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By successfully breaking out of its Ascending Broadening Wedge pattern and its price movement which is below the WMA (30 Shift 2) which has a downward slope and is also confirmed by the appearance of deviations between the price movement of Natural Gas commodity assets and the Stochastic Oscillator indicator on its 4-hour chart, it gives a fairly strong indication that #NG is currently in a weakening condition, but with the condition of the Stochastic Oscillator indicator which is currently below the Oversold level and is preparing to rise above level 20, it indicates that in the near future there will be a correction retracement upwards which has the potential to bring #NG to level 2,500, which is important as long as the strengthening does not break and close above level 2,658, then #NG has the potential to continue its weakening where level 2,222 will be attempted to be broken if successful then #NG will continue its weakening to level 1,967 as its main target and if momentum and volatility support then 1,575 will be the next target to be aimed at.
(Disclaimer)
The material has been provided by InstaForex Company - www.instaforex.com.Although currently on the 4-hour chart the AUD/USD commodity currency pair is moving harmoniously within the Bearish Pitchfork channel and is below the MA 50 which also has a decreasing slope where all of this indicates that Sellers are quite dominant, but with the appearance of deviations between the AUD/USD price movement and the Stochastic Oscillator indicator, it gives an indication that in the near future there is a potential for a strengthening retracement where the level of 0.6221 and/or Middle Pitchfork Line will be the target to be aimed at, but as long as the strengthening does not break and close above the level of 0.6667, AUD/USD still has the potential to continue its weakening where the level of 0.6550 will be the main target to be aimed at and if the momentum and volatility support it, it is not impossible that the level of 0.6509 and/or Lower Pitchfork Line will be the next target to be aimed at.
(Disclaimer)
The material has been provided by InstaForex Company - www.instaforex.com.Two macroeconomic events are scheduled for Tuesday. The first one, Germany's GFK Consumer Confidence Index, is barely worth mentioning, as it's a relatively minor report. The second report, however, holds more weight: the U.S. JOLTs Job Openings data for September. A slight decrease is expected compared to August, but since U.S. unemployment fell in September, the actual JOLTs figure could surpass expectations. This is the only report today that might influence market sentiment.
No notable fundamental events are expected on Tuesday. No new speeches from European Central Bank representatives are scheduled, though they're not particularly necessary now, as the next ECB meeting is still five weeks away. No comments from Federal Reserve officials are planned either, as the central bank's meeting on November 6-7 is approaching, during which officials are restricted from discussing monetary policy.
On the second trading day of the week, the British pound might attempt to resume its decline, while the euro may continue to rise. In reality, these currencies will unlikely move in opposite directions today, with only the JOLTs report potentially influencing their direction. Therefore, it may be more prudent to wait for buy or sell signals to form on both currency pairs, aligning in the same direction rather than opposing each other.
Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed around these areas.
Red Lines: Channels or trend lines that indicate the current trend and the preferred trading direction.
MACD Indicator (14,22,3): Histogram and signal line—an auxiliary indicator that can also be used as a source of signals.
Major speeches and reports (always found in the news calendar) can significantly impact currency pair movements. Therefore, it's advised to trade cautiously or exit the market during their release to avoid sharp price reversals against prior movements.
Beginners trading on the forex market should remember that not every trade will be profitable. A clear strategy and money management are the keys to success in long-term trading.
The material has been provided by InstaForex Company - www.instaforex.com.Recently, the euro has fluctuated upward, often without any specific reason. It's clearly largely oscillating around the 1.08 mark, with movements merely representing minor deviations from this level. Given that this week is sparse on macroeconomic data, this situation will likely continue until Friday. Additionally, with the U.S. presidential elections set for next Tuesday, the uncertainty intensifies, as the outcome remains highly unpredictable and the media portray the two candidates as complete opposites. In other words, the atmosphere is tense, and few are willing to take risks in such a setting. Therefore, this stagnation may well extend into the middle of next week.
The material has been provided by InstaForex Company - www.instaforex.com.The U.S. stock market ended the day in the green on Monday amid growing optimism ahead of a flurry of earnings from major corporations and the final push before the November 5 presidential election. Investor confidence was boosted by the fact that energy supplies remain stable despite the escalation in the Middle East, which has not affected critical infrastructure.
Israel's response to the Iranian attack earlier this month focused on military plants and strategic sites near Tehran, leaving refineries and nuclear facilities out of the strike zone. That caution has reduced the risk to global oil supplies and provided reassurance to investors worried about the impact of geopolitical tensions on the energy sector.
This week's key event will be the release of quarterly earnings reports from 169 companies in the S&P 500, including many of the tech leaders. Investors are particularly focused on the so-called "Magnificent Seven" — the tech giants that have driven the market to record highs. Alphabet, Meta, and Apple are set to report results in the coming days, fueling speculation about further gains.
The major indexes gained steadily on Monday, with the S&P 500 up 15.4 points (+0.27%) to 5,823.52; the Nasdaq Composite up 48.58 points (+0.26%) to 18,567.19; and the Dow Jones up 273.17 points (+0.65%) to close at 42,387.57.
Last week was a big one, with Nvidia overtaking Apple in market value to become the world's most valuable company. Investors are now eagerly awaiting data on AI spending, which could play a key role in the tech sector's performance given the huge expectations for AI in the coming years.
"Earnings reports will be key to understanding what capital expenditures companies can afford to make next year," said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute. Corporate executives will be disclosing their plans for the future, which will be an important guide for investors. Microsoft and Amazon, in particular, will be in the spotlight this week when they report results.
The Russell 2000 index, which tracks small-cap companies, rose 1.63% today, outperforming the major indexes. The jump underscores investors' appetite for riskier assets as larger companies focus on earnings.
As crude oil prices fell 5%, the energy sector took a hit, falling 0.65%. The easing of concerns over oil supplies has dampened interest in energy, while financials have been the most dynamic sector, demonstrating the attractiveness of banking and insurance assets in the current economic environment.
The New York Stock Exchange was dominated by gainers today, with nearly two gainers for every one that fell (a ratio of 1.88 to 1). An impressive number of stocks reached new highs, with the NYSE recording 147 new records and 41 new lows. The S&P 500 posted 15 new yearly highs and 2 new lows, while the Nasdaq Composite posted 101 new highs and 67 new lows.
Markets will be watching economic data closely this week, especially the Consumer Price Index (CPI) due out on Thursday. The data is critical for the Federal Reserve as it is an indicator of inflation and could influence its future policy.
With the presidential election approaching, investors are keeping a close eye on the political situation in the United States. Despite the close forecasts, markets are considering the possibility of a second Donald Trump administration, adding an additional layer of uncertainty to the investment strategy for the coming years.
Aircraft giant Boeing shares fell 2.8% after the company said it would raise up to $22 billion in additional funding. The funds are expected to support Boeing as it struggles financially with an ongoing labor strike that is having a significant impact on its business.
3M shares jumped 4.4%, providing significant support to the Dow. The gains came after analysts at JP Morgan raised their price target for the industrial conglomerate, boosting investor optimism and adding to the positive sentiment in the market.
The yen fell to a three-month low against the US dollar. The moves came amid political instability in Japan following the recent elections, which left the country in a state of political uncertainty that has spilled over into the currency market.
Markets are eyeing US jobs data for October on Friday. The economy is expected to add 123,000 jobs and the unemployment rate will remain steady at 4.1%. The report will be a key indicator of the health of the economy ahead of the presidential election in a week.
Ahead of the US presidential election, polls show a tight race, with Vice President Kamala Harris holding a narrow lead over Donald Trump, 46% to 43%, according to a national survey. The November 5 vote is expected to be one of the closest and most unpredictable in recent memory.
With political and economic data in the air, the yield on the US 10-year Treasury note has hit a three-month high. On Monday, the yield rose 4.4 basis points to 4.274%, indicating a growing appetite for longer-dated assets ahead of the election and more economic data.
"We are experiencing a kind of calm before the storm," is how Subadra Rajappa, head of US rates strategy at Societe Generale, described the current situation. According to her, investors have become cautious ahead of the presidential election, trying to minimize risks.
Oil prices fell sharply as fears of an escalation in the Middle East eased. Brent crude futures closed at $71.42 a barrel, down 6.09%, or $4.63. American WTI crude also fell, by 6.13% or $4.40, to close at $67.38 per barrel. The decline put pressure on energy stocks, and the S&P 500 energy sector ended the day down 0.7%, although the major indices remained in positive territory.
Shares in Trump Media & Technology Group, the owner of the Truth Social platform, jumped 21.6% on Monday, continuing their recent rally. Interest in the company is growing in light of the upcoming elections and increased attention to media assets associated with Donald Trump.
Global markets also saw growth, with the MSCI index for world shares rising by 0.29%, or 2.44 points, to close at 847.93. The European STOXX 600 index also ended the day up 0.41%, reflecting positive investor sentiment in the global market.
The Japanese yen continues to remain under pressure due to political changes in the country. The results of the latest elections have weakened the ruling coalition, and this brings significant uncertainty to the political course and monetary policy. The Liberal Democratic Party of Japan lost its parliamentary majority, leaving the country with 215 seats in the lower house instead of the required 233, which has presented the country with new challenges in governance and financial policy.
The dollar against the yen shows significant gains, rising 1% to reach 153.88, which was the yen's lowest value since late July. Later, the dollar corrected slightly, ending the trading session up 0.64% at 153.28. This reflects the continued interest in the dollar despite the instability that has gripped the Japanese currency following the country's political changes.
The dollar index, which tracks its value against a basket of major world currencies, showed a slight decline of 0.08%, reaching 104.30. At the same time, the euro strengthened by 0.19%, reaching $1.0813. These indicators indicate the complex dynamics of currency markets against the backdrop of global political and economic factors, as well as the delicate balance between the American and European currency blocs.
The material has been provided by InstaForex Company - www.instaforex.com.The GBP/USD currency pair showed little activity on Monday. Once again, the price attempted to consolidate above the moving average, but even such a breakout does not guarantee the start of a correction. Although the pound has been declining slowly over the past few weeks, it continues to weaken, and investors have little interest in buying the currency. The reason is apparent: the pound rose excessively for too long, driven solely by the anticipated easing of the Federal Reserve's monetary policy.
In October 2024, it became clear that although the Bank of England has only lowered rates once and is generally reluctant to pursue further easing soon, it will eventually reduce rates. If the Fed's future rate cuts could be priced in two years in advance, why can't the BoE's easing be reflected in just a few months? From our perspective, the pound sterling will likely continue declining, especially as the long-term, 16-year downtrend remains in place. While this trend will eventually end, there are no signs of it happening yet.
On the fundamental and macroeconomic front, no significant events are scheduled in the UK this week. However, these are currently unnecessary for the pound. It's clear to all market participants that expecting economic growth is futile without real rate cuts from the BoE. Inflation in the UK has already dropped below 2%, but the British central bank is still waiting for a slowdown in services inflation and core inflation. Thus, they might continue to wait a little longer, which does not change the outlook.
As a result, this week, the fate of the GBP/USD pair will largely depend on U.S. reports. We previously mentioned that the most critical are ADP, JOLTs, Non-Farm Payrolls, the unemployment rate, and the ISM manufacturing index. Positive data from these reports could bolster the dollar as it is time to rise. Poor data might trigger the long-awaited correction, though this will likely be just a correction.
From a technical standpoint, the CCI indicator has formed several bullish divergences and has entered the overbought zone twice. However, in a bearish trend, these are only signals for a potential correction, which may not even materialize. Since the price cannot even secure a position above the moving average at the moment, we see no reason to buy.
The average volatility for the GBP/USD pair over the past five trading days is 68 pips, considered "average" for this pair. Therefore, on Tuesday, October 29, we expect movement within a range limited by 1.2906 and 1.3042. The higher linear regression channel points upward, indicating that the upward trend remains intact. The CCI indicator formed six bearish divergences before the recent decline, and it has now entered the oversold zone, forming a few bullish divergences, indicating a possible upward pullback.
Nearest Support Levels:
Nearest Resistance Levels:
The GBP/USD currency pair maintains a downward trend. We are not considering long positions, as we believe that all growth factors for the pound have already been priced in by the market several times. For pure technical traders, long positions with targets of 1.3092 and 1.3123 may be considered if the price secures a position above the moving average line. Short positions remain more relevant, with targets of 1.2909 and 1.2878. However, consolidation above the moving average will likely indicate a correction, which could take considerable time.
Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.
Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and current trading direction.
Murray Levels act as target levels for movements and corrections.
Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.
CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.
The material has been provided by InstaForex Company - www.instaforex.com.The EUR/USD currency pair showed no interesting movements on Monday, trading most of the day below the moving average line. While an upward correction still seems possible, it hasn't affected market sentiment. Therefore, even a consolidation above the moving average won't guarantee the start of a correction, especially since we've already seen such a break last week.
On Monday, no significant macroeconomic releases from the U.S. or the Eurozone left the market with little to react to. The euro did manage to gain slightly during morning trading, but a 35-pip upward movement hardly signifies much. The second trading day of the week will likely follow a similar pattern. The primary factor currently influencing market sentiment is the monetary policy stance of the European Central Bank and the Federal Reserve. While the Fed's policy easing has been fully or almost fully priced in, the ECB's easing is less so. The euro appreciated over the last two years despite the ECB lowering its already low rate more than the Fed. Therefore, we believe the euro's path is downward in the medium term. The global trend remains bearish, with a sideways trend on the weekly time frame. Since the price recently reversed near the channel's upper boundary, it could now fall toward the lower boundary at the 1.0435 level.
This week, the U.S. will release substantial information, and the Eurozone will also present some significant reports. Consequently, the market will likely wait to make major decisions until these reports are released. Only after data on the economy and inflation in the Eurozone and employment and unemployment figures in the U.S. will it become clearer what to expect from the ECB and the Fed at their upcoming meetings. We do not wish to speculate on these outcomes, as it's unlikely anyone can predict them in advance. Insider information may exist in the market but is not readily accessible to ordinary traders. Therefore, trading decisions will likely be made as the data is released. If most macroeconomic data favors the dollar, it could continue to rise. If most data is unfavorable for the dollar, a correction may start.
However, from our perspective, any such movement would be only an upward correction. Simply put, we expect the euro's decline to resume, whether strong or weak, once this correction is completed. Technically, a potential correction has been brewing for a couple of weeks, but it might remain limited.
As of October 29, the average volatility for the EUR/USD pair over the past five trading days is 49 pips, classified as "low." We expect the pair to move between 1.0763 and 1.0861 on Tuesday. The higher linear regression channel points downward, indicating that the overall bearish trend persists. The CCI indicator has formed multiple bullish divergences, suggesting a correction may be on the way, but this is only a warning.
Nearest Support Levels:
Nearest Resistance Levels:
The EUR/USD pair continues its downward movement. In recent weeks, we have stated that we expect only a decline from the euro in the medium term, so we fully support the downward trend. There's a chance the market has priced in all or nearly all of the expected Fed rate cuts. If this is the case, the dollar has fewer reasons to fall, as it didn't have many reasons to decline previously. Short positions remain viable with targets at 1.0763 and 1.0742 if the price stays below the moving average. For traders using a purely technical approach, long positions are relevant only if the price consolidates above the moving average line, though this would likely signal only a correction.
Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.
Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and current trading direction.
Murray Levels act as target levels for movements and corrections.
Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.
CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.
The material has been provided by InstaForex Company - www.instaforex.com.Yesterday went quite well for the euro, although support from other counter-dollar currencies and stock markets was somewhat weak. The Marlin oscillator is gaining momentum toward the uptrend territory, pulling the price along with it.
Our previous expectation of price consolidation within the 1.0882-1.0950 range leading up to the U.S. election day is still on track.
On the four-hour chart, the price has turned from the support of the MACD indicator line and is now trying to consolidate above the balance line. The Marlin oscillator is firmly in the growth territory. The target is 1.0882.
The material has been provided by InstaForex Company - www.instaforex.com.The British pound is pressing more firmly against the 1.2994 resistance level, with the Marlin oscillator moving higher and pulling further away from its October 23 low. A firm hold above 1.2994 would open up a target at 1.3080—a goal the pound may reach before the presidential exit polls.
If the price falls below the lower boundary of the price channel at 1.2927, it may face another push down to 1.2859. However, this is an alternative scenario under current conditions.
On the four-hour chart, the price failed to consolidate above the balance indicator line yesterday, making it a target for today. A consolidation above this line would shift market sentiment toward buying, making the 1.3080 target accessible. The Marlin oscillator has already supported this move by consolidating in positive territory.
The material has been provided by InstaForex Company - www.instaforex.com.Yesterday, the Australian dollar couldn't rally like European currencies due to a sharp drop in commodity prices (oil -1.18%). Investors were also unsettled by the rise to power of the Liberal National Party in Queensland (D. Crisafulli, with elections held over the weekend), which, through its policies, downplays official inflation by excluding certain compensations for gas usage and other utilities. As a result, investors believe that the Reserve Bank of Australia may begin lowering rates sooner.
The Australian dollar nearly reached its target support at 0.6570. As the Marlin oscillator begins to turn upward, the price may rebound from this level into a correction. The fact that the price hasn't broken below the 0.6570 support makes rising to the first level at 0.6640 easier.
On the four-hour chart, the price and oscillator have formed a convergence. The nearest signal resistance, a break of which would signal the price's determination and readiness to continue upward toward 0.6640, is the MACD line around the 0.6603 mark.
The material has been provided by InstaForex Company - www.instaforex.com.The GBP/USD currency pair could not show any interesting movement on Monday. In the first half of the day, the price attempted to at least test the trendline, but by the second half, it was already falling. It appears that without strong macroeconomic support, the British pound has little to rely on. We are unsurprised that the pound cannot even manage a minimal correction. Throughout 2024, we have maintained that the pound is overbought and unjustifiably expensive. The market has consistently overlooked the actual state of the British economy and that the Bank of England will also lower its key rate, just like the Federal Reserve. Additionally, we have seen a two-year upward correction within the framework of a global, 16-year downtrend. With these factors in play, expecting sustained growth in the British pound is extremely difficult.
There were no macroeconomic reports on Monday in either the U.K. or the U.S. If, by the end of the week, most reports from the U.S. fall below forecasts, we may see the price consolidate above the trendline and start a correction. However, we must remember that just as the market ignored negative news for the pound for most of the year, it might now ignore negative news for the dollar. This is likely because the impact of the Fed's monetary easing has already been priced in.
On the 5-minute chart, there is no point in highlighting any trading signals. The pair moved slowly toward the 1.2981-1.2987 area, but when it reached it, the momentum faded. Volatility was again low, and buying the pound when it couldn't even consolidate above the trendline, which has been close to the price for weeks, is simply illogical. However, consolidating below the critical line could spark a new wave of decline for the pound. This week, a lot will depend on U.S. macroeconomic data.
The COT (Commitment of Traders) reports on the British pound show that commercial traders' sentiment has constantly shifted over recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, frequently cross and are mostly close to the zero mark. We also observe that the latest downtrend cycle coincided with a period when the red line was below the zero mark. Currently, the red line is above zero, and the price has broken an important level at 1.3154.
According to the latest COT report on the British pound, the non-commercial group closed 11,300 BUY contracts and only 100 SELL contracts. Consequently, the net position of non-commercial traders decreased by 11,300 contracts. In the medium term, the market still shows little interest in selling the pound sterling.
The fundamental backdrop still provides no basis for long-term purchases of the pound sterling, and the currency has a real chance of resuming a global downtrend. However, on the weekly time frame, an ascending trendline is in place, so until this is broken, it is premature to expect a long-term decline in the pound. The pound sterling has continued to rise despite nearly every adverse condition (again, in the medium term), and even when COT reports indicate that major players are selling the pound, it still manages to climb.
In the hourly time frame, the GBP/USD pair continues its decline. The uptrend has been negated, so further declines in the British currency, possibly significant and prolonged, should be expected. Currently, traders must stay below the 1.2981-1.2987 area and the trendline for the pound to keep falling. There are no reasons to expect a correction now, as the price can't reach the trendline.
For October 29, the following key levels are highlighted: 1.2796-1.2816, 1.2863, 1.2981-1.2987, 1.3050, 1.3119, 1.3175, 1.3222, 1.3273, 1.3367, and 1.3439. The Senkou Span B (1.3020) and Kijun-sen (1.2952) lines may also be signal sources. A Stop Loss level is recommended to be set to break even once the price has moved 20 pips in the intended direction. Note that the Ichimoku indicator lines may shift throughout the day, which should be considered when determining trading signals.
On Tuesday, no significant events are scheduled in the U.K., while only one report will be released in the U.S. – the JOLTs job openings data. This rather interesting and important report could prompt a market reaction. The dollar may again show a tendency to rise.
Support and resistance levels: thick red lines around which movement may end. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines: Ichimoku indicator lines transferred from the 4-hour to the 1-hour timeframe. These are strong lines.
Extreme levels: thin red lines where the price previously rebounded. They are sources of trading signals.
Yellow lines: Trend lines, trend channels, and other technical patterns.
Indicator 1 on COT charts: The net position size for each category of traders.
The material has been provided by InstaForex Company - www.instaforex.com.The EUR/USD currency pair attempted an upward correction on Monday but failed again. Looking closely at the illustration above, you can see that despite efforts over the past five days to move upward, each new high is lower than the previous one. This means that there is currently no corrective movement. We warned that breaking the trendline does not guarantee the start of a correction and could be a false breakout. The trendline has recently been very close to the price, so almost any upward move could break it. If not for the significant data scheduled for release in the Eurozone and the U.S. this week, we would have said that the euro would continue falling without any correction.
As mentioned before, the euro is highly overbought and overvalued and will likely continue declining in the medium term. The minimum target is 1.0435. Reaching this target would mean that the price on the weekly time frame has reached the lower boundary of the horizontal channel. The overall trend is still downward. The market has been correcting the pair upward for two years due to the Federal Reserve's monetary easing. Even without external factors, restoring a fair EUR/USD exchange rate is necessary. Therefore, we expect a decline in the euro under almost any scenario.
Only one trading signal was generated in the 5-minute time frame yesterday, but Monday's volatility was very weak, and there was no significant fundamental or macroeconomic data. After consolidating above the critical line, traders could open long positions, but they likely saw no gain or loss, as the price did not move significantly upwards nor fall below the Kijun-sen line by the end of the day. This week, the pair's fate will largely depend on macroeconomic releases.
The latest COT report, dated October 22, shows that the net position of non-commercial traders has remained bullish for a long time, and the bears' recent attempt to gain dominance failed. However, last week saw a sharp increase in the number of short positions opened by professional traders, and the net position became negative for the first time in a while, indicating that the euro is now sold more frequently than bought.
We still see no fundamental reasons for euro strength, and technical analysis suggests that the price is in a consolidation zone – essentially flat. The weekly time frame shows that since December 2022, the pair has been trading between levels 1.0448 and 1.1274, extending from a seven-month flat phase into an 18-month phase. Thus, a further decline remains more likely.
The red and blue lines have crossed and reversed their relative positions. During the last report week, the number of longs in the non-commercial group decreased by 16,200, while shorts increased by 29,500, causing the net position to drop by 45,700. The euro still has strong downward potential.
On the hourly time frame, the pair continues to trend downward, which may mark the beginning of a new prolonged downtrend. There's little reason to discuss fundamental or macroeconomic reasons for a new dollar decline – they do not exist. In the medium term, we anticipate nothing but further euro depreciation. While a short-term correction is possible, the market currently shows little interest in buying euros, and there are insufficient technical signals to expect an upward move.
For October 29, we highlight the following trading levels: 1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, 1.1006, 1.1092, and 1.1147, as well as the Senkou Span B (1.0873) and Kijun-sen (1.0801) lines. The Ichimoku indicator lines can move throughout the day, which should be considered when identifying trading signals. Remember to set a Stop Loss to break even if the price moves 15 pips in the intended direction to protect against potential losses if the signal proves false.
On Tuesday, no significant events are scheduled in the Eurozone, while in the U.S., the JOLTs report on job openings will be released. This is a medium-importance report but could be a starting point for price movement this week.
Support and resistance levels: thick red lines around which movement may end. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines: Ichimoku indicator lines transferred from the 4-hour to the 1-hour timeframe. These are strong lines.
Extreme levels: thin red lines where the price previously rebounded. They are sources of trading signals.
Yellow lines: Trend lines, trend channels, and other technical patterns.
Indicator 1 on COT charts: The net position size for each category of traders.
The material has been provided by InstaForex Company - www.instaforex.com.Early in the American session, the Euro is trading around 1.0814, above the 21 SMA, and above 1/8 Murray.
We can see on the H4 chart that the Euro is recovering after having reached a low of 1.0750 last week. If EUR/USD consolidates above 1.0800, it could continue its rise this week.
If the euro returns below 1/8 of Murray, we could expect the bearish cycle to resume. For that, we could sell with targets at 1.0780 and 1.0742.
Technically, the Eagle indicator is reaching overbought levels. So, we believe that if the Euro falls below 1.08, it will be seen as a signal to sell over the next few days.
The material has been provided by InstaForex Company - www.instaforex.com.Analysis of Trades and Trading Tips for the Japanese Yen
Testing the 153.15 level occurred when the MACD indicator had already moved significantly below the zero line, which limited the pair's downward potential. For this reason, I did not sell the dollar, especially considering the substantial Asian rally and subsequent correction. Unfortunately, there's no U.S. economic data for the second half of the day, so it will be challenging to expect large dollar buyers to re-enter the market. However, the stronger the correction, the greater the chances for bulls to return. For my intraday strategy, I'll primarily focus on implementing Scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy USD/JPY upon reaching an entry point around 152.95 (green line on the chart) with a target rise to the 153.47 level (thicker green line on the chart). Around 153.47, I'll exit my buy positions and open sell orders in the opposite direction (anticipating a 30-35 point reversal from that level). Any rise in the pair today will likely follow the upward trend. Note: Before buying, ensure that the MACD indicator is above the zero line and just beginning its upward movement.
Scenario #2: I also plan to buy USD/JPY today if there are two consecutive tests of the 152.45 level while the MACD indicator is in the oversold zone. This setup may limit the pair's downward potential and lead to an upward market reversal. A rise toward the opposite levels of 152.95 and 153.47 is expected.
Sell Signal
Scenario #1: I plan to sell USD/JPY after it breaks below the 152.45 level (red line on the chart), leading to a quick drop in the pair. The main target for sellers will be 152.03, where I'll exit my sell positions and switch to a buy position (anticipating a 20-25 point reversal from that level). Selling pressure on the pair may remain through the end of the day. Note: Before selling, ensure that the MACD indicator is below the zero line and just starting its downward movement.
Scenario #2: I also plan to sell USD/JPY today if there are two consecutive tests of the 152.95 level with the MACD indicator in the overbought zone. This setup will limit the pair's upward potential and may trigger a downward market reversal. A decline toward the opposite levels of 152.45 and 152.03 is expected.
Chart Guide:
Important Notes for Beginner Forex Traders:
New traders should exercise extreme caution when entering the market. It's best to stay out of the market before major fundamental reports to avoid sudden price fluctuations. If you choose to trade during news releases, always set stop orders to minimize losses. Trading without stop orders can lead to significant losses, especially if you lack a solid money management strategy and trade in large volumes.
Remember, successful trading requires a clear plan, like the one outlined above. Making spontaneous trading decisions based on the current market situation is an inherently losing strategy for intraday traders.
The material has been provided by InstaForex Company - www.instaforex.com.Analysis of Trades and Trading Tips for the British Pound
Testing the 1.2965 level occurred when the MACD indicator had already moved well above the zero line, limiting the pair's upward potential—especially given the absence of significant fundamental data. For this reason, I did not buy the pound. A second test of this level shortly afterward found the MACD indicator already in the overbought zone, creating an opportunity to implement Scenario #2 for selling. However, as you can see on the chart, the best outcome was exiting at breakeven, as Friday's trend did not continue. With no U.S. statistics expected in the second half of the day, trading will likely remain within the range, with a slight advantage for pound buyers. For my intraday strategy, I'll primarily focus on implementing Scenario #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound upon reaching an entry point around 1.2992 (green line on the chart) with a target rise to the 1.3034 level (thicker green line on the chart). At 1.3034, I'll exit my buy positions and open sell orders in the opposite direction (anticipating a 30-35 point reversal from that level). The pound may continue its morning upward trend today. Note: Before buying, ensure that the MACD indicator is above the zero line and just beginning its upward movement.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.2959 level while the MACD indicator is in the oversold zone. This setup may limit the pair's downward potential and lead to an upward market reversal. A rise toward the opposite levels of 1.2992 and 1.3034 is possible.
Sell Signal
Scenario #1: I plan to sell the pound after it breaks below the 1.2959 level (red line on the chart), leading to a quick drop in the pair. Sellers' main target will be 1.2917, where I'll exit my sell positions and switch to a buy position (anticipating a 20-25 point reversal from that level). Sellers may step in after an unsuccessful break of last Friday's high. Note: Before selling, ensure that the MACD indicator is below the zero line and just starting its downward movement.
Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.2992 level while the MACD indicator is in the overbought zone. This setup will limit the pair's upward potential and may trigger a downward reversal. A decline toward the opposite levels of 1.2959 and 1.2917 can be expected.
Chart Guide:
Important Notes for Beginner Forex Traders:
New traders should be extremely cautious when entering the market. It's best to stay out of the market before major fundamental reports to avoid sudden price fluctuations. If you choose to trade during news releases, always set stop orders to minimize losses. Trading without stop orders can lead to significant losses, especially if you lack a solid money management strategy and trade in large volumes.
Remember, successful trading requires a clear plan, like the one outlined above. Making spontaneous trading decisions based on the current market situation is an inherently losing strategy for intraday traders.
The material has been provided by InstaForex Company - www.instaforex.com.Analysis of Trades and Trading Tips for the Euro
Testing the 1.0805 level occurred when the MACD indicator had already moved well above the zero mark, which limited the pair's upward potential. For this reason, I did not buy the euro. Due to the market's extremely low volatility, I missed out on other entry points. This situation is likely to repeat in the second half of the day, as no U.S. statistics are scheduled in the economic calendar, so market volume will likely remain low. I'll continue trading within the range of the sideways channel. For my intraday strategy, I'll primarily focus on implementing Scenario #2.
Buy Signal
Scenario #1: Today, you can buy the euro when the price reaches around 1.0832 (green line on the chart) with a target rise to 1.0862. At 1.0862, I plan to exit the market and sell the euro in the opposite direction, aiming for a 30-35 point movement from the entry point. A strong rise in the euro is unlikely in the second half of the day. Note: Before buying, ensure that the MACD indicator is above the zero line and just beginning to rise from it.
Scenario #2: I also plan to buy the euro today if there are two consecutive tests of the 1.0807 level when the MACD indicator is in the oversold zone. This will limit the pair's downward movement potential and lead to a market reversal upward. A rise to the opposite levels of 1.0832 and 1.0862 can be expected.
Sell Signal
Scenario #1: I plan to sell the euro after it reaches the 1.0807 level (red line on the chart). The target will be 1.0766, where I intend to exit the market and immediately enter a buy position in the opposite direction (aiming for a 20-25 point movement in the opposite direction from this level). Pressure on the pair will return if there's no activity at the daily high. Note: Before selling, ensure that the MACD indicator is below the zero line and just beginning to decline from it.
Scenario #2: I also plan to sell the euro today if there are two consecutive tests of the 1.0832 level when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a market reversal downward. A decline to the opposite levels of 1.0807 and 1.0766 can be expected.
Chart Guide:
Important Notes for Beginner Forex Traders:
New traders should exercise extreme caution when entering the market. Before major fundamental reports are released, it's best to stay out of the market to avoid sudden price swings. If you decide to trade during news releases, always set stop orders to minimize losses. Trading without stop orders can lead to significant losses, especially if you don't use money management practices and trade in large volumes.
Remember, successful trading requires a clear trading plan, like the one outlined above. Making spontaneous trading decisions based on the current market situation is an inherently losing strategy for intraday traders.
The material has been provided by InstaForex Company - www.instaforex.com.Early in the American session, the XAU/USD is trading around 2,732 where the 21 SMA is located and around 3/8 of Murray with a bullish bias.
This week, gold opened with a bearish gap, reaching the low of 2,724 during the European session. Since then, we have seen a strong technical rebound. However, this gap is still open, which means that gold will probably continue to rise in the next few hours until it reaches Friday's closing price of around 2,747.
If gold consolidates above 2,730 in the next few hours, the outlook still favors a further bullish movement up to 2,747. The metal could even reach the key level of 2,750.
On the contrary, if gold breaks sharply below 2,725, the outlook could be negative and we could expect the price to reach last week's low around 2,704.
The material has been provided by InstaForex Company - www.instaforex.com.In my morning forecast, I highlighted the level of 1.2961 and planned to make market entry decisions based on it. Let's take a look at the 5-minute chart to review what happened. The breakout and retest of 1.2961 offered a strong entry point for buying the pound, resulting in a 20-point increase in the pair by the time this forecast was written. The technical picture has been slightly revised for the second half of the day.
To Open Long Positions on GBP/USD:
With no major U.S. statistics in the second half of the day, buyers have a chance to reach the nearest resistance at 1.2991. It's also essential to monitor the support level of 1.2961, which worked well in the morning. If the pair declines, a false breakout at this level, as discussed earlier, will confirm a valid long entry point, targeting 1.2991, which was not reached in the first half of the day. A breakout and retest of 1.2991 will present a new entry point for long positions, with the potential to reach 1.3011. The final target is around 1.3030, where I plan to take profits. Should GBP/USD decline with no bullish activity at 1.2961 in the second half of the day, the bear market will likely return, pushing the pair toward the next support at 1.2940. Only a false breakout here will provide a suitable condition to open long positions. I'll consider buying GBP/USD on a rebound from the 1.2924 low, aiming for a 30-35 point intraday correction.
To Open Short Positions on GBP/USD:
Sellers made little effort to defend 1.2961, which raises some questions. Now, it's crucial not to miss the nearby resistance at 1.2991, which could be tested soon. Only a false breakout at this level will provide a suitable selling opportunity, keeping the pair within the sideways channel and targeting the support at 1.2961. A breakout and retest of this range from below will strike a blow to buyers' positions, potentially triggering stop orders and opening the way to 1.2940. The final target is the 1.2924 level, where I plan to take profits. Testing this level will reinforce the bear market. If GBP/USD rises and no bearish activity appears at 1.2991—which is likely under the current conditions—buyers may continue pushing higher. In this case, bears will have to retreat to the resistance at 1.3011. I'll only sell there on a false breakout. If there's no downward movement, I'll look for short positions on a rebound around 1.3030, aiming for a 30-35 point downward correction.
The October 15 COT report showed a decrease in long positions and an increase in short positions, though this hasn't significantly impacted the buyer-to-seller ratio, which remains approximately 2.5 to 1. UK labor market and inflation data have negatively affected the pound's upward potential, as they suggest further rate cuts in the UK, which is unfavorable for the currency. With limited significant statistics this week, market attention will focus on statements from Bank of England representatives that may provide guidance on future policy. The latest COT report indicates that long non-commercial positions decreased by 5,743 to 151,923, while short non-commercial positions increased by 1,590 to 66,121, narrowing the net gap between long and short positions by 212.
Indicator Signals:
Moving Averages
Trading is occurring around the 30 and 50-day moving averages, indicating a sideways market.
Note: The period and moving average prices are considered on the hourly H1 chart and differ from the conventional daily moving averages on the D1 daily chart.
Bollinger Bands
In the case of a decline, the lower boundary of the indicator, near 1.2940, will act as support.
Indicator Descriptions:
In my morning forecast, I highlighted the level of 1.0801 and planned to make market entry decisions based on it. Let's look at the 5-minute chart and see what happened. The upward movement and false breakout at this level provided an excellent entry point for selling, but the expected downward movement didn't materialize, resulting in taking losses. The technical outlook was unchanged for the second half of the day.
To Open Long Positions on EUR/USD:
With a lack of Eurozone data, buyers seemed to take advantage of thin market conditions, pushing above 1.0801 with minimal resistance. Their primary task in the second half of the day will be to defend this level. A false breakout at this level amidst the absence of significant U.S. data would create favorable conditions for building long positions, opening the way back to 1.0838. A breakout and retest of this range will confirm a buying point with a target of reaching 1.0868. The final target is 1.0900, where I plan to take profits. If EUR/USD declines and no activity is seen around 1.0801 in the second half of the day—where moving averages favor the sellers—the pair will likely revert to support at 1.0764, creating significant challenges for buyers. I'll only enter here after a false breakout form. I plan to open long positions on a rebound from 1.0738, targeting a short-term upward correction of 30-35 points.
To Open Short Positions on EUR/USD:
Sellers made no attempts in the first half of the day, which was surprising, especially after their active behavior on Friday. Now, bears have a much more critical task: defending the upper boundary of the consolidation range at 1.0838. If the pair rises, a false breakout at this level will provide an entry point for short positions with the potential to move down to support at 1.0801, which is reinforced by moving averages that favor the bulls. A break and hold below this range, followed by a retest from below, will serve as another valid selling point, with movement toward 1.0764, erasing buyers' growth prospects. The final target is the 1.0738 level, where I'll take profits. If EUR/USD rises in the second half of the day and bears are absent at 1.0838, buyers will have a chance to build a larger upward correction. In this case, I'll delay sales until testing the next resistance at 1.0868. I'll also sell here, but only after an unsuccessful consolidation. I plan to open short positions immediately on a rebound from 1.0900, targeting an intraday downward correction of 30-35 points.
The October 15 COT report showed a sharp increase in short positions and a further reduction in long positions. The data clearly reflects the recent decision by the European Central Bank to cut rates, and the focus on a more aggressive policy easing by year's end has visibly shifted market dynamics. Now, risk asset buyers no longer dominate as before, with the balance nearly equal: 169,319 versus 152,169. This week promises to be relatively quiet, as little important data is expected, so the euro's bearish market remains the focal point. The COT report indicates that long non-commercial positions decreased by 4,547 to 169,319, while short non-commercial positions increased by 17,401 to 152,169, narrowing the net gap between long positions and short positions by 1,402.
Indicator Signals:
Moving Averages
Trading occurs slightly above the 30 and 50-day moving averages, indicating a pair correction.
Note: The period and moving average prices are considered on the hourly H1 chart and differ from the conventional moving averages on the D1 daily chart.
Bollinger Bands
In case of a decline, the lower boundary of the indicator at around 1.0785 will act as support.
Indicator Descriptions:
Following comments from European Central Bank (ECB) board member Pierre Wunsch regarding inflation, the EUR/GBP pair began to gain positive momentum. Wunsch stated that temporary and minor deviations from the inflation target due to energy price fluctuations are acceptable. He also mentioned that discussing the December policy decision is premature, and further monetary easing is not immediately necessary. These remarks are considered a primary factor in supporting the EUR/GBP pair.
Additionally, the rise may be driven by technical buying near the 0.8300 level, which has provided solid support for spot prices since the end of September. However, the pair's growth potential remains limited due to expectations of more aggressive ECB rate cuts, confirmed by a drop in Eurozone consumer inflation below the 2% target for the first time since June 2021 and sluggish economic growth.
On the other hand, the British pound is supported by expectations that the Bank of England's rate cuts will proceed more gradually than in the Eurozone.
With no major economic data scheduled for release today, the pair's volatility and direction remain limited. Traders should await the release of preliminary Consumer Price Index data from Germany and the Eurozone on Wednesday and Thursday, respectively.
From a technical perspective, daily chart oscillators indicate downward momentum, so it is too early to anticipate a recovery in the EUR/GBP pair from its September lows.
The material has been provided by InstaForex Company - www.instaforex.com.Today, USD/JPY reached a three-month high and tested the 154.00 resistance level (upper line of the Bollinger Bands indicator on the D1 timeframe). USD/JPY opened the week with a gap up. Friday's closing price was 152.30, and today's opening was 152.94, leaving the gap unfilled. The yen is under intense pressure following the unexpected and, arguably, sensational results of Japan's snap parliamentary elections. Factors already challenging USD/JPY sellers—such as the Bank of Japan's indecision and inflation deceleration—are now intensified by the new political instability.
Briefly recapping, Shigeru Ishiba, who won last month's party election and was subsequently appointed as prime minister, called an early parliamentary election, believing it would strengthen his political position and provide him with greater political flexibility. However, this decision turned out to be a critical error for Ishiba and his ruling party, which may soon lose its majority.
As it stands, the Liberal Democratic Party lost its majority in the lower house—a rare event in Japanese political history, marking the first time the LDP has lost ruling status since returning to power in 2012.
The yen reacted negatively to the election outcome. First, given the political instability, the Japanese central bank is unlikely to pursue any moves to tighten (or normalize) monetary policy. This adds yet another reason for the Bank of Japan to take a pause (in addition to other factors discussed below).
Second, the economic stance of the new coalition and potential changes in government (should Ishiba lose his position, which seems likely) remain unclear.
Analysts at Okasan Securities note that many opposition politicians who could join a minority coalition are calling for measures to increase wages. Should these policies take effect, it would complicate the Bank of Japan's ability to raise interest rates without more clarity on wage growth. This clarity will likely come only after the spring "shunto" (Japan's annual wage negotiations between companies and unions). Thus, any adjustments to monetary policy might be postponed until next spring, despite earlier expectations of a December rate hike by some experts.
In short, USD/JPY traders currently face many unanswered questions. What form will the new parliamentary coalition take? What will the new government look like? Will Shigeru Ishiba retain his position? And what course will a minority coalition take if one is formed?
We won't have to wait long for answers. Under the Japanese Constitution, an extraordinary session of Parliament must be convened within 30 days to elect a prime minister. In this climate of political uncertainty, the yen will likely remain under pressure, and USD/JPY buyers could push the pair higher, possibly toward the 154.00-155.00 range.
However, politics isn't the only force weighing on the yen. Other fundamental factors allow USD/JPY bulls to maintain their confidence. First and foremost is inflation, which showed signs of slowing in September. The Tokyo Consumer Price Index fell to 1.8% in October, the lowest growth rate since April this year. The core index, excluding new food prices, also slowed to 1.8% in October, continuing its downward path (it was recorded at 2.0% in September).
The broader CPI data released earlier also reflected slowing inflation, with the overall CPI decelerating to 2.5% last month (the slowest growth rate since April), and the core CPI index falling to 2.4% (also the lowest since April).
All of this suggests that the Bank of Japan may not rush into the next rate hike cycle. BOJ Governor Kazuo Ueda, incidentally, hinted at this stance before the elections. Now, those advocating a wait-and-see approach have one more significant argument in their favor.
The only factor that might save USD/JPY sellers could be a hit to the U.S. dollar. This scenario could happen if the U.S. labor market once again disappoints dollar bulls. October's Non-Farm Payroll report is due this Friday, and early forecasts suggest a weak result (expected job growth is around 110,000).
Thus, despite the yen's overall weakness, it may be too soon to jump into USD/JPY longs—at least until traders break through the 154.00 resistance level, corresponding to the upper line of the Bollinger Bands on the D1 timeframe. The yen remains weak, but the dollar hasn't yet found a firm footing either. Under these fundamental conditions, a wait-and-see approach to this pair seems prudent.
The material has been provided by InstaForex Company - www.instaforex.com.On Friday, the EUR/USD pair returned to the support zone of 1.0781 – 1.0797. A rebound from this zone would signal a new reversal in favor of the euro and a resumption of growth towards the 161.8% retracement level at 1.0873. If the pair consolidates below this zone, it would increase the likelihood of further decline toward the 261.8% Fibonacci level at 1.0662. Trader sentiment remains firmly bearish.
The wave structure is clear. The last completed upward wave (September 25-30) did not break the previous peak, while the new downward wave (still forming) has broken the lows of the previous three waves. This suggests that the pair is currently continuing to form a new bearish trend, specifically its first wave. A corrective wave may soon appear, but bulls have already lost market control. Regaining it would require considerable effort, which seems unlikely at this stage.
Friday's news had little impact on trader sentiment, and activity was low. The bulls managed to prevent consolidation below the 1.0781 – 1.0797 zone, offering a small chance for recovery. This week's news background will be strong, although Monday is completely empty. Tomorrow also has few key events, so the primary movements and events are scheduled for Wednesday to Friday. On Monday and Tuesday, the bulls need to hold above the 1.0781 – 1.0797 zone; beyond that, further movement will depend on favorable data outcomes. Weak data from the U.S. and EU could lead to new bearish attacks, and the 1.0781 – 1.0797 zone might not shield the euro from a new drop. If reports disappoint for the dollar, the bulls might form a corrective wave, but it would still be a correction.
On the 4-hour chart, the pair reversed in favor of the euro following a bullish divergence, though the growth was short-lived. On Friday, bearish divergences appeared on both indicators, signaling a potential decline towards the 23.6% retracement level at 1.0807. The support zone on the hourly chart remains significant, with both bulls and bears in a tight range as they await key economic data from the EU and U.S.
COT Report:
Over the past week, speculators closed 16,160 long positions and opened 29,514 short positions, shifting the "Non-commercial" group sentiment to bearish. The total number of long positions among speculators now stands at 153,000, with short positions at 181,000.
For the seventh consecutive week, major players have been reducing their holdings in the euro. This trend may indicate a new bearish movement or, at the very least, a significant global correction. The key factor that drove the dollar's decline—expectations of FOMC easing—has now been priced in. Though reasons could arise over time, dollar growth is currently more probable. Technical analysis also suggests the start of a bearish trend, indicating a prolonged decline for EUR/USD.
News Calendar for the U.S. and EU:
The economic calendar for October 28 contains no notable entries. There will be no significant impact from the news background on market sentiment today.
EUR/USD Forecast and Trader Tips:
Selling opportunities may emerge if the pair closes below the 1.0781 – 1.0797 zone on the hourly chart, targeting 1.0729. Buying opportunities are possible with a rebound from the 1.0781 – 1.0797 zone, targeting 1.0873. However, activity may be weak until Wednesday due to the limited news background.
Fibonacci retracement levels are based on 1.1003 – 1.1214 on the hourly chart and 1.1139 – 1.0603 on the 4-hour chart.
The material has been provided by InstaForex Company - www.instaforex.com.Potential for the further drop on EUR/USD
The material has been provided by InstaForex Company - www.instaforex.com.Video Agenda:
00:00 INTRO 00:12 Totay's key events: BoC Gov Macklem Speaks, BCB Focus Market Readout, Wholesale Sales, 2-Year Note Auction, 5-Year Note Auction, ECB's De Guindos Speaks 01:53 EUR/USD 02:17 GBP/USD 04:30 USD/JPY 06:24 USD/CAD 08:06 BTC/USD
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Important:
The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.
Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.
#instaforex #analysis #sebastianseliga
The material has been provided by InstaForex Company - www.instaforex.com.Friday's trading session on the Nasdaq closed on a positive note, fueled by gains in mega-cap stocks as investors eagerly awaited upcoming earnings reports from some of Wall Street's largest players. This anticipation created a notable surge of interest across the market.
Tesla shares became a symbol of renewed optimism on Wall Street. Brian Jacobsen, Chief Economist at Annex Wealth Management, noted that Tesla's performance strengthened investors' belief that the rally in tech giants — known as the "Magnificent Seven" — is far from over. This elite group includes the stocks of major companies that are sensitive to interest rate changes and actively involved in AI advancements.
Amid this tech rally, Nvidia (NVDA.O), the largest chipmaker, briefly surpassed Apple (AAPL.O), making it the most valuable company by market capitalization. This achievement highlights the high interest in AI-developing companies, further supporting the entire tech sector.
Investors are also closely monitoring U.S. 10-year Treasury yields, which rose again. On Friday, they approached a three-month high of 4.26%. This level of yield generally pressures the stock market, raising questions about the future of Federal Reserve interest rates. All eyes are now on next week's U.S. employment data, which may provide clues about the Fed's upcoming rate decisions.
The Dow Jones Industrial Average (.DJI) dropped by 259.96 points, or 0.61%, to settle at 42,114.40. Meanwhile, the S&P 500 (.SPX) slipped by 1.74 points, or 0.03%, to 5,808.12, while the Nasdaq Composite (.IXIC) gained 103.12 points, or 0.56%, reaching 18,518.61.
The Dow Jones dropped primarily due to weak bank stock performance. For example, shares of Goldman Sachs (GS.N) fell by 2.27%. McDonald's (MCD.N) also lost 2.97% amid a negative reaction to news of an E. coli outbreak allegedly linked to its burgers.
Next week promises to be eventful, as the earnings results of major companies and economic data could set a new tone for Wall Street.
The S&P 500 (.SPX) has shown impressive annual growth of about 22%, but recent days have seen a pullback from record levels. Despite this, stocks remain highly valued, making them vulnerable in the event of unexpected disappointments in the near future.
According to LSEG Datastream, the S&P 500 P/E ratio, calculated based on expected earnings over the next 12 months, reached 21.8. This value is approaching a three-year high, highlighting investors' high expectations. High multiples, as known, can provoke a deeper correction in case of negative news, and in the coming days, investors, as noted by Chase Investment Counsel Corp. President Peter Tuz, will be "on pins and needles."
Five of the largest tech giants from the "Magnificent Seven" group — the very companies that have consistently influenced the stock market in recent years — are preparing to release their quarterly reports. Next week, investors will closely monitor the results of leaders such as Alphabet (GOOGL.O), Microsoft (MSFT.O), Meta Platforms (banned in Russia), Apple (AAPL.O), and Amazon (AMZN.O). The outcome of their reports could set the tone for the market in the near future.
The combined market value of these giants constitutes 23% of the total S&P 500. This means that their financial results could significantly impact the overall market, as any fluctuation in these corporations' stocks will inevitably affect the main indices.
Shares of the so-called "Magnificent Seven" companies are currently trading at a forward P/E ratio of 35. This is significantly above the average for other S&P 500 companies, as these tech giants have consistently outperformed in profit growth. However, experts predict that this gap will gradually narrow in the coming quarters.
Bryant VanCronkhite, Senior Portfolio Manager at Allspring Global Investments, noted that high valuations are only justified as long as these companies maintain stable growth. "If the justification for these high valuations weakens, there could be significant downside," he emphasized, adding that stock price fluctuations will directly depend on the consistency of growth metrics.
Investors are paying close attention to these tech giants' spending on artificial intelligence. Companies with massive AI platforms, such as Microsoft, Amazon, Alphabet, and Meta, plan to increase capital spending by 40% this year. Meanwhile, other companies in the S&P 500 are expected to cut capital spending by 1% in 2024, according to BofA Global Research. This underscores the strategic importance of AI initiatives for tech leaders, but also raises questions about the potential return on these investments.
Tesla (TSLA.O) became the first of the "Magnificent Seven" to release its latest quarterly results. The company saw a boost in its stock price after CEO Elon Musk announced plans to increase car sales by 20-30% next year. This positive outlook heightened interest in the upcoming earnings reports and further fueled enthusiasm for Tesla shares, which remain influenced by the company's ambitious goals.
In the coming weeks, investors will assess whether the new investments in artificial intelligence and technology scaling justify the high expectations placed on the "Magnificent Seven," or if the market will need to adjust its hopes.
The upcoming week promises to be one of the busiest for the third-quarter earnings season, with over 150 companies from the S&P 500 expected to report their financial results. This is a crucial moment for the market, as many investors are counting on solid numbers that could drive further growth.
The U.S. employment report, expected on November 1, comes amid debates over whether a robust economy could prevent the Federal Reserve from cutting interest rates. Economists estimate that the U.S. economy added around 140,000 jobs in October. However, recent severe storms could complicate the data. Special attention will be on wage data, as it may provide insight into future inflation dynamics, explained Nanette Abuhoff Jacobson, Global Investment Strategist at Hartford Funds.
This week, U.S. Treasury yields reached three-month highs, indicating rising expectations of a less dovish Federal Reserve policy. Moreover, there is an increasing likelihood of higher spending under a new president. Political betting markets have recently raised the probability of a Trump victory, as the Republican candidate is associated with protectionist policies, including tariffs, that could lead to higher inflation.
Next week marks the beginning of a series of significant events that could impact the market. From Election Day on November 5 to the Federal Reserve's announcement on November 7, investors may find themselves in a state of anxious anticipation. In such an environment, every economic report and corporate result will be critical in shaping future market sentiment.
The Cboe Volatility Index (.VIX), known as an indicator of demand for protection against market swings, is again showing signs of strain. After dipping below the 15 mark at the end of last month, the VIX is now hovering around 19, reflecting growing unease among market participants ahead of the upcoming election.
UBS Global Wealth Management analysts, in a Thursday note, highlighted that investors should brace for increased volatility ahead of the November 5 presidential election. As Election Day approaches, market confidence will likely remain under pressure, and any news event could trigger sharp price swings.
Experts believe that the high volatility is tied to overall uncertainty and political risks that typically accompany election periods in the U.S. Investors seeking to protect their assets are increasing demand for protective options, which is reflected in the VIX's rise.
The material has been provided by InstaForex Company - www.instaforex.com.Think you know something about forex? So, to help you measure just how great your Forex skills are, we have designed a little quiz to test your knowledge. Test your knowledge and skills with our forex trading free online quiz!
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What is fundamental, graphical, technical and wave analysis of the Forex market?
Fundamental analysis of the Forex market is a method of forecasting the exchange value of a company's shares, based on the analysis of financial and production indicators of its activities, as well as economic indicators and development factors of countries in order to predict exchange rates.
Graphical analysis of the Forex market is the interpretation of information on the chart in the form of graphic formations and the identification of repeating patterns in them in order to make a profit using graphical models.
Technical analysis of the Forex market is a forecast of the price of an asset based on its past behavior using technical methods: charts, graphical models, indicators, and others.
Wave analysis of the Forex market is a section of technical analysis that reflects the main principle of market behavior: the price does not move in a straight line, but in waves, that is, first there is a price impulse and then the opposite movement (correction).
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