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WHAT IS PMI AND WHY IS IT IMPORTANT?

 

 

Purchasing Managers’ Index (PMI) is an indicator that measures the economic health of the manufacturing sector. The aim of the Index is to provide information about current business conditions to company analysts, purchasing managers, decision makers.

Learn more on this interesting article https://goo.gl/MxM2BV

 

PMI in the Economic Calendar 

How is the information gathered?

Why is it so important?

 

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AUD/USD Daily Analytics

06:35 01.02.2018

 

Technical levels: support – 0.7970; resistance – 0.8080

 

Trade recommendations:

 

Buy — 0.7980; SL — 0.7960; TP1 — 0.8040; TP2 — 0.8080.

Reason: bullish Ichimoku Cloud with falling Senkou Span A; a new dead cross of Tenkan-sen and Kijun-sen with falling lines; a market in correctional movement and entered into the cloudy area.

 

1517466914-42a68b4bfa2f0515dfbaa054e9dba

 

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USD/JPY Daily Analytics

06:37 01.02.2018

 

Technical levels: support – 108.50; resistance – 110.00.

 

Trade recommendations:

 

Sell — 110.00; SL — 110.20; TP1 — 109.00; TP2 — 108.50.

Reason: narrowing bearish Ichimoku Cloud with rising Senkou Span A; a cancelled dead cross of Tenkan-sen and Kijun-sen, the lines are horizontal; the prices have grown to the bottom border of the Cloud.

 

1517466914-3dcc4d3b0e9d38341d309e86e7227

 

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EUR/JPY Daily Analytics

07:23 01.02.2018

 

Recommendation:

 

BUY 136.25

 

SL 135.70

 

TP1 137.25 TP2 138.10

 

On the daily chart, EUR/JPY retested the upper border of the previous consolidation range of 131.50-134.30. This and the following formation of a pinbar will allow bulls to return initiative. The necessary condition to continue advance towards 127.2% of the AB=CD pattern is the confident test of resistance at 136.25.

 

1517469652-151f939c6df1fdb4a28b3d5785d89

 

On H1, EUR/JPY the inability of bears to lead the pair below 38.2% of the last bullish wave points at their weakness. A break of resistance at 136.25 will open the way to the upside.

 

1517469672-b35d7fb0c22de42ad09055593ba2f

 

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USD/JPY Daily Analytics

08:27 01.02.2018

Recommendations:

 

SELL 110.1 SL 110.65 TP 109.10 TP2 108.20

 

SELL 110.65 SL 111.2 TP1 109.65 TP2 108.65

 

On the daily chart, a natural pullback happened after USD/JPY reached 88.6% target of the “Bat” pattern. If bears manage to hold the pair within inside the downward trading channel, chances of a sharp decline’s continuation will increase substantially.

 

1517473593-3297c54597baddc0779dab87f7356

 

On the hour chart, a break of resistance at 109.50 will increase the risks of activation of the “Shark” pattern with a target of 88.6%. In an obvious bearish trend, rebounds from levels of 110.05-110.15 and 110,65 should be used for selling.

 

1517473615-1f50b4d918123f905c31c70a9dfda

 

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EUR/USD Daily Analytics

12:25 01.02.2018

 

1517487855-159e2454640d6b25cbc50f048398d

 

The main trend is still bullish, but the price is consolidating. It's likely that the market is going to test the nearest resistance at 1.2500 - 1.2537. If a pullback from this area happens little later on, there'll be an opportunity to have a decline towards the closest support at 1.2456 - 1.2358.

 

1517487855-e176175194be4a178c1be19327dea

 

The pair is consolidating between the levels 1.2456 - 1.2384. The main intraday target is the next resistance area at 1.2493 - 1.2537, which could be a departure point for a bearish correction.

 

 

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GBP/USD Daily Analytics

12:27 01.02.2018

 

1517487855-53c51b36b1acc2fcf484907612a40

 

There's a "Double Bottom", so the market is likely going to reach the closest resistance at 1.4344. If a pullback from this level happens afterwards, there'll be a moment to have a downward correction.

 

1517487855-108b91da64ce255c9020d1867bc88

 

Bulls faced resistance at 1.4284, but the market is likely going to continue moving higher in the short term. The main intraday target is the next resistance at 1.4344 - 1.4386

 

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EUR/USD: BULLISH "HAMMER" ON THE 55 MA

12:30 01.02.2018

 

1517488154-783a7d8119ca874b8c92c5b9de518

 

The 21 Moving Average acted as support, so there're a "Tweezers" and a "High Wave" patterns. In this case, the market is likely going to continue rising towards the last high.

 

1517488154-4e76bff1f63c910057d548a13d978

 

There's a bullish "Hammer", which has been formed on the 55 Moving Average. Therefore, bulls are likely going to achieve the next resistance area in the short term.

 

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USD/JPY Daily Analytics

12:33 01.02.2018

 

1517488154-7ffac5ef33812a942a4a141fe327a

 

There's no any reversal pattern so far, which means the price is likely going to test the upper "Window" soon. If a pullback from this level, there'll be a moment to have a local decline.

 

1517488154-8f1038ea7414f5f92164decad7c62

 

All the Moving Averages have been broken, so the price is rising. If any bearish pattern forms soon, bears will probably try to test the nearest support.

 

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EUR/JPY: BULLS KEEP ON PUSHING

07:23 01.02.2018

 

Recommendation:

 

BUY 136.25

 

SL 135.70

 

TP1 137.25 TP2 138.10

 

On the daily chart, EUR/JPY retested the upper border of the previous consolidation range of 131.50-134.30. This and the following formation of a pinbar will allow bulls to return initiative. The necessary condition to continue advance towards 127.2% of the AB=CD pattern is the confident test of resistance at 136.25.

 

xkvxrtykamw3piwybmu2l.png

 

On H1, EUR/JPY the inability of bears to lead the pair below 38.2% of the last bullish wave points at their weakness. A break of resistance at 136.25 will open the way to the upside.

 

xld2vvtd9fvix1ebw66.png

 

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DOES THE POUND HAVE CHANCES FOR FURTHER STRENGTHENING?

14:20 01.02.2018

 

The pound rose from 1.35 versus the US dollar at the start of the year to 1.4345 on January 25. Then there was a pullback down, but starting from Wednesday, January 31, GBP/USD once again headed up. As a result, British currency showed in January its best monthly performance since May 2009.

 

1517494802-f4b658a485febed9dfa293b578b77

 

The rise happened because of the several reasons. First of all, the weaker US dollar has been supporting the rise of many currencies during a long period. The pound added than 5% since the start of the year, while the dollar is near its 3-year lows against major currencies. Analysts say that the advance of GBP/USD is more the result of the market selling dollars than buying pounds.

 

The second reason is positive prospects for a Brexit deal that was supported by domestic economic developments and comments of the Bank of England’s Governor Mark Carney.

 

The general sentiment about Brexit is positive since the start of the year. The market believes that the country will be able to reach a favorable deal with its European partners. The talks are proceeding with some difficulties though. According to Reuters, EU officials don’t want to allow finance companies to operate in each other’s markets without barriers if Britain leaves the single market. A report was leaked this week that Brexit will bring negative consequences to the UK economy, no matter whether it leaves the European Union with a free trade deal, single market access or without any deal at all.

 

However, so far positive comments of BOE Governor Mark Carney have shielded the pound from the Brexit-related uncertainty. Sterling rose on Tuesday after he said that the country’s economy has recovered from the financial crisis. Mr. Carney said that private sector is gradually firming and a rise in wages over the next few years appeared to be on track. All this allows the bank to occupy itself with bringing down inflation. As a result, many analysts now think that the BOE will raise interest rates faster than expected. The first 2018 policy decision of BOE will be announced on Thursday, February 8. Before this Services PMI will be released on Monday, February 5.

 

Some analysts have already changed their long-term forecasts for the pound. For example, HSBC increased the year-end projection for GBP/USD from $1.26 to $1.34. UniCredit now thinks that the pound will end 2018 at $1.49. Their previous estimate was by 9% lower. BMO Capital Markets predicted GBP/USD at $1.45 last October, but, nowadays, they forecast $1.52 if the dollar continues to weaken and the UK economy keeps growing.

 

At the same time, there are experts who think that the pound has gained too much in the short-term and that this growth is not fully justified. Commerzbank believes that there will be a lot of problems in Brexit negotiations. According to the bank, Carney will recognize Brexit-related risks and will discourage the rate hike expectations next week. That’s why Commerzbank is cautious about buying GBP at the current levels.

 

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USD/JPY: BULLS FOLLOW A SHARK

08:27 01.02.2018

 

Recommendations:

 

SELL 110.1 SL 110.65 TP 109.10 TP2 108.20

 

SELL 110.65 SL 111.2 TP1 109.65 TP2 108.65

 

On the daily chart, a natural pullback happened after USD/JPY reached 88.6% target of the “Bat” pattern. If bears manage to hold the pair within inside the downward trading channel, chances of a sharp decline’s continuation will increase substantially.

 

xi7wswznm9j5ctswh68bl.png

 

On the hour chart, a break of resistance at 109.50 will increase the risks of activation of the “Shark” pattern with a target of 88.6%. In an obvious bearish trend, rebounds from levels of 110.05-110.15 and 110,65 should be used for selling.

 

xldru2gnqtuz76ght5tc.png

 

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EUR/USD Daily Analytics

05:55 02.02.2018

Technical levels: support – 1.2480; resistance – 1.2530.

 

Trade recommendations:

 

Buy — 1.2480; SL — 1.2460; TP1 — 1.2530; TP2 — 1.2590

Reason: expanding bullish Ichimoku Cloud with rising Senkou Span A; a new golden cross of Tenkan-sen and Kijun-sen, but the lines are horizontal; the market is supported by Cloud and returned into the positive area.

 

1517550933-5974574d0f06c411e972e24d898d2

 

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GBP/USD Daily Analytics

05:56 02.02.2018

Technical levels: support – 1.4200; resistance – 1.4280, 1.4390.

 

Trade recommendations:

 

Buy — 1.4280; SL — 1.4260; TP1 — 1.4390; TP2 — 1.4470.

Reason: expanding bullish Ichimoku Cloud with rising Senkou Span A; a new golden cross of Tenkan-sen and Kijun-sen, but the lines are horizontal; the prices returned into the positive area and may continue uptrend.

 

1517550933-5838ef800660551113de2aff99712

 

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EUR/USD Daily Analytics

07:32 02.02.2018

Recommendation:

 

SELL 1.2445 SL 1.25 TP 1.2345 TP2 1.22

 

SELL 1.2335 SL 1.239 TP1 1.2235 TP2 1.22

 

On the daily chart of EUR/USD, there’s a sustainable uptrend. Bulls are getting ready to test a 3-year high to reach 200% target of AB=CD. Failure or inability to fix above 1.2535 will be the first signal of buyers’ weakness.

 

1517556674-8afba167b3e7c15d0d5d28d0f3c7b

 

On H1, EUR/USD bulls have to fear the formation of a “Widening wedge”. For that the euro needs to decline below $1.2335. Aggressive sell position is possible at the low of the bar #2. 

 

1517556693-cd38927ea0f956dcaeee884bec774

 

 

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EUR/GBP Daily Analytics

07:42 02.02.2018

Recommendation:

 

SELL 0.8875

 

SL 0.893

 

TP1 0.8775 TP2 0.8715 TP3 0.869

 

On the daily chart of EUR/GBP, bears failed with their attack on the support of the lower border of the medium-term consolidation range of 0.8690-0.9015. Sellers retain hopes for a break and formation of the AB=CD pattern.

 

1517557263-bc1ce4ebdd72b71af2881b8edc2b5

 

On H1, a break above resistance levels at 0.8780 and 0.8810 will increase the risks of triggering Gartley pattern with a target at 78.6% of the wave XA. From this area (0.8870-0.8880), there is a high possibility of aggressive selling by large players.

 

1517557292-311438cdc50bb0f634d8ee27e47a0

 

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EUR/GBP: BULLS RETREAT, BUT DON’T GIVE UP

07:42 02.02.2018

 

Recommendation:

 

SELL 0.8875

 

SL 0.893

 

TP1 0.8775 TP2 0.8715 TP3 0.869

 

On the daily chart of EUR/GBP, bears failed with their attack on the support of the lower border of the medium-term consolidation range of 0.8690-0.9015. Sellers retain hopes for a break and formation of the AB=CD pattern.

 

2uuyo9l.png

 

On H1, a break above resistance levels at 0.8780 and 0.8810 will increase the risks of triggering Gartley pattern with a target at 78.6% of the wave XA. From this area (0.8870-0.8880), there is a high possibility of aggressive selling by large players.

 

1vd9jbU.png

 

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EUR/USD Daily Analytics

10:32 02.02.2018

 

1517567469-a7baa887f5f872cded5d7fe46beb5

 

The main trend is still bullish. It's likely that the market is going to reach the next resistance at 1.2537 - 1.2569 in the short term. If a pullback from this area happens little later on, there'll be a moment to have a decline towards the nearest support at 1.2456 - 1.2384.

 

1517567469-efde1e25089051387039844a6bf0d

 

The pair is consolidating between the levels 1.2537 - 1.2493. The main intraday target is the 34 Moving Average, which could be a departure point for another upward price movement in the direction of the next resistance at 1.2537 - 1.2569.

 

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GBP/USD Daily Analytics

10:35 02.02.2018

 

1517567469-b1c84980e59c11d301e9df88d8b7b

 

The price is still rising above the Moving Averages. The main intraday target is the next resistance at 1.4344. If a pullback from this level happens afterwards, bears will probably try to test the closest support at 1.4206 - 1.4129.

 

1517567469-74fbd5500f91482d5c038a23d6d5e

 

Bulls faced with resistance at 1.4284, so the market is going to test the 89 Moving Average. This line could be a departure point for an upward price movement towards the next resistance at 1.4327 - 1.4344.

 

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US Employment Data.

 

The US usually releases labour market data on the first Friday of a month. This time this tradition won’t change. America will publish Nonfarm Payrolls (NFP), unemployment rate and average earnings at 15:30 MT time on February 2. 

 

Take into consideration two more important indicators about US labour market:

1⃣   Unemployment Rate.

2⃣  Average Hourly Earnings.

 

This may be a great chance to trade the greenback as the currency will likely move with great swings. Traders will buy on strong data from the US and sell if American figures disappoint.

 

FolloW these events on the FBS Economic Calendar  https://goo.gl/MyaEL7

 

KrVVOeV.png

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ANY CHANCES TO FORECAST NFP?

11:15 02.02.2018

 

Today the US Bureau of Labor Statistics will release the Nonfarm Payrolls at 15:30 MT time. Nonfarm Payrolls count the change in the number of employed during the previous month. The data is important because it displays consumer spending and economic health. The advantage of the indicator is that it is delivered shortly after the month ends. It is announced together with two other indicators such as Average hourly earnings and Unemployment rate.

 

Nowadays, we can notice that the indicator is not as important as it was before. During the financial crisis, numbers of it were highly taken into consideration because of its main function as a measure of the economic health. However, now the economy is quite firm, it does not require additional supportive indicators. But still, the data support interest rates hikes. This year the Fed is expected to increase interest rates three times. So a market follows changes in the labor market. A tighter market causes wages rise. Wages increase will boost the interest rates.

 

Although it is almost impossible to forecast Nonfarm Payrolls data, analysts do not give up.

 

This time, analysts are divided into two camps.

 

For example, analysts of Nomura and Goldman Sachs predict 205K rise.

 

On the other hand, Hongkong and Shanghai Banking Corporation makes its prediction based on the temperature. It claimed that the drop in average temperatures across the country may cause the fall of job creation for the month. So its expectations are at the level of 170K. The Australian Bank Westpac agrees with HSBC, maybe the reason for the number is different, but the number is the same. Toronto-Dominion Securities is not far from them, it is looking for 175K.

 

Making a conclusion, we can say that despite the fact that the Nonfarm Payrolls data is not used as much as it was during the financial crisis, it is still a crucial indicator, for the Fed policy especially. Its volatility is still incredible, that creates difficulties for forecasts. October data of -33K was followed by 261K in November, the data delivered in December was quite similar to previous one, but the next one was in 80K less. However, the data is still taken into consideration and always supported by two other indicators that smooth its volatility.

 

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EUR/USD Daily Analytics

13:07 02.02.2018

 

1517576777-49aba98b37cca53a58a9cffbb5a0c

 

The market has been rising since a "Tweezers" model formed on the 34 Moving Average. There's no any reversal pattern so far, which means the market is likely going to test the nearest resistance area in the short term.

 

1517576777-1d3e3793f84aa65d90c0cf4f12074

 

There's a bullish "Hammer", which has been formed at the last local low. So, the price is likely going to continue moving up in the coming hours.

 

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