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Thread: Wave Analysis by InstaForex

  1. #361
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    The dollar takes the initiative

    Positive macroeconomic data allowed the dollar to finally recoup from a prolonged fall caused by panic sell-offs in stock markets.

    Against the euro, the dollar fell below the psychological level of 1.24, the reason was the increased demand for the dollar after unexpectedly positive data on the housing market for January. The number of new buildings grew by 9.7%, experts expected growth of only 3.4%, and also by 7.4% the number of building permits increased with a forecast of 3.5%. Growth in activity in the construction sector may lead to a slowdown in housing prices.

    The University of Michigan's report on consumer confidence turned positive, the sentiment index rose to 99.9 against 95.7 in December, apparently, the mood of the taxation was positively influenced by the start of the tax reform, with a deterioration in sentiment rather than growth. The peak that was formed - the second since 2004 - indicates that in the American society, the perception of reforms is assessed positively.

    In addition, the rise in prices for imports and exports were above forecasts, which will affect inflation, and we will get quite a confident growth in the dollar, even despite the recent turmoil in the stock market.



    The forecast for GDP growth in the first quarter from the Federal Reserve Bank of Atlanta improved slightly and amounts to 3.2% on Monday evening. The negative from the weak data on retail sales and consumer inflation is somewhat stable, the threat to the selling of the dollar has decreased significantly.

    Markets can not yet understand how the tax reform will affect the US economy. In pre-election promises, Trump focused on the fact that he would begin to reduce the budget deficit and the huge debt, but in reality so far everything is developing in the opposite scenario. The budget deficit will significantly increase this year, as well as the level of public debt. As for the corporate sector, there is still no desire to reduce borrowing, on the contrary, the benefits of tax cuts can cause not a decrease in debt, but its growth - companies intend to issue more bonds this year than in 2017. This trend , if it is implemented, can completely reverse the intent of the tax reform on its head.

    The key event of the upcoming week is the publication of the minutes of the FOMC meeting on January 31. The test of the statement slightly changed in regards to the meeting in December, but it was impossible to understand what estimate the members of the Cabinet gave to the launched tax reform. A detailed alignment can again lead to an increase in volatility, since the forecast for the number of rate hikes this year will directly depend on it. While the markets are confident of two increases in March and June, further opinions vary, and the protocol can greatly affect market sentiment. Business activity indexes from Markit will also be released on Wednesday.



    At the moment, the dynamics of the indices is opposite, the production PMI rose in January to 55.5p compared to 55.1p in December, which indicates the strongest growth in the manufacturing industry since March 2015. Regional data show continued growth, the ISM index rose more than expected , so on Wednesday, most likely, there will be a confirmation of growth in business activity.

    At the same time, in the service sector, activity slowed for several months in a row, which quite distorted the overall picture. It is expected that against the backdrop of growing consumer confidence and confident labor market data, the PMI index in the services sector will also show growth, which will provide additional support to the dollar.

    Thus, by the end of the week, the dollar managed to survive the blow and has good chances to stay on the achieved levels.

    Monday is a holiday in the US, so strong movements due to lack of objective data are not expected. The likelihood against commodity currencies appears to be at its highest, however, the yen will not enjoy less demand, the growth of usdjpy is unlikely. It is also possible to resume demand for gold and the Swiss franc.

    Analysis are provided byInstaForex.
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    Learn more about InstaForex Company at http://instaforex.com

  2. #362
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    Elliott wave analysis of EUR/NZD for February 20, 2018



    Wave summary:
    A break above the minor resistance at 1.6865 will indicate that the wave ii has completed and the wave iii higher to 1.7470 and 1.7777 is developing.

    As long as the minor resistance at 1.6865 is able to cap the upside as long must we allow for a final spike lower to 1.6740 before completing the wave ii.
    R3: 169.78
    R2: 1.6860
    R1: 1.6825
    Pivot: 1.6770
    S1: 1.6740
    S2: 1.6681
    S3: 1.6630

    Trading recommendation:
    We are long EUR from 1.6790 with stop placed at 1.6690.

    Analysis are provided byInstaForex.
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    Learn more about InstaForex Company at http://instaforex.com

  3. #363
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    Technical analysis of NZD/USD for February 21, 2018



    Our first downside target which we predicted in yesterday's analysis has been hit. NZD/USD is still expected to trade with a bearish outlook. The pair is capped by a bearish trend line since February 16, which confirmed a negative outlook. The downward momentum is further reinforced by both declining 20-period and 50-period moving averages. The relative strength index lacks upward momentum.

    To conclude, below 0.7375, look for a new drop with targets at 0.7305 and 0.7280 in extension.

    The black line shows the pivot point. Currently, the price is above the pivot point, which is a signal for long positions. If it remains below the pivot point, it will indicate short positions. The red lines show the support levels, while the green line indicates the resistance levels. These levels can be used to enter and exit trades.

    Resistance levels: 0.7410, 0.7440, and 0.7485.
    Support levels: 0.7335, 0.7295, and 0.7330.

    Analysis are provided byInstaForex.
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    Learn more about InstaForex Company at http://instaforex.com

  4. #364
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    Weak data on the euro area is weighing on the euro



    Weak data, including the preliminary, in the production and services sectors of the euro area put pressure on the European currency in the first half of the day. However, there was no significant sale of risky assets. This again indicates that most traders will focus on the Federal Reserve's protocols today.

    The British pound collapsed against the US dollar after the release of a weak report on the UK labor market, where there was a significant surge in the number of unemployed.

    In Germany, which is the flagship of the European economy, the growth rates of the manufacturing and services sectors have slowed. According to IHS Markit, the purchasing managers' index for the German services sector in February 2018 dropped to 55.3 points versus 57.3 points in January with economists expecting the February value to be at 57.0 points. The PMI for the manufacturing sector fell to 60.3 points from 61.1 points in January.

    The preliminary index of supply managers for the manufacturing sector in France also fell in February, reaching 56.1 points compared to 58.4 points in January. Economists had expected a less significant decline, to a level of 58.1 points.

    The preliminary index of supply managers for the services sector in France dropped to 57.9 points in February against 59.2 points in January this year. Economists had expected the index to remain unchanged at 59.2 points.

    As a result business activity in general for the euro area slowed in February.

    According to the report of IHS Markit, the composite index of supply managers of the eurozone in February fell to 57.5 points from 58.8 points in January. It is important to note that a value of above 50 in the index indicates an increase in activity. Economists also expected the decline but only to 58.5 points.

    The technical picture in the EURUSD pair remained unchanged compared with the morning forecast. In the event of a decline in the euro after the publication of the Fed's protocols, opening long positions is best after the major support levels of 1.2240 and 1.2200 have been updated.

    The British pound, as noted above, fell sharply against the US dollar after it became known that unemployment in the UK in the fourth quarter of 2017 increased.

    According to the report of the National Bureau of Statistics, the number of unemployed in the UK increased by 46,000 from October to December 2017. The unemployment rate was at 4.4% while economists expected unemployment to remain unchanged at 4.3%.

    Analysis are provided byInstaForex.
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    Learn more about InstaForex Company at http://instaforex.com

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    ECB report disappointed traders

    The European currency remained under pressure in tandem with the US dollar after the release of a weak report on the business climate in Germany. The traders were also not optimistic about the report of the European Central Bank on monetary policy.

    According to the Ifo Institute, the German business climate index declined for the month of January this year. This was due to the fact that the expectations of the companies in the manufacturing sector deteriorated for the next six months.

    Thus, the business sentiment index in February fell to 115.4 points from 117.6 points in January, while economists had expected the index to reach 117 points for the month of February. Despite this, the market reaction was rather restrained, as many traders were also confident that it would be difficult to surpass the positive sentiment in the German economy observed at the beginning of the year. The additional problems for exporters as reflected in the mood index, created a strong euro, as well as volatile capital markets.



    The publication of the minutes from the last meeting of the European Central Bank put pressure on the European currency because many traders and investors did not find the necessary signals from the regulator in connection with the end of the bond redemption program, which is expected to be completed this fall.

    Thus, the leaders of the ECB considered the inflation to still be too low as discussed in their January meeting. This suggests that it is too early to change monetary policy.

    As for the technical picture of the EURUSD pair, there have been no significant changes compared to the morning forecast. Still, you can expect to form an upward correction towards the end of the week, which may start from the support levels of 1.2260 and 1.2240 in the short term. However, there is no need to exclude today's possibility of sellers updating to a larger support area of 1.2210, where large players will also announce themselves.

    The British pound negatively reacted to the UK GDP report and fell in the morning against the US dollar. According to the data, the UK economy in the fourth quarter of 2017 grew weaker than expected.

    The report of the National Bureau of Statistics indicates that the UK GDP in the fourth quarter grew only by 0.4% against a preliminary estimate of 0.5%. On an annualized basis, GDP growth in the fourth quarter was revised downward to 1.6% from 2.0%. For the entire 2017, the UK's GDP grew by 1.7%. The main problem for the government remains to be the Brexit, which continues to affect many sectors of the economy.

    Analysis are provided byInstaForex.
    Best regards, PR Manager
    Learn more about InstaForex Company at http://instaforex.com

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