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TRADE WARS ARE GOOD AND EASY TO WIN: IS IT REALLY SO?

14:09 05.03.2018

In the world of free trade, trade wars became a rare event. However, now we are coming back to them because of Mr. Trump’s policy.

 

Let’s start with the definition of a trade war.

 

Trade war is a negative result of protectionism. It occurs when one country (1) implements trade barriers such as tariffs or quotas against imported goods of another country (2). As the result, that country (2) has to retaliate with the same measures.

 

Trade wars happen when one country considers another country’s trade policy as unfair or aims to protect the domestic economy and make imported goods less attractive.

 

So why are we talking about trade wars and how can they affect markets?

Talks appeared after the US president Donald Trump announced that he is going to enact tariffs on steel and aluminum imports next week. It is anticipated to be a 25% tariff on steel and a 10% tariff on aluminum. The USA is the world’s biggest steel importer. So such measures will lead to the redistribution of forces on the steel market.

 

Mr. Trump said that trade wars are good and easy to win. However, let’s look if it reflects the reality.

 

It is worth to come back to the history. In 1930 the US president Herbert Hoover signed the Smooth-Hawley Tariff Act that increased tariffs on all manner of imports. In opposition to this, other countries implied tariffs against US goods. It led to such economic disasters as an enormous unemployment, exports, and imports plunge, banks and companies went out of business. So this Act made the Great Depression even worse.

 

That is why there are doubts that these tariffs will bring something good for the American economy. An imposing of tariffs will be dangerous for the job sector and living standards. Prices will rise, that will hurt the US consumers and put American companies at a serious disadvantage. The unemployment rate will increase. There is a possibility that tariffs will push steel and aluminum manufactures, but there are doubts that these sectors will be able to support an increased demand. Moreover, because of the rising steel and aluminum prices, the cost of raw materials will increase. So other sectors will suffer as well.

 

What is happening in markets

News about the tariffs has already affected stocks. The stock market fell immediately after Trump announced the soon tariffs’ implementation.

 

If tariffs will affect the US economy as we described above, it will lead to the depreciation of the greenback. The US dollar will not be able to stabilize its positions.

 

Furthermore, the imposing of the tariffs will affect not only the American economy but the world in general. A circle of retaliation will damage the global supply chains. Most of the products produced in one country are consists of inputs from other countries.

 

Even at the moment, the European Commission President Jean-Paul Juncker claimed that they will put tariffs on such American products as Harley-Davidson, bourbon and blue jeans - Levi’s. China is going to implement tariffs on American soybeans and sorghum. And later there will be more retaliation.

 

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Making a conclusion, we can say that the claim of Mr. Trump that “trade wars are good and easy to win” is quite doubtful. According to the history, trade wars led to the economic depressions, unemployment, lack of supply, the suffering of different sectors. As we know, the Fed policy could support the US dollar last week and it is supposed to lead to its appreciation. However, Trump’s protectionism can lead to the fall of the US economy that will affect the greenback. Moreover, destabilization of the US economy will damage stability of the world supply chain and create problems for the manufacturing and labor market in world scales.

 

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USD/JPY: "SHOOTING STAR" LED TO DECLINE

12:25 05.03.2018

 

S2uOZxG.png

 

The price has been declining since a "Shooting Star" pattern was formed on the Moving Averages. However, there's a bullish "Harami", so we could have a local upward correction in the short term. Anyway, bears will probably try to test the lower "Window" afterwards.

 

ZfKyrq0.png

 

The price is consolidating under the Moving Averages. Also, we've got an "Engulfing" pattern, so the market is likely going to test the closest resistance area, which could be a departure point for another decline.

 

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FBS Video Lessons

 

In this video Tutorial LESSON 12. TRANSACTION, PROFIT, LOSS. TYPES OF ORDERS

You will learn that the decision to buy or sell the currency pair depends on your expectations of the future price. If you think that EUR/USD will rise, you buy the pair or if you think that the EUR/USD will fall, you sell the pair. 

Learn more


 

Do not forget to chose your language from the video's subtitles :) 

 

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AUD/USD Daily Analytics

05:37 06.03.2018

Technical levels: support – 0.7690; resistance – 0.7790

 

Trade recommendations:

 

Sell — 0.7760; SL — 0.7790; TP1 — 0.7690; TP2 — 0.7600.

Reason: bearish Ichimoku Cloud, but rising Senkou Span A; a dead cross of Tenkan-sen and Kijun-sen with rising Tenkan-sen; the market is in correctional movement to the Cloud and the prices are breaking out the Kijun’s resistance.

 

1520314575-42a68b4bfa2f0515dfbaa054e9dba

 

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USD/JPY Daily Analytics

05:39 06.03.2018

Technical levels: support – 105.50; resistance – 106.50.

 

Trade recommendations:

 

Sell — 106.20; SL — 106.50; TP1 — 105.50; TP2 — 105.10.

Reason: bearish Ichimoku Cloud with falling Senkou Span A and B; a dead cross of Tenkan-sen and Kijun-sen, but rising Tenkan; the market had corrected to Kijun’s resistance and now may continue the downtrend.

 

1520314575-3dcc4d3b0e9d38341d309e86e7227

 

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XAU/USD Daily Analytics

07:29 06.03.2018

Recommendations:

 

BUY $1328 SL $1313 TP2 $1346 TP2 $1358

 

SELL $1302 SL $1317 TP1 $1272 TP2 $1245

 

On the daily chart of XAU/USD, bulls to continue the rally to 127.2% and 1.618% of the senior and junior AB=CD need to overcome resistance at $1,340 and $1,360 an ounce. On the other hand, another test of support at $1,302 in case of success will lead gold to 88.6% target of the “Shark” pattern.  

 

1520321183-20c6ebb86722ac92f8a505b7903a9

 

On H1, a break of resistance at $1,328 will open the way to 113% and 88.6% targets of the “Shark”.

 

1520321198-e12a637cc937326a9c7981d6dfc46

 

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USD/CAD Daily Analytics

07:39 06.03.2018

Recommendation:

 

BUY 1.2915

 

SL 1.286

 

TP1 1.3015 TP2 1.3110

 

On the daily chart of USD/CAD, bulls managed to rise to an important level of 1.2920 and settle above it. Now they count on an advance to 127.2% target of AB=CD. At the same time, if the pair reached 113% of the “Shark”, the risks of a pullback will increase.

 

1520321829-1430b06b52ccdf0a9e951da313446

 

On H1, there is a “Spike and reversal with acceleration” pattern. The pair reached 224% target of AB=CD. This increases the odds of correction. The trend is bullish, so it will be wise to use pullbacks for opening long positions.

 

1520321843-5c726ce87bf89e31cdcfbd4c37b26

 

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WILL THE EURO CHANGE ITS DIRECTION AFTER THE ITALIAN ELECTIONS?

10:34 06.03.2018

Italian parliamentary elections and German coalition votes started to affect the euro much earlier they were held. And when the German votes’ results could support the single currency, the Italian elections does not portend anything good for it.

 

The results of Italian votes were announced on Monday and created the environment of uncertainty not only for the euro but for Italy itself. No party or coalition won the majority in the government, so a hung parliament was formed. Moreover, the majority of all votes received the right-wing bloc of parties. The leader in the bloc is the anti-immigrant and euro-skeptic party “League”. A leader of the party Matteo Salvini is ready to leave the European Union and the Eurozone unless Brussels changes the current treatment Italy receives. He wants fewer constraints from the European Union. The anti-establishment Five Star Movement received the largest number of votes as the single party.

 

1520332206-d54f90eb183f3f369e8e722e9e67a

 

Where will Matteo Salvini lead Italy?

 

Why have these parties got such a huge support?

 

The answer is clear. Italian citizens are tired of enormous migration and economic problems.

 

The most crucial woe is poor career prospects. Unemployment is the biggest fear of Italians. Both parties promised to solve this issue, that led to their victory, especially, in the areas where the unemployment rate is incredibly high. Although Italy has the third-biggest economy in the Eurozone, its government debt is quite big. Net national debt is over 120% of GDP. So the Five Star Movement campaigned for a basic income. In addition, right-wing coalition promoted an anti-immigration policy, putting “Italians first”.

 

How will the results of elections affect the euro?

 

As we mentioned above, the active parliament has not been formed yet. It creates uncertainty both for Italy and the EU.

 

The hung parliament means the continuation of the parliament’s formation until one of the coalitions will get the majority. If parties do not back a coalition, Italy will not avoid another election. The period of the formation is unknown as well. So the euro will be under the pressure for the uncertain period that will be depicted by volatility.

 

More likely, that the euro-skeptic and anti-establishment parties will become the leading force in the government. It will create problems for the European Union, as the Italian economy is the third-biggest economy of the Eurozone after Germany and France. The EU managed to stabilize the economic growth, and now it is aiming to raise interest rates in soon future. It supposed to support the euro. However, if there are misunderstandings with the Italian government, the EU will have difficulties in the future.

 

Let’s look at the chart.

 

1520332161-ece6c3cfd6736c88dad910dc12d69

 

On Monday the EUR/USD pair showed big volatility. After the results of the German elections were announced, the single currency climbed to the important level of 1.2360. But the pair could not break the resistance because of the uncertain news from Italy. So the single currency fell to 1.2268. However, the pair closed almost at the level of the opening price.

 

Today, EUR/USD is climbing to the resistance at 1.2360 and if it manages to break it, there will be a good chance for the euro to move further.

 

It means that although the Italian elections create uncertainty, currently the euro has chances to recover. If the euro-skeptic parties will get the majority in the government, it will take a long time to solve all issues between the European Union and Italy. However, the euro will stay under the pressure, until all misunderstandings will be solved.

 

But in the short-term, the euro can be supported by such events as European central bank’s meetings and US data.

 

To sum up we can say that the Italian parliamentary elections create uncertainty for the euro area in the medium term. Although the euro was not affected too much and still has chances for recovery after the last week falls, it is under the pressure until the government will be finally formed and the issues between Italy and the EU will be solved. Any news on this topic will create volatility of the euro. We recommend you to closely follow the news.  

 

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EUR/USD Daily Analytics

12:13 06.03.2018

 

1520338217-f2ebc6a25c9aa45bf7918d030c5e4

 

The main trend is still bullish, so it's likely that the price is going to reach the next resistance area at 1.2391 - 1.2434. If a pullback from these levels happens, there'll be a moment for a decline towards the nearest support at 1.2319 - 1.2296.

 

1520338217-557b5f397a0af6e4a0c0883db2e50

 

The price is consolidating above the Moving Averages. The main intraday target is the closest support at 1.2319 - 1.2296, which could be a departure point for an upward price movement in the direction of the next resistance at 1.2391 - 1.2434.

 

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GBP/USD Daily Analytics

12:19 06.03.2018

 

1520338217-721ceea329e32e673b0ba08183f7e

 

The 34 Moving Average has acted as resistance, so there's a "V-Top" pattern. In this case, we could have a decline towards the nearest support at 1.3799 - 1.3763. If a pullback from this area forms little later on, there'll be a moment to have another bullish price movement.

 

1520338217-2752feaaae4b7fbff733f8e31e280

 

The price is consolidating between the Moving Averages. The main intraday target is the closest support at 1.3799 - 1.3763. If we have a pullback from these levels, bulls will probably try to test the next resistance at 1.3875 - 1.3904.

 

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EUR/USD Daily Analytics

12:30 06.03.2018

 

1520339284-b3fb2d2d74c9dd6c49f8c15340eb4

 

We've got a bearish "Harami" pattern, which hasn't been confirmed yet. So, if a pullback from the Moving Averages happens little later on, there'll be an opportunity to have a new local high. Meanwhile, if we have another reversal pattern, bears will probably try to deliver a downward correction.

 

1520339284-5f0293fb9a01214ee954036dc2b63

 

There're bearish patterns such a "High Wave" and a "Shooting Star", which both have been confirmed. In this case, the Moving Averages is likely going to act as support anytime soon.

 

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USD/JPY Daily Analytics

12:35 06.03.2018

 

1520339285-894260becd97e9a6e3d3ba934314a

 

There's a bearish "Harami", which has been formed on the 21 Moving Average. So, the market is likely going to decline towards the nearest support area in the short term.

 

1520339284-5ea34cddd0c53201ddcae92198e3c

 

The last "Shooting Star" led to the current decline. Also, there's a pullback from the 89 Moving Average. Therefore, the price is likely going to decline in the coming hours.

 

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USD/JPY: "SHOOTING STAR" LED TO DECLINE

12:35 06.03.2018

 


 

OTwPd6c.png

 

There's a bearish "Harami", which has been formed on the 21 Moving Average. So, the market is likely going to decline towards the nearest support area in the short term.

 

5EN5Pxt.png

 

The last "Shooting Star" led to the current decline. Also, there's a pullback from the 89 Moving Average. Therefore, the price is likely going to decline in the coming hours.

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EUR/USD: BEARISH "HARAMI" PATTERN

12:30 06.03.2018

 


 

OhBvi9v.png

 

We've got a bearish "Harami" pattern, which hasn't been confirmed yet. So, if a pullback from the Moving Averages happens little later on, there'll be an opportunity to have a new local high. Meanwhile, if we have another reversal pattern, bears will probably try to deliver a downward correction.

 

MSHjHlU.png

 

There're bearish patterns such a "High Wave" and a "Shooting Star", which both have been confirmed. In this case, the Moving Averages is likely going to act as support anytime soon.

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HOW TO PLACE A STOP LOSS ORDER?

 

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Successful risk management means that the losses should be minimised. Stop loss order can be an efficient solution for that. 

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USD/CHF Daily Analytics

07:44 07.03.2018

Recommendation:

 

SELL 0.9325 SL 0.938 TP1 0.9255 TP2 0.9220

 

BUY 0.9475 SL 0.9420 TP1 0.9610 TP2 0.9715 TP3 0.9780

 

On the daily chart of USD/CHF, bulls need to rise above resistance at 0.9475 and trigger the “Shark” pattern. This is a signal of their weakness. Currently, bulls and bears are fighting for 0.9380. The further face of franc depends on the result of this battle.

 

1520408567-a5903a7f3cf43bc4f33886526fd84

 

On H1, the decline of USD/CHF below support at 0.9340 and 0.9325 allows triggering the “Shark” pattern and AB=CD. Their 88.6% and 200% targets correspond to 0.9255 and 0.9220.

 

1520408584-351a015a31e5fdb2fee97b43bc66a

 

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GBP/USD Daily Analytics

08:16 07.03.2018

Recommendation:

 

SELL 1.3975

 

SL 1.4030

 

TP1 1.3875 TP2 1.384 TP3 1.3795

 

On the daily chart, GBP/USD bulls are ready to make another attempt to test the upper border of the downtrend channel. If the pair managed to break above this line, an inverted “Shark” pattern with target at 88.6% will be triggered. On the other hand, a pullback will return the initiative to bears.

 

1520410399-b6b56ed02b1869ac79ae2067aff9c

 

On H1, GBP/USD is fighting for 1.39. The inability of bulls to move above this level will point at their weakness. The risks of decline to 88.6% of the “Bat” will increase.

 

1520410428-2cf183d9aa99dd882e50bd88c66a5

 

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EUR/USD Daily Analytics

07:53 07.03.2018

Technical levels: support – 1.2380, 1.2350; resistance – 1.2450, 1.2480.

 

Trade recommendations:

 

Sell — 1.2450; SL — 1.2480; TP1 — 1.2380; TP2 — 1.2350

Reason: narrowing bearish Ichimoku Cloud with rising Senkou Span A; a golden cross of Tenkan-sen and Kijun-sen with rising lines; the prices are in the positive area, but there is a strong resistance on 1.2450.

 

1520409151-5974574d0f06c411e972e24d898d2

 

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GBP/USD Daily Analytics

07:54 07.03.2018

Technical levels: support – 1.3820; resistance – 1.3930.

 

Trade recommendations:

 

Sell — 1.3870; SL — 1.3890; TP1 — 1.3820; TP2 — 1.3770.

Reason: narrowing bearish Ichimoku Cloud with rising Senkou Span A; a golden cross of Tenkan-sen and Kijun-sen; a market reached the resistance of the Cloud’s bottom border.

 

1520409151-5838ef800660551113de2aff99712

 

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EUR/USD Daily Analytics

10:48 07.03.2018

 

1520419391-0b432bcc4c1feef392cd2cd1fa4c4

 

The main trend is still bullish, but the pair faced with resistance at 1.2359, so there's consolidation. Nevertheless, it's likely that the market is going to continue moving up towards the next resistance at 1.2474 - 1.2509. If a pullback from this area happens little later on, there'll be a moment to have a decline.

 

1520419391-d7b299aaee18461fd26c2239db1dd

 

The price is consolidating between the levels 1.2334 - 1.2391. It's likely that the pair is going to reach the closest support at 1.2391 - 1.2368. Meanwhile, if we see a pullback from these levels, bulls will probably try to test another resistance at 1.2434 - 1.2474.

 

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GBP/USD Daily Analytics

10:50 07.03.2018

 

1520419391-3dcc83d8a2d798e98f56d54c820fb

 

There's a "Double Top" pattern, which has been formed on the Moving Averages. So, we should keep an eye on the nearest support at 1.3856 - 1.3799 as the next bearish target. If a pullback from this area happens, we could have another upward price movement.

 

1520419391-4f1d85241ca91922b0d8e6168090a

 

We've got two bearish "Thorn" patterns on the one-hour chart. Therefore, there's an opportunity to have a downward correction towards the closest support area at 1.3816 - 1.3799 in the short term.

 

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EUR/USD Daily Analytics

12:55 07.03.2018

 

1520427159-9ab7b52240b88239939e19299a677

 

There's a "Three Methods" pattern, which has been confirmed. Also, there's no any reversal pattern, so the market is likely going to test the next resistance area. If a pullback from this zone happens little later on, there'll be a moment for a bearish correction.

 

1520427159-a17c27389b2bc4eb1a6d38620729b

 

We've got a bearish "Shooting Star" right under the upper "Window". In this case, there's an opportunity to have a local correction towards the nearest support, which could be a departure point for another bullish price movement.

 

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