Forex Analysis & Reviews: Trading recommendations for starters of EUR/USD and GBP/USD on July 8, 2021
time 08.07.2021 11:05 AM
time Relevance up to, 09.07.2021 10:04 AM

Here are the details of the economic calendar from July 7:

The data on the number of open vacancies in the US JOLTS labor market was published yesterday, where an increase from 9 193 thousand to 9.209 thousand in May was recorded.

* The number of open vacancies in the labor market (JOLTS) is a monthly report on open vacancies in the retail, manufacturing, and office sectors of the United States. This report is prepared by the US Bureau of Labor Statistics, which is created on the basis of surveys of employers.

The increase in the number of open vacancies is a positive signal for the labor market and the economy as a whole, of course, if unemployment does not increase at this moment, then the opposite effect will take place.

In this case, we can say that the growth of open vacancies in the US has become an additional factor for the growth of the US dollar.

Analysis of trading charts from July 7:

The EUR/USD pair took the path of downward development again after a short pullback, eventually breaking through the support level of 1.1800. The last time the quote was below this level was at the beginning of April.

The trading recommendation on July 7 considered trading on the breakdown of the level of 1.1800, where it was possible to enter into positions to sell the euro.

The GBP/USD pair slowed down the decline in the area of the level of 1.3785 after a sharp downward movement on July 6. This resulted in variable turbulence within 80 points.

The absence of a recovery process relative to July 6 suggests that the downward interest is still relevant in the market.

* The recovery process is when the quote after a sharp price change (up or down) partially returns to the previous levels, which is where it all started. The recovery is usually 15-35% relative to a sharp price surge.

In our case, the recovery of the pound sterling took place, but, following the general price fluctuations on July 7, it is clear that the recovery was replaced by stagnation, returning the quote to the levels of the base of the downward momentum from July 6.

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Trading recommendation for EUR/USD and GBP/USD on July 8, 2021

Today, the United States will release its weekly data on claims for unemployment benefits, whose volume is expected to decline.

  • The volume of initial applications for benefits may fall from 364 thousand to 350 thousand.
  • The volume of repeated applications for benefits may fall from 3,469 thousand to 3,335 thousand.

* Applications for unemployment benefits reflect the number of currently unemployed citizens and those receiving unemployment benefits. This indicator is considered to be the state of the labor market, where the growth of the indicator negatively affects the level of consumption and economic growth. The reduction of applications for benefits has a positive effect on the labor market.

To simply put it, a decline in the number of applications for benefits can lead to a strengthening of the national currency – the US dollar.

12:30 Universal time - Applications for US unemployment benefits

Looking at the EUR/USD trading chart, one can see the price fluctuation within the control level of 1.1800. In order for the downward cycle to continue its formation, the quote must be kept below the level of 1.1800. In this case, an increase in the volume of short positions is not excluded, which will eventually lead to a price movement towards the base of the current year in the face of the support level of 1.1700.

Short positions or Short means positions to sell in anticipation of a decline in the value of the asset.

* The support level is the so-called price level, from which the quote can slow down or stop the downward course. The principle of building this level is to draw pivot points on the chart history, where the price reversal in the market has already occurred earlier.

It is worth considering that the support level cannot be eternal and constantly leads to a price reversal. Therefore, traders always have an alternative scenario for the development of the market, which considers the breakdown of this level.

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As for the trading chart of the GBP/USD, it shows that that the quote is still focused on the next decline, but in order to reduce the risks of false price fluctuations, the quote must hold below the local low of 1.3730 from July 2. In this case, the downward trend cycle may open the way towards the level of 1.3670, which is the bottom of the previous downward cycle.

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Gven Podolsky,
Analytical expert of InstaForex
© 2007-2022
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