Tag: forex

4 Global Market Updates- 25 July, 2022

In this article, we have covered the highlights of global market news about the Natural Gas, Crude Oil, USD/JPY and USD/CAD.

Natural Gas Futures: The recovery seems to be solid.

When taking into account CME Group’s advanced prints for the natural gas futures markets, open interest increased on Friday by around 11.2K contracts, reversing the prior daily decline. However, volume decreased for the second session in a row, this time by around 25.2K contracts.

Natural gas prices significantly rose on Friday due to growing open interest, which suggests that more gains are anticipated very shortly. In contrast, the commodity may be heading for a peak of almost $9.60 per MMBtu in 2022. (June 8).

Crude Oil Futures: More losses on the way

According to CME Group’s flash statistics for crude oil futures markets, traders increased their open interest holdings by roughly 11K after the previous week, marking the third consecutive daily growth. Instead, volume decreased for the third consecutive session by around 19.5K contracts.

Rising open interest on Friday coincided with prices of the WTI continuing their downward trend, suggesting that the commodity is still likely to suffer significant losses. However, the current level of support is the July low of $90.58 a barrel (July 14).

USD/JPY maintains minor rebound gains around 136.30-35 but lacks follow-through.

During the Asian session on Monday, the USD/JPY pair received some buying at the 136.00 level but could not profit from the move. The pair has retreated a few pips from the daily low and was last seen trading in the 136.30–136.35 range with barely slight intraday gains.

On the opening day of a new week, the US dollar marginally increased along with a little increase in US Treasury bond rates. This, in turn, provided some support for the USD/JPY pair, albeit several variables discouraged bulls from betting aggressively and limited any appreciable upward movement.

The market’s concerns about a global economic slowdown were further increased by the depressing publication of the US and Eurozone flash PMI prints on Friday. As a result, market confidence continued to deteriorate, supporting the safe-haven Japanese yen and capping the USD/JPY pair.

The recent steep decline in US Treasury bond rates results from a worldwide flight to safety and the anticipation that a US recession may compel the Fed to delay its policy tightening. Consequently, the US-Japan rate disparity decreased, which benefited the JPY even more.

However, it is widely anticipated that the US central bank would increase interest rates by 75 basis points, which might continue to support the USD. As a result, Wednesday’s announcement of the results of a two-day FOMC policy meeting will continue to dominate market attention.

USD/CAD rises further from a multi-week low and approaches mid-1.2900s.

The USD/CAD pair gained momentum for the second straight day on Monday, building on Friday’s solidish recovery from the 1.2820 regions, or a nearly four-week low. Several factors supported the trend that drove spot prices to a multi-day high during the first half of trading, closer to the mid-1.2900s.

Investors are nonetheless concerned that major central banks’ continued aggressive tightening would constrain economic activity and hinder global development. Concerns about the fuel consumption forecast have been heightened due to this and the implementation of tight COVID-19 limits in China, which has continued to put pressure on crude oil prices. As a result, the commodity-linked loonie lost value, supporting the USD/CAD pair as some US dollar purchasing started to appear.

Investors’ enthusiasm for deemed riskier assets was curbed by growing recession worries, as seen by a generally softer tone in the equities markets. In addition, a little increase in the rates on US Treasury bonds benefited the safe-haven dollar. Any additional gains for the dollar and the USD/CAD pair may be restrained by concerns that a US economic slowdown would compel the Fed to scale down its aggressive policy tightening course.

Please click here for the Market News Updates from July 23, 2022.

July 25, 2022
WHAT IS FOREX SWAP-THE FOREX HIDDEN COST?
Few people know what a “Forex Swap” is or how it may cost you or even earn you money. It’s critical to understand how the swap may impact your account, particularly if you hold transactions for an extended time.

You may believe you know all the expenses related to forex trading, but are you?

Also known as the carry trade or the rollover charge, this cost may add up quickly while you’re trading.

There will always be a fee connected with trading, regardless of the trading organization you are using or the financial market you are looking at.

What are the primary Forex costs?

The broker fee, the spread, and the swap are the three direct expenses in the forex market to take into account.

To make trading more straightforward, brokers charge a commission. The spread is the difference between the purchase and sale prices. This spread can go up depending on the currency pair you’re trading.

The majors or anything else up against the USD usually have a very narrow spread. Of course, some exotic pairings received a four-pip spread, such as EUR/HK$. The spread will be more significant for the currency pairings with less activity in trading. And it’s essential to take this into account when choosing which currency pairings to trade.

A swap, also known as the rollover charge, is essentially a payment your broker makes for keeping a trade open overnight. Why? Because the forex market is accessible around-the-clock.

Brokers extinguish one daily candle and start a new one every 24 hours. You get the daily candles as a result.

Traders often use the 5:00 PM New York close. However, each broker has the option to adjust this by a few hours.

You can be paid the price for the privilege of keeping a trading position overnight through that 5:00 PM New York close. In some instances, you can even be paid for staying in that position overnight.

How do interest rates impact the swap?

Interest rates are the primary factor driving a particular currency pair’s up or downtrend. The cost of borrowing money is determined by interest rates, as are the returns on deposits made into savings accounts.

Employment, inflation, and other variables influence interest rates. To predict where the interest rates of the central banks will be in the future, you need constantly pay attention to the essential news throughout the week.

We get interested in the currency we purchased when we trade the Forex market using leverage, which is essentially a loan from the broker, but we have to pay interest on the currency we sold. We get the payment if we purchase a currency with a greater interest rate than the one we sold. An example of this is a positive swap.

On the other side, a negative swap occurs when you purchase a currency with a lower interest rate than the one you sold, which results in you having to pay interest.

Consider that you are making a long trade on the AUD/EUR currency pair. It implies that you are first purchasing Australian dollars and afterward selling Euros. In this case, you would collect 0.25 interest on the Australian dollars and pay no interest on the sold Euros. This swap is positive since the difference in interest rate levels defines it. Holding that trade overnight through the 5:00 PM New York candle means you get money.

How can you determine the precise cost?

Most broker systems include a calculator to determine the price of holding your position overnight.

Let’s say you decide to invest for the long term in the GBP/JPY. Your overnight position holding swap fee will be $2 for one standard contract.

It doesn’t say much. However, if you stay in that role for an entire year, you will have earned more than $700.

A brief summary of the Swap:
- Swap is the credit or debit for the overnight holding a foreign exchange deal.
- A positive swap involves purchasing a currency that pays a greater interest rate than the short currency, which results in an overnight profit.
- Negative swapping involves paying money overnight for a currency with a lower interest rate than the one you are short of.
- The interbank market influences the daily changes in interest rates.
- Because of the three-day settlement, Wednesday is a triple swap.
July 23, 2022
4 Global Market Updates- 23 July, 2022

In this article, we have covered the highlights of global market news about the Crypto Forecast, AUD/USD, S&P 500/ Nasdaq 100/ Dow Jones and XAU/ XAG.

Crypto Forecast: As the “Merge” date is made public, BTC and ETH lead the rally

While we are still one week away from the much anticipated U.S. Federal Reserve Meeting on July 27, this week has been whole with meaningful news stories that have caused volatility to rise. Over the last week, there has been significant momentum in the cryptocurrency market as a whole, and Bitcoin (BTC) has risen over the highs of its consolidation zone, which were $23,000, to reach a new high of $24,200.

Growing future premiums show that the market is feeling better. Offshore premiums align with early July levels but remain squeezed, indicating a cautious attitude. After a record-breaking 74-day stretch of high dread, the Fear and Greed index has moved out of that region, which might be another help to the struggling crypto market’s morale.

Ethereum (ETH), which is up more than 50% since last week, had significant weekly gains and reached a high of $1,646. The revelation that an event known as “The Merge” has a tentative launch date, the week of September 19, gave a lift to the second-most valuable cryptocurrency in the world. This will result in Ethereum switching from a proof-of-work system to a proof-of-stake one, using 99.95% less energy overall.

Weekly Forecast for AUD/USD: Commodities Strengthen the Resilient Aussie Fed in Focus Despite PMI Failure

Considering that both the manufacturing and services PMIs for Australia fell in July, the Australian dollar closed the week on a somewhat positive note. Although the two prints were still over the mid-50 level (expansionary territory), the decline emphasizes inflation and recession worries’ effect on Australian economic indicators. The U.S. PMI miss, which sent the composite and services readings into the contractionary range, drove the Australian dollar to monthly highs. Due to its role as a proxy for currency risk,The Australian dollar may decline over the following months if the pattern persists and the case for a recession intensifies according to the forecasts.

Forecast for the Upcoming Week for the S&P 500, Nasdaq 100, and Dow Jones

Stocks had a good week as the main indexes recovered from lows in June, just before the last FOMC rate decision. The day after the Fed raised interest rates by 75 basis points, the Nasdaq bottomed out, and the next day, the S&P 500 and Dow both reached a low. It’s noteworthy that rates peaked then, with the 10-year bond hitting 3.495 percent before turning. Since then, we’ve seen yields decline and stock prices rise, evoking previous bull markets fueled by easy-money policies from the Federal Reserve. Many are now calling for higher stock prices as the Fed deals with a slew of dismal economic data that may indicate pressures toward a recession.

The housing data released on Monday in the U.S. was incredibly disappointing and probably a reaction to higher interest rates; the jobless claims data on Thursday came in above expectations, highlighting a potential impact on the labor market; and the PMI release on Friday, which is regarded as a leading indicator, came in at 47.5. Printing below the 50 mark, which represents growth, shows contraction. The PMI is at its lowest point since the financial collapse, except for a short time in 2020.

Gold and Silver Technical Forecast: Charts Show More Losses for XAU and XAG

TECHNICAL OUTLOOK FOR GOLD

Gold prices plummeted to a new 2022 low before finding support close to the 2021 swing low at approximately 1,680. This ended a five-week losing trend for the metal. Strength rapidly diminished after that. A recently broken support area at 1,720, dating back to April 2021, changed to resistance. Bullish energy was snuffed out as a result, and prices pared gains entering the weekend.

After a string of significant weekly losses, XAU’s performance on Friday was pretty lackluster. It was up just 0.4 percent for the week. The gains seem ready to be given up, and gold prices may return to their prior downward trend. If so, prices might fall below last week’s low, or 1,681, which often supported prices in 2021. Levels not traded since early 2020 would become accessible with a lower break.

According to the forecasts, Gold bulls may yet retake the area of support of around 1,720, but they may need to recover first. The 23.6 percent Fibonacci retracement level, which is tightly matched, provides a distinct target to reclaim. A possibly positive move will occur when the MACD line crosses over the oscillator’s signal line. Should prices succeed, the 38.2 percent Fib level and the declining 26-day Exponential Moving Average (EMA) would likely serve as targets.

TECHNICAL OUTLOOK FOR SILVER

Silver prices narrowly ended a seven-week losing run, tracking just 0.25 percent higher through Friday. A region of prior opposition was given a bedrock of support for XAG dating back to October 2016. Nevertheless, a multi-month downturn is present, and the bias is still tilted downward. The cost of goods has decreased by more than 7% since July 1.

Even yet, silver may recover if prices stay around the low of 18.148 from last week. The Relative Strength Index (RSI) surged out of its oversold region, signaling a positive crossing of the MACD. Like with gold, the declining 26-day EMA presents a challenge that, if overcome, might return prices to a firm footing. The 26-day EMA and 38.2 percent Fib retracement would then focus from that point on according to the forecasts.

Please click here for the News Updates from July 22, 2022.

July 23, 2022
Gold price rises over $1,735 as US bond rates fall
Gold price soars to nearly one-week high of $1,735 after steep decline in US bond yields.
- The price of gold rose for the second day in a row and reached a record high on Friday.
- Fears of a recession and falling US bond rates help to underpin the safe-haven gold.
- The trend of tighter monetary policy globally might work against the non-yielding XAUUSD.
The gold price gains momentum for the second day in a row, building on the goodish overnight rebound from the $1,680 zone, or its lowest level since March 2021. During the North American session, the momentum propels the XAUUSD to a level close to $1,737, which is more than a week’s high. However, any significant upside remains elusive, so aggressive optimistic traders should use care.

Fears of a recession support the price of gold.

The ongoing concerns about a potential global recession are a significant reason for supporting gold as a haven. Following the poor announcement of the Eurozone PMI numbers on Friday, the worries reemerged. In reality, the preliminary S&P Global/BME research manufacturing activity report revealed that the decline in German and French business activity accelerated in July.

Reduced US bond rates provide more backing.

The rates on US Treasury bonds continue to decrease as concerns about the deteriorating economic picture grow. Weekly Jobless Claims and the Philly Fed Manufacturing Index from Thursday’s US macro data show an economic downturn. This has caused the standard 10-year US government bond yield to drop to its lowest point in more than two weeks, which is considered another factor is supporting the gold price.

Major central banks act aggressively to limit gains.

However, the likelihood of a more forceful response from important central banks to rein in surging inflation may discourage speculators from making substantial optimistic wagers on the non-yielding gold. Following the trend of tightening worldwide, the European Central Bank on Thursday increased its benchmark interest rates for the first time since 2011. The central bank announced a massive rate rise of 50 basis points and signaled more tightening in upcoming sessions.

Additionally, the Bank of England Governor Andrew Bailey’s hawkish comments on Wednesday increased the likelihood of a 50 basis point rate increase in August, the most since 1995. At its forthcoming policy meeting on July 26–27, the Federal Reserve is also anticipated to increase rates by an additional 75 basis points. In addition, the Reserve Bank of Australia hinted earlier this week that higher interest rates were necessary to rein in growing inflation.

Technical analysis of the gold price

The immediate resistance level of $1,710-$1,712 has now been successfully overcome, and the price of gold is set to increase. However, any further increase may draw some sellers in the vicinity of the $1,745–$1,746 supply area. As a result, the XAUUSD’s gains should be capped close to the $1,752 area, which should serve as a turning point and assist in identifying the next leg of a directional advance.

The $1,712-$1,710 resistance breakpoint, on the other hand, seems to be protecting the immediate downside currently before the $1,707 region and the $1,700 round-figure threshold. A convincing break below the latter would indicate that the attempted recovery has failed and would cause new selling to start. The price of gold may then revert to the YTD low, reached on Thursday around the $1,680 area, before finally falling to the next necessary support close to the $1,670 horizontal zone.
July 22, 2022
HOW TO DRAW FOREX TREND LINES?
One of the most popular types of technical analysis is trendlines. However, are you sketching them properly? If not, allow me to demonstrate.

Many different types of technical analysis are used to study the markets. The application of support and resistance is, by far, the most typical.

Trend Lines: What Are They?

On a chart, a trend line is a line that is drawn between two levels to represent support or resistance, depending on the trend’s direction. The more often a price abides by a specific trend line, the more critical that trendline is.

Based on these trend lines, we can quickly identify possible pockets of higher supply and demand that may help the market go downward or upward.

How are trend lines drawn?

In my years of trading and instructing, I’ve seen a lot of misunderstandings about the precise location and placement of trend lines. In this area, there are two schools of thought:
- You may create a trendline by connecting the highs and lows of a particular candle.
or
- They may be deducted from the final price.
The key is to remain consistent in your approach, so you can either do one or the other.

Drawing a trendline from the highest closing price of one candle to the higher candle and trying to compel them to match the market is pointless. You’ll likely get some false trade signals as a result of this.

The direction of the trend, from where the price has been to where it is heading, should be considered while drawing trend lines.

Let’s examine the trend line in the chart below:

Source: Forex Signals

The trend line will be positioned below the price in an upward market, functioning as support.

The trendline will be located where the market price is in a downtrending market, functioning as resistance.

How should the trend line be placed?

One technique is to align the trend lines with the extreme highs and lows of a particular candle as measured by its wicks.

The price is now quite far from where that specific trendline is drawn, which is the only issue. The same holds if you are projecting a market that is declining.

The closing price method is the alternative strategy. Using the line graph, the price will trade much more closely to the trend line, which you can see on the candlesticks with ease.

How do you trade using trend lines?

First off, trendlines established on a long-term chart using the closing price are more accurate and dependable. It might be used on many kinds of charts and for a breakout.

Second, trend lines may be utilized to create dynamic support and resistance levels based on recent price movements. The support level will be the uptrend line, and the resistance level will be the downtrend line.

Price movement might either break through the trend line and create a reversal or bounce off the trend line and continue the trend.

The price won’t always bounce back precisely from the moving average since these trend lines are like regular support and resistance lines.

The next move should see prices move toward the break after the level of resistance or support has been breached. A fake breakout will occur if prices break and then fail to go forward quickly.

Trendlines may also be significant or minor, much as with support and resistance.

Summary:
- A line drawn between two levels on a chart to represent support or resistance is known as a trend line.
- The most trustworthy trend lines will always be produced at more significant periods.
- NEVER try to shoehorn trend lines into a market by drawing them.
- Trend lines may be used as dynamic levels of support and resistance.
July 22, 2022
4 Global Market Updates- 22 July, 2022

In this article, we have covered the highlights of global market news about the Price of Natural Gas, Dollar, Crude Oil Prices and Gold Price.

Futures for natural gas: Further increases seem to be unfavorable

On Thursday, open interest in natural gas futures markets decreased by around 3.2 thousand contracts, which was the opposite of the previous increase when advanced prints from CME Group were included. After three days of daily increases, volume followed suit and decreased by roughly ten thousand contracts.

In the future, Natural Gas may try to consolidate some of its operations. On Thursday, the price of natural gas temporarily climbed over the $8.00 per MMBtu level for a short period; nevertheless, the commodity finished the trading session with slight losses and settled in the center of its daily range. This decline came at a time when open interest and volume were both on the down, highlighting the need for some consolidation in advance of a possible corrective decline in the near term.

The dollar gains traction as the atmosphere deteriorates ahead of PMI data.

Even though the European Central Bank (ECB) decided to raise its key rates by 50 basis points, the euro gained strength due to this move. However, the euro lost its positive momentum early on Friday due to the unfavorable shift seen in risk sentiment. During today’s European trading session, the US Dollar Index is moving closer to 107.00, while futures prices for US stock indexes are falling between 0.3 percent and 0.8 percent. On Friday, S&P Global will publish the results of its flash Manufacturing and Services PMI surveys for the United States, Germany, the euro region, and the United Kingdom. Data on Retail Sales for May will be included on the economic agenda for Canada.

In addition to the increase in dosage rate by a factor of two, the European Central Bank (ECB) presented its brand-new anti-fragmentation instrument, known as the Transmission Protection Instrument (TPI). The bank also gave up providing forward advice by announcing that all of its meetings would be broadcast live and that they would evaluate the data before making any decisions. During the press conference, Christine Lagarde, President of the European Central Bank, abstained from providing critical facts on the TPI. In the meanwhile, Italian President Sergio Mattarella has just dissolved the Italian parliament, which will result in early elections taking place on September 25.

Crude Oil Futures: Expectations Call for Further Decline

According to the flash data provided by CME Group for the crude oil futures markets on Thursday, market participants added more than 11,000 contracts to their open interest holdings. On the other side, volume fell for the second session in a row, this time by around 27.9 thousand contracts less than it did in the previous session.

The price of WTI may go back up to $96.50. On Thursday, the price of a barrel of WTI crude oil saw its second decline in a row due to an increase in open positions. In contrast to this, the commodity might continue its downward trend, with the immediate objective being the 200-day simple moving average, which is now $94.67, and the low for July being $96.46. (July 14).

Gold futures: Potential upside seems to be restricted.

According to preliminary readings from CME Group, open interest in gold futures markets decreased by around 9.6 thousand contracts on Thursday. In contrast, volume increased for the second trading session in a row, this time by around 87.4 thousand contracts.

Around $1,680, gold seems to have some support. The slight increase in the price of an ounce of troy gold that occurred on Thursday was driven by rising open interest; nevertheless, this leaves the possibilities for even further upside to be considerably decreased. On the positive side, there is strong support in the $1,680, which is also where the bottom for 2021 converges.

Please click here for the News Updates from July 21, 2022.

July 22, 2022
THE RISK OF LEVERAGE IN FOREX TRADING
The primary reason so many retail traders are lured to the Forex market in the first place is leverage.

Although you have probably already heard about this, it is so crucial for a beginner that we felt compelled to talk about it once again.

The forex market has developed into a bit of a nursery for “the get rich fast marketeers” and the many so-called gurus. And the primary lure they use is leverage.

What Is It?

Its is the capacity to manage a sizable sum of money with little or no of your funds and by borrowing the rest. In essence, it’s a loan from the broker that will provide you with more market exposure.

He could let you trade a $100,000 position, for instance, provided you put $1,000 into your brokerage trading account. Greater exposure and position equate to higher earnings (but also, your losses can be more significant).

What would life be like without leverage? Take a look at this:

Suppose you have $5000 in your trading account and wish to purchase shares of Amazon, Apple, or Facebook. You could purchase 43 shares of Apple, 18 shares of Facebook, and only one share of Amazon at the time this blog was being written.

You’ll get $500 if these firms see a spectacular 5 percent increase.

Can you picture it? Although it’s just $500, life without leverage is this.

How is life in the Forex market with leverage?

A leverage of 50:1 will give you control over 250.000 units of the base currency for the same $5000 account.

Lots are used for purchasing or selling a foreign exchange transaction, and a conventional lot is equal to 100,000 of the base currency.

How does it Leverage function?

As I usually advise, you should always set aside a predefined amount that you are willing to risk on every transaction while trading the markets.

Let’s suppose that each transaction will have a risk of 1% of the $5000 account. Fifty dollars would be equal to 1% of $5,000. Therefore, you will take a $50 risk utilizing the 1 percent.

50:1
- You are trading 2.5 lots with leverage of 50:1.
- Since each lot is worth $10 per pip, each pip is worth $25.
- Just two erroneous pips are permitted before you are stopped out.
20:1
- One standard lot, or 100,000, is controlled by a 20:1 leverage.
- $10 per pip for one lot. Only five pip are permitted before you are stopped out and lose your whole 1% account balance.
5:1
- Controlled by a 5:1 leverage ratio, 25.000 units are equivalent to 0.25 lots.
- With a $2.5 pip value, you may lose 20 pip before your stop loss is reached.
It increases risk and the likelihood that an investment may be stopped. You must be aware that risk and leverage are inextricably linked.

There is undoubtedly a coordinated attempt in the sector to safeguard clients like you. This enormous leverage might be fantastic when the markets are on your side, but it can destroy you when they are not.

That is both the strength and the risk of leverage. It may be used in your favor or against you.
July 21, 2022

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