US Home Sales Fell in January

U.S. home sales unexpectedly fell for a second straight month in January, weighed down by a persistent shortage of houses that is pushing up prices and keeping first-time buyers out of the market.

The National Association of Realtors said on Wednesday that existing home sales dropped 3.2 percent to a seasonally adjusted annual rate of 5.38 million units last month. December’s sales pace was revised down to 5.56 million units from the previously reported 5.57 million units.

Economists polled by Reuters had forecast existing home sales rising 0.8 percent to a rate of 5.60 million units in January. Sales fell in all four regions last month. Existing home sales, which account for about 90 percent of U.S. home sales, declined 4.8 percent on a year-on-year basis in January.

via CNBC

The Basics of Technical Analysis

The Basics of Technical Analysis. A few weeks ago, the global stocks market started to fall. Some indices, such as the S&P and Hong Kong’s Hang Seng dropped so much that they entered a correction zone. To many investors and market watchers, this was a surprise to them.

However, to traders who believe in technical analysis, this situation was not a surprise. It was an expected thing. As I had written before the drop, the S&P was trading in an increasingly overbought position as shown below.

In the financial markets, assets move for several reasons which are categorized into technical and fundamental reasons. In the fundamental aspect, assets because of the economic and intrinsic issues. For example, an economic reason for the rise in a currency is the improving employment numbers. For stocks, fundamental reasons could include the quarterly and annual financial results.

On the other hand, technical reasons are those associated with the chart patterns. Every day, traders take time to analyze chart patterns and then decide on when to enter and exit. In the example above, while the fundamentals for US stocks were strong, the technical chart pattern showed a different picture.

There are hundreds of technical indicators today. To be excellent at doing this type of analysis, there are a few things you need to do.

First, select a few indicators and study them. A common mistake I often notice is when traders want to be excellent at all indicators. This is wrong because, using multiple indicators will only present you with confusing details.

For years, I have specialized on a few indicators that have been really good and if you are a new trader, I recommend them. First, there is the Fibonacci Retracement indicator. When plotted well, the Fibonacci Retracement indicator will give you an indication of where the asset is likely to move to. It will not help you predict whether the chart will go up or down, but it will give you a guidance of where to look at.

For example, in the chart below, you can easily predict where the asset will find support and resistance.

The second indicator I regularly use is the Relative Strength Index. This is the one I used to predict the coming correction in the S&P 500. The RSI is an oscillator indicator which can tell you when an asset is overbought and oversold. In this, it is always risky to buy assets that are in the overbought zone and short those in the oversold zone. To make a better decision on this, you can combine this with other oscillators like Stochastics and the Relative Vigor Index.

The third best indicator I recommend is the Moving Average. There are several types of this but, the underlying principle is the same. Moving Averages give you the average pricing of the asset within a certain period. One way to use moving averages is to combine two MAs where one has a shorter timeframe than the other. In most cases, when the longer-term MA crosses the shorter term one in the outside, this is an indication that the asset could move higher. A good example of this is shown below.

Finally, the Elliot Wave is an important method to predict the future movements of financial assets. The idea behind Elliot Wave is that assets tend to move in patterns. These patterns could either be impulse or corrective. After ending an impulse or bullish wave, assets tends to go through a 3-step corrective wave.

The post The Basics of Technical Analysis appeared first on Forex.Info.

USD Higher Ahead of Minutes

The dollar rose to its highest level in a week on Wednesday and world stocks fell for the third day as investors braced for minutes from the Fed’s last policy meeting to see if they would herald more rises in interest rates and global bond yields.

Wall Street looked set for a weaker session, with equity futures down around 0.2 percent and the VIX volatility gauge up for the third day in a row.

The dollar index, which measures the greenback against a basket of peers, rose 0.2 percent. The index has bounced almost 1 percent so far this week, after slumping 1.5 percent the previous week to its lowest level in three years [FRX/].

MSCI’s world index of stocks was down 0.1 percent, set for its third straight decline this week, as a down day in Europe offset earlier gains in Asia.

Investor attention is on the minutes of the Fed’s last policy meeting in late January, due at 1900 GMT. The last readings of U.S. wages and inflation came in higher than expected, with some blaming the numbers for a violent sell-off in stocks earlier this month.

via Reuters

UK Posts Strong Quarterly Productivity Growth in December

The UK has seen the strongest two quarters of productivity growth since the recession of 2008, according to the latest data.

Output per hour rose 0.8% in the three months to December, the Office for National Statistics said. It follows growth of 0.9% in the previous period.

There was also a better than expected rise in wages. Excluding bonuses, earnings rose by 2.5% year-on-year.

However, unemployment edged higher, but still remains low at 4.4%.

The growth in productivity – as measured by the amount of work produced per working hour – will provide encouragement to policy makers who have wrestled with the challenge of low productivity growth since the financial crisis.

via BBC

Eurozone Growth Cools Down But Remains Steady

Eurozone business activity continued to rise at a steep pace in February, albeit with the rate of expansion cooling from the near 12-year high recorded in January. Price pressures and employment growth also remained elevated, though likewise saw rates of increase ease slightly.

Business optimism about the coming year meanwhile ticked higher.

The headline IHS Markit Eurozone PMI fell from 58.8 in January to 57.5 in February, according to the estimate, which is based on approximately 85% of usual final replies.

The slower growth of business activity reflected an easing in the rate of increase of new orders which, while elevated, slipped to a five-month low.

By country, growth in Germany came in at a three month low, while in France the composite PMI moderated to the weakest for four months.

However, in both cases the PMI readings remained at levels indicative of strong growth, close to recent seven-year highs. Business activity growth meanwhile also slowed across the rest of the eurozone, though still registered the second-largest expansion in nearly 12 years

via Market Flash Eurozone PMI

UK PM Warned by 62 MPs to Stand Up to EU Regarding Brexit

Theresa May has been warned Britain cannot become simply a “ruler-taker” after Brexit, in a letter signed by 62 Tory MPs including Jacob Rees-Mogg this week.

The letter urged Theresa May to stick to the Brexit ideals outlined in her rousing Lancaster House speech one year ago.

The Tory MPs offered their “continued and strong” support for Mrs May’s leadership before strongly suggesting six ways in which the PM could strengthen the country’s position.

The letter was written by former Remainer John Penrose and signed by another 61 MPs, including hardline Brexiteer Mr Rees-Mogg, former cabinet member Priti Patel and former party leader Iain Duncan Smith.

The letter, which is date-stamped February 16 and was shared on social media last night, emphasised the group’s support for leaving both the EU customs union and single market – before pointedly offering “suggestions” on how Mrs May could achieve her goals.

via Express

DAX Under Pressure, Investors Eye Fed Minutes

The DAX index has posted losses in the Wednesday session. Currently, the index is trading at 12,428.50 down 0.48% since the Tuesday close. On the release front, German and Eurozone Manufacturing PMIs slowed in January. The German PMI dipped to 60.3, shy of the estimate of 60.6 points. It was a similar story with the Eurozone PMI, which dropped to 58.5, shy of the estimate of 59.2 points. In the US, the key event is the Federal Reserve minutes from the January meeting.

It continues to be a blue February for the DAX, which has declined 6.2% so far this month. The correction on the US stock markets has sent European markets lower, although the DAX managed to gain ground last week, as European corporate earnings were generally strong. Will the stock market volatility resume? The markets are keeping a close eye on the Fed minutes, which could provide a hint of future rate policy. . Recent US numbers have been strong, and inflation indicators have been pointing upwards. This has raised concerns that the Fed may accelerate its pace of hikes, which triggered a sharp correction in global stock markets. The new chair of the Fed, Jerome Powell has tried to reassure the markets that the Fed is monitoring the situation, but it’s doubtful that the Fed can do much to prevent volatility in the markets.

It’s been a wild, wild ride for Bitcoin, the most popular virtual currency. Bitcoin has fluctuated between $900 and $19,000 over the past years. These wild swings have drawn the attention of policymakers and lawmakers, as there are growing concerns that virtual currencies could have a negative economic impact. France and Germany want to put virtual currencies on the agenda at the next G-20 meeting, and there is bipartisan support in Congress to adopt new rules to regulate virtual currencies. However, Draghi poured cold water on any ECB involvement, saying that it was not the ECB’s responsibility to ban or regulate Bitcoin. Draghi added that the ECB was exploring the use of blockchain, a digital technology to monitor bitcoin transactions.

Economic Calendar

Wednesday (February 21)

  • 3:30 German Flash Manufacturing PMI. Estimate 60.6
  • 4:00 German Flash Services PMI. Estimate 56.9
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 59.2
  • 4:00 Eurozone Flash Services PMI. Estimate 57.7
  • 14:00 US FOMC Meeting Minutes

*All release times are EST

*Key events are in bold


DAX, Wednesday, February 21 at 8:50 EDT

Open: 12,451.96 High: 12,512.00 Low: 12,426.50 Close: 12,428.50

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.