Daily Market Analysis from NordFX

Forecast 2021: What to Expect from the Euro and the Dollar

 

If someone asks which currency pair is the most important and most liquid on Forex, the answer will follow immediately. Even a beginner will say: “Of course, EUR/USD”. There is even nothing to doubt about this: the trading volume for this pair reaches $1.1 trillion per day. These currencies represent two of the world's most powerful economies, and the US dollar is the first most important reserve currency. Most central banks continue to store large volumes of their gold and foreign exchange reserves (over 60%) in US dollars. The euro comes in second with over 22%.

It should be noted that the dollar is gradually losing its positions, according to Bloomberg, its peak (45.3%) in global payments was in April 2015. Now, following the SWIFT statistics, the euro has managed, although not by much, to bypass the dollar. In October 2020, 37.8% of money transfers served by this system were in the euro, while the share of the dollar was 37.64%. (The British pound took the third place with a huge margin with 6.92%).

Despite the weakening US currency, it is certainly too early to bury the dollar. The Bank for International Settlements (BIS) announced in the summer of 2020 that about 50% of cross-border loans and international bonds are denominated in USD. Finally, about half of all trade invoices in the world are issued in dollars, even for non-US trade.

And let's not forget that market analysts evaluate the strength of different currencies by looking at the US Dollar Index (DXY). In fact, this is a basket of monetary units of six countries, the value of which is compared with USD. And the euro takes the lion's share of 57.6% in it (the remaining 5 account for only 42.4%).

All the above statistics indicate unambiguously that EUR/USD is number 1 among the major pairs on Forex. It is this pair that sets the main trends for other currencies. And that is why it is necessary for every trader to know and understand whatever happened to it, is happening and will happen.


A Bit of History

Surprisingly, despite its importance, the EUR/USD pair is quite young. The euro appeared thanks to the creation of the European Union in 1992, first in non-cash form, and it was only on January 1, 1999 that it officially replaced the rest of the European currencies. A few more years passed and in June 2002 the EUR became the sole means of payment in the Eurozone, displacing the then favorite, the German mark (USD/DEM) from the pedestal.

This event was preceded by two others, which had an important influence on the formation of the subsequent EUR/USD exchange rate. The first is a cut in interest rates by the US Federal Reserve in late 2000, and the second is a series of four coordinated terrorist attacks, the largest in the history of mankind, committed in the United States on September 11, 2001, including the destruction of the twin skyscrapers of the World Trade Center in New York. As a result, having started from the rate of 0.93 dollars per euro, by the middle of 2008 the pair rose to the level of 1.60. In other words, the dollar has lost more than 70% against the euro.

However, the European Central Bank (ECB) did not want to see the euro so strong, as it posed serious problems for European exports and dealt a blow to the trade balance. Therefore, verbal intervention began in the market. In addition, positive news constantly came from the United States regarding the state of the economy of this country, as a result of which the EUR/USD pair began to slide southward and recorded the low of the second decade of the 21st century near the 1.032 mark by the end of December 2016.

Many analysts then predicted a quick parity for the pair at the level of 1: 1, but this did not happen. And now the European currency is quoted in the area of 1.22 dollars per 1 euro. 

What Happened: Year 2020

Exactly a year ago, we published forecasts given by experts from leading world banks regarding the EUR / USD rate for 2020, and now we can decide which of them was right and to what extent.

Thus, back in December 2019 analysts at Deutsche Bank, Goldman Sachs, Bank of New York Mellon and a number of other banks reached consensus, predicting a fall in the US dollar in 2020. The main reason was the slowdown in global economic growth. In addition, it was predicted that on the eve of the presidential elections, the US Federal Reserve under pressure from Donald Trump will continue to reduce interest rates, or at least keep them at the current level.

Both of these forecasts proved to be absolutely correct. If at the end of 2019. the DXY dollar index fluctuated around 97, then after 12 months it fell below 90 points. The interest rate also went down: in December 2019 - January 2020 it was 1.75%, in early March it was lowered to 1.25%, and then completely dropped to 0.25%.

Recall that in December 2019, only the first outbreak of COVID-19 in Chinese Wuhan was recorded, and there was no idea of a global pandemic. But even then, the Financial Times published a forecast of Citigroup experts that the quantitative easing (QE) policy pursued by the US Federal Reserve and pumping the market with cheap dollar liquidity could cause the dollar to fall. Colleagues from Citigroup were supported then by analysts at the Swiss bank Lombard Odier, as well as one of the world's largest investment companies, BlackRock. And this scenario also came true 100%, and the coronavirus pandemic only played the role of a catalyst for this process: almost a quarter of all existing dollars were released in just one past year.

Some conspiracy theorists argue that the coronavirus was deliberately invented to implement the plan of a secret world government and help the financial elite buy up the bulk of dollar liquidity on the cheap. But exposing all sorts of conspiracies is not the purpose of this review. Therefore, let us turn to specific figures and see whose forecast turned out to be the most accurate.

According to Bloomberg, the consensus forecast of the largest market operators suggested that by the end of 2020, the US dollar wouldl "lose weight" by another 400-500 points, and the EUR/USD pair would rise to the 1.16 zone.

JPMorgan Chase specialists predicted the level of 1.14 for this pair for the end of 2020. Goldman Sachs and Bank of America Merrill Lynch called 1.15. And the German Deutsche Bank and the French Societe Generale pointed to the level of $1.20 per euro. The last two forecasts turned out to be the most accurate: the pair reached a high of 1.225 at the end of 2020. (Recall that all these scenarios did not take into account the consequences of the blow that COVID-19has inflicted on the economy).


What Will Happen: Year 2021

Some experts believe that for the United States, the onset of COVID-19 can be compared with the Third World War: more than 300,000 dead, a third of the working population is left without a constant source of income. The pandemic hit the country at the end of the 10-year economic growth cycle and in a presidential election year. Additional pressure on the economy was exerted by the trade wars that Donald Trump unleashed with China and Europe, as well as the growth of the dollar supply.

Most likely, in 2021, money will actively flow to Europe, and the dollar will face a deep devaluation. True, different analysts assess the depth of a possible fall in the USD differently.

So, for example, Goldman Sachs predicts a fall in the weighted USD rate in 2021 by only 6%, while Morgan Stanley expects the EUR/USD pair to rise from current levels to 1.25. (By the way, the figure 1.25 also sounds in many other moderate forecasts).

But there are also those who predict a catastrophic fall in the American currency. Prominent economists, Euro Pacific Capital President Peter Schiff and former Morgan Stanley Asia head and Fed Board member Stephen Roach estimate the likelihood of a dollar collapse in 2021 at 50%. At the same time, Roach believes that the devaluation of the dollar can reach 35%. A slightly smaller but also impressive devaluation of 20% is forecast by analysts at Citigroup. That is, in their opinion, we can see the EUR/USD pair in the 1.40-1.44 zone by the end of next year.

What can stop the dollar from falling?

Naturally, the Federal Reserve's monetary policy tightening. As of today, long-term inflation expectations have already jumped to 1.85%, which is not far from the regulator's target threshold of 2.0-2.5%. This inflation leads to the depreciation of the dollar. And at some point, lest the US currency collapse definitively, the Fed will be forced, albeit with great reluctance, to stop pumping the economy with cheap money and start a cycle of raising basic interest rates.

By the way, Europe, perhaps even more than the USA, is interested in stopping the growth of the EUR/USD pair.

Since mid-March 2020, the euro has strengthened against the dollar almost continuously. This is despite the fact that the ECB has printed over €2.2 trillion in a year and set negative interest rates.

There are calculations showing that a 10% strengthening of the euro is reducing Eurozone GDP by about 1%. And imagine that the EUR/USD pair will rise, as predicted in Citigroup, to the level of 1.40. Such growth would put all European exports at a blow. Who will then buy goods from the EU at rapidly rising prices?

The ECB already had a chance to weaken the euro against the dollar. However, this did not happen: the European regulator has decided not to interfere in the affairs of the foreign exchange markets and simply limit itself to "monitoring the exchange rate." But, according to many analysts, with the growth of the pair to levels around 1.25, the ECB will be forced to take very serious steps to limit the further growth of its currency. And it is quite possible that the next program of assistance to the EU economy in the amount of €2 or €3 trillion will be adopted in the near future. And in the wake of Europe, similar steps will be taken by the central banks of Great Britain, Canada, China and many other countries. And if 2019-2020 can be called the time of the World Trade Wars, then 2021 will be the time of the World Currency War.

Although ... most likely we will see both wars at the same time. 

Happy New Year, 2021! It promises to be very interesting!



NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

Forex and Cryptocurrencies Forecast for January 11 - 15, 2021


First, a review of last week’s events:

- EUR/USD. The dollar has been falling, and the EUR/USD pair has been rising accordingly since the start of the COVID-19 pandemic last March. And now it is no longer far from its Q1 2018 highs. True, the result of the last three weeks can be considered zero. And the blame is not only the Christmas and New Year holidays, but also the growth in the yield of US Treasury bonds, coupled with the hawkish statements of the Fed representatives.
After the certification of President-elect Biden and the majority of Democrats in the Senate, the yield of 10-year-old American Treasuries skyrocketed, pulling the dollar with it. The President of the Federal Reserve Bank of Richmond, Thomas Barkin, said that the growth in Treasury yields confirms the desire of investors to see higher interest rates on USD, and the head of the Federal Reserve Bank of Philadelphia, Patrick Harker, predicted that the curtailment of the QE program could begin in the second half of 2021. All this sharply reduced the appetite of the bulls, who began to close long positions in EUR/USD, as a result of which the pair ended the week at 1.2225;

- GBP/USD. The storms associated with the signing of the Brexit agreement subsided, and, following the EUR/USD, the GBP/USD pair took a breather. Having reached a high of 1.3705 on January 04, by the end of the week it returned to where it had already visited in mid-late December, and finished at 1.3560;

- USD/JPY. Three weeks ago, we predicted the movement of the pair from the central line to the upper border of the medium-term channel, along which it has been sliding smoothly south from the end of March 2020. This is exactly what happened. Twice, on January 4 and 5, after bouncing off the central line, the pair went up sharply, approaching the upper border of the channel at 104.10 on January 8. A small pullback followed, and it froze at 103.95. Note that the 104.00 zone has been a strong support/resistance level for the last four months, from which the pair has repeatedly bounced off in one direction or another;

- Cryptocurrencies. it was 12 years ago, on January 3, 2009, that a person or group of people under the nickname Satoshi Nakamoto launched the main bitcoin network, mining a genesis block with 50 BTC. A few days later, on January 12, the first bitcoin transaction took place: Satoshi Nakamoto sent 10 BTC to Hal Finney. And more recently, in July 2020, information appeared on the Whale Alert Twitter account that before his mysterious disappearance more than ten years ago, Nakamoto managed to mine 1,125,150 BTC. Now, when bitcoin has reached the mark of $41,000, the value of these coins would exceed $45 billion, and Nakamoto would have taken the 25th place among the richest people on the planet.
Here, in fact, we have already announced the most important news of the past week: the quotes of the main cryptocurrency exceeded $41,000 on Friday, January 8. Thus, starting in December 2020, in just five weeks, each BTC coin grew 115% heavier.
Which pleases not only investors, but also miners. December turned out to be their most successful month in the last three years. According to the analytical service Block Research, in December the total revenue of miners reached $692 million, which is almost $1 million per hour.
At the moment, the cryptocurrency mining market is dominated by China, which, according to some estimates, accounts for more than 50% of the global hash rate. The head of Ripple even called Bitcoin and Ethereum cryptocurrencies controlled by China.
By the way, about Ripple. The last week and a half have given some hope to the owners of this altcoin. Recall that while the rest of the top coins were growing in price, the XRP/USD pair, starting from November 24, was steadily going down. Starting at $0.77, it fell to $0.17 by the end of 2020, shrinking 78%.
But this is not all either. The biggest disaster awaited Ripple in the futures market. On December 23, the price of the March futures for this token fell to $0.00023 on the BitMEX derivative platform. Investors sold 80 million coins in one minute - this is how the market reacted to the lawsuit of the US Securities and Exchange Commission (SEC), which accused this startup of illegally selling securities under the guise of XRP for $1.3 billion.
Now the situation has stabilized somewhat, and XRP/USD is quoted at $0.31 on January 8. And if a trader placed orders in advance to buy Ripple at the minimum price, then they made a profit of 1350% in just the last two weeks.
Returning to the main cryptocurrency, we note that its volatility, of course, is not as cosmic as that of Ripple, but it still remains more than impressive, reaching 10% per hour. The Crypto Fear & Greed Index is in a very overbought zone: at 95 out of 100. But, despite this, following the BTC/USD quotes, the total crypto market capitalization continues to grow steadily, having reached $1.1 trillion. At the same time, the bitcoin dominance index came close to 70%.


As for the forecast for the coming week, summarizing the views of a number of experts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:

- EUR/USD. We described in detail a week ago how analysts from the world's leading banks and financial agencies see the rate of this pair in 2021. The median forecast is 1.2500, which corresponds to the January-February highs of three years ago.
As for the near future, 60% of experts hope that this January will become, if not a month of trend reversal, then at least a sufficiently deep correction of the pair to the south, which will return it to the level of 1.2050, or even 1.1900. The nearest support is in the 1.2100 zone. However, as for the indicators, this development was supported by only 80% of indicators on H4. On D1, both oscillators and trend indicators have taken a neutral position.
40% of analysts side with the bulls, supported by graphical analysis on H4 and D1. According to them, the pair, having pushed back from 1.2200, should return to the uptrend, and we will soon see it at 1.2350. And then 1.2500 is not far off.
As for the events of the coming week, of interest are the data on the US consumer market, which will be published on Wednesday January 13 and Friday January 15. Fed Chairman Jerome Powell is also scheduled to make a speech at the end of the working week, and the market will wait whether he confirms the words of his colleagues Thomas Barkin and Patrick Harker regarding a possible increase in interest rates and curtailment of the quantitative easing (QE) program;

- GBP/USD. In general, the forecast for the next week or two here is very similar to the forecast for the euro/dollar. Technical indicators on D1 provide either neutral or multi-directional signals. 60% of experts, 70% of oscillators and 75% of trend indicators on H4 vote for the fall of the pair. 40% of analysts are for its growth, as well as the remaining indicators on H4 and graphical analysis on both timeframes. Support levels are 1.3525, 1.3485 and 1.3285. The next strong support is in the 1.3185 zone. Resistance levels are 1.3620 and 1.3725.
As for the events of the coming week, we should pay attention to the speech of the head of the Bank of England Andrew Bailey, which will take place on Monday, January 11;

- USD/JPY. How the yen will behave largely depends on both the risk sentiment of investors and the behavior of US Treasury securities. For now, most analysts (55%) are confident that the pair will stay within the downward medium-term channel and, having fought off its upper border around 104.00, will return to its central zone. This possibility is confirmed by 25% of oscillators giving signals on the pair being overbought on H4 and D1. The nearest support is 103.65, the next one is 103.00. The target is located in the 102.50 area.
35% of experts and graphical analysis on D1 vote for the fact that the pair will still be able to break through the upper border of the designated channel and rise to the zone 104.70-105.00. The next target of the bulls is 105.70; And finally, the remaining 10% of analysts are neutral, suggesting that the pair will fluctuate around Pivot Point 104.00;

- cryptocurrencies. Investors' optimism was added by the imminent coming to power in the United States of the Joe Biden administration. The founder of the Galaxy Digital crypto bank, Mike Novogratz, noted on CNBC that Trump's team was never able to stop the record growth of the main cryptocurrency, and expressed hope that financial regulators under the leadership of the new president would take a more loyal position. “I hope that after the inauguration [January 20, 2021] we will get more progressive regulators. I will be happy to wait for the new administration and get a regulatory framework that supports rather than fights cryptocurrencies,” said Novogratz.
As for the entry into the market of large institutional investors, in addition to regulatory restrictions, they are hampered by extremely high volatility of major cryptocurrencies. Thus, experts at the investment bank JPMorgan believe that the image of an alternative to gold will make bitcoin even more popular and predict its growth to $146,000. But this requires convergence of the volatility indicators of bitcoin and gold, and this is a "multi-year process."
Looking at what's been happening with bitcoin lately, JPMorgan's estimate may seem too conservative to many. According to investment analytics from Pantera Capital, the market is just weeks away from seeing Bitcoin price at $115,000. Speaking on CNBC, Dan Morehead, CEO of Pantera Capital investment company, called the limited supply of bitcoin as a key driver of growth in the value of this cryptocurrency. Currently, giants like PayPal and Grayscale are buying more BTC than bitcoin miners can mine, he explained.
At the moment, Bitcoin and Ethereum Grayscale trusts have accumulated digital assets of $14.075 billion and $1.808 billion, respectively. And, according to analyst Kevin Rooke, this giant continues to buy bitcoins, which suggests that Grayscale is set for long-term growth in the value of the largest digital currency.
Another popular analyst, Willie Woo, agrees with this. In his opinion, after bitcoin crossed the border of $24.000, it became clear that the market finally came under the control of long-term investors.
Binance, one of the largest crypto exchanges, also raised its forecast. “We thought the $50,000 price was reasonable, but that number will definitely be higher. I think that we will reach $75.000 - $100.000 for 1 BTC, by the end of 2021” says the CEO of its US unit Catherine Coley.
And finally, the most daring predictions for the BTC/USD pair, made by Insider co-founder Henry Blodget and the CEO of the Kraken bitcoin exchange Jesse Powell: both named $1 million per coin. However, the former believes that this will happen thanks to speculators, while the latter relies on the growth of institutional investments in cryptocurrency.
As for altcoin No.1, the capitalization of ethereum has exceeded $140 billion, which is many times more than that of such auto giants as, for example, General Motors ($59.5 billion), BMW ($47.1 billion) and Ferrari ($36.2 billion). Capital inflows into ETH will be even more significant in 2021, according to Messari analyst Ryan Watkins. Some investors are already concentrating exclusively on ethereum. And the key event for this altcoin will be the launch of ethereum futures on the Chicago Exchange (CME). In general, according to the estimates of the trader of the Amsterdam Stock Exchange, Michael van de Poppe, a strong rally in the altcoin market should start after the first quarter of this year.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

Forex Forecast and Cryptocurrencies Forecast for January 18 - 22, 2021


First, a review of last week?s events:

- EUR/USD. Making a forecast for the past week, the majority of experts (60%) were in favor of reducing the pair first to support 1.2100, and then, possibly, another 50 points lower. Almost everything happened as forecasted: the EUR/USD pair was at the level of 1.2075 at the end of the trading week.
It should be noted that a somewhat atypical situation has developed on the market since the start of 2021. Usually, the rise in the stock market puts downward pressure on the dollar. This is exactly what happened in the previous month: fueled by risk appetites, the S&P500 grew steadily, while the dollar index, which plays the role of a defensive asset, was steadily falling. According to Bank of America Merrill Lynch, in December, large investors hoped for a quick victory over COVID-19, a surge in GDP, they were actively buyingt shares of technology companies and were also actively getting rid of the dollar. And now the situation has changed dramatically: the USD DXY index began to grow in parallel with the S&P500.
What is the reason for this? First, US stocks look overvalued at the moment. At least from the point of view of American investors. In addition, we wrote in the previous review that after the certification of the US President-elect Biden and the majority of Democrats in the Senate, the yield of 10-year American Treasuries went up sharply, pulling the dollar with it. The leaders of the Federal Reserve Banks (FRB) of Richmond and Philadelphia added fuel to the fire, hinting at a possible curtailment of the QE program and an increase in interest rates on the dollar; bulls began to close long positions in EUR/USD;

- GBP/USD. Over the past five days, this pair has drawn a clear sinusoid, moving in the 1.3450-1.3700 channel along the 1.3575 Pivot Point. At the beginning, it dropped to the lower border of this trading range, and then turned around and sharply went up, reaching the values of 2.5 years ago on Wednesday.
The pound was supported last week by the head of the Bank of England, Andrew Bailey, who not only rejected the possibility of introducing a negative interest rate, but also expressed the opinion that the coronavirus pandemic is not capable of causing any structural changes in the UK economy. As a result, the pound showed the biggest gains in the past two months. However, then, following the general trend of strengthening dollar, the pair returned to the Pivot Point and finished the week at 1.3580;

- USD/JPY. The forecast, which was voted for by the majority of analysts (55%), turned out to be absolutely correct: the pair kept within the descending medium-term channel and, having bounced off its upper border, moved to its center.
Recall that another 10% of analysts assumed that the pair would move sideways, making fluctuations around Pivot Point 104.00. And they also turned out to be right: having started the five-day week at 103.95, it completed it also within this zone, at 103.85;

- cryptocurrencies. By the evening of Friday January 15, the bitcoin chart can equally likely speak of both a return to an uptrend or a continuation of a downward correction. Reaching a historic high of $41.435 on January 08, the BTC/USD pair turned south and dropped to $30.600 by January 11. All major indicators have long been giving signals of bitcoin being overbought, and only an excuse was needed for such a deep correction. And it was found in the form of an increase in the yield on US government bonds, which caused the dollar to strengthen. As a result, the main cryptocurrency lost more than 25% in price in just three days.
Then, to the delight of investors, the pair again approached the $40,000 mark, and the USA again became the formal reason for this. More precisely, President-elect Joe Biden, who announced a new $1.9 trillion economic aid package that includes $2,000 in direct payments to Americans. Such massive fiscal and monetary stimulus is likely to drive inflation and, as a result, increase demand for risky assets, including cryptocurrencies.
All good things are known to end someday. So bitcoin stopped its growth on January 14, and failed to set a new height record. And then the head of the ECB Christine Lagarde called for global regulation of the digital currency market. Referring to the speculative nature of bitcoin, she stated that such regulation could be initiated within the G7 countries, then carried over to the G20, and eventually expanded to a global level.
Taking advantage of the situation, the bears regained control of the situation and the BTC/USD pair dropped below the $ 35,000 level again in the second half of Friday, January 15.
It should be noted that the activity of investors has significantly decreased at the start of 2021. According to CoinShares, only $29 million was invested in crypto funds in the first week of January. This is despite the fact that similar investments amounted to more than $ 1 billion the week before Christmas. Of course, such a lull can be explained by a respite for the holidays. Moreover, crypto whales also reacted sluggishly to the correction on January 8-11: withdrawal operations were recorded only on a very small number of their BTC wallets.
PayPal data show that at least the retail market is gradually waking up after the Christmas and New Year hibernation, the volume of bitcoin trading on this platform has increased by 950% since the beginning of January, that is, almost 10 times. If, according to the analytical service Nomics, platform users made transactions with BTC for only $22.8 million on January 01, 2021, their volume amounted to $242 million ten days later.
The total cryptocurrency market capitalization was $1 trillion by January 15 (it was $1.13 trillion at the high of January 10). The BTC dominance index is in the region of 68%, and the Crypto Fear & Greed Index fell from 95 to 88 points over the week.


As for the forecast for the coming week, summarizing the views of a number of experts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:

- EUR/USD. Federal Reserve Chairman Jerome Powell denied the statements of his colleagues from the regional Federal Reserve Banks, saying that one should not count on raising interest rates and curtailing soft monetary policy in the near future. These words, coupled with Joe Biden's new $1.9 trillion fiscal stimulus package, are likely to halt the rise in US Treasury yields and support the bulls on S&P500. Moreover, the hopes for vaccination, which will lead to a rapid growth in GDP, have not disappeared. Thus, Wall Street Journal experts predict an increase in American GDP by 4.3% in 2021.
But will this break the current correlation between the dollar and the stock market? Will the dollar stop rising? It is not excluded that the growth of the S&P500 will be supported not only by American, but also by major investors from other countries. And such an infusion of foreign capital into the US economy will lead to the strengthening of the US currency.
Now, specifically about the EUR/USD pair. It is clear that at the time of writing the forecast (January 15), most indicators are painted red. 100% of trend indicators on H4, 75% on D1, as well as 75% of oscillators on both timeframes look to the south. The remaining oscillators signal that the pair is oversold.
As for the experts, their opinions are divided equally at the moment. But when moving from a weekly to a mid-term forecast, the scales are tilted towards the bulls. 65% of analysts, supported by graphical analysis on D1, expect the dollar to weaken and the pair to rise to at least 1.2500-1.2550 over the next one and a half to two months. The nearest resistances are 1.2175, 1.2275, 1.2300 and 1.2350. The main support area is 1.1800-1.1900.
As for the important events of the coming week, attention should be paid to the ECB's interest rate decision and the subsequent press conference of the management of this regulator on Thursday 21 January. And data on business activity of Germany and the Eurozone as a whole will be published the next day, on January 22;

- GBP/USD. Not only Germany and the EU, but also the UK will release statistics on business activity (Markit in the services sector) on Friday 22 January. This data could send a signal to investors about how the attack of a new coronavirus strain has affected the country's economy. Recall that earlier Britain reported record levels of deaths and new cases over the past few weeks in London and the south-east of England.
However, problems associated with COVID-19 are intensifying in other countries as well, including the United States. Therefore, 60% of analysts, supported by graphical analysis on H4 and D1, believe that the pair will be able to return to the level of 1.3700, and perhaps rise another 100 points higher. An additional argument for its growth is the new fiscal stimulus in the US, which has been discussed above.
Support levels 1.3540 and 1.3450;

- USD/JPY. The rise of the pair from the lower to the upper border of the descending medium-term channel, which took place in the first two weeks of January, is associated by a number of experts with an increase in risk sentiment and a decrease in interest in the yen as a safe-haven currency. Based on this, they believe that the pair will still be able to break through the upper border of the designated channel and rise to the 105.00 zone. 35% of analysts and graphical analysis on D1 vote for this scenario. The next target of the bulls is 105.70, the nearest resistance is the zone 104.00-104.35.
The majority of experts (65%) are confident that the pair will stay within the designated channel. The nearest support is 103.60, the next one is 103.00. The target is located in the 102.50 area.

- cryptocurrencies. So, the total cryptocurrency market capitalization is now at the level of $1 trillion. This is an important psychological level, especially for retail investors. Further growth of this indicator will be a clear confirmation of forecasts about the rise of the BTC/USD pair at least to a height of $50.000. If the capitalization goes down, then this can cause a landslide sale of coins: the example of the 2018 crypto winter is alive in the market memory.
In the meantime, the market is still dominated by an optimistic mood. So, for example, Bloomberg crypto analyst Mike McGlone believes that $50.000 is a real target for bitcoin.  He gave a forecast a few months ago, according to which BTC was supposed to grow to a new historical high in December 2020, which eventually did happen. ?I think that the asset will take the barrier of 50 thousand in the near future,? said this expert and added that the chances of BTC growth are much greater than its further weakening, and a pullback to $20,000 is now practically excluded.
Dan Morehead, CEO of investment company Pantera Capital, predicts that bitcoin's price will hit $115,000 by August 2021 and events such as the launch of the digital yuan will help further the penetration of cryptocurrencies into the global economy.
If this happens, there will be even more crypto millionaires and billionaires in the world. For now, according to Forbes, the list of the richest of them looks like this:
In first place are the founders of the bitcoin exchange Gemini, the Winklevoss brothers. The estimated value of their cryptocurrency assets, according to Forbes, is about $1.4 billion each. Bloq co-founder Matthew Roszak with $1.2 billion in digital assets ranks second, followed by venture capitalist Tim Draper. According to Forbes, the value of his assets is estimated at $1.1 billion.
In fourth place is the head of MicroStrategy, Michael Sailor, with assets worth $600 million, in fifthis the founder of the crypto bank Galaxy Digital Mike Novogratz. Forbes valued his cryptocurrency assets at $478 million. The last on the list is the co-founder of ethereum Vitalik Buterin with assets worth $360 million.
Speaking of ethereum. According to the founder of the investment fund DTAP Capital Dan Tapiero, this coin is ready for further growth. This is evidenced by the interest on the part of institutional clients of the American financial holding Northern Trust. The holding company launches a service for storing cryptocurrencies, in partnership with Standard Chartered bank. And "if Northern Trust stores bitcoin and ethereum, then they have buyers for both assets," Tapiero substantiated his point of view.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

Forex Forecast and Cryptocurrencies Forecast for January 25 ? 29, 2021


First, a review of last week?s events:

- EUR/USD. We published a chart seven days ago that clearly showed how the correlation between the S&P500 index and EUR/USD was broken in early January. But now everything is back to normal: the S&P500 continued its growth, reaching a historic maximum of 3859.84 on January 21, and the EUR/USD pair went up with it, fully justifying the forecast of the majority (65%) of experts. Groping on Monday the local bottom at 1.2053, the euro then rose to 1.2190, the final chord sounded slightly lower, at 1.2170.
The end of the week was quite calm, thanks to the head of the European Central Bank. Christine Lagarde was never able to weaken the European currency, but also did not allow it to seriously overtake the dollar. And this can be considered a certain success. 
In her speech following the ECB meeting on Thursday 21 January, Madame Lagarde explained what is good and what is bad. The "Good" section includes the start of vaccinations, the success of the EU economic recovery and the reduction of political uncertainty in the US. The "Bad" section includes the worsening epidemiological situation, increased lockdowns, the likelihood of a double recession in the eurozone and low inflation, which is reluctant to grow because of the strong euro. At the same time, the ECB refused again at its meeting last Thursday to adjust monetary policy, only stating that ?the package of the Pandemic Emergency Purchase Programme may not be used in full.? That news pushed the euro up. However, not by much since no specifics followed. And what criteria will be used to determine the scale of PEPP has remained a mystery to investors;

- GBP/USD. The pound grew along with the euro for the first half of the week. And it even broke through the upper boundary of the channel 1.3450-1.3700, reaching the height of 1.3745. However, the ending of the five-day period turned out to be blurry. The rally in the pound was not supported either by retail sales (an increase of 0.3% instead of the forecasted 1.2%), or business activity indicators: in the service sector, the Markit index fell from 49.4 to 38.8. British Prime Minister Boris Johnson added pessimism, saying that the third round of the lockdown could last well into the summer. As a result, the pound made a reversal, returned within the designated channel, and finished at 1.3680;

- USD/JPY. Recall that the main forecast, supported by 65% of analysts, said that this pair would hold within the downward medium-term channel, which began in the last days of March 2020 of the year. Levels 103.60 and 103.00 were called as supports.
That scenario turned out to be perfectly correct. The pair moves for the second week in a row unsuccessfully trying to break the upper bound of this channel. The first attempt last week was made on Tuesday January 19, when it bounced off the support at 103.60 and reached 104.07. The next rebound, on Thursday January 22, from the level of 103.30, was stopped at 103.90, after which the pair ended the working week where it had already visited repeatedly in January, in the 103.80 zone;

- cryptocurrencies. Is this atemporary correction or the beginning of a new crypto winter? This question became dominant last week. Bitcoin dipped below $29.000 on Friday December 22, which, of course, scared many investors. Guggenheim investment director Scott Minerd predicts a further decline down to $20,000 - the zone from which the explosive rally started in the second half of December 2020, which raised the BTC quotes by 100%.
Optimists reassure: over the year, bitcoin has risen in price by 5.75 times, from $7,300 on January 01, 2020 to $41.900 on January 08, 2021, so a correction by "some" 30% is, they say, not a reason for panic. In addition, a number of analysts note that this time the fall of bitcoin is not accompanied by an exit to fiat. Investors, fixing profits on the main cryptocurrency, do not leave the digital market, but open positions on more promising, in their opinion, altcoins. For example, on ethereum, the price of which has increased more than 11 times over the year. And if by the evening of January 22, the BTC/USD pair lost 22% relative to the maximum, then the decline in ETH/USD was less than 10%.
This version is also supported by data on the crypto market capitalization. In seven days, total capitalization, including bitcoin, decreased by 9.5% (from $1.028 trillion to $0.933 trillion). At the same time, the capitalization of altcoins remained at the same level of $300 billion. It was mainly bitcoin that was losing, the dominance index of which decreased from 67.48% to 64.31%. The share of Ethereum, on the contrary, increased from 13.52% to 15.01%.
As for the Crypto Fear & Greed Index, it finally came out of the overbought zone and fell from 88 to 40 points in a week. This value corresponds to a neutral state, when it is too late to open short positions on the BTC/USD pair, and too early to open long positions. Although, according to analysts, it is during such price rollbacks that "whales" begin to actively replenish their bitcoin wallets, buying up coins of small alarmist investors.


As for the forecast for the coming week, summarizing the views of a number of experts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:

- EUR/USD. Analyzing the results of the last ECB meeting, we can conclude that, despite the not very clear comments of Ms. Lagarde, the mood of the European regulator is still hawkish. The bank's Governing Council noted that EU debt markets had shown a rise in yields and concerns about a rapid strengthening of the euro had eased. Now we must wait for the meeting of the US Federal Reserve, which will be held on January 28. The interest rate on the dollar is likely to remain at the same level of 0.25%, so the main interest will be the comments of the regulator's management regarding the monetary policy in the near future. Special attention will be drawn to them also because this will be the first Fed meeting since the inauguration of the new US President Joe Biden.
Of course, we will also see the release of a fairly large volume of macro statistics next week, including the volume of orders for capital goods and durable goods in the United States (to be announced on Wednesday January 27), as well as data on the GDP of the United States and Germany, which will be released, respectively, on Thursday January 28 and Friday January 29.
In the meantime, the opinions of experts have been distributed as follows. 45% of analysts supported by graphical analysis on D1, 75% of oscillators on ?4, 90% of trend indicators on H4 and 75% on D1, side with the bulls. The nearest resistances are 1.2275, 1.2300 and 1.2350. The medium-term target is the same - rise to a height of 1.2500-1.2550.
The opposite view is held by 55% of experts. 25% oscillators on H4 signal that the pair is overbought. The nearest support is 1.2130 and 1.2060. The main objective is the zone 1.1800-1.1900;

- GBP/USD. At the time of writing the review, oscillator readings on H4 look pretty chaotic. As for the remaining indicators, most of them are still painted green. Thus, 75% of oscillators and graphical analysis on D1, as well as 75% of trend indicators on H4 and 100% on D1 look to the north.
But as for analysts, they, for the most part (65%), do not share the bullish optimism of technical analysis. The reason, as mentioned above, is the poor performance of the British economy and the statement of the country's Prime Minister Boris Johnson warning that the third round of the lockdown could last well into the summer. This is forcing investors to not just revise their forecasts for the pound, but also to re-start discussing a scenario with negative Bank of England interest rates.
The support levels are zone 1.3615-1.3635, then 1.3525 and finally the lower limit of the three-week side channel 1.3450. Resistance levels ?- the upper limit of the channel 1.3700, 1.3745 and 1.3800;

- USD/JPY. At its meeting on Thursday January 21, the Bank of Japan, as well as the ECB, did not adjust the parameters of its monetary policy. The expectations for GDP were slightly lowered over the past, 2020, but the regulator raised its forecasts for 2021, considering that despite everything, the country's economy will continue to grow.
Based on this, 70% of experts favored further smooth strengthening of the yen and the descent of the pair to support 103.00, and in case of increased volatility - another 50 points lower. The nearest support is 103.30.
An alternative scenario, for which 30% of experts voted, assumes a breakdown of the upper border of the descending channel, and the rise of the pair first to the resistance of 104.00, then 104.40. The next goal of the bulls is zone 104.70-105.00;

- cryptocurrencies. It is no secret how highly volatile and risky bitcoin is. Its explosive growth was driven by large institutional investors who began to enter the crypto market in the second half of 2020, fueled by the COVID-19 pandemic and fiscal stimulus from the US Federal Reserve, which cut interest rates and flooded the market with cheap dollars.
And now analysts are talking about the fact that cryptocurrencies could only be a temporary measure to preserve capital, and that now institutions are phasing out purchases of digital assets.
According to JPMorgan Chase strategists, the key to the short-term outlook for bitcoin's price is the world's largest digital asset management company Grayscale Investments, with a crypto portfolio currently valued at $23 billion. According to the calculations of bank analysts, for the BTC/USD pair to break through the resistance of $40,000, it is necessary that Grayscale Bitcoin Trust maintain the pace of inflow funds of $100 million per day in the coming days and weeks. Otherwise, a deep correction can be expected.
At the time of writing the forecast, the pair's quotes are in the region of $32,500. This is a fairly strong support/resistance level for the past three weeks. And if capitalization does not go up, and the price again manages to fall below $30,000, one can expect increased pressure from the bears and a new wave of active sales. 65% of experts agree with this.
But there are also professional market participants who maintain a moderately bullish mood, which is confirmed by positive premiums for March futures, + 3.5-5.0%. And the head of investment company Pantera Capital Dan Morehead expects to see "bitcoin for $45,000 or even more" in February. However, he advises traders and other industry participants to be as prudent as possible.
The statements of the new US administration also inspire some optimism. So the candidate for the US Treasury and former Fed Chairman Janet Yellen, speaking about possible improvements to the traditional financial system, called for encouraging the use of cryptocurrencies, if it, of course, occurs within the framework of the law. But time will tell what these laws will be. Although ... already now those who wish can use the services of ... a fortune teller.
As Reuters reported, fortune teller Maren Altman from New York makes her predictions of the bitcoin rate based on the movement of the stars. She predicted the beginning of the January correction of bitcoin absolutely accurately, since on that day the trajectory of Mercury (the price of BTC) should have been crossed by Saturn (the limiting indicator). Looking ahead, Ms. Altman sees ?some favorable signals at the end of the month and especially in February and early March.? ?However, a big correction will begin in mid-March,? the fortune teller says. ?Mid-April also looks pessimistic. May is bullish.?
By the way, Ms. Altman already has more than a million followers on social networks, among whom there may be large institutional investors. So, it is possible that it is she, together with the stars, and not Grayscale Investments, who runs the crypto market ?.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

Forex Forecast and Cryptocurrencies Forecast for February 01-05, 2021


First, a review of last week?s events:

- EUR/USD. The trade wars unleashed by the previous US President Trump have just seemingly subsided, but now we can "congratulate" everyone on the start of a new - currency - war. And it could prove equally exciting and unpredictable. This time, it was the European Central Bank, headed by Christine Lagarde, that declared hostilities. The adversary was, as you might guess, the US Federal Reserve System.
We have repeatedly written that the growth of the euro was caused by the outbreak of the COVID-19 pandemic. The European currency rose against the dollar by more than 1700 points from March 20, 2020 to January 15, 2021. For the time being, the ECB leadership pretended that the problem lies not in the current level of the EUR/USD rate, but in the rate of its growth. But it turns out now that the current quotes are also of great importance for the EU economy, and that it would not be bad for them to go down.
The heads of the Banks of Finland and the Netherlands have started to speak actively about the fact that the ECB is very concerned about the euro exchange rate and should take decisive steps to stimulate inflation, hinting at a further decrease in interest rates. And Janet Yelen will definitely not like it. Recall that the former head of the Federal Reserve, and now the new US Treasury Secretary, Janet Yelen promised in every possible way to stop other countries' attempts to artificially reduce the rates of their currencies.
So, we can assume that the challenge has been posed and accepted, and the duel has begun. And right from the start, the EU has been let down... by its main support, Germany. It turns out that inflation in this country in January jumped from -0.7% to + 1.6%, which will certainly affect the growth of the total indicator of the Eurozone. Whether this will entail an accelerated curtailment of the ECB's quantitative stimulus (QE) program remains in question. The market is at a crossroads, which can be clearly seen from the EUR/USD quotes: the pair has been moving in a rather narrow sideways channel 1.2055-1.2185 for the last two and a half weeks. And even the fall of US stock indices on January 27-29 could not push it out of this corridor. As for the end of the week, the pair put the final point at 1.2135;

- GBP/USD. Last week, most analysts (65%) refused to share the bullish optimism of technical analysis. The reason is the poor performance of the British economy and the statement of the country's Prime Minister Boris Johnson warning that the third round of the lockdown could last well into the summer. This is forcing investors to not just revise their forecasts for the pound, but also to re-start discussing a scenario with negative Bank of England interest rates.
Looking at the chart of the pair, we can state that the bullish momentum has exhausted itself for the time being. Even fresh positive data on the UK labor market, published on January 26, did not help the pound. The pair cannot break above resistance 1.3750 for the second week in a row. Its volatility has also plummeted. If it exceeded 400 points a week at the end of December, the figure has now fallen to 150 points. As for the end of the five-day period, the final chord sounded in the zone of another strong resistance level, at 1.3700;

- USD/JPY. The medium-term trend for this pair was laid back at the end of March 2020, when it began to slide smoothly along the descending channel. There have been many discussions among experts, whether the pair will be able to reverse this trend and break through the upper limit of this channel.
It was only 30% of analysts who voted for such a development a week ago, but they were the ones who were right. The zone 104.70-105.00 was indicated as the target of the bulls, which was reached by the pair USD/JPY on Friday, January 29. Unlike the euro and the pound, it reacted quite actively to both positive reports on the labor market and the US trade balance. But the main impetus was given by the redistribution of financial flows caused by the fall of the American stock indices S&P500, Dow Jones and Nasdaq. As a result, the pair reached the 10-week high at 104.95, and ended the trading session slightly lower at 104.70;

- cryptocurrencies. We were certainly joking, but it seems the forecast of a fortune teller from New York is starting to come true. Last week we talked about Maren Altman, who determines the trends of the BTC/USD pair based on the stars movement. So, she absolutely accurately predicted the beginning of the January correction of bitcoin, since the trajectory of Mercury (the price of BTC) was to be crossed by Saturn (the limiting indicator) on that day. Her latest forecast spoke of "some favorable signals at the end of January."
For the past three weeks, the main cryptocurrency has been clinging to support in the $30,000 zone, trying to break even lower and thereby instilling pessimism in many experts and investors. For example, Scott Minerd, the director of investments at Guggenheim Partners, said that the bitcoin rate would not stay above $35 thousand or even above $30 thousand, since there is no institutional demand now that can support the quotes at these levels.
However, the end of the month showed that the fortune teller could win in a duel between a fortune teller and an expert, . Having found the local bottom at $29,200 on Wednesday January 27, the pair turned around and reached $38,100 on Friday January 29. But then another sharp reversal followed, and it dropped to the level of $33,500. So, the outcome of the fight at the time of writing the review remains in question.
Scott Minerd is certainly right that big professional investors are not digital currency fans at all. And what happened in the second half of 2020 can rather be considered an experiment on their part, which they went to, constantly looking back at the reaction of regulators. But the director of Guggenheim Partners may not have taken into account that, in the absence of institutions, retail investors can also move bitcoin up, as was the case in 2017. Moreover, if then they were young enthusiasts, now the middle generation has joined them.
A study conducted by specialists of the Wirex platform together with the company Stellar Development Foundation showed that most of cryptocurrency investors are not at all young millennials, as the case was recently, but people over 45 years old. Investors aged 25 to 45 are only 22%.
The active buyback of bitcoin after the drawdown below $30,000 and the absence of panic sell-off showed that many investors still believe in the growth of bitcoin to new heights. The total capitalization of the crypto market once again broke the psychological mark of $1 trillion over the past seven days, rising from $0.933 trillion to $1.08. As for the Crypto Fear & Greed Index, it also began to grow along with the growth of quotations. If at the end of last week the index was at around 40 points, it climbed to 77  on Friday, January 29. This is already close to the overbought zone, but the maximum values are still far away. Recall that the index values were constantly in the zone 95-98 out of 100 possible during the rally in December - the first week of January.


As for the forecast for the coming week, summarizing the views of a number of experts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:

- EUR/USD. The currency war referred to in the first part of the review is not a matter of one week and not one month, it can stretch for years. The US economy ?shrank? by 3.5% in 2020. And this is not only the first negative indicator since 2009, but also the largest drop since the end of World War II. However, investors expect a low interest rate and huge cash injections into the US economy ($900 billion from Donald Trump and $1,900 billion from Joe Biden), together with successful vaccination against COVID-19, will help it return to growth in 2021. Although, this will happen gradually, incrementally.
In contrast to the United States, support for the Eurozone economy was much more modest - ?750 billion, therefore, the Eurozone GDP growth will be more moderate (according to forecasts + 1.5%). And the rate of vaccination is lower here than overseas. If we add to this the efforts of the ECB to weaken the common European currency, we can expect that the EUR/USD pair will be under certain pressure. But, as already mentioned, US Treasury Secretary Janet Yelen will make every effort to prevent this from happening.
After two and a half weeks of sideways movement of the EUR/USD pair in the channel 1.2055-1.2185, technical indicators are in confusion, giving no clear signals in either direction. As for the experts, most of them (65%) expect that in February, despite all, the dollar will continue to lose its positions and the pair will return to the 1.2200-1.2300 zone. The target is the January high of 1.2350, the nearest resistance is 1.2185. The nearest support is 1.2055, the main goal of the bears is the zone 1.1800-1.1900.
As for important economic events, there will be a lot of them in the coming week. Data on business activity and the labor market in the US will be published on Monday February 01 and Wednesday February 03. We will find out preliminary data on GDP On Tuesday February 02, and on the Eurozone consumer market on the next day. Finally, on February 05, on the first Friday of the month, data on the number of new jobs created in the United States outside the agricultural sector (NFP) will traditionally be released. This indicator is predicted to show an increase from -140K to +85K, which may lead to a short-term strengthening of the dollar, although this is often taken into account in advance by the market;

- GBP/USD. We will be waiting for a meeting of the Bank of England on Thursday February 04, where questions will be resolved about the planned volume of asset purchases under the programme to support the economy, as well as the interest rate reduction. Will Britain's regulator surprise investors? According to our forecasts, it is unlikely. It is likely that the volume of purchases of bonds on the open market will remain the same - ? 895 billion, and the rate will remain at 0.1%. Therefore, the market will wait for any signals, explicit or implicit, from the head of the Bank of England Andrew Bailey, whose speeches are scheduled for February 04 and 05.
As for analysts, 70% of them believe that the GBP/USD pair will still manage to break through the resistance at 1.3750 and rise to the height of 1.3800 for at least a short time. Graphical analysis and 85% of oscillators on D1, as well as 100% of trend indicators on H4 and D1 agree with this. At the same time, 60% of experts, along with graphical analysis, believe that after a dash to the north, the pair will return to the zone 1.3615-1.3700. The next support level is around 1.3500;

- USD/JPY. Most experts (70%), supported by graphical analysis on D1, believe that the pair's movement to the south will continue. However, now it has changed echelon, and the upper border of the medium-term descending channel will now become a support line for it. The main resistance level is 105.00, support is at 104.00, 103.55 and 103.00 levels.
The remaining 30% of analysts expect that the pair will be able to rise even higher and reach the zone of 105.70-106.10.
Among the trend indicators, 100% look up at ?4 and 85% at D1. As for the oscillators, 75% on H4 and 60% on D1 are colored green, the rest give signals that the pair is overbought;

- cryptocurrencies. According to a number of experts, the January drawdown is now fully redeemed, and the BTC/USD pair is ready to grow to $50,000. Those who wanted to take profits and transfer their crypto assets to fiat have already done so. And now the bulls are regaining strength, forming another upward momentum. Central bank interest rates, which are close to zero, the huge scale of fiscal stimulus, putting pressure on the dollar in the first place, and stock market fluctuations, drawing attention to Bitcoin as a hedge asset, can still act as arguments for the rally to continue.
It is likely that 2021 will be the scene of a struggle between the crypto market and regulators. And if we set aside the optimism of crypto fans, it remains questionable whether digital assets can seriously strengthen their positions.
So, for example, Bank of Singapore, which is one of the largest Asian financial organizations, called bitcoin a promising instrument that can not only compete with gold, but also shift it from the first place on investments security. At the same time, the bank's experts believe that "we are unlikely to see widespread adoption of bitcoin soon, since regulators simply will not allow users to independently decide how transactions with millions or even billions of dollars will be performed." Governments are making it increasingly clear that they will not allow attacks on their main instrument of power - national currencies.
As for the second most important cryptocurrency, the market is waiting for the launch of futures on Ethereum. It is this factor that allowed the ETH/USD pair to hold its positions even in the days of January, when bitcoin sought to break through support in the $30,000 zone.
Recall that one of the factors that allowed bitcoin to surpass the $20,000 mark at the end of 2017 was the launch of futures for this cryptocurrency by the Chicago Mercantile Exchange (CME). And now, on February 8, 2021, the same exchange is awaiting regulatory approval of the application for listing Ethereum futures, which may lead to a further increase in its quotations.
And in conclusion, another funny life hack from the life of cryptocurrencies. Last time we talked about an American fortune teller who predicts bitcoin prices by observing the movement of the planets. Now we are talking about another resident of the United States, Simon Berne, who placed a mining farm in the trunk of his BMW i8 sports car. The farm receives energy from the car battery, to which it is connected using a DC inverter. The battery power of the BMW i8 is 3500W, while the mining plant only consumes 1500W. According to Berne, this is a great way for him to make money even while traveling.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

Forex Forecast and Cryptocurrencies Forecast for February 08 - 12, 2021


First, a review of last week?s events:

- EUR/USD. The dollar has been growing throughout the week, fueled by optimism about the imminent recovery of the US economy. The incidence of coronavirus is down sharply: in just three weeks since the peak, the 7-day moving average has dropped by almost 50%. And a successful vaccination, complete with a new economic aid package, can generally lead to an economic boom in the country.
And that is where the confusion begins, which has puzzled many economists. With the outbreak of the pandemic at the end of last February, an inverse correlation has clearly emerged between the dollar and stock indices. After an initial sharp collapse, thanks to fiscal incentives (QE), lower interest rates and pumping the US economy with cheap money, stock indices, S&P500, Dow Jones, Nasdaq, went up, and the DXY dollar index went down.
And here came 2021, and everything turned upside down. Against the backdrop of good economic data and expectations of a new injection of financial "vaccine" for almost $2 trillion, the growth of risk sentiment and stock indices continued. But in parallel, the yield of long-term US Treasury bonds and the dollar grew.
?But it shouldn't be that way,? many experts exclaim. A soft monetary policy and pumping liquidity into the market should lead to a weakening of the currency, but not vice versa. Or maybe it's not the dollar's strength at all, but the weakness of its competitors? First of all, the euro?
Starting on Monday at 1.2135, the EUR/USD pair groped the local bottom at 1.1950 on the morning of Friday 05 February, breaking through 1.2000 support for the first time in 10 weeks. After that, the correlation between the stock market and the dollar once again changed its sign, from plus to minus this time: the S&P500 continued to grow, while the DXY began to fall. As a result, the EUR/USD pair went up again and finished the five-day period at 1.2050;

- GBP/USD. We predicted that at its meeting on Thursday 04 February, the Bank of England would leave both the volume of bond purchases of ?895bn and the interest rate at 0.1% unchanged. And so it happened, no changes in monetary policy took place. But at the same time, in just a couple of hours the pound has strengthened sharply against the dollar, jumping up 135 points, from 1.3565 to 1.3700.
The whole point was not in the results of the meeting of the Bank, but in market expectations. The Bank's committee unanimously decided to leave key parameters of its policy unchanged. Some investors expected that a split in the ranks of the Committee would happen, and that a number of its members would support the introduction of negative rates. The split did not occur, the result of the vote was 9:0.
A negative rate, no doubt, would have led to a collapse of the pound, but the situation was saved by the optimism of officials regarding the growth of the UK economy. In their opinion, thanks to vaccination, the country's GDP will reach pre-COVID indicators during the current year, and the consumer price index will rise to 2% at the beginning of 2022.
The Bank of England's unanimous decision to abandon negative rates for the near future should encourage capital inflows into the country. And this was clearly demonstrated by the GBP/USD pair, which continued its growth on Friday February 05, and ended the weekly session at 1.3735; 

- USD/JPY. The movement of this pair in most cases depends on what is happening not in Japan, but in the United States, on where the DXY dollar index, stock indices, as well as the yield of American state bonds are moving. This happened last week as well.
Back on January 27, the pair broke through the upper border of the medium-term descending channel, along which it had been descending since the end of last March and went up sharply. And although the overwhelming majority of oscillators and trend indicators on both ?4 and D1 indicated an uptrend, only 30% of experts voted for further growth among analysts. But it was their forecast that turned out to be absolutely accurate: at the high on Friday, February 05, the pair reached a height of 105.75, after which a correction followed and then a finish at 105.35;

- cryptocurrencies. We noted in our last review that the bulls are gaining strength again, forming another upward momentum in bitcoin. It also said that the main problem of the crypto market in 2021 will be regulators, whose goal is to take this segment under their maximum control.
Starting from the second half of 2020. institutional investors have become the main drivers of growth. In addition to specialized funds like Grayscale Investments and technology companies such as MicroStrategy, Harvard, Yale and Michigan universities have begun to acquire cryptocurrencies, using their endowment funds for this. Even conservative giants such as US government pension funds like CalPERS have been seen buying digital assets. However, due to regulatory issues, these institutions are acting very cautiously, investing in bitcoin, for now, very small amounts in their scale.
Recall that as soon as the BTC/USD pair renewed its all-time high on January 8, rising above $42,000, and the crypto market capitalization exceeded $1 trillion, the head of the European regulator Christine Lagarde immediately stated that this was a very speculative asset, which is used to conduct a rather "strange business" and money laundering activities. The new US Treasury Secretary Janet Yellen also joined her from across the ocean, according to her, "cryptocurrencies are of particular concern, and many of them are used to finance illegal activities." Both Lagarde and Yelen indicated that there is a need for serious regulation of this market. However, both kept silent about the main reason for such concern. Although, it is clear that governments are most concerned about the loss of their control over monetary resources.
Be that as it may, but after the statements of the President of the ECB and the US Treasury Secretary, the price of bitcoin fell below $30,000. However, by the end of January, the market came to its senses, and the main coin rate went up again.
On Friday evening, February 05, the BTC/USD pair is trading in the $38,000 zone, and the total capitalization of the crypto market hits highs, rising to the level of $1.16 trillion. As for the Crypto Fear & Greed Index, it reached 81, and although it is in the overbought zone, it is still far from the maximum values.
According to Glassnode specialists, the number of unique active BTC addresses reached 22.3 million in January. ?This is the highest rate in the history of bitcoin to date,? analysts say. The January surge in activity beats the previous record of 21 million active addresses in December 2017.
BTC miners also showed indicators close to the record ones. Despite a 30% drop in the price of bitcoin, January was a very good month for this "strange business". Mining the main cryptocurrency brought them $1.1 billion (the maximum of $1.2 billion was recorded in December 2017). The production of Ethereum showed a record result of $0.83 billion, exceeding the figure of December 2020 by 120%.


As for the forecast for the coming week, summarizing the views of a number of experts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:

- EUR/USD. So far, the situation seems to be still in favor of the dollar. In anticipation of the explosive growth of the US economy, investors are ready to turn a blind eye to another increase in the country's national debt, which will follow the next package of economic stimuli. The yields on long-term treasuries are growing, and the spread between US and European bonds is growing, strengthening the dollar, and putting pressure on the European currency. Thus, the yield of 10-year American state bonds has already reached about 1.15%, and the growth potential has not yet been exhausted. Here you can also recall the statements of Christine Lagarde that the ECB is not at all against the weakening of the euro.
The above has led to the fact that 70% of experts, supported by 85% of oscillators, 70% of trend indicators and graphical analysis on D1, agreed that the dollar will continue to grow in the coming days, and the EUR/USD pair to fall. Support levels are 1.1950, 1.1885, 1.1800 and 1.1750. However, the situation is changing with the transition from weekly to monthly forecast and here it is already 60% of experts together with graphical analysis who are waiting for the pair to return to the zone 1.2200-1.2300. The target is the January high of 1.2350, the nearest resistance is 1.2175.
As for important economic events in the coming week, we can note data on consumer markets in Germany and the United States, which will be released on Wednesday February 10;

- GBP/USD. Will the market still be able to maintain its bullish optimism about the British currency for some time? 65% of analysts believe that at least briefly the pair will still succeed, breaking through the resistance of 1.3750, to rise to the height of 1.3800, and possibly 25-50 points higher. Graphical analysis, 85% of oscillators as well as 100% of trend indicators on H4 and D1 agree with this. However, 15% of oscillators are already giving clear signals about the pair being overbought.
The remaining 35% of experts consider the 1.3700-1.3750 zone as an insurmountable obstacle, according to them, having broken through the support at 1.3700, the pair will first go down 100 points and then reach the 1.3485-1.3500 zone.
Among the events to which attention should be paid, of interest are the speech of the head of the Bank of England, Andrew Bailey on Wednesday, February 10, and the publication of GDP data for the IV quarter of 2020 on Friday, February 12;   

- USD/JPY. Most experts (70%) supported by graphical analysis on D1, 75% of oscillators and 80% of trend indicators, expect the pair to continue to grow at least up to 106.00-106.25 zone. The next goal is 107.00. The nearest resistance is 105.75.
The remaining 30% of analysts believe that the pair will return to the level of 104.00, and graphical analysis on H4 predicts an even greater drop, to the low of January 21, 103.30. Supports are at 104.75, 104.00 and 103.50 levels.

- cryptocurrencies. What is good, and what is bad.
The support of cryptocurrencies from large institutional investors is, of course, good. It can provide further growth for bitcoin. However, the fact that the crypto market now largely depends on the sentiments of this rather small group, and that, in turn, on the sentiments of government officials, is bad, and can lead to a collapse of the quotes. A clear example is the January drop in the BTC/USD pair by 30%.
However, government actions can not only put pressure on the crypto market, but also push it up. Thus, US President Joe Biden has confirmed his readiness for a new stimulus package for almost $2 trillion. And this is good, since with an almost 100% probability, some of these funds will flow to the digital asset market.
But, for example, is Chinese New Year good or bad? It is definitely good for people, a fun holiday, gifts, fireworks... But, according to a number of experts, on the eve of this joyful event, the value of bitcoin may fall again. Moreover, in this case, the price of the main coin is threatened not by the central banks, but small investors, who will begin to transfer their crypto assets to fiat for the purchase of New Year's gifts.
Currently, it is in China that the bulk of the owners of bitcoin wallets with savings of up to 10 thousand dollars are concentrated. And, according to the specialists of the investment company Stack Funds, ?since it is customary to celebrate the New Year in China very splendidly, small investors will definitely begin to withdraw funds before the holidays. In addition, - they explain, ?charts over the past few years show that it is in the run-up to the holidays that the capitalization of bitcoin is greatly reduced.? We do not have long to wait for either a confirmation or a refutation of this prediction: the New Year in China is this Friday, February 12, and the holidays will last from February 11 to 17.
Now about Ethereum. This leading altcoin continues to deliver impressive results. It has increased in price by 130% since the beginning of the year, and its increase was 448% in 2020. The main impact on such dynamics is the expectation of the launch of futures on it on the Chicago Mercantile Exchange (CME), which is scheduled for Monday, February 8.
The forecasts for this event are mixed. Optimists (and they are the majority) recall that the launch of bitcoin futures on the CME allowed this cryptocurrency to break the $20,000 mark at the end of 2017. Pessimists say that it was this event that marked the beginning of the crypto winter of 2018. So, the question of whether futures is good or bad remains open.
In December 2020, when the BTC/USD pair reached its previous high of $20,000 and ETH/USD was still very far from its similar mark, we noted a significant potential for the Ethereum growth. Now a similar situation is observed with another token, Litecoin, which we have not thought about for a long time. 
This coin appeared in October 2011, becoming an early fork of bitcoin, from a technical point of view is almost identical to it. Litecoin's all-time high of $370 was recorded on December 19, 2017. Then crypto winter came and, a year later, the price of the coin dropped to $20, having lost almost 95% of its value. At the moment, the quotes of the LTC/USD pair are at the level of $155, which is more than twice below its historical maximum, which can lead to its growth. Moreover, Litecoin even surpasses the main cryptocurrency in some important parameters. So, for example, the transaction speed with it is four times higher than with bitcoin.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex Trend Indicators: Destination, Features, Varieties


Finding patterns, repeatability and historical cyclicality is one of the main tasks of a trader. Some use graphic patterns to look for the silhouettes of geometric shapes. Some study the characteristic price movements: acceleration, braking, and interaction with graphic objects. However, there is a huge category of traders who are engaged in technical analysis of Forex using indicators. They allow you to predict the market, study its various characteristics and use these patterns in your own trading. Even beginners who have just heard about the existence of technical analysis will be able to analyze the market with their help.

One of the largest categories of the entire variety of instruments is Forex trend indicators. They are based on a simple pattern of price movement, namely, the tendency to trend movements.  A trend is a forward movement of the price up or down, in which the rewriting of extremes is characteristic. It is formed under the influence of majority positions in the market when there is a prolonged imbalance between buyers and sellers.

By identifying a trend, you shift the likelihood of success of the trade to your own direction. We will tell you in this article what Forex trend indicators are used for, what you should pay attention to when working with them, and what place they can take in the trading system.

Purpose and Methods of Using Trend Indicators

The overwhelming majority of books on technical analysis are based on the fact that the trend is the basis around which strategies are built. You should always stick to its direction and open trades in its direction. A trader must be able to identify it and build trading in its direction. However, it is difficult to determine it in a timely manner and without errors.

This is due to market noise, which blur the overall picture of what is happening. Trend indicators were created to combat it, that, depending on the formula embedded in them, average the price or in other ways indicate the global price movement, helping to determine the direction of future transactions.

Most often, their use is reduced to the filter function in the strategy, when the signals from the oscillator are matched with a global trend. For example, it can be a bundle of EMA and Stochastic, RSI, any other indicators of building channels and levels can be used. If they match in their readings, a trade is opened, and in case of a discrepancy, a trade should not be opened.

In addition to the filter, they can give signals to enter the market. This could be both a change in global and short-term trends. One way or another, indicators of this type can be a source of data for opening future positions by a trader.

In some cases, trend indicators can also be used to set Stop Loss. A prime example is setting a stop order under EMA, where the indicator line is the main pointer to limit risk.

Three Main Trend Indicators

Technical Analysis is world famous for its range of instruments around the world. A huge number of custom developments allows you to create a wide variety of trading systems. As mentioned above, a trader can take any trend-type instrument as a basis and attach an RSI indicator or any other oscillator to it. As a result, you get a balanced basis for developing a trading strategy.

The following TOP-3 trend indicators on Forex can be distinguished among all the tools that the MetaTrader terminal allows you to use. This is Moving Average, MACD, Bollinger Bands. They are present by default in all existing terminals and are considered standard. By the way, NordFX broker allows you to work with them through the MT4 terminal, which can be installed not only on a computer, but even on your mobile phone.

Moving Average Review

The Moving Average indicator is a classic trend indicator that draws a price line on a chart by averaging its value over a specified number of candles. SMA is considered a basic tool for technical analysis. First, it is a medium-arithmetic value, easy to calculate, and therefore was created one of the first. Secondly, many modifications and other indicators have been created on its basis. Thirdly, a trader can implement absolutely any strategy on its basis (Fig. 1).



There are several types of moving averages:

1. Simple moving average (SMA);
2. Exponential Moving Average (EMA);
3. Weighted moving average (WMA).

It is difficult to see the difference between them  at a first glance. The fact is that they differ in the type of price averaging, which entails some differences in sensitivity and lag. The last one on the list is the slowest and roughest of market noise. EMA is on the contrary the fastest and is more commonly used in practice.

The line you see on your chart can generate the following signals:

1. Crossing of the line and the price;
2. Crossing of the moving average lines between each other;
3. Average with a large period as a line of support and resistance.

We also want to pay attention to the angles of inclination and the position of price relative to the line. If it is above the line, the current trend is upward, if it is below the line, it is downward. It is worth reminding once again that in strategies Moving Average is almost always used in tandem with oscillators: Stochastic, RSI and others, which help to determine the beginning, continuation or end of the current trend.

A simple example of how the Stochastic indicator exits the overbought zone confirms a downtrend in the SMA and gives a command to open a sell trade is shown in Figure 2 below:



MACD Overview

This indicator is sometimes mistakenly considered an oscillator. This is not the case, because it is based on price averaging. The MACD algorithm is based on the convergence and divergence of two Moving Averages, and the histogram shows the distance between them. So MACD, unlike Stochastic or RSI, is not a stochastic oscillator, but a classic trend indicator (Fig. 3).



It is a huge source of signals, as it is able to find short-term and medium-term changes of the trend, generate signals to change the global trend. Its most formidable weapon is divergence. It has become a common signal for a huge number of Forex indicators.

Divergence is a reversal type of signal that is formed due to the mismatch of the extremes of the instrument with the real price. Simply put, if the price curve is still going down, and the indicator curve has already turned upstairs, this is a strong signal that the trend reversal should soon be expected. Thus, MACD, like other reversal indicators, is able not to post facto, but to warn in advance about fractures in price movements. The example is given in Figure 4:



You can see divisions above and below the 0.00 mark on the histogram. At moments when the graph crosses this zero line, a global trend change is fixed. It is clear that if the intersection occurs from bottom up, then the trend has changed from downward to rising. Accordingly, at the reverse level crossing, the trend changes from ascending to descending.

Also note how the MACD histogram interacts with the signal red dotted line. Their intersection generates a signal of a short-term change in the price movement and helps to determine the moment for opening orders either for buy or sell (Fig. 5).



Some Forex traders use this indicator not only together with other technical analysis tools, but also on their own. This is explained by the strength and accuracy of the MACD signals, especially if divergence occurs on the chart.

Bollinger Bands Review

Bollinger Bands round out the top three Forex trend indicators. They are an ordinary moving average, at a distance from which a trading range is built. It is interesting that this indicator is able to find and give the trader information not only about the direction of the trend, but also about the market volatility, as well as give signals to pull back from the boundaries of the range (Fig. 6).



Bollinger Bands demonstrate the strength and potential of the trend with its range. When the channel narrows, a transition from trend to flat or accumulation stage should be expected. Expansion, on the other hand, indicates an increase in volatility and trend activity. Trading can be based on the interaction of the indicator lines and the price, which can bounce back from them, break them or test them. This allows you to trade either on the break, or on the breakdown of the range. Both options will be correct. An example of how the Relative Strength Index indicator works in tandem with Bollinger Bands to rebound from the range boundaries can be seen in Fig. 7:



Strengths and Weaknesses

The strong point of trend indicators is the ability to cut off minor price fluctuations and identify the main trend of its movement. Фlmost all trend instruments use the averaging algorithm to combat market noise. On the one hand, it frees you from noise, makes the market picture clearer and more understandable. On the other side of the scale is the signal delay. Moreover, the more noise the indicator cuts off, the more delayed its signals.

It should also be borne in mind that signals such as, for example, divergence, can occur quite rarely. Therefore, having missed one such signal, you can wait a long time for the next one to appear. Especially if you trade on large time frames.

However, the usefulness and effectiveness of Forex trend indicators is beyond doubt. They allow not to be mistaken with the global direction of the price, due to which they are able to become the basis of a high-quality trading strategy and bring stable profits both in manual trading and in automatic trading with the help of robot advisors.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

Two More Awards for NordFX: Best Affiliate Program & Best Forex Broker Middle East 2020


At the end of 2020, the Forex-Awards.com expert council named NordFX Best Forex Broker Middle East. The two-tier NordFX affiliate program was also awarded a prestigious award.



Forex-Awards.com is a team of professionals headquartered in Hong Kong, which specializes in the analysis and evaluation of brokerage companies since 2010, aiming to identify the real market leaders. Based on the opinions of both independent experts and the trader community, Forex-Awards.com employees compile regular ratings of brokers, identifying their strongest and most attractive sides. The winners in each of the 30 nominations are then determined based on the results obtained. A convincing victory was won by the brokerage company NordFX in two of them in 2020.

More than one and a half million accounts have been opened by clients from almost 190 countries during 13 years of NordFX work, among them many traders from the Middle East. Back in 2013, at the 12th MENA Forex Show, the company won the prize as Best Forex Arabic Platform. And now the new award confirms the high level of services that NordFX provides to clients from this region: the first place in the Best Forex Broker Middle East nomination.

Another victory at the Forex Awards was won in the Best Affiliate Program category. Since 2016, thanks to its effectiveness and popularity, NordFX's two-tier affiliate program has been receiving the highest marks. It has been recognized as the best by expert committees of not only Forex-Awards.com, but also by Academy Masterforex-V and Saigon Financial Education Summit. More than 25,000 of the company's partners have already been paid more than $30,000,000 as commission until now, and these figures continue to grow steadily.


#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market