In the week ahead, inflation-related data will dominate the headlines.
The Consumer Price Index (CPI) and Producer Price Index (PPI) data from the United States and Gross Domestic Product (GDP) data from the UK are expected to provide further clues on the durability of inflation pressures in both countries.
In June of 2022, consumer prices in the United States increased 1.3% month-on-month, the most significant rise since September 2005. This caused an increase in the annual inflation rate to 9.1%, its highest level since November 1981.
Producer prices for final demand in the US leapt 1.1% month-on-month in June of 2022, their biggest rise in three months, with analysts forecasting a slower PPI date at 0.9%.
Meanwhile, the British economy unexpectedly expanded 0.5% month-on-month in May 2022 as shown in the GDP, recovering from a 0.2% contraction in April and rising 1.7% above its pre-coronavirus pandemic levels in February 2020.
British consumers feel more confident about their finances but remain worried about job security and prospects, suggesting a slow recovery for retailers following the Covid-19 lockdown.
The University of Michigan Consumer Sentiment rose to 51.5 in July 2022 from a record low of 50 in June, indicating that consumers are beginning to feel more confident about their finances again following a recession that started at the end of 2020, with fears over whether or not there would be enough food supplies.
US stock notched a weekly gain on Friday, as a release of an unexpectedly strong jobs report, which alleviated recession fears but cleared the path for the Federal Reserve to raise interest rates in a more hawkish way at its next meeting. The report validated the Fed’s view of a resilient economy that can withstand additional interest rate hikes and also forced investors to recalibrate their expectations of the next interest rate policy, a 75 bps hike is the more likely scenario at the September meeting. Some investors have resumed shunning global stocks in favour of bonds while corporate earnings, combined with thin liquidity that is common in the summer, took the stock market on a ride this week, and many firms beat the forecast and proved they could handle high inflation and a gloomy economic outlook.
The benchmark, S&P500 slid with a 0.16% loss on a daily basis after falling as much as 1.1% during the trading session. Six out of eleven sectors stayed in negative territory, as Consumer Discretion and Communication Service performed worst among all groups, falling 1.66% and 0.88% respectively while the Energy sector rose with a 2.04% gain on Friday. However, the Dow Jones Industrial Average rose 0.2%, Nasdaq 100 dropped 0.8%, and the MSCI world index rose 0.3%.
Main Pairs Movement
The US dollar rallied on Friday after a surprisingly strong job on the US payrolls report suggested the Federal Reserve may take a more aggressive interest rate hike policy. The DXY index surged with a 0.84% gain on a daily basis, and climbed to a daily high level above 106.9 after a report showed nonfarm payrolls increased by 528k jobs last month, which is the largest gain since February.
The GBP/USD dropped with a 0.72% loss on a daily basis for the day, as an unexpected powerful NFP report led to advances in the greenback across the board, weighing heavily on its peers. It’s worth noting that, the Bank of England raised the rate by the most in 27 years to fight runaway inflation in a dovish 50bp hike to 1.75%, and said that a long recession was coming, highlighting the bleak outlook for the UK economy and the pound. Meanwhile, EUR/USD touched a daily low of nearly 1.014 level, and the pairs declined with a 0.61% loss on Friday.
The Gold fell with a 0.88% loss on a daily basis, as the US dollar is strong across the board, and XAUUSD touched a daily low of $1765 marks during the US training session. The investors need to keep their eyes out for the consumer and producer index next week.
Technical Analysis
EURUSD (4-Hour Chart)
The EUR/USD pair tumbled on Friday, witnessing heavy selling and dropped to a daily low below the 1.015 mark after the release of US Nonfarm Payrolls for July. The pair is now trading at 1.01580, posting a 0.86% loss on a daily basis. EUR/USD stays in the negative territory amid renewed strength observed in the US dollar, as the upbeat US jobs report provided a strong boost to the safe-haven greenback and undermined the EUR/USD pair. The US Nonfarm Payrolls rise by 528K in July, which came in better than the expectations of 250K and showed the growth momentum in the US jobs market. On top of that, the higher-than-expected NFP results also reignited the perception of a more aggressive policy tightening by the Fed in the next months. For the Euro, the increasing speculation of a potential recession in the Eurozone continued to exert bearish pressure on the shared currency.
For the technical aspect, the RSI indicator is 42 figures as of writing, suggesting that the downside is more favoured as the RSI stays below the mid-line. As for the Bollinger Bands, the price witnessed fresh selling and crossed below the moving average, therefore the bearish momentum should persist. In conclusion, we think the market will be bearish as the pair is heading to test the 1.0150 support line. A break below that level could lead the pair toward the 1.011 mark.
Resistance: 1.0289, 1.0438, 1.0486
Support: 1.0150, 1.0111, 0.9991
GBPUSD (4-Hour Chart)
The GBP/USD pair slipped on Friday, extending its previous slide and dropping sharply to a two-week low below the 1.202 level amid a stronger US dollar across the board. At the time of writing, the cable stays in negative territory with a 0.83% loss for the day. The upbeat US Nonfarm Payrolls that was released earlier in the European session has revived bets for a larger interest rate hike at the September FOMC policy meeting. There is now a 70% probability of a 75 basis points hike at the next policy meeting amid more hawkish comments by several Fed officials this week. For the British pound, the gloomy outlook for the UK economy and the comments from the BoE that a long recession is coming in the fourth quarter of this year both acted as a headwind for the cable.
For the technical aspect, the RSI indicator is 37 figures as of writing, suggesting that the pair is facing bearish pressure but the RSI has rebounded toward the mid-line. For the Bollinger Bands, the price rebounded after falling out of the lower band, therefore some upside traction can be expected. In conclusion, we think the market will be slightly bullish as long as the 1.2007 support line holds. The rising RSI also reflects bull signals. On the downside, sellers could take action if 1.2007 support fails.
Resistance: 1.2178, 1.2277, 1.2317
Support: 1.2007, 1.1933, 1.1830
XAUUSD (4-Hour Chart)
As the US dollar continued to find demand amid the stronger-than-expected US employment report on Friday, the pair XAU/USD came under heavy selling pressure and slumped to a daily low below the $1,767 level at the start of the US trading session. XAU/USD is trading at 1777.82 at the time of writing, losing 0.73% on a daily basis. The renewed strength witnessed in the US dollar continued to undermine the dollar-denominated gold, as investors have lifted their bets for a larger Fed rate hike move at the September meeting. However, the growing fears of recession and China-Taiwan tensions should limit the downside for the precious metal after the news showed that China conducted missile strikes in the Taiwan Strait.
For the technical aspect, the RSI indicator is 50 figures as of writing, suggesting the pair’s indecisiveness in the near term as the RSI indicator stays near. For the Bollinger Bands, the price regained some upside traction and rose toward the moving average, therefore a continuation of the upside trend could be expected. In conclusion, we think the market will be slightly bullish as long as the 1771.12 support line holds. A break below that level might favour the bear and open the door for additional losses.
Successful trading doesn’t happen overnight. You need to learn many concepts and strategies to build a good foundation on which you would base your decisions every trading day.
In technical analysis, the moving average is one of the most crucial indicators you need to know about and learn.
What is a moving average?
A moving average is a type of calculation used for analysing data points through a series of averages from different subsets that belong to an entire data set.
The moving average of an instrument is calculated to create an updated average price that will help analysts determine any short-term price fluctuations that could affect trading. It is also a useful technical indicator of a trend and its direction, so you’ll know if you should buy, sell, or pass.
Gold (H1) with 3 exponential Moving Average 12 (Red), 24 (Yellow), 72(Green)
What are the types of moving averages?
There are two basic forms of moving averages: Simple Moving Average (SMA) and Exponential Moving Average (EMA).
Simple Moving Average (SMA)
SMA is a straightforward process of summing up past data points in a set and dividing the total by the number of periods. Traders use this technical indicator to determine when they should join and leave a market on a trading day. With the SMA method, a trader can identify support and resistance prices, which are crucial in knowing when to buy or sell.
Exponential Moving Average (EMA)
EMA, on the other hand, relies on the most recent price points, so it’s more responsive to current price fluctuations. EMA starts by summing up the security’s closing prices for a given period and dividing that by the number of periods. Then, the multiplier is calculated using the formula:
(Multiplier = [2/ (10+1)] – 0.1818)
After that, EMA is calculated by taking the period from the initial EMA up to the most recent period using the multiplier, the price, and the previous period’s EMA value.
The formula for this is:
Current EMA = [Closing Price – EMA (Previous Time Period)] x Multiplier + EMA (Previous Time Period)
What are the benefits of using a moving average?
Although using the moving average method may take some time, many traders have been using it for years as it helps them make the right decisions with their trade. For one, this strategy keeps your analysis straightforward on a price chart by cutting down unnecessary data.
If you look at the moving average, you’ll know if the price is moving up or down. This move can help you decide whether to buy, sell, or sit the market out for a while.
Technical analysts also use the moving average to determine support or resistance in the long term. In an uptrend, the moving average can serve as the support where the prices bounce from. In a downtrend, the moving average will act as the resistance where the price hits and drops again.
2 Common Uses of Moving Average
Using Moving Averages as Trend Indicators
The most common use of Moving Average is to determine where the trend is moving, whether Downtrend, Uptrend or Reversal.
There are 2 ways to do this:
Solely with 1 moving average
Some traders use only one Moving Average by looking at the candles (price). If the price moves above the Moving Average, sloping higher, they believe the trend is an uptrend.
EURUSD (H1), 24 EMA (Red).
If the price moves below the moving average, sloping down, they believe the trend is a downtrend.
EURUSD (H1), 24 EMA.
Using 2 Moving Averages
Other traders use 2 Moving Averages (slower- and faster-moving averages) and the candles (price) to know where the market is going and if there is a potential reversal.
If the candle (price) moves above the 2 Moving Averages and the faster-moving average is above the slower-moving average, they believe the trend is an uptrend.
EURUSD (H1), 24 EMA as faster Moving Average (Red) and 72 as slower Moving Average (yellow)
If the candle (price) moves below the 2 Moving Averages and the faster-moving average is below the slower-moving average, they believe the trend is a downtrend.
EURUSD (H1), 24 EMA as faster Moving Average (Red) and 72 as slower Moving Average (yellow)
Using 2 Moving Averages allows traders to determine when a trend has a potential reversal. If there’s a cross between the moving averages, there’s a possible reversal, or at least the trend is slower.
EURUSD (H1), 24 EMA as faster Moving Average (Red) and 72 as slower Moving Average (yellow)
Using Moving Averages as Support and Resistance Levels
Another common use of a Moving Average is to find the support and resistance levels in a moving trend.
Usually, traders use 2 Moving Averages.
If the candle (price) moves above the 2 Moving Averages and the faster-moving average is above the slower-moving average, they believe the trend is still an uptrend. Then we can use the Moving Averages as the Support levels.
EURUSD (H1), 24 EMA as faster Moving Average (Red) and 72 as slower Moving Average (yellow)
If the candle (price) moves below the 2 Moving Averages and the faster-moving average is below the slower moving average, they believe the trend is a downtrend. Then we can use the Moving Averages as the Resistance levels.
EURUSD (H1), 24 EMA as faster Moving Average (Red) and 72 as slower Moving Average (yellow)
Conclusion
If you want to learn all about moving averages, it’s a must to study this method and ask for advice from traders who have been using it for a while. You can also tap into the expertise of a Forex broker for guidance.
Of course, it would be highly beneficial to join a community for trading updates, market changes, and strategies to help you maximise your trading day and earn the best returns from your investment.
The price of gold continues to consolidate its recent run to new four-week highs ahead of the crucial US NFP report.
The yellow metal is supported by rising demand for safe havens in the midst of fears of a recession.
In the face of the impending bear cross, the XAU/USD currency pair is eyeing $1,800 as the next potential upside goal.
The price of gold has reached a monthly high and is currently trading just below the $1,800 level. This comes as bulls take a breather following the recent increase in price and in anticipation of the all-important US Nonfarm Payrolls report. The markets witnessed a temporary safe haven bid in the US dollar in the midst of mounting recession risks, particularly after the Bank of England (BOE) projected one later this year. However, dismal weekly Jobless Claims data dragged the USD lower, causing the recession risks to have a negative impact. The United States Department of Labour reported that the number of people filing initial claims for state unemployment rose by 6,000 to a total of 260,000 in the week that ended on July 30. This number is hanging close to an eight-month high. The financial markets are anticipating that if the figures continue to grow, it may be an indication that the largest economy in the world is about to enter a period of recession. The demand for safe havens shot through the roof, and investors rushed to buy gold as a classic safe haven investment.
In the middle of worries about economic expansion and positive corporate earnings reports, the value of the United States Dollar (USD) continued to weaken, which helped the price of gold to gain strength. The focus has now shifted to the data on the labour market in the United States, where it is anticipated that the economy created a measly 250,000 jobs in July, compared to the previous month’s gain of 372,000 jobs. Any sign of weakness in the US employment sector is likely to revive lower expectations of further Fed tightening, which will lead to a decline in the value of the dollar. As a result, the bullish trend that has been seen in stocks and the price of the precious metal measured in USD could continue.
On Thursday, the price of gold managed to finish the trading day at $1,790, which was higher than the crucial downward-sloping 50-day moving average.
The way is now clear for a second rise to the figure of $1,800, which, if achieved, will bring into play the horizontal trendline resistance connecting the high reached on July 5 at $1,812 in the price action. This means there will be less of a barrier for gold to overcome on its way to the next Resistance Levels at $1,808.
Stochastic Indicator for a period of 5 days showing a stronger Gold to rise to chase the overbought levels, which means that the possibility of it going up is quite high but is still limited to the Resistance Levels. Stochastic Indicator for a period of 5 days showing a stronger Gold to rise to chase the overbought levels.
Gold’s daily support levels are at $1,752, $1,734, and $1,697, while its daily resistance levels are at $1,808 and $1,828, respectively.
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US stocks wavered on Thursday as traders parsed various corporate earnings against a backdrop of aggressive interest-rate hikes by global central banks. The US yield curve continued to be inverted as recession fears persisted.
The S&P 500 ended the session little changed after fluctuating throughout the day. The Nasdaq 100 closed up higher for the second straight day after swinging between modest gains and losses. The Nasdaq 100 closed up higher for the second straight day after swinging between modest gains and losses.
A flurry of economic data released this week assuaged fears of a downturn while hinting at stabilising growth. But the bond market, especially the persistently inverted Treasury yield curve, is flashing warnings on the economy amid a global wave of monetary tightening. All eyes will be on the US jobs report on Friday for further clues about the Federal Reserve’s path of rate hikes.
Elon Musk said he sees signs that the global economy has gone “past peak inflation.” Speaking at the electric-vehicle maker’s annual shareholder meeting, Musk said the company’s commodity and component costs are trending downward over the next six months. He also reiterated prior comments that he expects a mild recession to hit that could last 18 months.
“The trend is down, which suggests we are past peak inflation,” Musk said at Tesla’s Austin headquarters and factory. “I think inflation is going to drop rapidly” at some point in the future, he said.
Global central banks have embarked on a path of policy-tightening as inflation pressures consumers and corporate bottom lines. In the US, consumer prices increased by 9.1% in June from a year earlier, and Federal Reserve officials say the price gains have yet to slow. The next print on inflation comes on Aug 10.
Main Pairs Movement
The dollar fell against most of its major rivals, ending the day near its recent lows, usually a sign of further declines ahead in the near term. The fear of a global recession returned after the Bank of England announced its latest decision on monetary policy. The central bank raised interest rates by 50bps to 1.75% as expected.
But politicians have revised their inflation forecast upwards, expecting a recession in the next five quarters. A Federal Reserve official said that recession risks have increased in the US and that interest rates should continue to rise at least through this year and the first half of 2023.
GBP/USD recovered some of its losses from the past two days and advanced towards 1.2170 in early European trading on Thursday. EUR/USD benefited from the broad dollar’s weakness and settled around 1.0250. The AUD/USD advanced and hovered around 0.6970, bolstered by gold, as the bright metal reached fresh one-month highs in the US$1,790 price zone. The US dollar strengthened against the Canadian dollar, climbing to around 1.2860 before settling at that level. The barrel of WTI currently trades at US$88.40 a barrel.
XAU/USD has pushed down within its weekly bullish correction to mark a high of US$1,794.23. Gold price increased as US bond yields decreased and the Bank of England issued a warning that the UK’s economy might be headed for a recession later this year due to inflation could reach 13%.
Technical Analysis
EURUSD (4-Hour Chart)
The EUR/USD pair advanced on Thursday, regaining upside momentum and rebounded from a weekly low below the 1.013 mark that touched yesterday amid the current rebound in the risk complex. The pair is now trading at 1.02106, posting a 0.46% gain on a daily basis. EUR/USD stays in the positive territory amid weaker US dollar across the board, as the falling US Treasury bond yields and the disappointing Jobless Claims data exerted bearish pressure on the greenback. The US Weekly Initial Jobless Claims rise to 260K, which came in slightly worse than the market expectation of 259K. But the recent hawkish stance from several Fed speakers and expectations for further rate hikes in the next months should limit the losses for the greenback. For the Euro, the IHS S&P Global Germany Construction PMI fell to 43.7 in July.
For the technical aspect, the RSI indicator figures as of writing, suggesting that upside is more favoured as the RSI stays above the mid-line. As for the Bollinger Bands, the price preserved its upside strength and crossed above the moving average, therefore the bullish momentum should persist. In conclusion, we think the market will be bullish as the pair is testing the 1.0221 resistance line. A break above that level might bring additional gains to the pair.
Resistance: 1.0221, 1.0287, 1.0438
Support: 1.0150, 1.0082, 0.9991
GBPUSD (4-Hour Chart)
The GBP/USD pair edged lower on Thursday, coming under selling pressure and dropped to a daily low below 1.208 level after the announcement of the Bank of England’s policy decision. At the time of writing, the cable stays in negative territory with a 0.17% loss for the day. The BoE decided to raise the benchmark rate by 50 bps to 1.75% as widely expected, which was fully priced in the markets and prompted fresh selling around the cable. For the British pound, the currency remained under bearish momentum amid the dovish BoE policy decision. Investors continue to anticipate further rate hikes after this week. Moreover, BOE Governor Bailey also said that he expects the UK economy to tip into recession in Q4 in the press conference, therefore the pound is likely to have a difficult time finding demand.
For the technical aspect, the RSI indicator is 48 as of writing, suggesting that the bull is preserving strength as the RSI climbs toward the mid-line. For the Bollinger Bands, the price failed to touch the lower band and started to rise, indicating that some upside traction can be expected. In conclusion, we think the market will be bullish as the pair is heading to re-test the 1.2178 resistance line. On the upside, additional gains can be expected if the pair breaks above the aforementioned resistance.
Resistance: 1.2198, 1.2277, 1.2317
Support: 1.2050, 1.2002, 1.1897
USDCAD (4-Hour Chart)
Despite the US dollar coming under selling pressure amid dismal Initial Jobless Claims data on Thursday, the pair USD/CAD witnessed some upside momentum and climbed to a daily top above the 1.287 mark in the early US trading session. USD/CAD is trading at 1.28671 at the time of writing, rising 0.21% on a daily basis. The market focus now shifts to the Canadian employment conditions report and US Nonfarm Payrolls for July this Friday, as the market mood is mixed after US House Speaker Pelosi’s trip to Taiwan. On top of that, the falling crude oil prices also undermined the commodity-linked loonie and pushed the USD/CAD pair higher as WTI tumbled back to the US$88 per barrel area. Investors started to seek safety as the regional tensions have escalated.
For the technical aspect, the RSI indicator is 51 as of writing, suggesting the pair’s indecisiveness in the near term as the RSI indicator stays near. For the Bollinger Bands, the price lost its upside strength and dropped toward the moving average, therefore a continuation of the downside trend could be expected. In conclusion, we think the market will be bearish as long as the 1.2885 resistance line holds. The falling RSI also reflects bear signals.
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Please note the specific adjustments as follows:
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Best Affiliate Programme, Ultimate Fintech Awards 2022
VT Markets, the international multi-asset broker, is proud to announce that it has clinched the “Best Affiliate Program” at the prestigious Ultimate Fintech Awards 2022, hosted by iFX EXPO International. This globally respected award recognises VT Markets’ large and trusted affiliate network across the world.
VT Markets’ impeccable industry-leading Affiliate Partnership programme consistently delivers innovative trading product and service offerings, attractive and transparent commissions, advanced marketing and institutional solutions designed to ensure the success of its affiliates.
Yiangos Georgiou, Director of Business Development, comments: “Fostering successful affiliate partnerships has always been one of our top priorities as we understand the importance of our international affiliates in expanding our markets globally. We are committed to developing and nurturing these partnerships to help our affiliates achieve sustainable growth as an essential part of our global expansion journey.”
Best Mobile App Europe 2022 (Forex Division)
VT Markets won the “Best Mobile App Europe 2022 (Forex Division)” award with its recently relaunched trading app. It is recognised for creating a secure and integrated trading app that stays true to the brand promise of “Trading can be easy”.
It provides clients with real-time price alerts, performance analytics and smart signals newsletter. It gives in-depth product information with corresponding market analysis and economic news. The enhanced user interface offers excellent accessibility and over 80 payment methods.
An exciting new feature is “Big Movers” which alerts clients on major market shifts and trading opportunities in the previous 24 hours. The “Learn” feature provides valuable educational trading content.
Timothy Lee, Integrated App Marketing Manager comments: “VT Markets has made tremendous investments to bring significant improvements to our mobile offerings and trading platform and this is reflected in the positive feedback from our global clients since our app relaunch. We will continue to invest in innovative features to provide the most optimal trading experience for all our clients.”
The VT Markets trading app is available for download from the Apple App Store and Google Play Store.
Other Awards
VT Markets have received numerous awards this year that recognises it as the innovative market leader in the industry:
Best Forex Broker Europe 2022, International Business Magazine
Best Partnership Programme Global 2022, Global Business Review Magazine
Best Customer Support UK 2022, World Business Outlook Awards
US stock rallied on Wednesday, snapping a two-day loss since the beginning of this week, as earnings buoyed the market mood. Investors could clear their concerns about earnings disaster after 70% through the season, as more cheering data like a solid report from Moderna.Inc and Paypal Holding Inc. released.
However, Jerome Powell signalled that the pace of future rate increases may slow later this year, which boosted the speculations for cuts next year in market-implied measures, as even several Fed leaders said central banks still keep their eyes out for the hottest inflation in four decades. Moreover, after House Speaker Nancy Pelosi left Taiwan, the market is calmer amid the undermining relationship between China and the United States.
The benchmarks, S&P500 and Dow Jones Industrial Average both advanced on Wednesday as tech earnings performed better than expected. S&P500 rose with a 1.56 % gain on a daily basis, and ten out of eleven sectors stayed in positive territory, as Information Technology, Consumer Discretion, and Communication Service got the best performance, with a 2.69%, 2.52% and 2.48% growth rate respectively for the day. Besides, the Dow Jones Industrial Average rose 1.3%, Nasdaq 100 rose 2.7%, but the MSCI world index slid with a 0.8% loss on Wednesday.
Main Pairs Movement
US dollar rose on Wednesday, as the upbeat prints of US data and hawkish comments from the Fed mixed with recession fears put a firm floor for the safe-haven greenback. The DXY index surged at the beginning of the US trading session as stronger than forecast earnings were released, but lost bullish momentum and reversed from a weekly top to a depressed around 106.5 level. It’s worth noting that, US ISM Services PMI for July rose to 56.7 from 55.3, far above the market expectation of 53.5, and the Final reading of the US S&P Global Services PMI for July dropped to 47.3, which is the first contraction in two years.
The GBP/USD slid for the day, market amid a strong US dollar across the board and the expectation of a 50-bps rate hike by the Bank of England (BOE), however, the price pressure has risen up to 9.4%. The cables suffered selling during the selling pressure as upbeat US data and US stock and to a daily low level around 1.210. Meanwhile, EURUSD dropped to a daily low level below 1.013, then regain bullish momentum back to a 1.016 level. The pairs remained unchanged on Wednesday.
Gold advanced with a 0.28% gain on a daily basis and closed at $1765 marks for the day. However, investors put focused on upbeat US data and comments from Fed during the US trading session, which caused the XAUUSD to fall below $1755 marks. It’s also worth noting that WTI and BRENT oil dropped 3.74% and 3.98% respectively.
Technical Analysis
EURUSD (4-Hour Chart)
The EUR/USD pair declined on Wednesday, extending its previous day’s slide and refreshed its daily low below the 1.013 mark in the early US session after the release of upbeat US ISM Services PMI data. The pair is now trading at 1.01282, posting a 0.37% loss on a daily basis. EUR/USD stays in the negative territory amid a stronger US dollar across the board, as the tensions between the US and China still remain after US House Speaker Nancy Pelosi left Taiwan during the European morning. China has planned military exercises around Taiwan for the next three days. Meanwhile, the US ISM Services PMI also came in higher than expected at 56.7 in July, which lend support to the greenback. For the Euro, the dismal Eurozone Retail Sales data weighed on the shared currency, as the report showed that Eurozone’s Retail Sales fell by 1.2% MoM in June.
For the technical aspect, the RSI indicator is 38 figures as of writing, suggesting that downside is more favoured as the RSI stays below the mid-line. As for the Bollinger Bands, the price witnessed heavy selling and dropped toward the lower band, therefore the bearish momentum should persist. In conclusion, we think the market will be bearish as the pair is heading to test the 1.0111 support line. The falling RSI also reflects bear signals.
Resistance: 1.0221, 1.0287, 1.0438
Support: 1.0111, 0.9991
GBPUSD (4-Hour Chart)
The GBP/USD pair dropped on Wednesday, failing to preserve the upside traction that was witnessed in the first half of the day and touched a daily low near the 1.210 mark amid renewed US dollar strength. At the time of writing, the cable stays in negative territory with a 0.41% loss for the day. A combination of factors continued to help the safe-haven greenback to find demand, as recession fears and US-China tensions both undermined the market sentiment. For the British pound, the currency came under bearish pressure today as the data from the UK revealed that the business activity in the service sector expanded at its weakest pace in 17 months. The Services PMI declined to 52.6 in July and missed the market’s expectations.
For the technical aspect, the RSI indicator is 44 figures as of writing, suggesting that the pair is facing bearish pressure as the RSI indicator continues to move south. For the Bollinger Bands, the price also gained downside traction and touched the lower band, indicating that the pair is surrounded by bearish momentum. In conclusion, we think the market will be bearish as the pair tests the 1.2115 support line. On the upside, a break above the 1.2198 resistance line could favour the bulls and lead to additional gains toward 1.2277.
Resistance: 1.2198, 1.2217, 1.2317
Support: 1.2115, 1.2039, 1.1940
USDCAD (4-Hour Chart)
Despite the US dollar capitalising again on Wednesday versus G10 currencies amid rising US 10-year Treasury yield, the pair USD/CAD failed to climb higher and dropped to a daily low below 1.284 level in the late European session. USD/CAD is trading at 1.2869 at the time of writing, losing 0.09% on a daily basis. The market focus now shifts to July’s Nonfarm Payrolls report this Friday after the upbeat US Services PMI data showed that the business activity expanded at a more robust pace. On top of that, the falling crude oil prices failed to lift the USD/CAD pair higher as WTI slipped back towards the $92 per barrel area. The latest news showed that OPEC+ have agreed to raise the oil output by 100,000 barrels per day in September.
For the technical aspect, the RSI indicator is 54 figures as of writing, suggesting that the upside is more favoured as the RSI stays above the mid-line. For the Bollinger Bands, the price regained upside strength and rebounded from the moving average, therefore a continuation of the upside trend could be expected. In conclusion, we think the market will be bullish as the pair might head to re-test the 1.2891 resistance line. A break above that level could confirm the bullish bias and lift the pair higher toward 1.2944.
You hear these words a lot from traders—support and resistance. And if you’re new to trading, you’re probably wondering what they mean and how they can help you make the best trading decisions.
In its essence, support means that a downtrend may stop because of increased buying interest or demand. Resistance means that an uptrend is expected to pause due to an increased selling interest.
Here are some of the most important things that you need to know about support and resistance:
Trendlines.These are angled or horizontal lines highlighting support and resistance in a chart. If you’re in an uptrend, there are higher highs and higher lows, while in a downtrend, there are lower lows and lower highs. You need to connect those highs and lows during a trend and extend that line to the right of the chart to determine where the price may reach support or resistance at some point. Trendlines are very important because they help you decide when to buy or sell.
Source: VT Markets MT5 EURUSD H1
Source: VT Markets MT5 EURUSD H1
Major and minor. Support and resistance levels can be classified as major and minor, which means that a trend can fluctuate from going down low and suddenly bouncing up before going back down again. If this happens, you call it a minor support area. If the situation follows an uptrend, you call that a major resistance area. Knowing your major and minor support and resistance levels will allow you to see potential trading opportunities so you can take advantage of them and not get left behind by the pack.
Source: VT Markets MT5 EURUSD H1
False breakouts. Although support and resistance levels are highly reliable determinants for buying, selling, or sitting the market out, there are some instances when prices will move slightly further than expected—a phenomenon called a false breakout. Since support and resistance are not exact prices, you can expect that price analysis could be lower or higher than the real price. While this could cause some risks to you as a trader, some experts would say this is a great opportunity to trade. If you know how to identify a false breakout, you can wait for it to occur on the chart and only enter the market after it happens. That will help you ensure a better trade while still following your analysis based on support and resistance levels.
Source: VT Markets MT5 EURUSD H1
Trading decisions. The trick to taking advantage of opportunities based on support and resistance is to buy near them because you’ll never know when that trend will stop. Keep in mind that trends play a huge role in dictating where things will be for trading, so you need to be keen on looking for those support and resistance opportunities and take advantage of them before they’re gone. This is why it pays to trade in a platform where all the data you need is right in your hands, and you can also ask for expert advice from people who know these levels well.
At the end of the day, being a successful trader will boil down to how dynamic you are in making trading decisions. While there are no hard-and-fast rules to succeeding in trading, there are strategies and methods like support and resistance to guide you through your trading journey.
Learn all these concepts, talk to people within the trading community, and choose a platform where you can nurture yourself as a trader while building your portfolio and growing your investment.
Get in touch with our team at VT Markets to know more about what we can offer to traders like you.
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