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FUNDAMENTAL STRATEGY Wed 5 May

Why commodities will always trade in cycles

The psychology of the market in unchanging Bloomberg recently did a podcast where they spoke with a lumber trader and he talked about that industry and how the scars of the US housing bust set the stage for the boom we're seeing now: We're [the lumber industry] more conservative than others because of what we went through in 2007 and 2008 and what we ignored in 2006 and 2007 and paid the piper in 2008. And we're one of the sectors that still haven't reached and eclipsed our peak if you just look at housing starts.And it was pretty devastating for a lot of people involved. And a lot of people got cleaned out. And if you survived, it's because you're extremely conservative. You hold a lot of cash. You're slow to re-invest. You're slow to hire. You're slow to expand. You're slow to buy more trucks because 'what if?' And also you're slow to buy a bunch of inventory. You want as little inventory as possible in case the bottom falls out.That's very fresh in everyone's mind. The names that are around right now are around because they were able to scrap, scrape and survive being in the epicenter of the great financial meltdown.The same with the homebuilders. They're paying down debt and they're not aggressively going after land and they're playing it safe. And it's like 'What are we doing here?' We have this massive housing shortage but you can just feel how hesitant everyone is to believe it. That same mentality and the psychology around it can be applied to every commodity -- if not every industry. It's especially evident in spaces where there is a long time lag between investments and production. I see this kind of psychology in many industries right now -- particularly commodities. Oil executives aren't drilling despite higher prices. If they do announce plans to raise production then investors punish them -- likely because investors are captivated by the same psychology and want all money to go towards debt reduction, buybacks and dividends -- all quick ways to return capital. I've been especially surprised by copper executives. You see some companies sitting on 3-4 undeveloped projects and they appear in now rush to put shovels in the ground despite talk of $13,000/t prices. As an investor, this is the kind of psychology you look for in an industry. It means that supply will be slow to catch up to demand and it will lead to persistently high prices. h/t to Ben Carlson Invest in yourself. See our forex education hub.

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MARKET WISDOM Wed 5 May

Patience and trading

It's called trading for a reason One of the programs I have been enjoying over the COVID-19 induced lockdowns is a fishing program called 'Wicked Tuna'. If you haven't seen the program it revolves around a group of blue fin tuna fishing teams who try to compete with each other to win the most dollar value of tuna. In it there is a great assortment of characters and it combines fishing with competition. I love it, but my wife hates it.Ok, her loss ;-).  A waiting gameSometimes those on the boat will have to wait 2 or 3 days for a tuna bite. You see them getting very down. It is hard to wait. However, landing a $10K tuna soon brightens their day. Land a couple in a day and all is well with the world. Patience is key here. This was underscored by my wife scrolling through reviews to prove to me that women did not watch 'wicked tuna'. It was a 'blokes' programme. I explained that there were some women on the boats fishing (argument won in my mind - my mind alone I might add). So my wife read through the comments as we enjoyed some marital rib taking until we got to one review that made me laugh.The review that made me laughOne star was awarded out of a possible five stars.'Terrible program', it began. 'These people sit around on boats all day and call it 'work'. I actually work for my living. They should come with me and see what a proper day's work really looks like'. Ok we can look aside from the chaps obvious ignorance to the hardship and dangers of fishing. He did not realise that patience is a needed quality. Not everyone will have the patience, They will give up, come home or look for another job.  To land the $10 tuna, you sometimes have to sit around catching squid bait for 3 days and earning nothing. It's a test, for sure. Patience pays in tradingIn trading patience will actually pay you. Avoiding unnecessary losses will be your saving grace. So, be more a blue fin tuna fishing team. Sit around until there is something to do. As Jim Rogers famously said:"I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime." The more we can sit around waiting for the 'easy money trades' the more success we are likely to have over the long term. So, be more like the blue-fin tuna fishing teams.    Invest in yourself. See our forex education hub.

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TECHNICAL ANALYSIS | EDUCATION FROM BROKERS Tue 4 May

How to trade by fractal-based strategy

Understanding fractals in technical analysis The fractal-based trading strategy is rather simple in use. At the same time, it might yield quite satisfactory results. Though in Forex, fractals are an indicator, I would call this strategy indicator-less. This is a rare case when the indicator does all the job for the trader. Fractals are very easy to detect. How to detect fractals? The Fractal pattern consists of 5 candlesticks. The first one is a fractal candlestick. It must have two more candlesticks to the right from it that will not violate its borders. After two candlesticks form at its sides, the fractal is considered complete; if any of the candlesticks break the border of the fractal candlestick, the pattern is considered erratic. What is a fractal border? Fractals can be upper or lower. In case of an upper fractal to be complete, two candlesticks to the right and left from it must not violate the upper border of the pattern. Here is a picture of the pattern. At first glance, it is quite sloppy. I have marked each pattern by a different color. Each square contains five candlesticks: the fractal one in the middle and two at each side, remaining within its borders. I have done this to show you that a fractal candlestick of one pattern can easily be just a side candlestick in another one. They help us catch the direction of the trend and place a Stop Loss. Generally speaking, you can calculate them yourself, and if you have enough experience, you will see them without indicators. That is why I call the strategy I am describing an indicator-less strategy. Trading breakaways of fractals The main characteristics of the strategy are: Currency pairs: multicurrencyTimeframes used: M30, M5Instruments used: Bill Williams's standard Fractals Detecting the trend Start your analysis on an M30 chart. The first thing to be done is to find the last broken fractal. The direction in which it has been broken is the direction in which your entry point must be headed. (See an example on the chart.) As you can see, the last broken fractal is the upper one (enclosed in a red circle). The red line is its upper border, broken by the price. Here, you should be looking for entries to a buy because the situation indicates an ascending move. Looking for an entry point After you have made up your mind about the direction, you need a correct entry point to place a pending order (I will be working with an example of an ascending move). For this, switch from M30 to M5. Then draw a vertical line over the current candlestick. Ignore everything to the right of the line. Focus only on that going on to its left - we are waiting for a lower fractal to form. After it is complete, draw a horizontal line over its border (low) and wait for the price to break through it. If this is not done, and new fractal forms, drag the line to its border and wait for a breakaway again. After the line is broken, find the last upper fractal and place a pending Buy Stop order at its border. A Stop Loss should be placed at the previously drawn horizontal line. Here is an example on the chart: In the picture above, almost everything about Forex fractal-based trading is made clear. You need to draw a vertical line after a certain move. Then a lower fractal formed, and at its low, a horizontal red line was drawn. Then it was broken, and at the high of the last upper fractal, a green Buy Stop order was placed with a Stop Loss at the high of the last lower fractal (I highlighted it by a blue line). Also, there are situations when you need to move pending orders. In the example above, you might need this if new upper fractal forms - then you will need to bring the pending order to its high. With shifting the SL, it is the same: if a new lower fractal forms, you will need to place an SL at its border. The new fractal can form either above or below the first one. Following the trade The main of following trades by the Forex fractal-based strategy is transferring positions to the breakeven. After the pending order gets triggered, and the price goes in the necessary direction, check for new fractals at the side of the SL. In our example, we have a buying trade, the SL is at the border of the last lower fractal, and as soon as a new one forms, drag the SL to its border, and go on like this. Also, you can use the pivot of the day as the goal; if an open trade is transferred to the next day, the next pivot becomes the goal. By Dmitriy Gurkovskiy, Chief Analyst at RoboForex Invest in yourself. See our forex education hub.

FUNDAMENTAL STRATEGY | EDUCATION FROM BROKERS Tue 4 May

Cryptocurrencies have come a long way since the last bull run in 2017. Here's why

How have things changed since 2017? Crypto is having the movement of its limited life! Haven't you heard? Experts say that the reason behind bitcoin seeing an upsurge on a daily basis dates back to October 2020. The trend that began during the last months of the previous year is still powerful and will likely move in that direction. With an annual return of 745%, Bitcoin sits atop the list of crypto pricing. The previous all-time high the cryptocurrency saw was twenty thousand dollars in 2017. Since then, the stock has seen tremendous growth.  The traders who follow the crypto market closely can rightfully address the fact that there were not a lot of people who saw this coming. The times were good, and nobody gave two thoughts about what magic can blockchain with the interoperability it was born with.  Times are now a lot more smooth, and the people who were keen enough on bitcoin's space-bound price showed they entered the market.  They knew that the crypto market is practically frictionless. Friction in the market refers to the transaction costs that are implemented with each trade. Bitcoin offers the least of them.  So the market is good, the people are investing, everyone thinks that the bitcoin will only, Then what has changed since 2017? Let's have a look.  Tax management with portfolio and accounting: When cryptos saw their first uptrend, many were still looking at them the magic money that was making chaos in the market. This was the time when uncountable memes were on the socials, dominated by the "bros" who had steady gains and were making the IRS look like a pathetic joke. Some of them changed their Lambos like they were changing wearables.  This was not particularly the case with real life. Cryptocurrencies were taxable in the US since late 2104 but, a 2017 order ruled out that coinbase has to provide the revenue services with records that hold the identity and transaction records of the users it had. Since that incident, the IRS has been harsh enough to the crypto market, the users and the exchanges.  A lot of start-ups that were forward in terms of market psychology saw this coming. However, the reporting of tax was just one variable in the equation. The mathematics is even more complicated for individual users and for individual businesses; the whole idea can be more arduous.  The leading online broker HFTrading has been in the market for a long time and has been providing better trading opportunities to its traders than the rest of the market. The broker provides leverage that is out of the competition and spreads that no other broker can match. HFTrading has a strict no-no policy for commissioned trades and hence, attracts more and more swing traders and scalpers. The broker is also regulated by more than one regulating authority, and the mere presence of two, not just one of such authorities, is a serious flex.  The financial service provider helps the traders by providing three main trading accounts silver, platinum and gold. By keeping it simple, HFTrading has made itself stand out from a market filled with scam brokers and complex brokers that end up taking a lot of money out of the traders pocket in the names of the various fees they ask.  The infrastructure surrounding DeFi: No one knew what Defi was until the bull run bitcoin had in 2017. Now, it is an entirely new segment of the crypto market with a market cap of 15 billion dollars and is still growing in the market.  Short for decentralised finance, DeFi refers to the financial service's technologies that allow the trading of cryptocurrencies. DeFi also provides its users with an option to take out loans and services like interest accounts as well. DeFi relies on public blockchains like Cryptocurrencies and Etherium. Kava, one of the projects of DeFi has had a partnership with plasmapay, aiming at enhancing the User Experience of the whole platform. PlasmaPay s another venture of DeFi itself that deals in online transactions and payments. With this partnership, at least 100,000 different users from 165 countries will be able to buy Kava tokens via credit cards. However, the two firms aim at a deeper collaboration that is being looked at for the long term. This move will be made into reality with the integration of plasma pay and kava's 100% service- range involvement.  Security: Security is an issue that dates back to the pre bull market times of cryptocurrencies, possibly before 2012 or 2011. This is the only single issue that literally haunts the exchanges, terrifies the users of applications and wallets to the present day. According to the security firm SlowMist, there has been a loss of at least 10,92,16,25,000 Euros worth of digital assets. All to the hackers in the past few years.  Exchanges are more prone to getting a bad reputation in the market, while wallets are an easier target. There are also wallets prevalent in the market that are termed cold. These wallets are never 100% online, keeping them off the web for a brief amount of time. These wallets are said to be the most secure, and even these are said to have possible loopholes that are more than breachable and can lead to significant data leakage.  A Belgian startup has taken this problem hands-on and have provided a solution with a completely offline wallet that has no connectivity at all. There is only one cable designed for charging and has neither Bluetooth nor WIFI or any other network that is included in the wallet's functionality. This wallet is also the only product in the universe of crypto space that features a certificate for EA7 security. This is the highest security certification in the world.  Users can interact with the wallet through a touch-sensitive scream. They can use an indigenous application developed by NGRAVE to have a glance at the balance and make requests for payments. NGRAVe is also the company that has shaped this product. There is a great probability of newcomers that can possibly dive into the crypto -sea. All of them look at a bull market so that they can make gains. The past few years have seen great technologies coming up, and the crypto space has had a lot of innovation. The people who enter the market now have comparatively less to worry about as compared to the previous generations of crypto players. This can conclude that cryptocurrencies are, for sure, growing up.  Conclusion: This can be clearly seen that the cryptocurrencies, bitcoin, in particular, will serve tough competition to gold. This is also only possible when the countries have reserves of Bitcoin instead of gold.  The crypto market is also growing at an unprecedented pace. This can result in digital currencies replacing fiat currencies. A lot of brokers already similarly offer cryptocurrency trading to forex trading. Here, traders can bet on the movement of a cryptocurrency price with another. This can be seen as a move of the market to compete with the fiat currencies. Invest in yourself. See our forex education hub.

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ECONOMICS | EDUCATION FROM BROKERS Tue 4 May

After COVID — Pandemic failures are the new stock market winners

A look at what stocks are making waves a year after the pandemic When WHO declared the Coronavirus-induced disease as a pandemic, many stocks were being sold off. Since the vaccine rollouts are in the picture, with huge countries like India beginning their inoculation during the month of January, the market sees a flip these days.  Rebounds in the hardest crashed divisions during the initial time span of the crisis have eased equity benchmarks worldwide rise to never seen before highs. The real estate market of the United States is one of those markets which have shown more than strong signs of a rebound.  The portfolio manager of PineBridge Investments, Hani Redha, said that there's immense opportunity in such lags relating to cruise operators, hotels and airline stocks.   The investors are looking back at the stocks they were trading with the last year. This can be seen as many stocks that performed relatively well last year have now plummeted.  The likes of Germany's Delivery Hero SE and zoom, a video communication service, rose as the pandemic grabbed grip and transformed the way humans saw life as we know it, soon toppled as time grew. The price of the stocks, which were the front runners in witnessing the pandemic, naturally depends on the infection rate and the efficacy of different vaccine approved by the nations in their respective countries. Given below is a rough estimate of the price fluctuation, divided by sector-based differentiation. Stay Home Stocks: The previous year's most prominent trading assets have lost their charm since investors are now hooked to the stocks that are cheaper and have a goliath possibility of growth in various sectors of the industry. The stocks of companies that provided the users with entertainment while they were locked in, such as the likes of Amazon Prime Video and Netflix, to name a few, have plunged since October ended.  Wall Street analysts have not paid much attention to zoom because it has been trading at more than 25% higher than its previous year's peak. On the other hand, the stocks of companies like Amazon have been showing a flat-line chart since the fall last year. There is also a prediction of an upsurge in sales from the analysts.  Europe sees a similar situation where the stocks of leading online food delivery companies see a downfall. The giants like Delivery Hero have seen f drops of more than 15% since the year began. A similar anomaly is seen in the stocks of the gaming industry goliaths in the UK. Their prices have fallen beyond the math conducted by analysts.  This is, however, not the case with every stock. Online payments firms are seeing an upsurge, with Ayden NV witnessing an uptrend of more than 150% since the past year, and casino services that allow people to play poker online have also flourished. Evolution gaming group, for example, has tripled its revenue since last year. It also shows clear signs of maintaining the same trend in the current fiscal year.   Retailers: Investors speculate that online shoppers' greater interest will survive the pandemic, including retail giants like eBay, which is a completely digital online firm. These firms are expected to outperform their counterparts swiftly.  Department stores like Kohl's Corp. and apparel retailers like Urban Outfitters Inc. have the opportunity to recover some market portion lost to e-commerce as shop based traffic begins to improve next year. Both firms stocks have grown more than 18% this year, exceeding the S&P 500 Index. At the same time, apparel designing firms like H&M have raised to more than 9% to trade at a coming one year high. There were companies that had to shut their physically present showrooms since the pandemic hit. People were more inclined to online shopping. A lot of experts, however, now believe that these stocks will see a rise as the restrictions ease off in the coming months.  Travel and Leisure: The leisure and travel division is on the tracks of a comeback, but several groups like movie theatre chains and airlines remain well under levels that were present before the virus hit the world. Live Nation Entertainment has come out as an underdog in the performance during the pandemic, which earned higher than 80% after October ended and is at an all-time high.  Investors bet that restricted demand will begin to flood in profit and revenue, though some interpreters have advised that judgments could be a lot more frivolous. Since Europe opened its borders and eased off with restrictions, airlines and hotel lines' stock prices had made up for what they lost when the world went into a lockdown.  Analysts from firms like Morgan Stanley have raised their standards in terms of price targets. Each of such firms has started doing data centre stocks' price a business this year.  Real Estate: In the United States of America, The price of data centre stocks was at an all-time high as people were demanding them in huge volumes. The scene has taken a 180-degree turn in recent months since the investors are keener in investing in stocks that have already seen the ground as the REIT stock. Real estate investors that are specific to shopping mall spaces like Kimco Realty corp have made a decent profit of more than 60% since 2020. The Europe market still poses a challenge. Critics said recent events from commercial real estate companies, who seem to own the largest piece of land in all of Europe, had nothing that could attract investors.  It received no profits. Huge market analysts have recently stated that the latest lockdown actions hitting more than 55% of its shops would proceed to smash its inflow of cash this year. However, they intimated that buyers would have a lesser restriction in March. In comparison. Both the stocks have continued their 2020 slumps in the current fiscal year. Office owners have undergone, as their premises stand empty. However, rent collection-number has kept up strong compared to the retail-focused companions. There continues an expectation amongst interpreters that shares like Convivio SA and Alstria Office REIT will bounce when markets recover. However, that does not eliminate the existential warning set by a higher dimension of people operating from home. It's like developers with latest buildings adjusted to meet changing employers and employee needs will increase. Conclusion: Many people have seen a loss in the pandemic, but some people have multiplied their wealth exponentially. Apart from their experience as traders, a good broker has also played a crucial part. Brokers like ETFinance pave a success leading the way for novice traders. The broker offers three main trading accounts, Silver, platinum and gold. CySEC regulates the broker. The fact that there is a regulatory authority involved in each transaction that asses the broker obliterates the broker's doubt of being a scam. Invest in yourself. See our forex education hub.

FUNDAMENTAL STRATEGY | EDUCATION FROM BROKERS Mon 3 May

Where oil prices could be heading later this year?

An overview of where the oil market is headed towards in 2021 Oil prices have been among the interest of most investors this year, not just for investment opportunities, but as a benchmark to track the economic recovery. It has been more than a year with the pandemic, and since the second quarter of 2020, focus was on the economic recovery. Politicians, Central Bankers, and almost everyone tried to forecast when the virus spread could end, and the global economy recovers. There has been high uncertainty with newly discovered variants making it almost impossible to predict what's next. The vaccination roll-out was the light at the end of the tunnel, but yet there is more about this. Where do you think oil prices will head in the future? Just a quick look back for newcomers, as covid19 disrupted the economic activity, oil demand dropped significantly, but it took some time for oil producers to notice the risks and put their market-share conflicts aside. They continued to pump oil; inventories soared as the restriction measures reduced demand. Tankers and storages were full, and buyers had no place to store oil, where paying a premium for you to buy their oil, a cheaper alternative. Thus, oil prices fell to $-37. Yes, you were getting paid to buy oil. President Donald Trump putting an end to the clash between Russia and Saudi Arabia. OPEC and other top producers, aka OPEC+ decided to cut oil output to match the falling demand. The organization had a strategic plan, they go aggressive on cuts at the beginning, and unwind as the economic activity rebounds. Their actions worked extremely well, but they had to improvise, especially as the second wave of the virus kicked in, derailing their initial plan. After the storytelling, let's move forward by dissecting the matters that would drive oil prices in the coming period, go over top banks prediction, and analyze the chart. The Rising United States Oil Production With the help of shale discoveries, the United States was able to steal the podium positions from Russia and Saudi Arabia, and become the top oil producer in the world, even a petroleum exporter for first time since 1949. As oil prices recovered during the past 12 months, US shale oil producers are coming back to work, fighting for a portion of the cake, aiming to recover from last year's losses, incurred as prices fell below cost. Currently, as per the US EIA, the production is stalling near 11 million barrels per day. However, if we take a quick look at seasonals, we can notice that during the past 10 years, the US production activity picked up towards year-end. The charts below show the US production since 2015, and how production progressed on average since 2011, versus this year's path. The United States oil production The United States production this year, relative to the past 10 years. Biden's Administration and the Nuclear Deal The nuclear deal between the World's superpowers and Iran has been an interest for energy market participants. In May 2018, the prior US President Donald Trump abandoned the Obama's deal, and implemented sanctions on the regime. The move pushed the tensions between the two countries to historic heights. As Biden came to the presidency, he seemed more open to negotiating with Iranians. The recent negotiations were described as very constructive by both ends. The prospects of restoring the same deal are low, but as long as the parties are in talks, they can agree on a different scheme, which would come back to oil markets with additional supply from Iran. The chart below shows how the Iranian oil production was affected in the past 10 years. Iran Oil Production OPEC+ Long-term disputes Early in 2020, conflicts aroused between OPEC+ components, especially Russia and Saudi Arabia, which account for the biggest production share. Price-war fears weighed on market, and with lower demand due to lockdowns, oil prices plunged sharply with WTI ending in negative territory. As oil producers realized the need to put disputes aside till the oil market stabilizes, they agreed on a certain quota. Lately, we have witnessed different views on production, some members wanted to pump more oil, and others preferred to continue supporting the fragile market. Saudi Arabia voluntarily announced cutting production, allowing Russia and Kazakhstan only to raise production a little, taking into consideration seasonal factors. Covid19 forced governments to implement exceptional spending measures, raising their deficits. Oil producers are seeking higher earnings from their selling to cover up. In the long run, producers will clash, as the recovery from COVID19 is uneven around the world. Some producers are more fortunate than others, making it hard to stick to a certain quota to match everyone. OPEC+ meetings will become more challenging going forward, and a failure in keeping a proper production plan will weigh on prices again. OPEC Production Patterns 2016 till date. Russia Oil Production Patterns 2016 till date. Green Energy Era The covid19 outbreak urged policymakers to take more steps to protect the environment. Reducing carbon emissions is one, and this came more into the spotlight with Biden supporting green energy, and fighting the traditional energy sources. The latter is proposing a massive infrastructure plan that promotes clean energy sources. A clear example of where the world is going in terms of energy can be seen with the latest rush to electric cars. The World's top carmakers were challenged by Tesla to design an alternative better for the environment. Many carmakers are shifting to electric cars, this will be followed by electric boats, and electric planes, affecting negatively oil demand levels on the long run. Moreover, the technology behind green energy sources is progressing by the day. These alternatives are becoming cheaper and more efficient than traditional ways. China and the United States which account for almost 35% of the world's emissions are moving forward with increasing non-fossil share of primary energy, promoting financing for green energy sources, and much more. The charts below show how the issuance of Green bonds was emerging in the past years, and growing investors' interest in Renewable and Alternative energy. Green Bonds Issued in US dollars. FTSE Environmental Opportunities Renewable and Alternative Energy 50 Index COVID19 Continuous Spread Covid19 disrupted the global economic activity, and since then investors were trying to anticipate when the world would be virus-free. This is a million-dollar question, when the virus first invaded the world, market participants were expecting the recovery to take place in six months or a bit more, but the world yet hasn't recovered and the virus is hitting back with different variants. When the vaccines were discovered, we were so optimistic about them, but as we are witnessing by the day, some of them are being avoided, and their rollout is slow and limited to rich countries. Top oil producers raised their forecasts for oil demand, but they aren't close to what they expected at the beginning of the pandemic. On the other hand, the virus created new habits for people and organizations which will delay any restoration of economic activity or at least oil demand to pre-pandemic levels. Covid19 Daily Cases United States Energy Information Administration oil supply/demand forecastTop Banks on Brent What does the chart say? Brent Crude. Daily Time Frame. EMA 55 - 200. The Brent crude has been trending upward in an equidistant channel. After logging, its exact 2020 high of $71.36, the price traded sideways, recording lower highs and higher lows, supported by the 55-day EMA. Bearish Scenario: Price breaks below the 55-day EMA targeting the 200-day EMA, which could coincide with the bottom of the channel and a previous resistance area that could turn into support, near $57.00. Bullish scenario: Price breaks above the interim high of $68.04, aiming at 2021 high of $71.60. An extension to the upward move would drive the price to $86.70, the highest since October 2018. This article was submitted by Wael Makarem - Market Analyst at ICM.com.

FUNDAMENTAL STRATEGY | EDUCATION FROM BROKERS Mon 3 May

Is the market entering a commodities supercycle?

Commodities prices have been the big winners of 2021 so far Commodity prices have been pointed sharply upward in 2021 so far, with surges in demand helping fuel this trend. This trajectory has continued virtually unabated over the first few months of the year leading many to question whether we are entering a commodities supercycle. Under ordinary market forces, a cycle will see increasing demand helping drive up prices. As such, the supply of assets, in this case commodities also increases in parallel to match demand. In doing so, this helps temper prices, effectively stabilizing this mechanism. However, in a supercycle, the supply cannot properly satiate the growth in demand, leading to a rise in prices over a longer interval. 2021 Snapshot The big winners of 2021 have been commodities, but not the most conventional assets. Precious metals such as gold and silver have taken a step back in recent months. In this place, industrials such as steel, aluminum, lithium, and other commodities have exploded to multi-year highs. This can be explained by the re-opening of the global economy on a macro scale, namely in the United States and China. These two economies constitute a sizable portion of global industry. The distribution of vaccinations has helped individuals get back to work, which is underscored by improving employment data in developed economies. Increased manufacturing means more demand for commodities such as copper, iron, steel, aluminum, etc. This trend was on full display during the 1970s and early 2000s. Going Green March saw the preliminary unveiling of the next big legislative package in the United States, this time focusing on infrastructure. Such an investment, currently pegged at over $2.0 trillion, would be a massive windfall to commodities, with bridges and most upgrades requiring steel, iron, and other such components. Markets have already reacted as such, with steel companies being a major winner in Q1 2021. Another key aspect of this package is an emphasis on green technology and electronic vehicles (EVs). This push is not relegated to only the US, with many other countries pushing for EVs and renewables. This positions commodities such as silver and copper, each of which are essential to solar or EVs. In particular, global copper demand could surge as a result of clean power and transport sectors, each of which are slated for sizable investments moving forward. Conclusion All of these factors are pointing to a surge in commodity prices though do not guarantee a supercycle. The specter of rising inflation and a faster than expected re-opening of economies could certainly push the market towards a supercycle. One factor that could derail this trend would be a returning outbreak of Covid that shackles economies and stymies much of this demand. The passage of the US infrastructure bill anywhere near its present size of $2.0 trillion would be the best bet yet for a supercycle. Markets and analysts will continue to monitor employment data and industrial indicators in the US, Europe, and China in coming months.

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FUNDAMENTAL STRATEGY | EDUCATION FROM BROKERS Mon 3 May

Sterling rallies but politics could limit gains

An overview of the pound and its future outlook As the US Dollar resumed its now 4-week down trend, earlier posting a 2-month low at 90.42 by the measure of the USDIndex, Sterling has posted a 9-day high versus the US Dollar while hitting respective 2- and 9-day highs against the Euro and Yen. Speculation that the Fed might have at least hinted at a tapering, which hadn't been our view, was thwarted, and longer-dated Treasury yields and the US Dollar duly took a turn lower. The 10-year T-note yield was pressed back under 1.62% after yesterday foraying above 1.65% ahead of the Fed's announcement. The limited magnitude of movement shows that most market participants viewed the FOMC as being uneventful, and the Fed's description of inflation pressures as likely being "transitory" as unsurprising. Sterling, which has developed a pandemic-era proclivity to correlate positively with risk appetite in global markets, has lifted concurrently with a burst in risk appetite in global markets today. Over the last month the currency has  underperformed the currencies we track (the G10 units plus several others), aside from the case against the US Dollar, but still registers as an outperformer on the year-to-date, with only the oil-correlating Canadian Dollar and Norwegian krone having risen by a greater extent than the UK currency. Overall the bullish outlook on the Pound against the Euro has been retained, and more especially the low-yielding currencies of surplus economies, such as Japan and Switzerland, which is hinged on the expectation that the global pandemic recovery trade will continue into 2022. The rootedness of JGB yields makes GBPJPY, USDJPY and even EURJPY attractive targets for speculators to play shifting yield differentials. Rate differentials are in favour of the USD, GBP and EUR if we compare it with Japanese yields hence this is a key factor that could likely keep JPY under pressure against these majors. Meanwhile, the UK's main equity indices are replete with globally-focused cyclical stocks, which should benefit as major economies rebound. The broad trade-weighted value of the Pound still remains near historically weak levels, too. These factors will have to offset any erosion in UK productivity and investment that may become apparent as a consequence of Brexit. UK local elections in early May will warrant monitoring, particularly with regard to how the pro-independence parties fare, and whether they can reach a supermajority in the Scottish parliament. This would legitimise their calls for another independence referendum, though polls have been tipping out of their favour lately. It's a close call: Politico's poll-of-polls tracker currently shows 46% in favour of remaining in the UK with 45% favouring an exit, with the remaining 9% undecided. Nevertheless, along with elections the BoE meeting is also one of the risky events for the week ahead and May overall. The BoE officials seem increasingly optimistic on the recovery and after underperforming last year, the UK economy is likely to post above Eurozone growth in 2021. With vaccinations proceeding rapidly and the economy set to re-open fully in coming months some expect the central bank to start scaling back asset purchases soon. BoE deputy governor Broadbent told a newspaper last week that the economy will see "very rapid growth at least over the next couple of quarter". That leaves some event risk for the May BoE meeting and although we suspect that the BoE may be reluctant to move before the Fed, with markets already pricing in 15 points higher rates by the end of the year the pound could struggle at least short term, if there is no hawkish leaning signal next week. GBPUSD - DAILY CHART GBPUSD returned to the 1.3900 area; however the positive momentum appears to be weak so far and currently impotent to break the 1.4010 Resistance level. This is a crucial Resistance level reflecting the 4 upwards fractals and the key 61.8% Fibonacci level since February's down leg. As the asset remains above  20-, 50- and 200-day SMA the long term outlook remains positive. However only a decisive break of 1.4010 could define price direction for May.   GBPJPY - WEEKLY CHART GBPJPY is sustaining a neutral to positive outlook as it held 2020-2021 gains intact, nudging  a strong floor at the 50-day SMA despite the zeroing of the positive sentiment. Currently turned above 152.00 covering more than 60% of the distance until the 2-year peak at 153.40. The fresh buying seen after the dovish FED could retest the latter as momentum indicators started rising further with daily RSI at 61. However only a confirmed break above 153.40 could suggest a continuation of the 8-month rally. Click here to access our Economic Calendar Andria PichidiMarket Analyst Disclaimer:  This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission. Invest in yourself. See our forex education hub.

BASICS | EDUCATION FROM BROKERS Thu 29 Apr

EUR/USD performance: A case for the currency pair's primacy

An overview of the EUR/USD pair EUR/USD is one of the topmost forex currencies being traded today. While the USD has been long established, the Euro is the crystallisation of the economic aspects of the union of European states. Despite formidable crises since 2008, the Euro has stood its ground. The currency of the EU is not going to dissolve as long as the European project stays afloat. EUR/USD performance is going to remain a given in International economics. Also, the forex pair will continue rewarding study. USD: A History of Dominance The USD, in its current form, was brought into being as a consequence of the founding of the Federal Reserve Bank in 1914. US dollar-denominated bonds facilitated the fall of the gold standard as the basis of the world's currency. The latter position belonged to the British Pound, which was supplanted by the USD following the tremendous strains of WW 1. As per the Bretton Woods Agreement of 1944, the world's central banks linked their national currencies to the USD, effectively making it the world's reserve currency. Also, confidence was kept buoyant by US gold reserves. Large chunks of bank reserves worldwide, as also debt, is denominated in US dollars. The US financial markets are dominant to such agree that such influence is not unwarranted. US Treasury securities represent the most secure store of money. On account of the sheer size and strength of its economy, the USD wields enormous clout. The rest of the world needed little persuading to render their acceptance of USD as a legitimate tender. The Euro The Euro was 'born' on January 1, 1999. The predecessors of the new currency had not been true currencies. The European Unit of Account, and the European currency unit (ECU) were actually currency baskets that aided stability. The ECU was crucial in the history of the Euro. The degree to which this is true is borne out by the fact of 1 ECU being the value of 1 Euro on January 1, 1999. After this date, the major European currencies no longer had separate historical FX rates. The USD EUR exchange rate amounted in the earliest days to 1.1686. Factors Impacting EUR/USD Pair In common with other forex pairs, the EUR/USD pair has had to react to a number of factors. The most critical factors include the underlying economy's vitality and the concerned central bank's monetary policy. The Role of Central Banks Central bank response to crises is key in moulding market perception of the concerned national currency. For instance, the reaction of the respective central banks to the 2008 financial crisis was markedly dissimilar. The US Fed met the crisis with the release of stimulus in several quantitative tranches of easing. The European Central Bank (ECB) gave a delayed response. In those days of EUR/USD trading, the Fed stimulus, in conjunction with the sovereign debt crisis plaguing the Eurozone, played a pivotal role. Even back in 2008, there was speculation as to if one monetary policy would iron out Eurozone members' differences. Predicting the performance of the pair is facilitated first of all by Fed forecasting. The better your understanding of the US Fed is, the better would be your appreciation of the EUR/USD pair.  Post-2008, the US Fed has demonstrably been generous in sharing the metrics impacting upon monetary policy. A key resource in this regard is the monthly employment situation report. Non-farm payroll (NFP) data has had a critical correlation to American GDP. Hence its significance in predictions. The monetary policy is effectively directly proportional to the strength of the payroll report. A bleak report leads to the loosening of policy, while a confident report translates as policy tightening. The latter implies greater Dollar deposit returns. Other Factors However, predicting forex pair behaviour is predicated upon many factors. Traders must employ complex means in order to have a reliable set of trading strategies. Average True Range & Volatility One instance of how all this plays out is when non-farm payroll reports are released. Energetic price movements immediately follow this. In other words, watching the Average True Range gives you a good measure of how you should tackle volatility to rake in profits. Is The EUR/USD Pair Stable? Despite a persistent trade deficit that's become a feature of the US economy, the USD's role as the world's reserve currency has permitted stability in the EUR/USD pair. ROInvesting has a trading platform that will make forex trading safer for you. Making sense of the economic and political conditions prevailing in the 27 EU member states is difficult. It is rewarding to keep abreast of happenings inside the bigger EU members. As these release data throughout the day, the value of the Euro is influenced several times daily. Between 2008 and 218, the forex rate ranged between 1.039 and 1.598. From a near equal exchange rate (1:1), there was a change to the tune of $1.60. The Euro side of the EUR/USD pair exchange rate is predicated upon: Eurozone member states;ECB monetary policy;Job creation and employment rates;Growth in Eurozone member states;National debt, trade deficits in Eurozone;World and domestic politics. The US Dollar side of the EUR/USD pair exchange rate depends upon: US GDP growth rates;Fed interest rates;Fed-set money supply;Unemployment rates;Social security;Consumer savings;National debt and trade deficits. The Mechanics of EUR/USD Performance In Light Of Volatility One pip, or percentage in points, is a measure of change that reflects variations in the relations between members of the currency pair. With respect to the EUR/USD pair, when the change is from 1.1703 to 1.1704, there's one point/pip movement. In order to understand EUR/USD performance, the charts can be read with the following parameters: Dealing;Margin. Dealing involves the following: Minimum size (1),Contract size (EUR 100,000),1 pip (0.0001 USD/EUR),Value of One Pip (USD 10),Margin (0.5%),Minimum stop distance (3),Minimum guaranteed stop distance (5). Generally, the following template is followed in evaluating margin in terms of tiers: Tier 1, Position Size 0 -11.5 Contracts, Margin 0.5% ;Tier 2 , Position Size 11.5 -115 Contracts, Margin 1%;Tier 3,  Position Size 115-172.5 Contracts,  3% ;Tier 4, Position Size 172.5 Contracts, Margin 15%. As we are already aware, there are a number of factors impacting how EUR/USD performance is played out daily. Additionally, a global pandemic that refuses to go away, combined with a new Presidency, have made evaluations more complex. In Trend EUR/USD Performance As per latest reports, the USD is climbing, with a bearish market. The EUR/USD has not been able to break $1.20 to the upside. Whether there will be a definite break below $1.185 any time soon is a moot question. Will USD Go Up In 2021? As per key sources, 2021 is set to be a year of the rise and rise of the USD. Economic recovery is underway. The USD is anticipated to appreciate to the tune of 1.15 against the Euro by the end of the year. An upside for the USD can actually arrive in a few months from now. The Fed and the ECB have different approaches to similar challenges facing them. The easy policy posture of the Fed is ebbing away. While there's no danger of early tightening, policy normalisation is expected within a year. The ECB is looking towards progressive easing. Stimulus as Catalyst in Policy Administration Unfettered by the absence of Republican support, the new administration seeks to reinvigorate the American economy by its $1.9 trillion stimulus package. Through the interplay between the Fed's normalisation of monetary policy with such a considerable fiscal relief package, the USD is, in the end, expected to emerge stronger. ECB policy may tighten earlier. Wall Street consensus estimates put US growth at 4.1% in the current year and 3.5% the following year. Another generous reckoning puts the consecutive growth estimates at 6% and 4.5%, respectively. US inflation is predicted to arrive above price growth in the EU. As the rates markets factor in policy normalisation, US -EU disengagement would lend support to the USD. Dollar Shorts Despite the USD's rally in the news, the market keeps on shorting the USD. Conditional upon the US economy outperforming the EU, EUR/USD trade selling would strengthen the USD by cutting into long positions. Risk Asset Positioning Well, before policy support reaches its limit in the following quarter, risk asset positioning will likely peak in the first quarter. The year has started at record high assets, which leaves little scope for more upside. The relatively long way to normalisation of the pandemic situation will be another factor upon which USD propping up will be predicated. Conclusion Given the US focus on reasserting their primacy in world affairs, Fed and governmental policies will synergise rather than allow conflict. The signs so far give a picture of robust growth. EU fundamentals being strong, the Euro is going to provide competent balance vis a vis the USD. Of the 19 Eurozone members, a few notables wield enough fundamentals to posit a counterweight to the US Fed. A ROInvesting demo account can let you habituate yourself to the highs and lows of forex trading. After this simulation experience, you can assess EUR/USD performance yourself with a live account. Invest in yourself. See our forex education hub.

ECONOMICS | EDUCATION FROM BROKERS Thu 29 Apr

FTSE 100 prediction: Where the United Kingdom's market will reach in the coming years?

A forecast of where the FTSE 100 is headed The FTSE 100 Index (FTSE or FTSE 100) is an acronym for the Financial Times Stock Exchange 100 Index. It represents the top 100 firms' stock index as per the market capitalisation listed on the London Stock Exchange. Moreover, the index gauges the performance and reflects the prosperity of popular companies regulated by the United Kingdom company law. The central authority maintaining this index is the FTSE group, a subsidiary of LSEG or the London Stock Exchange Group.  The UK 100 Index showed a sad growth during the pandemic months. However, the satisfactory news about COVID 19 vaccine development sighed relief in the United Kingdom's market. It pushed the value of FTSE 100 to about 19.5 per cent in November 2020. The Brexit agreement with the European Union and the selloff in January acted as a catalyst to this surge. With this, the index increased by 2.7 per cent.  So will the FTSE 100 rise further in 2021? Where it will reach in the coming years. The reported deal with the factors pushing the UK market, the FTSE 100 potential and the performance forecast for 2021, 2022 and 2023.  The FTSE 100 forecast for 2021: Where the index will reach?  As per some financial critics, if the United Kingdom's economy successfully recovers from the disturbance due to carnage COVID 19, the FTSE 100 will show a sharp surge. One of the UK situated consultancy with the name Capital Economics presented its views in the UK 100 outlook. They said that the economy would recover fuller and faster in 2021. The Chancellor will not make a compact fiscal plan. The Bank of England will stay away from the negative interest rate, and the economic fallout will not be as severe as people anticipate if there is a no-Brexit.  The USB investment bank analysts think that the UK market is being undervalued but has an immense potential to surge this year. They support this argument by adding that they keep their preference for the United Kingdom financial market. This market operates on around a twenty per cent discount to the worldwide stocks on the twelve months trailing P/E ratio still provides around a forty per cent earning surge in 2021 on their forecasts. They further recommend traders to take a broad approach to the United Kingdom stocks as internal market shifts could be larger.  The critics further added that financials might also register a further surge, notwithstanding the rally since November, on declined interests around a larger hit to the Gross Domestic Products. Moreover, they said that financials' valuation remains alluring, and earnings growth has come on track. As per their prediction, the oil or energy industry has enormous potential and is expected to reach a mark of $60 per barrel for Brent crude by the closing year 2021.  For the domestic stock, it is expected that they may outperform or surpass the global stocks because of their larger sensitivity to the United States Gross Domestic Product. At the same time, the sterling strength will negatively influence overseas earnings.  For the end of the year 2021, UBS has about 7,200 points of the FTSE 100 as it anticipates that United Kingdom firms' valuations will grow from twenty-year lows. Analyst of USB also predicts that the pound will continue to surge along with the equity market. Thus by attaining 1.44 against the United States dollar by the end of 2021. Professional at HSBC investment bank also presents positive views about the FTSE 100 this year. The year 2021 will prove better for dividends too. Last year was a shocker for both economy and dividends. About fifty firms in the FTSE 100 index cancelled, cut and suspended their payouts. The condition will improve this year, and we can find more stability in the index concerning the income front. You must have heard or seen that various big companies in the FTSE 100 have already announced that they will resume payouts.  Others will follow the same soon. Inspiring the ban on bank dividends was lifted by the Bank of England, which clearly reflects that the banks such as Barclays and Lloyds will continue their payouts in 2021. It is also notable to point out that several dividend payouts by the FTSE 100 firms may not be as easy and good as they used to be. Several firms are supposed to utilise the disorder as a chance to meet their payouts. In all, the dividend payments are expected to be significantly high compared to the last year.  In contrast to these positive predictions, there are those which also keep a negative view about the FTSE 100 surge. Trading Economics, the data platform, says that this index will decrease in 2021. The UK100 forecast reflects that the financial market will decline to 6,625.04 points by closing the first financial quarter and further showing a sharp decline to 6,246.70 points in 12 months. In addition to this, many think that FTSE 100 will not show strong price growth as expected by some analysts.  They provide a strong reason for this. They say that FTSE 100 consists of numerous large companies facing huge challenges and striving to provide any development at the moment. The example of such companies includes BT Group, Vodafone and Royal Dutch Shell. These kinds of firms' performance have pulled down the index in recent years, and it is expected that the same will continue in 2021 and beyond.  FTSE 100 forecast by months for the year 2022 and 2023  Here is the table presenting the monthly FTSE 100 forecast by some analysts for 2022 and 2023.  The Final call  The report presented the views of different analysts about the Financial Times Stock Exchange 100 Index. What do you think will the UK 100 price go down or up in 2021? Whatever may be the price shift in the market, you should always be vigilant while trading as an investor. A smart trader knows how to snatch profit from adverse market conditions.  One popular way to profit from the Financial Times Stock Exchange 100 Index's price variation is to trade it with contracts for difference or CFDs at T1Markets. CFD trading allows traders to take advantage in both directions. You can either take a long position if you think that the index price will surge, or you can go short if you feel that the index price will decline. Invest in yourself. See our forex education hub.


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