Here are the details of the economic calendar from July 13:
On Tuesday, the United States released its inflation data, which accelerated to 5.4% instead of a decline in consumer prices from 5.0% to 4.9%.
The United States Bureau of Labor Statistics, which prepares the data, noted that June's increase in consumer prices in annual terms was the highest since August 2008.
Economists believe that such an intensive pace of consumer prices is due to the effect of a low base, accelerated economic growth in the United States, the lifting of restrictions for business, and the growth of consumer demand amid mass vaccination and government incentive programs.
The market reacted to the statistics almost immediately, where speculative interest led to a sharp strengthening of the US dollar throughout the currency market.
* The consumer price index is prepared by the US Bureau of Labor Statistics, which determines the change in prices of the selected basket of goods and services for a given period. This indicator is considered a key indicator for assessing inflation. From the point of view of fundamental analysis, an increase in inflation is a positive signal for the national currency, but when consumer prices rise faster than forecasts, this is considered not the best signal and can lead to ambiguous speculation.
The low base effect is when the growth rate of an economic indicator is explained by its extremely low starting indicator.
Analysis of trading charts from July 13:
The EUR/USD pair continued to decline after a short correction move from July 8-9, which resulted in the breakdown of the support level of 1.1800.
Considering the daily articles, it can be noticed that the correction course has completed its construction just in the resistance area of 1.1880/1.1895, which we have repeatedly referred to. After that, there was a decrease in the volume of long positions and an increase in the volume of short positions. The acceleration of the downward course coincides with the publication of statistical data in the US.
The trading recommendation on July 13 considered the possibility of a price rebound from the resistance area (1.1880/1.1895), where the entry to sell positions was made at the level of 1.1835. As a result, our trade was profitable.
- Short positions or Short means sell positions
- Long positions or Long means buy positions
The GBP/USD pair showed quite active downward interest yesterday, which restored the short positions by about half relative to the correction course on July 9.
It is worth noting that the coordinates 1.3900 act as the resistance level, which was referred to in previous reviews.
To simply put it, traders could calculate the coordinates of the possible completion of the correction in advance, referring to the resistance level, and plan sell positions relative to it.
The trading recommendation on July 13 considered a possible rebound from the resistance level. If the sell positions were not opened today, we will point out a possible entry point in the area of 1.3835.
* The resistance level is the so-called price level, from which the quote can slow down or stop the upward movement. The principle of constructing this level is to reduce the price stop points on the history of the chart, where the price reversal in the market has already occurred earlier.
July 14 economic calendar:
The United Kingdom has already published its inflation data today, where consumer prices increased from 2.1% to 2.5%.
The pound sterling reacted to the statistical data in the form of a local strengthening.
The UK inflation is identical to the US one, with only one difference: the data is prepared by the Office of National Statistics UK.
The US producer price index for June will be published at 12:30 Universal time, which is expected to rise from 6.6% to 6.8% year-on-year.
The producer price index is prepared by the Bureau of Labor Statistics of the US Department of Labor. Their calculation includes all branches of American industry that produce physical goods, including commodity markets. In the production sector, the selling prices of producers in the mining and manufacturing industries, agriculture, construction, etc. are taken into account.
A high index value leads to the strengthening of the US dollar, while a low index weakens it.
Trading recommendation for EUR/USD on July 14, 2021
Looking at the EUR/USD trading chart, one can see the pullback stage due to the euro's local oversold status amid yesterday's weakening.
To simply put it, market participants temporarily align the quote relative to a sharp price change. This means that a pullback follows after any impulse.
Sell signal
Traders consider this in case of resumption of the decline. The most comfortable entry point is the level of 1.1770 towards 1.1700.
Buy signal
Traders consider this as a pullback in the direction of the 1.1800-1.1810 area.
* Oversold market – a situation where prices have declined too low and quickly. In this case, we are talking about the euro, which has lost almost 100 points in a short period of time.
Trading recommendation for GBP/USD on July 14, 2021
As for the trading chart of the GBP/USD, a similar picture associated with a pullback can be observed, where the quote has already managed to return to the price area of 1.1850.
In this situation, sellers still have a chance for a subsequent decline, but variable turbulence is possible before this important step, which reflects a pullback.
Sell signal
Traders consider this after the price is kept below the level of 1.3795 towards the range of 1.3750-1.3730.
Buy signal
Traders consider this as a pullback, which is already taking place in the market. A stop point is possible in the area of 1.3850/1.3865.
What is reflected in the trading charts?
A candlestick chart view is graphical rectangles of white and black light, with sticks on top and bottom. When analyzing each individual candle in detail, you will see its characteristics of a relative time period: the opening price, the closing price, the maximum and minimum prices.
Horizontal levels are price coordinates, relative to which a stop or a price reversal may occur. These levels are called support and resistance in the market.
Circles and rectangles are highlighted examples where the price of the story unfolded. This color selection indicates horizontal lines that may put pressure on the quote in the future.
The up/down arrows are the reference points of the possible price direction in the future.
Things to remember:
Golden Rule: It is necessary to figure out what you are dealing with before starting to trade with real money. Learning to trade is so important for a novice trader since the market will exist tomorrow, next week, next year, and the next decade.
