Trading Analysis

Technical Analysis of Daily Price Movement of S&P 500 Index, Thursday August 22, 2024.

On the daily chart of the S&P 500 index, it appears that Buyers are dominating the index. This can be seen from the price movement above the MA 100 & MA 200 where the position of the MA 100 is also above the MA 200 and the appearance of deviations between the price movements of the index which form Lower - Low while the Stochastic Oscillator indicator actually forms Higher - Low so that based on these facts in the next few days, although there could be a weakening correction, as long as it does not breaks below the level of 5175.59 which is only momentary, then #SPX has the potential to strengthen again where the level of 5669.73 will try to be broken upwards and if successful, #SPX will continue its strengthening to the level of 5887.80 as its main target and 6053.95 as the next target if it turns out that momentum and volatility support it.

(Disclaimer)

The material has been provided by InstaForex Company - www.instaforex.com #

Trading Recommendations and Analysis for EUR/USD on August 22; One Shot – Two Bullets

Analysis of EUR/USD 5M

Can you guess what happened with the EUR/USD pair on Wednesday? It continued its upward movement. During the day, only one report was published regarding the annual revision of Nonfarm Payrolls, which, unsurprisingly, turned out to be worse than forecasts. In fact, even if it had been better than expected, the dollar would still have fallen. For instance, on Monday and Tuesday, the dollar didn't need any macroeconomic backdrop to sustain its decline. So, of course, one could say that another weak report on the U.S. labor market caused the U.S. currency to fall further. However, the U.S. dollar has been falling daily regardless of these reports and can't even correct. The Nonfarm Payrolls report isn't a correction of previously published reports; it's merely an adjustment of the annual figure. The market first accounted for the weaker monthly reports and then the annual one, which essentially reflects the same data.

The only question traders should be concerned about now is how much longer this relentless rise will continue. Trading on the upside may seem easy, simple, and convenient, but only at first glance, as traders likely understand that the euro is rising almost out of the blue. Consequently, this movement could end at any moment. Buying a currency when you don't know why it's rising isn't a pleasant task. Nonetheless, as there are no signs of the upward trend ending, the price may continue to rise with targets at 1.1185 and 1.1234.

On Wednesday, only one trading signal was formed—during the U.S. trading session, the 1.1137 level was surpassed. By the end of the day, the euro rose by just 15 pips, but volatility is currently low, and the movement is one-sided. This trade could be held into Thursday with a target of 1.1185.

COT report:

The latest COT report is dated August 13. The illustration above shows that the net position of non-commercial traders has been bullish for a long time and remains so. The bears' attempt to move into their zone of dominance failed spectacularly. The net position of non-commercial traders (red line) has declined in recent months, while that of commercial traders (blue line) has grown. Currently, they are approximately equal, indicating a new attempt by bears to seize control.

We also still do not see any fundamental factors supporting the strengthening of the euro, and technical analysis indicates that the price is in a consolidation phase—in other words, a flat. In the weekly time frame, it is clear that since December 2022, the pair has been trading between levels 1.0448 and 1.1274. In other words, we have moved from a seven-month range into an 18-month one.

At the moment, the red and blue lines are slightly moving away from each other, which indicates that long positions on the single currency are increasing. However, given the flat conditions, such changes cannot be the basis for long-term conclusions. During the last reporting week, the number of long positions in the non-commercial group decreased by 3,600, while the number of short positions increased by 3,000. Accordingly, the net position decreased by 6,600. According to the COT reports, the euro still has the potential for decline.

Analysis of EUR/USD 1H

EUR/USD sustains a steady and measured upward movement in the hourly time frame. Last week, new U.S. inflation reports gave the market another reason to sell the dollar again. This week, the market expects dovish rhetoric from Federal Reserve Chair Jerome Powell. The market continues to seize every available opportunity to sell the dollar. We now have two ascending trendlines at our disposal, each supporting the euro. In general, none of the indicators currently suggest that the uptrend is ending.

For August 22, we highlight the following levels for trading: 1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, 1.1006, 1.1092, 1.1137, 1.1185, as well as the Senkou Span B (1.0964) and Kijun-sen (1.1049) lines. The Ichimoku indicator lines can move during the day, so this should be considered when identifying trading signals. Remember to set a Stop Loss to break even if the price has moved in the intended direction by 15 pips. This will protect you against potential losses if the signal turns out to be false.

For Thursday, Germany, the European Union, and the U.S. have scheduled releases of business activity indices for August's services and manufacturing sectors. We're not even sure if this data is needed by a market constantly pressing the "buy" button. In the U.S., a report on unemployment claims will also be released as a bonus.

Explanation of illustrations:

Support and resistance levels: Thick red lines near which the trend may end.

Kijun-sen and Senkou Span B lines: These Ichimoku indicator lines, transferred from the 4-hour timeframe to the hourly chart, are strong lines.

Extreme levels: Thin red lines from which the price previously bounced. These provide trading signals.

Yellow lines: Trend lines, trend channels, and other technical patterns.

Indicator 1 on COT charts: The net position size for each category of traders

The material has been provided by InstaForex Company - www.instaforex.com #

Review of GBP/USD on August 21; Vertical Movement Continues

The GBP/USD pair also continued its upward movement calmly. It goes without saying that no data or news were supporting the latest rise in the British currency. As we've consistently pointed out in 2024, the pair often displays illogical, irregular movement. If anyone had doubts, they can now see this firsthand. If one were to accept explanations like 'increased risk appetite,' then the movement might seem logical. The challenge lies in the uncertainty of when this 'increase in risk appetite ' will transition to 'risk aversion '.

The British currency has been appreciating almost every day. It is certainly possible to argue that the Federal Reserve is highly likely to start lowering rates on September 18, which means the dollar could continue to fall daily for an entire month. After all, the first Fed rate cut, which the market has been anticipating since January, is an event that should move the market by hundreds of points. A rate cut by the Bank of England or the European Central Bank shouldn't, but just the anticipation of a Fed rate cut must.

Naturally, this is sarcasm, but nothing can be done about the current movement. One can study technical indicators and fundamental and macroeconomic backgrounds as much as one likes, but if major players in the market are driving the pair upward, it will increase under any circumstances. This is because only supply and demand affect the price, not news, reports, or Fed Chair Jerome Powell's speeches. However, many traders and analysts need some explanation for the movements. Hence, the narrative becomes "a new dose of dovish rhetoric is expected from the Fed chair on Friday, and the Fed will cut rates on September 18." This is precisely why the dollar has been falling for two weeks straight. Powell may be excessively dovish on Friday, and the Fed will lower the key rate in September, which the market has already priced in about five times in recent months.

There is another hypothesis that explains the current plunge in the American currency. Major players may deliberately push the dollar down as low as possible to later buy it at the most favorable prices for themselves. It is worth noting that the decline in the American currency began when US inflation started to slow down. The market always tries to anticipate global fundamental events in advance. However, we often see movements that contradict logic and common sense when the event occurs. Thus, we assume that the euro and the pound will rise until September 18, and then, when the Fed officially begins its monetary policy easing cycle, the dollar will start to rise.

Meanwhile, most market participants will continue to explain movements using terms like "increased risk appetite/risk aversion." US data will immediately turn positive, and it will be revealed that the state of the American economy is excellent, with no sign of recession. Everyone will also remember that the dollar had been falling for quite some time, even though, as it turns out, there was no strong reason for it. Therefore, we would not be surprised if similar illogical movements were observed in the year's second half, but in the opposite direction.

The average volatility of the GBP/USD pair over the past 5 trading days is 71 pips. For the GBP/USD pair, this value is considered "average." On Wednesday, August 21, we expect movement within the range bounded by levels 1.2950 and 1.3092. The upper channel of the linear regression is directed upwards, signaling the continuation of the uptrend. The CCI indicator may soon enter the overbought zone again and has already formed a "bearish" divergence.

Nearest Support Levels:

S1 – 1.3000
S2 – 1.2939
S3 – 1.2878

Nearest Resistance Levels:

R1 – 1.3062
R2 – 1.3123
R3 – 1.3184

Trading Recommendations:

The GBP/USD pair continues its illogical rise but retains a good chance of resuming a downward momentum. We are not considering long positions at this time, as we believe that the market has already addressed all the bullish factors for the British currency (which are not much) several times. Short positions could be considered at least after the price consolidates below the moving average. For now, the current rise in the pair can be viewed as another phase of the correction, which means there are prospects for the British currency to decline below the last low of 1.2665.

Explanations for Illustrations:

Linear Regression Channels: help determine the current trend. If both are directed in the same direction, it means the trend is strong.

Moving Average Line (settings 20,0, smoothed): determines the short-term trend and the direction in which trading should be conducted.

Murray Levels: target levels for movements and corrections.

Volatility Levels (red lines): the probable price channel in which the pair will spend the next 24 hours, based on current volatility indicators.

CCI Indicator: Entering the oversold area (below 250) or the overbought area (above +250) means a trend reversal is approaching.

The material has been provided by InstaForex Company - www.instaforex.com #

Trading Recommendations and Analysis for EUR/USD on August 21; Euro's Unstoppable Growth Continues

Analysis of EUR/USD 5M

On Tuesday, the EUR/USD pair continued its upward price movement. During the day, only one macroeconomic report was released, which had no impact and could not have influenced the currency pair's movement. The second estimate for July was published, identical to the first. Inflation increased by 2.6% year-over-year, which the market was already aware of without today's report. Thus, yesterday's rise of the euro was unrelated to this report. In fact, the euro has been rising at all hours of the day and night, on any day, even when there are no fundamental or macroeconomic events. This current surge in growth is entirely irrational.

The only question that should concern traders now is how much longer this relentless rise in the euro will continue. Trading bullish currently seems easy, straightforward, and convenient, but only at first glance, as traders probably realize that the euro is rising for no apparent reason. Consequently, this movement could end at any moment. Buying a currency when you don't know why it's rising is not ideal. Nevertheless, there are still no signs of the uptrend ending, and the price could continue to rise with targets at 1.1137 and 1.1185.

On Tuesday, only one trading signal was generated—at the beginning of the US trading session, the level of 1.1092 was surpassed. By the end of the day, the euro rose by just 15 pips, but volatility is currently low, and the movement is one-sided. It is quite reasonable to stay in this trade on Wednesday.

COT report:

Analysis of EUR/USD 1H

EUR/USD sustains a steady and measured upward trend in the hourly time frame. Last week, new US inflation reports gave the market another reason to sell the dollar again. This week, the market is anticipating dovish rhetoric from Federal Reserve Chair Jerome Powell. The market has fully seized these opportunities to sell the dollar. We still have the ascending trend line at our disposal, which supports the euro. In principle, none of the indicators currently suggest that the uptrend is ending.

For August 21, we highlight the following levels for trading: 1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, 1.1006, 1.1092, 1.1137, 1.1185, as well as Senkou Span B (1.0964) and Kijun-sen (1.1035) lines. The Ichimoku indicator lines can move during the day, so this should be considered when identifying trading signals. Remember to set a Stop Loss to break even if the price has moved in the intended direction by 15 pips. This will protect you against potential losses if the signal turns out to be false.

No significant events are planned in the Eurozone on Wednesday. In the US, the release of the minutes from the last Fed meeting, a purely formal document, is the only notable event. Despite this, the euro's rise may continue as it remains unaffected by fundamental factors. Notably, there are no signs of a minor correction in the market.

Explanation of illustrations:

Support and resistance levels: Thick red lines near which the trend may end.

Kijun-sen and Senkou Span B lines: These Ichimoku indicator lines, transferred from the 4-hour timeframe to the hourly chart, are strong lines.

Extreme levels: Thin red lines from which the price previously bounced. These provide trading signals.

Yellow lines: Trend lines, trend channels, and other technical patterns.

Indicator 1 on COT charts: The net position size for each category of traders

The material has been provided by InstaForex Company - www.instaforex.com #

The Higher the Euro Goes, the More Cautious It Becomes

Everything is relative. If inflation is no longer of particular interest to financial markets, they have focused on the recession, but for politicians, it still is. Donald Trump continuously criticizes the Democrats for high inflation. It must be acknowledged that the Republican has a point—prices did indeed soar in 2022 and 2023. However, the former President's promises to bring them down to the level of a grain of sand are not very credible.

Trump's plan involves increasing oil production, which would then affect gasoline prices, save Americans money, and allow them to invest elsewhere. However, in reality, energy prices no longer have the significant impact on the CPI that they once did. Combating inflation requires something else—something that monetary policy from the Federal Reserve can influence.

Dynamics and Structure of American Inflation

Thus, if Trump intends to increase oil production while simultaneously pressuring the Federal Reserve to sharply lower interest rates, nothing substantial will result. Meanwhile, Fed Chair Jerome Powell and his team are preparing to announce the start of a monetary easing cycle in September, with Jackson Hole as the ideal venue for this announcement.

The market already expects the Fed to begin easing its monetary policy within the first month of autumn. Therefore, if Powell refuses to give hints, we should anticipate US stock indices and EUR/USD sell-offs. The only leverage the bears have on the main currency pair is the silence of the Fed chair and concerns about Trump coming to power.

Despite the weakness of the eurozone economy, positive developments elsewhere, including in the UK, Japan, China, and the US, extend a helping hand to the euro as a pro-cyclical currency. It reacts sharply to the recovery of the global economy, even if led by the US. I don't think the European business activity figures will significantly deviate from Bloomberg's expert forecasts in a way that would negatively impact EUR/USD. Minor discrepancies allow for purchasing the main currency pair on price dips.

Another important event of the week will occur at the midpoint of the week, in addition to Jackson Hole and the release of the Eurozone PMI data. This concerns the release of the minutes from the July FOMC meeting. At that meeting, the Fed decided to keep the federal funds rate at a plateau of 5.5%, but a change in rhetoric caused investors to become concerned. What exactly did the central bank mean? Investors will try to extract the answer from the minutes.

Technically, the long positions formed from the 1.1 level in EUR/USD appear shaky on the daily chart. A rebound from the pivot levels at 1.1065 and 1.1110, or the bulls' inability to hold the upper boundary of the fair value range of 1.0845–1.1040, will be grounds for selling.

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Review of EUR/USD on August 19; Preview of the week. A boring week and the euro's final blitzkrieg

The EUR/USD pair calmly sustained its upward movement on Friday, which was again not based on macroeconomic or fundamental factors. On Friday, there were no significant reports or events in the Eurozone; nonetheless, the euro rose during the night, in the morning, throughout the day, and into the evening. On Thursday, the CCI indicator entered the overbought zone for the third consecutive time. Therefore, we can assume that the pair's upward movement is nearing its end.

It is worth noting that the CCI indicator entering the overbought or oversold zone alone does not mean that the corresponding movement is over. In an uptrend, long positions should be based on entries into the oversold zone. The overbought zone merely confirms the strength of the uptrend. Consequently, theoretically, three entries into the overbought zone do not necessarily mean that the euro's growth will end soon. However, based on experience, we can say that usually, after three entries into the overbought zone, there is at least a substantial correction. The CCI indicator may now form a bearish divergence and update its last local high.

We mentioned expecting a decline in the euro when the price first approached the 1.1000 level. The price was within a seven-month horizontal channel of 1.0600-1.1000 at that time. Now, the price has already broken the upper boundary of this channel several times, but the nature of the movement on the daily and weekly time frames has not changed significantly. Sideways movement within a limited price range still predominates. Therefore, if the decline does not start at the 1.1000 level but starts at 1.1050 or 1.1100, we will not be too disappointed.

The main reason for the U.S. dollar's latest decline is the market itself, which continues to wait for and believe in a 0.5% rate cut by the Federal Reserve in September. Recall that previously, it was expected to cut rates in March and June. All this time, any decrease in any inflation indicator in the U.S. has only been used to sell the American currency, even when the reports themselves do not suggest a decline in the dollar.

There will be very few important reports and events in the Eurozone in the upcoming week. We can only highlight the final inflation estimate for July, which is unlikely to differ from the preliminary one, and the business activity indexes in the services and manufacturing sectors for August. All these reports have a very low probability of reversing the trend or significantly influencing market sentiment. However, we have determined that the pair is in a position where a strong downward movement is brewing. Therefore, next week, we need to be prepared for a rise above the 1.1047 level, followed by a decline that could take the euro at least to the 1.0800 level.

The average volatility of EUR/USD over the past five trading days as of August 18 is 62 pips, which is considered average. We expect the pair to move between the levels of 1.0966 and 1.1090 on Monday. The upper channel of the linear regression is directed upwards, but the global downtrend remains intact. The CCI indicator entered the overbought area for the third time, which warns not only of a possible trend reversal to the downside but also of how the current rise is entirely illogical.

Nearest Support Levels:

S1 – 1.0986
S2 – 1.0925
S3 – 1.0864

Nearest Resistance Levels:

R1 – 1.1047
R2 – 1.1108
R3 – 1.1169

We recommend checking out other articles by the author:

Review of GBP/USD on August 19; Preview of the week. An empty calendar and a vertical rise in the pound

Trading Recommendations:

The EUR/USD pair maintains a global downward trend, but in the 4-hour time frame, the upward movement has resumed, thanks to a new series of economic reports from the U.S. In previous reviews, we mentioned that we only expect declines from the euro in the medium term. We believe the euro cannot start a new global trend amid the European Central Bank's monetary policy easing, so the pair will likely fluctuate between 1.0600 and 1.1000 for some time. However, it is currently foolish to deny that the price is moving upward, and there are no signs of its end yet. The market continues to use any opportunity for purchases, but the technical picture warns of a high probability of the local uptrend ending.

Explanations for Illustrations:

Linear Regression Channels: help determine the current trend. If both are directed in the same direction, it means the trend is strong.

Moving Average Line (settings 20,0, smoothed): determines the short-term trend and the direction in which trading should be conducted.

Murray Levels: target levels for movements and corrections.

Volatility Levels (red lines): the probable price channel in which the pair will spend the next 24 hours, based on current volatility indicators.

CCI Indicator: Entering the oversold area (below 250) or the overbought area (above +250) means a trend reversal is approaching.

The material has been provided by InstaForex Company - www.instaforex.com #

Trading plan for EUR/USD on August 19. Simple tips for beginners

Analyzing Friday's trades:

EUR/USD on 1H chart

The EUR/USD pair sustained its growth on Friday. There were no significant reasons for the euro to rise and the dollar to fall again, but on Thursday, the price bounced off the ascending trend line, so the pair's growth can be considered reasonable. The problem is that the euro is rising both with and without the support of specific events or reports. On Friday, only two reports were noteworthy. While the report on the number of building permits in the U.S. was weaker than expected, the University of Michigan's consumer sentiment index exceeded market expectations.

Consequently, we saw another increase in the euro rather than the dollar. Thus, there is very little logic in the pair's movements. A break below the trend line would allow a new short-term downtrend to form.

EUR/USD on 5M chart

Two trading signals were formed in the 5-minute time frame on Friday. The first signal occurred overnight when the price precisely bounced off the 1.0971 level. Long positions could have been initiated when the European trading session opened, as the price had moved only a short distance from the entry point. The second buy signal appeared towards the end of the day. In that price area, long positions could have been closed with good profit, as the price had been rising all day.

Trading tips on Monday:

EUR/USD has formed a new upward trend supported by a trend line in the hourly time frame. We believe the euro has fully factored in all the bullish factors, so we do not expect sustained upward movement. The flat phase remains within the 1.06-1.10 range in the 24-hour time frame. However, the market again shows it is ready to react to almost any report by panic selling the dollar. Therefore, while expectations are one thing, the current technical picture should not be ignored. The pair can be expected to fall after the price breaks below the trend line.

On Monday, novice traders might anticipate a decline if the price consolidates below the trend line. In this case, the euro could fall to 1.0888.

The key levels to consider on the 5M time frame are 1.0526, 1.0568, 1.0611, 1.0678, 1.0726-1.0733, 1.0797-1.0804, 1.0838-1.0856, 1.0888-1.0896, 1.0940, 1.0971, 1.1011, 1.1043, 1.1091. Neither the Eurozone nor the U.S. has any fundamental or macroeconomic events scheduled on Monday. Thus, the day is likely to experience reduced volatility.

Basic rules of the trading system:

1) The strength of a signal is determined by the time it took for the signal to form (bounce or level breakthrough). The shorter the time required, the stronger the signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be ignored.

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, it's better to stop trading at the first signs of a flat market.

4) Trades should be opened between the start of the European session and mid-way through the U.S. session. All trades must be closed manually after this period.

5) In the hourly time frame, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.

6) If two levels are too close to each other (from 5 to 20 pips), they should be considered as a support or resistance zone.

7) After moving 15 pips in the intended direction, the Stop Loss should be set to break-even.

What's on the charts:

Support and Resistance price levels: targets when opening long or short positions. You can place Take Profit levels near them.

Red lines: channels or trend lines that depict the current trend and indicate the preferred trading direction.

The MACD (14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a source of signals.

Important speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.

Beginners should always remember that not every trade will yield profit. Establishing a clear strategy, coupled with effective money management, is key to long-term success in trading.

The material has been provided by InstaForex Company - www.instaforex.com #

Forecast for EUR/USD on August 16, 2024

EUR/USD

The battle between the bulls and the bears is intensifying. Yesterday, the euro went through the entire range between 1.0964 and 1.1010 with overlaps in both directions. Today, the pair slightly rose during the Pacific session. Each day closed with a black candle undeniably increases the likelihood of a reversal into a medium-term trend, as the Marlin oscillator moves further away from the upper boundary of its channel, indirectly pulling the price with it.

If the price consolidates below the 1.0964 level, Marlin may enter negative territory, but it will face a new test there—the support of the lower boundary of this channel, from which an upward reversal could occur. This scenario is marked with a dashed line. Such a scenario is possible if the price reaches the support level of 1.0905. As we mentioned yesterday, uncertainty could persist until the Federal Reserve's meeting on September 18. Speculators' interest in risk remains—yesterday the S&P 500 rose by 1.39% amid mixed economic indicators.

In the 4-hour chart, the price is beginning to consolidate above the 1.0964 level. Similarly, the Marlin oscillator shows an intention to stretch along the zero neutral line. Below the level is the MACD line (1.0940), which provides additional support; thus, the euro may experience fluctuations easily if it drops below this level.

Pentru mai multe detalii, va invitam sa vizitati stirea originala.

Trading recommendations and analysis for GBP/USD on August 16; The pound falls only to rise later on

Analysis of GBP/USD 5M

The GBP/USD pair also experienced a decline on Thursday due to US data, which for once were positive. However, before and after the release of the retail sales and jobless claims reports, the British pound, as usual, was rising. In the morning, its strengthening was triggered by a decent report on industrial production in the UK, and in the afternoon, the pound continued to rise for no particular reason. However, it can also be said that the dollar fell due to a weak report on industrial production in the US. As we see, when the dollar does rise, it is only for a brief period before it falls much more significantly. If one or two reports from the US are positive, a negative report usually follows immediately after.

The trend for the British pound remains unchanged. After breaking the descending trendline, we anticipated a relatively strong correction. The pound has been falling for three weeks, which is starting to feel unusual. Thus, the correction could be very deep, almost as significant as the previous decline. And if the data from across the Atlantic continue to be not even disastrous but merely allow the market to sell the dollar, the pair will continue to rise for a long time.

We still believe there are no fundamental reasons for the pound to rise significantly. The Bank of England has already started easing its monetary policy, and the market has already priced in about five rounds of Federal Reserve easing in advance.

However, the trading signals on Thursday were nothing short of excellent. The first sell signal was extremely difficult to act upon, as the price dropped 50 pips within 15 minutes. However, the rebound from the 1.2796-1.2816 area could be acted upon, after which the pair returned to the 1.2863 level. By the way, volatility was relatively low on Thursday – only 70 pips.

COT report:

COT reports for the British pound indicate that the sentiment among commercial traders has been constantly changing in recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, constantly intersect and are often close to the zero mark. According to the latest report on the British pound, the non-commercial group closed 39,600 buy contracts and 2,500 short ones. As a result, the net position of non-commercial traders decreased by 37,100 contracts over the week. But the buyers still have a considerable advantage.

The fundamental background still does not provide any grounds for long-term purchases of the pound sterling, and the currency has a real chance to resume the global downward trend. Nevertheless, an ascending trend line formed in the weekly time frame. Therefore, a long-term decline in the pound is unlikely unless the price breaches this trend line. Despite almost everything, the pound continues to rise, but even the COT reports show that major players are eager to buy it.

The non-commercial group currently holds 126,000 buy contracts and 51,700 sell contracts. However, apart from COT reports, nothing else indicates potential growth in the GBP/USD pair. Such a strong buyer's advantage suggests a possible trend change.

Analysis of GBP/USD 1H

In the hourly chart, GBP/USD has a real chance of continuing to rise as an upward correction begins. A decline remains the only logical and consistent scenario in the medium term when considering all factors: technical, fundamental, and macroeconomic. However, the market is again using any excuse to sell the dollar. And there are now reasons for that. Macroeconomic data on the labor market and unemployment in the US continue to disappoint repeatedly; this week, inflation data further hit the dollar. While the data wasn't particularly alarming, it was enough for the market.

For August 16, we highlight the following important levels: 1.2269, 1.2349, 1.2429-1.2445, 1.2516, 1.2605-1.2620, 1.2691-1.2701, 1.2796-1.2816, 1.2863, 1.2981-1.2987, 1.3050. The Senkou Span B (1.2763) and Kijun-sen (1.2799) lines can also serve as sources of signals. Setting the Stop Loss to break even when the price moves in the intended direction by 20 pips is recommended. The Ichimoku indicator lines may shift during the day, which should be considered when determining trading signals.

The UK is scheduled to release retail sales data on Friday, and the US will report on building permits and consumer sentiment. Thus, the market will again have something to react to.

Explanation of illustrations:

Support and resistance levels: Thick red lines near which the trend may end.

Kijun-sen and Senkou Span B lines: These Ichimoku indicator lines, transferred from the 4-hour timeframe to the hourly chart, are strong lines.

Extreme levels: Thin red lines from which the price previously bounced. These provide trading signals.

Yellow lines: Trend lines, trend channels, and other technical patterns.

Indicator 1 on COT charts: The net position size for each category of traders.

The material has been provided by InstaForex Company - www.instaforex.com #

AUD/USD. July employment report: another boost for the aussie

The AUD/USD pair showed increased volatility on Thursday. Traders of AUD/USD are struggling to determine the direction of the price movement. During the Asian session on Thursday, the pair hit a three-day low, dropping to 0.6571. However, the bearish momentum faded by the European session, and buyers took over. The pair has returned to the 66-level and is attempting to develop an upward trend.

It's all because of the "Australian Non-Farms". The key labor market data from Australia released on Thursday failed to provide clear support for the aussie, although I think AUD/USD buyers are clearly underestimating this report. Only the headline figure, which is a lagging indicator, was disappointing. All other report components came in "in the green," significantly exceeding forecasts.

For instance, employment increased by nearly 60,000 (58,200) in July, a figure almost three times the consensus forecast of 20,000. Remember, last month's figure was double the forecast, reaching 52,000. This indicator has been on an upward trajectory for the fourth consecutive month, a stark contrast to the almost 6,000 decrease in March. The July result is the strongest since February.

But that's not all. The report's structure indicates that the increase in employment in July was solely due to a rise in full-time employment (60,500). The part-time employment component came in negative (-2,300). A similar picture was observed last month: part-time employment increased by only 6,800, while full-time employment rose by 43,300.

It's a known fact that full-time positions generally offer higher wages and better social security compared to temporary jobs. An increase in full-time employment will likely boost Australian consumer activity and accelerate inflationary indicators. This bodes well for the aussie in the current scenario.

Another component of the report also came out in the green zone. Australia's labor force participation rate rose to 67.1% (the previous value was 66.9%). This is the highest value for this indicator since November 2023. The indicator has shown an upward trend for the fourth consecutive month.

The headline figure was the only component that came out in the red zone. The unemployment rate increased to 4.2%, compared to the forecast of 4.1%.

Overall, the July labor market report is significant. It can now be confidently said that the Reserve Bank of Australia (RBA), at its next meeting, will not only maintain all monetary policy parameters unchanged but will also refrain from softening its rhetoric. The Australian Non-Farms should be considered in conjunction with the inflation growth report. According to the latest data, the overall Consumer Price Index (CPI) accelerated to 3.8% year-on-year in the second quarter. The indicator had shown a downward trend for the past five quarters but unexpectedly accelerated in the second quarter. On a quarterly basis, CPI remained at the same level, i.e., 1.0% (as in the first quarter).

Now, strong employment data has been added to the inflation figures. This combination of fundamental factors indicates that the RBA will maintain the status quo not only in September but likely in subsequent meetings in 2024 as well. The central bank is unlikely to return to discussing a hawkish scenario (at least until the release of inflation data for the third quarter) but will undoubtedly declare a wait-and-see position.

In other words, on Thursday, the aussie received a significant fundamental boost, given that the Federal Reserve will undoubtedly start easing monetary policy in September (the only question is how much the rate will be lowered). This means we can now discuss the first signs of divergence between the Fed and the RBA's policy stances.

The evolving fundamental picture supports further growth of the Australian dollar. However, the aussie has one weak link: China. Macroeconomic weakness in the People's Republic of China could curb the growth of AUD/USD and even apply pressure on the pair. Thursday's price decline during the Asian session was partly a response to mixed reports from China. Notably, investment in fixed assets increased by only 3.6% in July (forecast was 3.9%), marking a fourth consecutive month of decline. Industrial production in China rose by 5.1% (forecast was 5.2%), while retail sales data came out in the green zone: the volume increased by 2.7% (forecast was 2.6%, the previous value was 2.0%). Reacting to these reports, the aussie saw a sharp drop but rebounded fairly quickly.

Overall, the AUD/USD pair, in my opinion, retains potential for further growth, given the broad weakness of the U.S. dollar (due to slowing inflation in the U.S. and rising dovish sentiment regarding the Fed's future actions) and the strengthening of the Australian dollar (boosted by strong employment data and rising inflation). Long positions should be considered after the pair breaks above the upper line of the Bollinger Bands on the four-hour chart (0.6650). The next target for the upward movement is 0.6710: at this price point, the upper boundary of the Kumo cloud aligns with the upper line of the Bollinger Bands on the daily timeframe.

The material has been provided by InstaForex Company - www.instaforex.com #