Technical Analysis of GBP/USD for November 24, 2020

Technical Market Outlook:

The GPB/USD rally has been capped after the Bearish Engulfing candlestick pattern occurred on H4 time frame chart at the level of 1.3395. The market made a local into the demand zone located between the levels of 1.3264 - 1.3295, so the pair trades back into the main channel. The next target for bulls is still seen at the level of 1.3447(swing high) and then at 1.3512. The nearest technical support is located at 1.3306, 1.3295 and 1.3264. The strong and positive momentum supports the short-term bullish outlook.

Weekly Pivot Points:

WR3 - 1.3491

WR2 - 1.3401

WR1 - 1.3359

Weekly Pivot - 1.3256

WS1 - 1.3209

WS2 - 1.3108

WS3 - 1.3061

Trading Recommendations:

The GBP/USD pair is in the down trend on the monthly time frame, but the recent bounce from the low at 1.1411 made in the middle of March 2020 looks very strong and might be a reversal swing. In order to confirm the trend change, the bulls have to break through the technical resistance seen at the level of 1.3518. All the local corrections should be used to enter a buy orders as long as the level of 1.2674 is not broken.

analytics5fbcb2f357656.jpg

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

EUR/USD: plan for the European session on November 24. COT reports. Hopes for euro's successive growth gradually fades

To open long positions on EUR/USD, you need:

The 1.1890 level was tested from top to bottom yesterday and it formed an excellent entry point for long positions on the euro, but, unfortunately, this signal did not materialize. On the 5-minute chart, you can see how the bulls are testing the 1.1890 level from top to bottom, and then they also tried to sustain the pair's growth, however, the data on the US economy played in favor of the dollar, which caused the euro to fall. And if you got losses on the first trade, then everything could be compensated for by buying on the rebound from a low of 1.1802. I also mentioned this deal in yesterday's forecast.

But before talking about the pair's prospects, let's look at what happened in the futures market and how the Commitment of Traders (COT) positions changed. Last week kept the market in equilibrium, as we could observe a slight increase in both short and long positions. Vaccine news predominantly played on the side of risky asset buyers, while an increase in the number of coronavirus infections in Europe and weak fundamental reports did not allow bulls to leave the horizontal channel. The COT report for November 17 showed an increase in long and short positions. Despite this, buyers of risky assets believe that the bull market will continue since the delta is on their side. Long non-commercial positions rose from 202,374 to 203,551, while short non-commercial positions increased from 67,087 to 69,591. The total non-commercial net position fell from 135,287 to 133,960 a week earlier. Take note that the delta has been declining for eight consecutive weeks, which confirms the euro buyers' reluctance to enter the market in the current conditions. We can talk about the euro's recovery only when European leaders have settled differences with Poland and Hungary, and also when the UK negotiates a new trade deal with Brussels. Otherwise, you will have to wait until restrictive measures have been lifted, which were implemented due to the second wave of coronavirus in many EU countries.

analytics5fbca72c681f3.jpg

Now for the technical picture. In order to keep the market on their side, euro buyers need to keep the pair above the 1.1844 level. Forming a false breakout on it in the first half of the day, together with good fundamental data on German GDP for the third quarter, produces a signal to open new long positions in hopes to return to yesterday's high at 1.1890, where I recommend taking profit. We can talk about continuing the upward trend only after a breakout and when the pair settles above this level, and by testing it from top to bottom, similar to yesterday, which then forms a new entry point into long positions. In this case, buyers will then aim for a high of 1.1929. In case bulls are not active and the pair returns to the area under 1.1844, I recommend not to rush into buy positions, but to wait for a downward correction towards the area of yesterday's support at 1.1802. You can open long positions from there only after forming a false breakout. I recommend buying EUR/USD immediately on a rebound but only from a low of 1.1749, counting on a correction of 15-20 points within the day.

To open short positions on EUR/USD, you need:

In order for bears to bring back the downward trend, it is enough for them to go below the 1.1844 level. Getting the pair to settle below this and testing it from the bottom up produces an excellent signal to sell the euro, while aiming to fall to yesterday's low towards the 1.1802 area, which is where I recommend taking profits. However, only a breakdown of this range can open a real road to the lower border of the wide horizontal channel to the 1.1749 area. In case the euro grows in the first half of the day when we receive good data on the German economy, it is best not to rush to sell, but wait until a false breakout forms in the resistance area of 1.1890. I recommend selling the euro immediately on a rebound but only from a high of 1.1929, counting on a downward correction of 15-20 points within the day.

analytics5fbca73891082.jpg

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates an attempt by the bears to take control of the market.

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.

Bollinger Bands

If the euro grows in the first half of the day, the upper border of the indicator around 1.1900 will act as resistance. In case the euro falls, the lower border of the indicator at 1.1802 will act as a support.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • Total non-commercial net position is the difference between short and long positions of non-commercial traders.
The material has been provided by InstaForex Company - www.instaforex.com

Indicator analysis. Daily review for the GBP / USD currency pair 24/11/2020

Yesterday, the pair moved up and tested the historical resistance level at 1.3393 (blue dotted line) and then went down and closed at the level of 1.3321. Today, the upward movement may continue. News on the market is expected at 15:00 UTC (USD) .

Trend analysis (Fig. 1)

Today, the market will try to continue moving up from the level of 1.3321 (the closing of yesterday's daily candle) with the goal of 1.3393 which is the historical resistance level (blue dotted line). If this level is reached, continue working up with the target 1.3436 target level of 161.8% (blue dotted line).

analytics5fbcac4b89e1b.jpg

Figure 1 (daily chart).

Complex analysis:

  • Indicator Analysis – up
  • Fibonacci Levels – up
  • Volumes – up
  • Candle Analysis – up
  • Trend Analysis – up
  • Bollinger Bands – up
  • Weekly Chart – up

General conclusion:

Today, from the level of 1.3321 (the closing of yesterday's daily candle) the price will try to continue moving up with the goal of 1.3393 which is the historical resistance level (blue dotted line). If this level is reached, continue working up with the target 1.3436 target level of 161.8% (blue dotted line).

Unlikely scenario: An upward movement with a target of 1.3336 is the resistance line (white bold line). If this line is reached, work down with the target of 1.3290 to roll back the level of 14.6% (red dotted line).

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

Trading plan for EUR/USD and GBP/USD for 11/24/2020

Yesterday was an extremely busy day, but what's extremely more important is that the activity on the market has clearly grown. The activity in the morning was associated exclusively with COVID-19, in particular with reports of successful British vaccine trials. This good news immediately became the reason why Mr. Boris Johnson put an end to the nationwide quarantine. Starting next week, many of the restrictive measures in the UK will be abolished, but regional restrictions may still be tightened. In general, this clearly led to the euro's growth. In turn, the US dollar not only recovered all its losses, but even tried to strengthen almost immediately after the opening of the US session. The reason for this was macroeconomic statistics and not the ending US presidential election. After all, Mr. Trump announced the beginning of the transfer of power to Mr. Biden a few hours after all these movements in the currency market happened.

However, the sharp rise in the US dollar coincides with the publication of American statistics. Thus, the gradual reduction in political uncertainty is unlikely to have affected market mood. Sooner or later, this whole political issue has to end. The only question was who would be declared the winner – the media has long ago announced Biden's victory, and everything is moving towards this. Meanwhile, Donald Trump still intends to continue to fight. However, he is unlikely to succeed, since the states certify the voting results, fixing precisely the victory of Joe Biden. It will probably be impossible to challenge these results in court.

At the same time, it is quite obvious that the euro has simply ignored the preliminary data on business activity indices, which turned out to be much worse than forecasts. Only the manufacturing index matched the forecasts and declined from 54.8 to 53.6. The index of business activity in the service sector fell from 46.9 to 41.3 instead of 43.7. As a result, the composite PMI fell from 50.0 to 45.1, although it was expected to decline only to 46.1. Nevertheless, the single European currency stood still at that time and began to grow following the pound only after a while.

Composite PMI (Europe):

analytics5fbca8fbafa74.jpg

It was noted above that the pound began to rise amid reports of a successful trial of the British vaccine. On another note, preliminary business activity indices were also pleasing, as they turned out to be slightly better than forecasts. Here, the manufacturing index rose from 53.7 to 55.2, rather than declining to 50.0. At the same time, the index of business activity declined from 51.4 to 45.8, instead of 42.0. Lastly, the composite index, which was forecasted to decline to 42.2, only declined from 52.1 to 47.4.

Composite PMI (UK):

analytics5fbca90460d6c.jpg

During the opening of the US session, the most interesting thing happened. And yes, of course, This can be explained by the fact that the political tension is nearing its end. However, it was mentioned above that the timing of all this perfectly coincides with the publication of preliminary data on business activity indices. Contrary to Europe's statistics, the indices in the US did not decline, but rose.

So, the manufacturing index rose from 53.4 to 56.7, with a forecasted decline to 52.9. The index of business activity in the service sector, in turn, rose to 57.7 instead of declining to 55.1. Generally, the composite PMI increased from 56.3 to 57.9, with an expected decline to 54.5. It can be observed that the data were very positive, which led to the dollar's growth. At the same time, the decrease in political uncertainty has only accelerated the process of returning the market to normality, when investors make decisions based on macroeconomic statistics. However, this will cause stagnation today, due to the lack of macroeconomic data.

Composite PMI (United States):

analytics5fbca90d041d9.jpg

The EUR/USD pair found resistance around the level of 1.1900 again, where there was a stop. As a result, the price reversed in the direction of 1.1800. We can assume that the recovery process yesterday will be replaced by a variable gap, where the range of 1.1830/1.1860 can be used as time limits.

analytics5fbca913e3ca9.jpg

In turn, the GBP/USD pair reached the resistance level of 1.3400, where a stop occurred, followed by a price rebound towards the 1.3300 level. We can assume that the quote will go into a stagnation stage between the range of of 1.3300/1.3350, if there will be no new upturn above 1.3350.

analytics5fbca91a496e0.jpg

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

Trading plan for USDJPY for November 24, 2020

analytics5fbca501a0fb8.jpg

Technical outlook:

USDJPY rallied from 103.70 lows yesterday, and managed to hit intraday highs around 104.50/55 levels in line with expectations. The currency pair produced a bullish Morning Start candlestick pattern on the daily chart, indicating a potential trend reversal ahead. Immediate resistance is now seen at around 106.00 followed by 107.00; while support comes in around 103.18, followed by 103.00 levels respectively. Intraday support is seen towards 104.10/20 levels and it might be used as another opportunity to initiate fresh long positions. A push above 106.00 will confirm that bulls are back in control and that USDJPY has already carved a meaningful low around 103.18. Furthermore, the currency pair will also enter into the buy zone once prices break above 106.00 that is encouraging for further highs.

Trading plan:

Remain long, stop @ 101.00, target 109.00 and higher.

Good luck!

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