Forex stochastic oscillator

Forex stochastic oscillator

How does forex stochastic oscillator work: formula, advantages and disadvantages, application to trade. Modifications of original stochastic and practical examples of trading strategies based on them.

Stochastic oscillator is one of the common tools used in different forex trading strategies, both in short term and position trading. It is well combined with trend oscillators on different timeframe and serves as additional filter in technical analysis. Its formula has been many times upgraded, but it has been quite popular among traders of different experience for over fifty years. Read on in the article about how stochastic works, about it s basic calculation formula, how you can read stochastic signals. I will also describe practical examples of trading strategies on they basis of forex stochastic oscillator.

Stochastic oscillator: theory and practice for newbies and advanced traders

I believe each trader has come across a basic technical tool, stochastic oscillator. It is included into all major trading platforms; it often recommended to be studied first in most of textbooks for beginner traders. However, it is also often criticized for sending not exact signal. But, it should be noted that stochastic is not designed to be the main indicator to build a trading strategy on. It is used as supplementary tool to the main indicator to reduce the number of false signals. So, it does not make any sense to criticize it. I have already described partially this indicator in this overview, so I will briefly deal with the indicator formula, signals interpretation and then move on to practical examples of the stochastic application to trade forex.

Theory of stochastic oscillator: principle, formula, signals.

Initially, stochastics had nothing to do with trading. The indicator developer, George Lane was originally aiming at defining the mathematical ratio of the amount of limestone added during smelting to iron ore to produce steel. Later, the formula most accurately describing the regularity was applied already in relation to trading in the forex market. 

A stochastic oscillator is a momentum indicator. It compares a current price (the price type is specified in the properties, but, the closing price is usually analyzed) to a range of its prices between the highest and the lowest price over a certain period of time.

  • Example. You enter the period of 20 day in the parameters. This means that the indicator finds out the price high and low over this period and compares them to the current price. Simply put, if 15 days ago, the     price high was at 1.1150, the current price is 1.1100, the difference will be 0.0050. The less is the difference, the closer is     the stochastic to a level of 0 or 100. This is a rough description as the stochastic formula is much more complex. 

The indicator display the percentage of the current price and the price extremes. If the value is 50%, the current price is in-between. When the current price is getting nearer to the extremes, it means that the price will reverse at the level of or next to the extreme. With each new bar, the indicator values are recalculated, since the time interval changes.

The most commonly used stochastic formula:

  • %К (major line of the indicator, a solid line) = 100*( (С – Min)/(Max-Min) ). C is the most recent closing price. Max and Min are the price high and low over the period indicated in the settings.
  • %D (the signal line of the indicator, a dotted line) = МА (М) of %К. So, %D is the moving average with the period M of %К. It sometimes is referred to as a fast stochastic. 

This formula is a basic one on trading platforms.

Parameters of the indicator:

  • %К is the period of the oscillator.
  • %D is the period of the signal line that is the moving average of the main line.     
  • Slowing is additional smoothing of both lines (reduced influence of the market noise that is random price swings).     
  • Price field is the price analyzed (open/close or high/low of the bar)
  • MA method is the method of the %D calculation     

Indicator has two lines that are moving between levels 0 and 100. The most common interpretation of stochastic signals. 

  • Indicator entered the overbought zone of 80-100 or the zone of oversold conditions 0-20. The trend may reverse. If both lines, being in the key zones, are     heading outside the zone, the signal is stronger.     
  • The crossover of the slow and the signal lines inside the zone. 
  • Divergence (it can be either bullish or bearish divergence, according to the type of trade).     

As many other indicators, the stochastic has a flaw of dependence of lagging and the number of false signals on the period (time interval). If it is short, the indicator responds to each next bar very sharply. If the period is too long, the signals are lagging. For example, if 13 out of 14 periods (bars) had roughly equal closing price (trading flat), and the tenth bar’s close is much greater, indicating the trend start, because of the 13 nine other bars, the stochastic value won’t change much. It can be managed by selecting the period for each asset and correcting it regularly.

I would like to add a few words about modifications of the stochastic oscillator. The most popular versions are described in this article. Next versions may serve as separate indicator. In this tools, the basic stochastic formula is smoothed in some way, attached to other indicators and so on. You will see how these tools work in practice in the strategies described below.

Five profitable forex strategies based on the stochastic and its modifications

The strategies described below are the examples of how a forex trader can discover entry signals using the stochastic both as the main and as a supplementary tool. I offer these strategies to study not as a perfect trading tool with a minimal risk of losses, rather, I want to demonstrate how one can estimate the accuracy of signals, how one should in general apply the oscillator and compare its performance with the modifications. In other wards, I’d like to encourage you to think, notice, analyze.

Each description contains the link to the free template of the indicator and the strategy for MT4. You can read about how to add them to the platform in the second half of this article.

1. Trading in the morning with Slow Stochastic

The European session is the best time, in terms of activity, to trade the EUR/USD pair. One can make a greater profit from the volatility than during other sessions. At the beginning of the session, the pair is trading by inertia in the first few hours, when it is suggested to trade according to this strategy.

Slow Stochastic, whose template can be downloaded here, differed from the original oscillator in that it uses in calculation the total of the price values of the last three bars divided by three. That is, at the last section, there is averaging of the indicator, smoothing, due to which the indicator’s line moves slower and smoother. Smooth movements are partially an advantage, as the signals are more logical and predictable. However, they may be also lagging, especially in day trading.

Timeframe is M5, currency pair traded is EUR/USD, parameters of Slow Stochastic: PK = 14, PD = 5, PS = 5, Levels – 10 and 90. Note that the levels are located higher deliberately. The strategy doesn’t suggest a pursuit for the number of trades. You may set the standard levels of 20 and 80, but this will increase the error risk.

Conditions for entering a long trade:

  • Trading    time is from 9.40 to 10.20 Eastern European Time. You don’t trade during the first 40 minutes as the price movements can’t be anticipated during this time period.     
  •  Slow Stochastic must go down to the oversold zone during this time (below level 10).
  • Before   9.40, the Slow Stochastic didn’t go lower than level 10 at the past eight bars. 

Once the stochastic crosses the target level, you enter a trade at the next bar. It doesn’t matter where the stochastic lines are directed (towards zero level or outside the zone) the signal is when the line crosses level 10.

Target profit is 10 pips, stop loss is also 10 pips. When the target profit is reached, the trade is exited. You may risk and leave 50% of the position open, moving the stop to the breakeven.

It is clear from the screen that the indicator is entering the oversold zone (below level 10), next, you wait until one more bar closes and enter a trade after that. Even if the trade was entered one bar earlier, the stop would not be triggered. The arrow marks the entry point. Horizontal red lines mark from top to bottom: take profit, entry and stop loss.

Conditions for entering short trade: 

  • Trading    time is from 9.40 to 10.20 Eastern European Time. 
  • Slow Stochastic must go up into the overbought zone (above level 90) during this time. 
  • Before  9.40, the Slow Stochastic didn’t go higher than level 80 at the past eight bars. 

The entry conditions are similar to that of the long trade.

Note that, unlike the previous previous situation, when the indicator has been in the oversold zone for some time after the trade was entered, in this case it goes outside almost immediately, but this doesn’t affect the result. As I have noted above, it is not so important how fast the indicator exits the zone, the sell signal are strong when it crosses the key level when the trade is entered.

Strategy allows at least avoid the loss. Indicator quite well picks up the inertia movement and in the worst case, the position is closed at breakeven. It is not recommended to extend the levels to 20 and 80, but you may extend the time period. However, there is a risk that the stop loss will work out more often.

2. Combination of CCI Stochastic and Heiken Ashi

This strategy uses an unusual combination of two indicators, each of which is itself unusual and is rather rarely used in classical trading.

1. CCI Stochastic. This is an arrow indicator that is based on a common stochastic oscillator and the commodity channel index. General rules of its application are explained here. I will only add some information about how it is build.

The indicator was developed by Donald Lambert, who first published the information about the CCI in 1980. It is based on the following theory: if the price deviates from the moving average (averaged price value over a few bars) more than the standard deviation of the specified period, it suggests that the trend may reverse. The CCI calculation formula is based on the Typical Price (the total of the high, the low and the closing price divided by three), probable mean deviation and the moving average of the typical price. You can easily find the formula on the Internet.

It is suggested that the CCI has levels of 100 and 100, but they are of a more visual nature. It means that you can’t interpret the crossing of these levels as an accurate signal. Another matter is the stochastic, where levels 20 and 80 clearly display the overbought and oversold areas. CCI Stochastic is an attachment of the stochastic levels (that is the oscillator itself) to the CCI formula. The stochastic applied to the CCI defines the range of levels.

2. Hama Jurik. It is a modification of the Heiken Ashi indicator. Heiken Ashi is one of the versions of the candlestick chart that is radically different from Japanese candlesticks. A Japanese candlestick specifies 4 types of price: open, close, high and low of a bar. Everything is clear.

In the Heiken Ashi chart, a bar also has similar types of the price, but it uses a different calculation algorithm, averaging. Each new bar is built from the middle of the previous one. The calculation algorithm is as follows: 

  • Opening price is the average of the previous open and close.     
  • Closing     price is the average of the previous open, close, Max and Min.     
  • Max is the average of the previous open, close and Max. 
  • Min is the average of the previous open, close and Min. 

It is thought that Heiken Ashi candlesticks, though they are a little lagging, paint a smooth chart without repainting that clearly displays the trend direction.

Due to a different calculation formula, the Heiken Ashi candlesticks are attached only to a linear price chart, that is, they are not compatible with the Japanese candlesticks.Hama Jurik is an alternative indicator that allows working with the common candlesticks and with the Heiken Ashi at the same time. In the chart, it looks like candlesticks of different color that are above/below the common Japanese candlesticks. Red candlesticks indicate a downtrend, green ones – an uptrend.

The recommended timeframe is H1, the currency pair traded is the EUR/USD. The template archive can be downloaded here.

CCI Stochastic parameters:

Hama Jurik parameters: МА period = 10, МА method =2, Shift = 1, BetterFormula = false, Jurik = true, Length = 20, Phase = 0.0.

Conditions for entering long trade:    

  • CCI Stochastic paints a green arrow.     
  • Current or next candlestick closes higher than the body of the Heiken Ashi candlestick. It will be perfect if the Heiken Ashi candlestick is completely engulfed by the previous Japanese candlestick.

After the both conditions have been met, you enter a trade with a stop of about 20 pips. Target profit is 20 pips. Next, you act according to the situation: you either close the entire position or close a half of it and protect the rest half with a trailing stop.

The screen presents the following situation: the CCI Stochastic paints a green arrow that appears as soon as it goes outside level 10 (marked with a yellow circle). The signal candlestick has a big body that fully covers the Heiken Ashi. Although the Heiken Ashi is red, the body of the candlestick is small which means that the downtrend is exhausting. It is within the Japanese candlestick which is the second signal. Pay attention to other Heiken Ashi candlesticks, they are higher or lower than their preceding Japanese candlesticks (examples to compare).

The next situation is also remarkable, it marked with a green circle. Here, the CC Stochastic also paints a red arrow and goes outside the overbought zone. But at the next candlestick, where one could have entered a trade, there is not met the condition for Hama Jurik indicator with the Heiken Ashi candlestick. As you see from the screenshot, a short trade in this case could have been profitable, but I don’t recommend risking.

Conditions for entering a short position:

  • The CCI Stochastic paints a red arrow.
  • Curren     or next candlestick closes lower than the body of the Heiken Ashi candlestick.     

Entry conditions are similar to that of a long trade.

Indicator paints a red arrow at the next candlestick after it has entered the oversold zone. The candlestick, where the arrow appeared, closes at the level of the Heiken Ashi candlestick (the Heiken Ashi color doesn’t matter), this level is marked by a black horizontal line. This means that the second condition hasn’t been met and one shouldn’t enter a trade. This condition is satisfied at the next candlestick, so, it can be called signal. At the next candlestick (highlighted with a pink box), the trade is entered.

A few comments on exit rules. There can be several ways:     

  • The trade is exited by a take profit. In both cases, the price not only     reaches the take profit, it is going farther. It is a conservative option with a minimal risk.     
  • You exit the trade when the CCI Stochastic reached the opposite key level (90 – for a long trade, 10 -for a short), this way worked     out only in the second example. 
  • You close the position when the Heiken Ashi changes its color. In the both examples described, this way won’t yield a profit, but it works out sometimes.     

The first option could be called perfect, but you may combine exit principles. As I’ve already mentioned above, you can close 50% of the positions at a target profit level (you can close 60% or 80%, it is up to you) and protect the rest of the position by a trailing stop, thus getting the most of the market. 

When there are published the news marked as important in the economic calendar, you do not enter a trade one hour before and one hour after the publication. A stronger signal is when Heiken Ashi candlestick changes the color at the next candlesticks (green is for a long position, red – for a short one).

3. Forex strategy with a combined indicator on the basis of stochastic

Unlike the previous strategy, where the modified stochastic is the major indicator, here, a classical oscillator is used. The only difference is that this indicator is a complex tool, and, in addition to the stochastic, its formula includes the values of the standard MACD, RSI and Momentum.

The first two are quite common, but the situation with the Momentum indicator is a bit more complex. It is referred to both oscillators and trend indicators. It has several calculation formulas, which makes up its complexity. One of them suggests using the difference between closing prices of the current and the previous (a few bars ago) periods. Another version suggests the ratio of these values. The farther the Momentum moves from zero level, the stronger is the market overbought or oversold.

Each of the basic indicators doesn’t deliver explicit signals. This strategy is remarkable because the combination of 4 oscillators yields quite a decent average result. This complex indicator is called MBA, you can download its template here. The needed parameters are already included in the code. The recommended timeframe is H1, pairs traded are EUR/USD, USD/CHF, GBP/USD

Conditions for entering a long position: 

  • You look for signals only during the European trade session.
  • MBA paints a series of columns above zero level.
  • After the previous condition is met, there is a column with zero value. 
  • Following zero column, the indicator paints a column with the values of 1-2 and more. The higher is the column, the stronger is the signal. There should be a rising candlestick at this column. You can see the indicator value in the MT4 information panel.

You enter a trade at the next candlestick. There is not a clear recommendation on a stop loss level. You can put it a little lower than the local low, but it is better to check this point on the historical data. A target profit for this currency pair is 20 pips, the recommendation is not strict. You can also hold the trade longer until there is a red column (a column of the opposite color).

It is clear from the figure that the MBA paints a series of rising green columns, next, it shows a decline and, finally, there is a candlestick in the chart where there is not a column. It is good if there is also a reversal pattern. In this case, at a zero (missing) column, there is candlestick with a long lower shadow ( a Hammer pattern). You enter a trade at the first or the second green column. You exit the trade when the take profit is reached or when there is a red column. In this example, the second exit option would have provided a double profit.

Pay attention to another two situations marked with green arrows. In the first case, the indicator also paints rising columns, followed by a falling red one, and next, a few short green columns (that where the arrow points to). But the columns are less than 1 (this is indicated in the indicator window on MT4), so, one should not enter a trade. In the second case, there is not a zero column, but the following green are greater than 2 and an entered trade could have yielded a profit. It is important that the column should be close to zero at the signal candlestick, and they following green columns should be greater than 2, the higher they are, the stronger is the signal.

The strategy suggest that you enter long and short trades on more than a single currency pair. So, as alternative, you may consider negatively correlated pairs, and, when you open a long trade one currency pair, based on the MBA signal, you enter a short on the second one. Foe example: EUR/USD, USD/CHF.

4. A simulator based on the stochastic for beginner traders

There is an opinion that the simpler is a forex strategy, the less likely it to be working. Many believe that it is impossible to trade according to a single signal. There must be a combination of a few factors – patterns, signals of several indicators and so on. I could partially agree with this opinion. But there is another extreme: some traders look for matches where none exist, and, as a result, give desirable for valid.

The strategy described below has just a single entry conditions, the signal delivered by the indicator. Is it enough? I suggest you download the template archive and test it on the historical data, and share your results in the comments.

The strategy uses an author’s indicator that is a combination of the ATR and the stochastic. The algorithm of identification of good entry points is based on the data of these indicators. The strategy principle is based on the position reversal: first, you enter a trade according to the signal, you reverse the trade when there is an opposite signal. Timeframe is H4, currency pair is EUR/USD. Indicator settings:

The first two parameters do not affect the calculation. The first means that you enable the record of the alert into a file; the second one means that each signal is assigned its unique number. Length is the period (the major parameter of the indicator), Price means the price type, according to which the data are analyzed (0 – calculation based on the closing price prices). Other parameters are developed by the author, so I suggest leaving the default values. If you wish, you can study the code and share your opinion about these parameters in the comments.

Conditions for entering a long trade:

  • Indicator paints a green dot.     

It is the only and sufficient condition. You enter a trade at the next candlestick. The strategy combines middle- and long-term trading, so, you may set target profits and stop losses quite far if you trade in a longer term. The target profit is 50-60 pips, stop loss is 50-60 pips. You can also exit the trade when the indicator paints a red dot.

Yellow circle marks the section of the price chart that is not good to enter a trade as constant change of the trend direction according to the signals will finally lead to a loss due to spread or a stop loss. For example, if you enter a trade at the next bar after the firs red dot, you will have to reverse it almost immediately. But the trade, entered according to the fourth signal of the indicator (the entry point is red, the exit is green), would yield over 250 pips of profit, covering the previous loss.

Conditions for entering a short trade:

  • Indicator paints a red dot. 

The entry conditions are similar.

You skip the first candlestick on Monday and the last candlestick on Friday, exclude the time period of 1 or 2 candlesticks around the rime of important news release. You should also ignore the signal if the signal candlestick has a relatively big body compared to the others. An example of such a situation is displayed in the first screenshot at the second (green) and the third (red) signals.

The strategy is good as psychological simulator. It yields quite many losing trades due to a reversal amid an opposite signal. But, if there is a winning trade, the profit will entirely cover the previous loss. The trader’s task is to pick up a strong trend and take a profit of 50-60 pips or more from it.

5.  Trading based on the Stochastic and the Moving Average Envelopes signal line.

It is a basically channel trading strategy, where the stochastic is a supplementary tool that is applied in an unusual way. In the settings, the color of the major line is white, that is, it is not visible in the chart, and the trading is based only on its signal line (%D). The major indicator is MA Envelopes that is described in detail here. I will only describe its calculation principle.

Envelopes consists of two Moving Averages that are on the both sides of the price. They form a kind of a channel that looks like another popular channel indicator Bollinger Bands. The difference is in the calculation formula:

  • Upper MA (Upper) = SMA (Close, N) * (1 + K/1000).
  • Lowe MA = SMA (Close, N) * (1 – K/1000).

 

SMA is a simple moving average that is calculated based on the closing prices, N is the averaging period, К/1000 is a deviation in tenths of a percent of the average. The deviation is adjusted to the pair volatility, there higher is the volatility the greater is the deviation. The shift is the indicator shift into the past relative to the current bar (to the left, negative value) or its projection into the future (to the right, positive value).

The strategy suggests you pick up the moment when the price breaks through the Envelopes channel. The stochastic signal line serves as a filter: at the breakout moment, it must be in the overbought or oversold zone.

Timeframe is H4, currency pair is GBP/USD, by adjusting the Envelopes parameters, you can find out the values for any currency pair. You should custom them in the following way: in the history, you find the moments when the stochastic enters the key zones and change the parameters so that the price should break out the channel at these moments. Basic parameters of the indicator for the GBP/USD pair:

  • Envelopes: Period = 12, Shift = 0, MA Method EMA, Apply K = Close, Deviation = 0.8.
  • Stochastic: %К = 5, %D = 3, Slowing =3, Price: Low/High, MA Method – SMA, Levels are -20 and 80.

You can download the template archive via this link.

Conditions for entering a long position:

  • The price touches the lower line of the Envelopes. The stochastic signal     line is in the oversold zone (below level – 20).

When the channel border is broken out, you enter a trade. As the price may go down by inertia, a stop loss could be set at quite a long distance – 40-60 pips. You exit the trade either when a target profit of 30-50 pips is reached or the price reached the middle line of the channel.

In this interval, the entry condition has been met only once, but the trade is winning. The take profit level was very close to the channel middle line (yellow circle).

Conditions for entering a short trade:

  • The price touches the upper border of the Envelopes. The stochastic signal line is in the overbought zone (above level 80).

Entry and exit conditions are similar to the long trade.

Now, look at the following situation:

You don’t enter a trade either in the first case or in the second one. In the first case (yellow circles), the stochastic is above level 20 when the price touches the lower line. This means that the downtrend has not yet exhausted and there is still a probability that, even if the stochastic enters the oversold zone at the next bars, it could stay there. So, one should not enter a trade at the next bars, including the second situation (green circles). Even though the trend has turned out to be rising after the second touch, such a movement do not always occur.

A few more tips:

  • An important conditions of the signal validity is that the stochastic must be directed up at the signal bar, and it should go outside the extreme zones as fast as possible. 
  • You should not enter the next bars if the stop loss has worked out.     

This is an example of unsuccessful entry. All conditions are met at the first bar, but the stochastic remains in the oversold zone and the trade would be closed by a stop loss at the next falling bar. The indicators don’t provide 100% of valid signals, but the loss would be grater without a stop loss, Green circle marks the signal that also meets all conditions, but, as the previous trade could have been exited by a stop loss, the trade here is not entered too.

And the last example where all the previous conditions are met:

Red arrows indicate the points where all the short entry conditions are satisfied, the trade is winning. Another situation is with the trade marked with green arrows. Here, although all the conditions are met, the trade is losing. As the stochastic remains in the overbought zone, and the stop loss works out, one should not enter the trade at the bar marked with blue arrows.

Conclusion: Although the stochastic oscillator is often criticized, it has been used over a few decades already. Its formula has been interesting for traders during more than fifty years, and constantly appearing new modifications are vivid evidence. The example of the last forex trading strategy described in the article proves that the stochastic is just a supplementary filter reducing the number of false signals. But it is not perfect either. How can you improve your trading performance using a stochastic? I think you should experiment, test, develop you trading intuition. Do you agree? Please, do write your ideas of how you can apply the stochastic to trade in the comments after the article.

I wish you successful trading!


P.S. Did you like my article? Share it in social networks: it will be the best “thank you” 🙂

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker here. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Use my promo-code BLOG for getting deposit bonus 50% on LiteForex platform. on LiteForex platform. Just enter this code in the appropriate field while depositing depositing your trading account.
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders https://t.me/liteforex

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Price chart of EURUSD in real time mode

Forex stochastic oscillator

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Forex is your way to success

Global currency trading volume is growing by the day

Global foreign exchange market continues attracting both institutional investors and individual traders. Forex traders are not discouraged by the drop of the Forex volatility to its all-time lows, or by the increase in the negative debt market volume up to $17 trillion, or by the horror stories that about 90% of beginner traders go bankrupt. According to the Bank for International Settlements, trading in the global foreign exchange market has jumped to the highest-ever level at $6.6 trillion. This is about 30% higher than $5.1 trillion recorded in 2016.

The U.S. dollar remains the world’s preeminent currency.  The greenback is rightly called the King as it is on one side of 88% of all trades. The share of trades involving the euro increased to 32%, from 28%; while the yen slipped to 17% from 22%. The eight most traded currencies include the British pound (13%), the Australian dollar (6.8%), the Canadian dollar (5%), the Swiss franc (5%) and the Chinese yuan (4.3%). Renminbi, by the way, is the most progressive currency in Forex. In 2016, it was involved in 3.7% of Forex operations, in 2013 – 2.2%, in 2010, it accounted for 0.9% of all exchange operations. I should remind you that any currency pair always includes two currencies, so, the total value is 200%.

Dynamics major Forex currencies in global market share

Source: Bloomberg

In general, emerging markets currencies’ look quite promising reaching 25% of overall global turnover, that is just a little less than the euro, being the second most traded currency. In my opinion, it is associated with the low volatility and increasing popularity of the carry trades.

If someone worries that London will lose its status of the world’s trading center due to Brexit, this is in vain. The UK capital, on the contrary, has strengthened its position, accounting for 43% of all activity, which is 6% up from that in 2016, while New Your (17%) has lost 3%. The 5 largest forex trading centers also include Singapore (7.9%), Hong Kong (6.7%) and Tokyo (6.1%). I believe that London has only benefited from the Brexit uncertainty, instead of losing its dominance. The most rapidly progressing Forex segment is derivatives, primarily cross-currency swaps that allow hedging against changes in the foreign exchange rates and interest rates. The UK market accounts for 50% of the global derivatives market, up from 38% in 2016. The share of euro-denominated swaps traded in London has been up to 86% from 75%.

Dynamics and structure of Forex operations

Source: Financial Times

The largest market-makers in Forex are JPMorgan Chase & Co (9.8%), Deutsche Bank AG (8.4%) and Citigroup Inc (7.9%). It is remarkable that Deutsche Bank, as Germany in general, is losing its leadership in the global market share. In 2007, its share in the forex operations was 19.3%.

I, personally, believe that the Forex is gaining popularity amid the large monetary easing packages used by the world’s leading central banks. Cheap liquidity provided by the Fed, the Bank of Japan, and the ECB encourages investors to buy much more assets in different countries. I don’t think that the situation will radically change amid the global GDP slowdown and the willingness of the major central banks to take every step to save the national economies from recession. Forex trading volume, as well as the number of new traders, should be increasing. Take your chance!


P.S. Did you like my article? Share it in social networks: it will be the best “thank you” 🙂

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker here. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Use my promo-code BLOG for getting deposit bonus 50% on LiteForex platform. on LiteForex platform. Just enter this code in the appropriate field while depositing depositing your trading account.
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders https://t.me/liteforex

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Price chart of EURUSD in real time mode

Forex is your way to success

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Oil supports dollar

USCrude and Brent grow in price increasing the risks of a wider growth-gap between the U.S. and other countries

Wasn’t for bad luck, wouldn’t have no luck at all. Brent price has been nearly 19% higher after an attack on Saudi Arabian crude facilities that cut crude oil output by 5.7 million barrels per day. Although Saudi Arabia’s national oil company expects to restore roughly a third of the disrupted production and the U.S. administration is willing to release oil from the U.S. Strategic Petroleum Reserve if needed to stabilize energy markets. They may not return to the previous production volume soon. This will seriously damage the economies competing with the U.S., including the euro area, China and Japan that are oil net importers.

In theory, the surge of the Brent and WTI leads to an increase in gasoline prices, higher energy costs in the U.S., reducing the consumption of other goods and services. At the same time, the inflation rate increases, which, amid the current robust GDP growth and strong employment, may force the Fed not to lower the interest rate, if not to hike it.

Dynamics of oil and U.S. inflation

Source: Trading Economics

The Fed basically treats the surges of oil prices as a temporary phenomenon and is willing to put up with the inflation above the target during the periods of monetary expansion. Furthermore, the attack on the Saudi Arabian crude facilities may be considered as an additional foreign risk, being another argument in favor of the FOMC doves at the September meeting. The U.S. economy is now less likely to be affected by the Brent and WTI growth than it was in the 1970-s, when the growing oil market resulted in the recession. The USA is an oil net exporter, so high oil prices are less harmful for it than for the euro area, China and Japan. In my opinion, investors are now buying the greenback just because of the rising risk of a wider growth-gap between the United States and other economies.

I don’t think that the Fed will give up on the idea of the federal funds rate cut just because of an increase in consumer prices. Jerome Powell’s opinion, who prefers to use an ounce of prevention instead of a pound of cure, has been surprisingly mirroring Donald Trump’s point of view over the recent times. The president, in one of his latest tweets, has once again called on the central bank to lower rates due to the attack on Saudi Arabian oil production facilities. He requires a monetary stimulus, allegedly worrying that they could see costs rise for gasoline in the U.S.

In any case, the global market uncertainty increases, having a negative influence on the euro area first of all. One of course can hope that Saudi Arabia’s national oil company will cope with the problems soon, however, when such things occur, there is a question about who should benefit from it. Although Yemen’s Iran-allied Houthi rebels have claimed the responsibility for the attack, it is clear that Saudi Arabia needs Brent oil at $85-$87 a barrel to balance its budget. Therefore, I do not think it will restore the production volume soon. Amid this situation, the EUR/USD pair should continue trading in the consolidation range of 1.093-1.1095.


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Price chart of EURUSD in real time mode

Oil supports dollar

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Euro reveals shameful secrets

There are revealed the details of the ECB meeting that have pushed the EUR/USD up

The EUR/USD soared to its two-week highs amid the public criticism of the restarted quantitative easing program by the Governing Council’s members and the greatest growth of the euro-area average earnings (+2.7% YoY) since 2009. However, bulls have failed to consolidate above the important resistance at 1.1085-1.1095. Positive report on the U.S. retail sales (+0.4% MoM and +4.1% YoY) proves that the U.S. economy is strong and raises doubts in the aggressive lowering of the federal funds rate. Isn’t it too early to sell the dollar?

Dynamics of euro-area earnings

Source: Financial Times

The swings in the major currency pair’s value, following the ECB meeting, raised talks about the White House intervention in the Forex market. The act of 1934 enables the U.S. Treasury to intervene in the foreign exchange and even forces the Fed to act as an agent. Another matter is that the U.S. Government’s resources are limited by the amount of $95 billion, which can hardly affect the Forex with its $5 trillion of daily turnover. Without the Fed’s funds, the interventions in the values of such giants as the pound or the yen, let alone the euro, will hardly have any effect. Jerome Powell won’t take part in it. Otherwise, there will be much more doubts in the Fed’s independence than now.

In my opinion, the main reasons for the EUR/USD rise have become the split among the ECB board members and a less volume of the QE than investors expected. Klaas Knot, the president of the Dutch central bank, says there is no need in the quantitative easing in the current economic environment, so the QE should have little effect. Austrian central bank Governor Robert Holzmann says more of QE was possibly a mistake. Germany’s Bundesbank President Jens Weidmann notes that there are no signs of deflation, and the trajectories of the consumer prices and the wages are not the same. Financial Times, referring to its sources, claims that 9, not 5, officials opposed the QE restart in September.

It is remarkable, that, among the hawks, there are united constant opponents, Germany and France. Germany argues because of the significant share of exports (over 40%) and industrial production (23%) in the GDP, so the country’s economy has been hit by trade wars, but the wages growth is rather high. France does not face such problems and believes in the strength of its domestic demand.

Dynamics of net exports as a share of GDP

Source: Financial Times

Among the FOMC members, there is also expected a great dispute. The FOMC officials who live on the plain, that is, mostly focused on the domestic economic data, are not willing to lower their rates. On the contrary, the governor from the mountainous states suggest that it is better to take preventative measures than to wait for disaster to unfold. 74% of 35 Bloomberg experts suggest two rate cuts, in September and in December. The federal funds rate should be down to 1.75%, but the Fed should take a long break afterwards. Expectations for the Fed’s monetary easing may encourage the EUR/USD bulls to try to break out the resistance at 1.1085-1.1095.


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Price chart of EURUSD in real time mode

Euro reveals shameful secrets

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Economic calendar for the week 16.09.2019 – 22.09.2019

Overview of the main events of the Forex economic calendar for the next trading week from 16.09.2019 to 22.09.2019

Trading on key Forex news: we expect publication of important macro statistics from China, Australia, Germany, the US, the UK, Canada, New Zealand, as well as interest rate decisions from central banks in the US, Japan, Switzerland, and the UK.

Following a meeting last Thursday, the European Central Bank lowered the interest rate on deposits by 0.1 percentage points to -0.5%, resumed the quantitative easing program, which was completed in December last year, and also lowered the cost of long-term loans for banks.

At the subsequent press conference, European Central Bank President Mario Draghi said that “the slowdown in growth reflects the prevailing weakness in international trade and the lingering uncertainty.” He also noted that the balance of risks for the economic prospects of the Eurozone “is still shifted in a negative direction.” The euro fell sharply after the publication of the ECB’s decision, but then rose against the US dollar among other currencies.

Now investors are turning their attention to the Fed meeting, which will be held next week. With regard to monetary policy, the Fed has more room to maneuver and ease it than other major global central banks.

Now the Fed rate is 2.25%. The Fed is expected to lower the rate by 0.25% next week. In anticipation of this decision, the US and global stock indices are rising. At the same time, economists believe that accelerating inflation in the United States may prompt the Fed to report on the limited space for lower interest rates at the next week’s meeting.

As the U.S. Department of Labor reported last Thursday, Core Consumer Price Index rose by 0.3% in August compared with the previous month and 2.4% compared with the same period in 2018, which is more than economists had expected.

If the Fed does not give signals about further easing of monetary policy, the dollar may resume growth after a short-term decline. At the same time, this will not be an obstacle to the further growth of US stock indices. US consumers are in good shape, consumer confidence is high, incomes are rising, and this allows us to be optimistic about the US economy and the American stock market.

Also next week, the central banks of Japan, Switzerland, and the United Kingdom will announce their decisions regarding monetary policies. While investors do not expect any sudden decisions from the Central Bank of Japan and Switzerland, intrigue remains around the actions of the Bank of England. The pound receives support from positive macro statistics indicating a decrease in unemployment in the UK in May-July to 3.8% from 3.9% in April-June and an increase in British income. The average earnings without bonuses in May-July increased by 3.8%, which is higher than the forecast of 3.7%. The growth of British income is a positive factor for the pound, since it speaks in favor of an increase in spending on personal consumption and, therefore, is an inflationary indicator.

Many economists believe that if it were not for Brexit, the Bank of England would seriously consider raising interest rates.

In addition to the meetings of the central banks of the US, Japan, Switzerland and the UK, the focus of traders next week will also be the publication of important macro statistics from China, Australia, Germany, the US, the UK, Canada, and New Zealand.

Thus, an extremely volatile trading week is ahead of us, which must be taken into account when preparing trading plans.

As always, this trading week we expect a number of important macroeconomic indicators and some important news.

*GMT time

Monday, September 16

No important macro statistics planned to be released.

However, traders should pay attention to the press conference of the National Bureau of Statistics of China and the publication of data on retail sales and industrial production of China for August, scheduled for 02:00 (GMT).

China’s economy is the second largest in the world after the American one. Therefore, the publication of important macroeconomic indicators of this country has a significant impact on global financial markets, primarily on the position of the yuan, other Asian currencies, the dollar, and commodity currencies, as well as Chinese and Asian stock indices. China is the largest buyer of commodities and a supplier to the global commodity market of a wide range of finished products. Therefore, a decrease in the macroeconomic indicators of this country may negatively affect the position of the yuan and commodity currencies.

Tuesday, September 17

01:30 AUD Minutes of the last meeting of the RB of Australia

This document is published two weeks after the meeting and the decision on the interest rate. If the RBA positively assesses the state of the labor market in the country, the GDP growth rate, and also shows a hawkish attitude towards the inflation forecast in the economy, the markets regard this as a higher probability of a rate increase at the next meeting, which is a positive factor for the AUD. The bank’s soft rhetoric, especially with regard to inflation, will put pressure on the AUD.

At the meeting held on July 3, the central bank (the second time this year and for the first time since August 2016) lowered its key rate to a record low of 1.00% from 1.25%, but did not change its policy in August and September. At the same time, the RB of Australia did not rule out further softening of the policy in the coming months in the event of a worsening situation on the labor market and a threat to economic growth from external shocks.

“Trade wars and technology conflicts affect international trade and investment, while companies cut spending plans due to uncertainty,” said head of the RBA Philip Lowe.

Earlier, the RBA leaders called increasing uncertainty in global trade a risk to the Australian economy. “There is reason to expect a lower key rate,” says head of the Reserve Bank of Australia Philip Lowe.

The Australian economy is growing at the slowest pace in ten years. Economists believe that the regulator will make another cut in rates by the end of the year, trying to spur GDP growth.

09:00 EUR ZEW Indicator of Economic Sentiment in Germany

This index reflects the difference between the share of optimistic and pessimistic investors, thus assessing the mood of investors and businesses. The growth of the indicator and its positive value indicates an optimistic attitude of investors, which is a bullish factor for the EUR. Vice versa, a decrease in the indicator and its negative value is a negative factor for the EUR. In August, the indicator value was -44.1, in July -24.5, in June -21.1. Forecast: the indicator for September will be -38.0, which is likely to have a negative impact on the euro. And the weaker the forecast is, the stronger the euro will decline.

Wednesday, September 18

08:30 GBP Consumer Price Index. Core Consumer Price Index

Consumer Price Index (CPI) reflects the dynamics of retail prices for a group of goods and services that are part of the British consumer basket. CPI is a key indicator of inflation. Its publication causes major movement of the pound on the foreign exchange market and the London Stock Exchange Index FTSE100.

In the previous month (in July), growth in consumer inflation turned out to be zero (in annual terms, inflation in July amounted to +2.1%).

Forecast for August: + 0.5% (+1.9% in annual terms). This value can positively affect the pound. An indicator below the forecast and previous values ​​may trigger the weakening of the pound, since low inflation will force the Bank of England to maintain a soft monetary policy.

Core CPI is published by the Office of National Statistics and determines the change in prices of a selected basket of goods and services (except food and energy) for a given period. It is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the GBP, a negative result weakens it.

In July, Core CPI (in annual terms) grew by +1.9%. It is likely that the publication of the indicator will positively affect the pound if its value is higher than the forecast. Forecast for August: +1.7% (in annual terms). An indicator below the forecast and previous values ​​can trigger a weakening of the pound.

12:30 CAD Consumer Price Indices in Canada

The Bank of Canada’s Core Consumer Price Index (Core CPI) reflects the dynamics of retail prices for a basket of goods and services (excluding fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, long-distance transport and tobacco products). The target inflation rate for the Bank of Canada is in the range of 1-3%. The increase in CPI is a harbinger of a rate increase and a positive factor for the CAD. Consumer prices rose in July by 2.0% (on an annualized basis) and Core CPI also increased by 2.0%. If the data for August is worse than the previous values, then this will negatively affect the CAD. Data better than expected and above the previous values ​​will strengthen the Canadian dollar.

Forecast for August: CPI will come out with a value of +1.7%, which probably will not provide significant support for the CAD.

18:00 USD The Fed’s decision on interest rate. The Fed’s comments on monetary policy. Summary of Economic Projections from the US Federal Open Market Committee

It is widely expected that the rate will be cut by 0.25% to 2.00%. After deciding on the interest rate, the Fed will publish a comment on the monetary policy (FOMC Statement). The report increases the USD volatility. Tough tone of comments on the Fed’s future plans strengthens the US dollar, while a soft tone weakens it.

A summary of the economic forecasts from the Federal Open Market Committee (FOMC Economic Projections) includes the Fed report with the FOMC forecast for inflation and economic growth over the next 2 years and, just as importantly, shows individual opinions of FOMC members regarding interest rates.

During the publication of the rate decision, the FOMC report and the Fed’s comments, a surge in volatility is expected throughout the financial market, primarily in the US stock market and in dollar quotes.

Powell’s comments can affect both short-term and long-term USD trading. A more hawkish position regarding the monetary policy of the Fed is seen as positive and strengthens the US dollar, while a more cautious position is assessed as negative for the USD. Any Powell’s hints to further lowering of interest rates will cause the dollar to fall and US stock indices to rise.

Investors want to hear Powell’s opinion about the Fed’s plans for this year, after the central bank executives, including Powell, have repeatedly expressed their cautious assessment of the prospects and pace of tightening of the Fed’s monetary policy, focusing on international risks trade conflicts. Many participants in the financial market bet that the Fed will lower the rate one more time before the end of the year.

Last week, Donald Trump called on the Fed to lower rates below zero for the first time ever. He said earlier that the Fed should cut the rate by at least 1%.

18:30 USD Press Conference of the FOMC (the US Federal Open Market Committee)

The press conference of the US Federal Open Market Committee lasts about an hour. In the first part, the decree is read, followed by a series of questions and answers that can increase market volatility.

Powell’s comments can affect both short-term and long-term USD trading. A more hawkish position regarding the monetary policy of the Fed is seen as positive and strengthens the US dollar, while a more cautious position is assessed as negative for the USD. Powell’s soft rhetoric will negatively impact the dollar and support stock markets.

The Fed is expected to cut interest rates by 25 bp up to 2.00%. The purpose of the rate cut, according to Fed officials, is to protect the economy from the effects of the global slowdown and the escalation of trade tension.

In July, the Fed lowered the rate by 0.25% to the current level of 2.25%. “The committee … will continue to monitor the impact of the incoming information on economic prospects and will act accordingly to support growth,” the Fed said in a statement.

At a subsequent press conference, the Fed Chairman Jerome Powell refrained from statements about further easing of the Fed’s policy. When asked if this decision was the beginning of a cycle of lowering rates, Powell replied that “at present we do not expect this.”

22:45 NZD New Zealand GDP for the 2nd quarter

The publication of the data will cause increased volatility in NZD. Against the background of the recent rise in prices for agricultural products (especially for dairy products, which are the most important component of New Zealand exports), it is likely that the New Zealand GDP report for the 2nd quarter will come out with positive indicators, and this will favorably affect the positions of the New Zealand currency.

Forecast: +0.4% (previous value +0.6%) and +2.0% in annual terms (previous value +2.5%). If the data are better than expected, the NZD will strengthen. Data worse than forecast and previous values ​​may adversely affect the NZD.

Thursday, September 19

01:30 AUD Employment rate. Unemployment rate. Share of labor force in the total population

Employment rate reflects a monthly change in the number of Australian citizens employed. The growth of the indicator has a positive effect on consumer spending, which stimulates economic growth. A high value is a positive factor for the AUD, and a low value is negative. Forecast: in August, the number of employed Australian citizens increased by 10,000 people (against +41,100 in July, +500 in June, +42,300 in May).

Also at the same time, the Australian Bureau of Statistics will publish a report on unemployment – an indicator that estimates the proportion of unemployed citizens to the total number of able-bodied citizens. The growth indicates a weak labor market, which leads to a weakening of the national economy. The decline is a positive factor for the AUD. Forecast: Australia’s unemployment in August was 5.3% compared to 5.2% in the previous 4 months.

Also the data provided by the Australian Bureau of Statistics includes an indicator of the share of labor force in the total population. This is the percentage value of the total number of able-bodied people considered to be labor force (either employed or in search of work). Forecast for August: 66.1% against about the same level in previous months (66.1% in July, 66.0% in June and May, 65.8% in April, 65.7% in March).

In general, the indicators can be described as weakly positive, with the exception of unemployment rising by 0.1%.

The RBA has repeatedly stated that in addition to the situation in international trade, the Australian economy and central bank monetary policy plans are affected by indicators of the level of debts and household expenses, the growth of workers’ salaries, as well as the state of the country’s labor market.

In the previous month, the Reserve Bank of Australia kept the key interest rate at a record low of 1%, but gave a more pessimistic forecast for the economy. According to the RBA management, an unemployment rate of 4.5% or lower is required for the growth of wages and acceleration of inflation to the target range. Unemployment in the country is not declining, and the return of inflation to the middle of the target range of 2-3% is not even close.

The AUD is unlikely to respond with a growth to the publication of data from the country’s labor market. If the values ​​of the indicators turn out to be worse than the forecast, then the Australian dollar may decrease significantly in the short term. Data better than forecast will strengthen the AUD in the short term.


 

02:00 JPY Bank of Japan’s interest rate decision. Press conference and monetary policy comments of the Bank of Japan

The Bank of Japan will decide on the interest rate. Currently, the main discount rate in Japan is in negative territory, amounting to -0.1%. Most likely, the rate will remain the same. If the rate is cut and goes deeper into negative territory, such a decision will cause a sharp decrease in the yen in the foreign exchange market and growth in the Japanese stock market. In any case, during this period, a jump in volatility is expected in trading of the yen and across the Asian financial market.

During the press conference, the head of the Bank of Japan Haruhiko Kuroda will give comments on the monetary policy of the bank. The Bank of Japan continues to adhere to its super-soft monetary policy. As Kuroda has repeatedly stated before, “it is appropriate for Japan to patiently continue the current soft monetary policy.” Markets usually react noticeably to Kuroda’s speeches. Surely, he will again touch upon the topic of monetary policy during his speech, which will cause an increase in volatility not only in yen trading, but throughout the Asian and world financial markets.

06:00 JPY Press conference of the Bank of Japan

During the press conference, the head of the Bank of Japan Haruhiko Kuroda will give comments on the monetary policy of the bank. Despite the bank’s earlier measures to stimulate the Japanese economy, inflation remains low, production and consumption are falling, the yen is growing, which negatively affects export-oriented Japanese producers. Markets usually react noticeably to Kuroda’s speeches. If he touches on the topic of monetary policy during his speech, volatility will increase not only in yen trading, but also throughout the Asian and world financial markets.

07:30 CHF The decision of the NBS on interest rate. Monetary Policy Statement of the NBS

The current deposit rate is in negative territory and amounts to -0.75%. At the previous meeting in June, rates remained unchanged. The Central Bank of Switzerland has consistently advocated soft monetary policy in the country, and the national currency has traditionally been considered “overvalued.” Recently, the franc has largely lost the status of a safe haven currency, and the threat of intervention certainly restrains the franc from excessive growth.

Traders will carefully study the statement of the NBS in order to catch signals regarding further plans of the monetary policy of the NBS. Tough rhetoric of the statement will strengthen the franc. A soft tone and the intention to continue the extra soft monetary policy of the NBS will negatively affect the franc. High volatility is expected in the foreign exchange market and, above all, in franc trading, especially if the management of the NBS makes unexpected statements.

11:00 GBP The decision of the Bank of England on interest rate. Minutes of the meeting of the Bank of England. Planned volume of asset purchases by the Bank of England

It is expected that the rate will remain at the same level of 0.75%. In August 2018, the rate was increased by 0.25% for the second time in 10 years, despite the fact that wages growth has slowed, and the uncertainties associated with Brexit have intensified. Economists believe that the next increase in interest rates will not occur until 2020, but the balance of risks is shifted towards an even later date in the continuation of monetary tightening.

Despite the postponed Brexit, uncertainty about further relations between the UK and the EU remains, and the postponement of Brexit does not eliminate its hard scenario. In addition, the former mayor of London Boris Johnson, who replaced British Prime Minister Teresa May, is considered a supporter of a hard Brexit.

In this situation, the Bank of England, most likely, will not change its monetary policy or raise the rate.

Also at this time, the minutes of the Monetary Policy Committee (MPC) of the Bank of England are published with the votes cast for and against the increase / decrease in the interest rate. The main risks for the UK after Brexit are associated with expectations of a slowdown in the country’s economic growth, as well as with a large current account deficit in the UK balance of payments.

The Bank of England Asset Purchase Program, also called Quantitative Easing, has remained unchanged since August 2016 at £435 billion per month. It is likely that the volume of bond purchases by the Bank of England on the open market in the coming month will remain at the previous level of 435 billion pounds.

Nevertheless, the intrigue over further actions of the Bank of England remains. Both in the pound trade and the FTSE100 index, a lot of trading opportunities will appear during the publication of the bank’s decision on rates.

Friday, September 20

No important macro statistics planned to be released.

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Price chart of EURUSD in real time mode

Economic calendar for the week 16.09.2019 – 22.09.2019

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Dollar jealous of pound

The US President may only dream the USD would obey him the way the pound obeys British politicians

Donald Trump is haunted with the glory of British politicians who have been moving the pound rate the way they want. Brexit fan Boris Johnson takes the chair and the pound drops to a 3-year trough against the greenback; Johnson loses a couple of battles to the Parliament and the pound soars. Even Governor of Bank of England Mark Carney had to admit that the pound rate depends on politics, not on economy. 

The US President may only dream of that. However often he may criticise the Fed, call to drop the rates to zero or protest against the strong dollar, investors show no reaction. They became immune. It seems the States can’t outrun Great Britain. But Trump would be so glad if EUR/USD reacted to his twitter the way it reacts to ECB’s meetings! 

Be persistent! Never give up and go on losing! The conservatives brought Boris Johnson to power some time ago and the Conservatives drowned him some time later. First by supporting the idea of extending the transition period to January 31, and then by declining the PM’s demand of early elections on October 14.  As a result, a few members of the Party were expelled and the PM was left nothing to do but bow to the EU. Brussels was astonished to see him like a female mantis. No one else can be more surprised to see their ex than a she-mantis. 

It seems the same people put Johnson on a pedestal and are now ready to throw him down. There are three things you can watch forever: fire burning, water falling, and Britain leaving the EU. They are fed up with the latter. The PM promised to drive the country out of the EU before October 31 or die. It looked attractive a couple of months ago. Then it became boring. The British politicians’ mood changes like socks. I won’t be surprised if they decide to save their marriage with Brussels, which doesn’t want to talk to London any more. 

– Why are you divorcing with your wife?

– She hasn’t talked to me for 6 months!

– Think twice! Such a good wife isn’t easy to find!

As for Johnson, he became an ordinary prey to a political struggle.  The Prime Minister is driven into a corner, but he doesn’t want to die in a ditch and counts on the EU’s indulgence. But the EU is inexorable and behaves like a wise woman: “I’m sorry that I felt sorry for you so many times!” 

We may get surprised one more time that people change so much because of politics. Boris Johnson came to power like a wolf and reminds of a lamb now. After his plan to organize early elections and cancel the parliament’s decision to extend Brexit failed, the PM risks becoming the shortest-playing Head of the Cabinet in the whole history of Great Britain.  Will he probably want to hold onto his chair if Britain remains with the EU after October 31? What about his loud declarations that he’d rather be dead in a ditch?


P.S. Did you like my article? Share it in social networks: it will be the best “thank you” 🙂

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker here. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Use my promocode BLOG for getting deposit bonus 50% on LiteForex platform. Just enter this code while deposit yout trading account in appropriate field.
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders https://t.me/liteforex

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Price chart of GBPUSD in real time mode

Dollar jealous of pound

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

XAU/USD: Elliott wave analysis and forecast for 13/09/2019 – 20/09/2019

The pair XAU/USD is still likely to grow. Estimated pivot point is at a level of 1444.44.

Main scenario: long positions will be relevant above the level of 1444.44 with a target of  1585.56 – 1650.00 once correction has formed.

Alternative scenario: Breakout and consolidation below the level of 1444.44 will allow the pair to continue declining to the levels of 1409.49 – 1373.28.

Analysis: Presumably, the ascending correction of senior level continues forming as wave (B) on the 1-week time frame, with wave C developing inside. The third wave of junior level iii of С continues developing on the daily time frame, apparently, with wave (iii) of iii formed inside. Supposedly, a downward local correction has started forming as the fourth wave (iv) of iii on the H1 time frame.  If this assumption is correct, the pair will continue to rise to the levels 1585.56 – 1650.00 once the correction’s over. The level 1444.44 is critical in this scenario.




P.S. Did you like my article? Share it in social networks: it will be the best “thank you” 🙂

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker here. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders https://t.me/liteforex

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Price chart of XAUUSD in real time mode

XAU/USD: Elliott wave analysis and forecast for 13/09/2019 – 20/09/2019

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

USD/JPY: Elliott wave analysis and forecast for 13/09/2019 – 20/09/2019

The pair USD/JPY is still likely to grow. Estimated pivot point is at a level of 107.23.

Main scenario: long positions will be relevant from corrections above the level of 107.23 with a target of 109.35 – 112.32. 

Alternative scenario: Breakout and consolidation below the level of 107.23 will allow the pair to continue declining to the levels of 104.40 – 103.00. 

Analysis: Supposedly, a large correction has stopped forming on the daily time frame  in the form of wave (B) of senior level and wave (С) is starting to form. Supposedly, the first wave of junior level i of 1 of (C) is forming on the H4 time frame. Apparently, the third wave of junior level (iii) of i of 1 is developing on the H1 time frame. If the presumption is correct, the pair may be expected to rise to the levels of 109.35 – 112.32. The level 107.23.is critical in this scenario.




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Price chart of USDJPY in real time mode

USD/JPY: Elliott wave analysis and forecast for 13/09/2019 – 20/09/2019

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

GBP/USD: Elliott wave analysis and forecast for 13/09/2019 – 20/09/2019

The pair GBP/USD is still likely to grow. Estimated pivot point is at a level of 1.1952.

Main scenario: long positions will be relevant from corrections above the level of 1.1952 with a target of 1.2543 – 1.2704.

Alternative scenario: Breakout and consolidation below the level of 1.1952 will allow the pair to continue declining to the levels of 1.1800 – 1.1700.

Analysis: Supposedly, a descending correction of senior level in the form of the second wave (2) finished developing on the daily frame in the form of a zigzag. Wave C of (2) stopped developing on the H4 time frame and wave (3) is starting to develop at the moment. Apparently, the first wave of junior level  i of 1 of (3) is developing on the H1 time frame, with wave (iii) of i developing inside. If the presumption is correct, the pair will continue to rise to the levels 1.2543 – 1.2704. The level 1.1952 is critical in this scenario.




P.S. Did you like my article? Share it in social networks: it will be the best “thank you” 🙂

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker here. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders https://t.me/liteforex

 

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Price chart of GBPUSD in real time mode

GBP/USD: Elliott wave analysis and forecast for 13/09/2019 – 20/09/2019

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

EUR/USD: Elliott wave analysis and forecast for 13/09/2019 – 20/09/2019

The pair EUR/USD is likely to grow. Estimated pivot point is at a level of 1.0922.

Main scenario: long positions will be relevant from corrections above the level of 1.0922 with a target of 1.1163 – 1.1249.

Alternative scenario: Breakout and consolidation below the level of 1.0922 will allow the pair to continue declining to the levels of 1.0850 – 1.0800.

Analysis: Supposedly, a descending correction of senior level in the form of the second wave 2 finished developing on the daily frame as a zigzag with a diagonal triangle located in wave (С) of 2. Supposedly, the fifth wave 5 of (C) finished forming on the H4 time frame, with wave c of 5 formed inside. Apparently, wave 3 has started forming on the H1 time frame, with counter-trend impulse of junior level (i) of i of 1 formed and correction (ii) of i of 1 completed inside. If the presumption is correct, the pair will logically continue to rise to the  levels 1.1163 – 1.1249. The level 1.0922 is critical in this scenario.




P.S. Did you like my article? Share it in social networks: it will be the best “thank you” 🙂

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker here. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders https://t.me/liteforex

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font-size: 16px;
color: #777;
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Price chart of EURUSD in real time mode

EUR/USD: Elliott wave analysis and forecast for 13/09/2019 – 20/09/2019

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.