became limited as the MACD was already far from zero. In the afternoon, another sell signal appeared at 1.2545, resulting in another 20-pip decrease. Its fourth test then led to a buy signal, which prompted a 50-pip increase as the MACD was moving above zero.

GBP/USD reached new monthly highs after traders did not find anything new in the minutes of the Fed's May meeting. Contrary to what was expected, there were no hints that the central bank will raise rates again at the next meetings.

However, today, it is likely that the pound will turn down as there are no statistics scheduled to be released in the UK. In the afternoon, data on US jobless claims and second estimate of the 1st quarter GDP will support the dollar, while the report on pending home sales may strengthen the emerging trend in the pair provided that its value turns out better than expected.

For long positions:

Buy pound when the quote reaches 1.2575 (green line on the chart) and take profit at the price of 1.2610 (thicker green line on the chart). There is a chance for a rally today because there is no scheduled statistics to be released. However, note that when buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.2553, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2575 and 1.2610.

For short positions:

Sell pound when the quote reaches 1.2553 (red line on the chart) and take profit at the price of 1.2516. Pressure is likely to return if there is no bullish activity in the market before and after the release of the US GDP report for the 1st quarter. However, note that when selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.2575, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2553 and 1.2516.

 

Major altcoins suffer losses

On Thursday, bitcoin dived to $28,900 and eventually closed at $29,117. At the time of writing on Friday, BTC fell to $28,982.

Since Monday, bitcoin has tried to break out of the 7-week long downtrend, but remained near the $30,000 mark. The leading cryptocurrency lost about 60% since it surpassed $69,000 and reached an all-time high in November 2021.

Crypto market lossesOver the past 24 hours, BTC lost about 2%. Howevre, major altcoins suffered more severe losses. STEPN's native token nosedived by 37.9% after its developer halted its services in China due to a demand from local authorities. STEPN is a move-to-earn lifestyle app which uses GPS and allows users to earn rewards in crypto by running, walking, or jogging outside. The company will stop providing GPS services to users in mainland China from July 15.

Solana fell by 7.15% to $45. The altcoin lost more than 17% last week. Among other cryptocurrencies, Ethereum decreased by 6.16% to $1,847, BNB slumped by 5.03% to $311.86, Cardano declined by 4.59% to $0.487, and Dogecoin slid down by 4.83% to $0.0791. The best performing cryptocurrency was Chain, which jumped by 46.6% on Thursday.

According to CoinGecko, the market cap of the cryptocurrency market decreased by 3.22% to $1.22 trillion yesterday. The Bitcoin Dominance Index reached 45.74%.

Lengthy crypto downtren

Since the beginning of 2022, the digital assets market dropped sharply as investors shifted away from risky assets. BTC lost about 37% since January, while Ethereum dived by 48%. The market cap of the cryptomarket declined to $1.3 trillion from $3 trillion in November 2021.

The war in Ukraine and rising geopolitical tensions in Eastern Europe have pushed the crypto market downwards.

Another bearish factor for crypto is the growing dominance of the United States in the digital assets market, reflecting the currency war between the US and China, which began in 2014. The US crypto dominance was reinforced by China's crypto ban in 2021

The Federal Reserve's monetary policy is also pushing the crypto market downwards. According to crypto market analysts, the Fed's interest rate hike has contributed to the downtrend. Investors are concerned that rising inflation would force the regulator to increase interest rates even higher in the future.

Earlier, Fed chairman Jerome Powell stated that the US central bank plans to act decisively to bring inflation back to the target level of 2%, despite short term recession risks.

In May, the Federal Reserve increased the key interest rate by 50 basis points to 0.75-1%. The US regulator hiked the rate by 25 basis points at its March meeting. It was the first back-to-back rate rise by the Fed since 2006 and the first 50 basis points increase since 2000

Light at the end of the tunnel?

Despite bitcoin's woes, JP Morgan strategists estimated BTC's fair value at $38,000, which is 30% higher than its current price of about $29,000. Furthermore, JPMorgan classified digital assets and hedge funds as its "preferred" alternative asset classes.

The bank's strategists also stated that BTC and digital assets have great upside potential after its recent fall.

 

Hot forecast for EUR/USD on 30/05/2022

Although the single European currency demonstrated good activity on Friday, showing a movement of fifty points, first up, then down, in fact, it was a stagnation. Which, in general, is not surprising, given that macroeconomic data was not published. And there were no serious news reports that could somehow affect the market either. The beginning of the new trading week will be much less active. And it's not just a completely empty macroeconomic calendar. After all, it is a holiday in the United States to honor Memorial Day. And in the absence of American traders, activity in the market is coming to naught. Like it or not, American investors control most of the capital circulating in financial markets. So the stagnation will become more pronounced, and the magnitude of the movement will be noticeably smaller than on Friday.

The EURUSD currency pair, despite the scale of the correction, adheres to an upward move. During this time, the euro exchange rate has strengthened by more than 400 points, which is considered a strong price change.

The RSI H4 technical instrument is moving in the upper area of the 50/70 indicator, which indicates an upward interest among traders. RSI D1 settled above the 50 line, this is a signal of an elongated correction.

Alligator H4 is signaling an upward trend, MA moving lines are directed upwards. The Alligator D1 indicator has changed direction from a downward cycle to an upward one. The moving MA lines are directed upwards.

Expectations and prospects:

There is a resistance area of 1.0800/1.0850 on the way, which can hold back the bulls. For this reason, the tactic of working on the rebound is considered as the most optimal strategy. In the future, this may lead to the completion of the corrective move.

An alternative scenario considers the prolongation of the correction. This signal will be relevant only if the price stays above 1.1850 in the daily period.

Complex indicator analysis has a buy signal in the short-term and intraday periods due to the correction. In the medium term, indicators changed to buy indicators due to a protracted correction.

 

Tips for beginner traders in EUR/USD and GBP/USD on May 31, 2022

Economic calendar for May 31

Today, traders are focused on the preliminary assessment of inflation in Europe. It is predicted that the consumer price index will continue to grow from 7.4% to 7.7%, which is a negative factor for the EU economy. Further inflation growth may stimulate the ECB to more aggressive tactics of tightening monetary policy. In simple words, the regulator may still move to an interest rate hike based on the growth of inflation. Thus, based on the logic of the ECB's further steps, this news may lead to an increase in the value of the euro in the medium term.

A short-term reaction to rising inflation could lead to a weakening of the euro.

Time targeting

EU Inflation - 09:00 UTC

Trading plan for EUR/USD on May 31

The area of resistance 1.0800/1.0850 is still putting pressure on buyers, which may lead to the completion of the corrective movement. If expectations are confirmed, the euro rate may return to the value of 1.0636.

An alternative scenario considers the prolongation of the correction. This signal will be relevant only if the price holds above 1.0850 in the daily period.

Trading plan for GBP/USD on May 31

In this situation, special attention is paid to the stage of stagnation within the amplitude of 1.2600/1.2700. This fluctuation may indicate the process of accumulation of trade forces, which will eventually lead to a local acceleration. Based on the assumption, the best trading tactic is the method of breaking through one or another stagnation border with confirmation in a four-hour period.