Ample policy support remains in placeSees further inflation pressure from supply bottlenecksNot really giving much away here with these remarks but they also don’t really take away from the more hawkish comments from Kazaks and de Guindos so far this week. Just a heads up, Lagarde will be speaking later in the day alongside Powell in a panel discussion as Eamonn previewed earlier here.

Just a couple to take note of for the day, that being large ones for EUR/USD at 1.0900-05 and USD/CAD at 1.2500.I highlighted the significance of the former earlier here, after the euro got a bit of a boost to push above 1.0900 following more hawkish remarks by ECB vice president Luis de Guindos. That could keep euro price action more anchored alongside Fib levels @ 1.0921 and 1.0971 respectively as also pointed out in the linked post above.Meanwhile, the largish one for USD/CAD may help to keep a lid on any upside push alongside some light offers as the pair tests waters below the 1.2500 mark. Besides that, there isn’t anything else too significant.For more information on how to use this data, you may refer to this post here.

Headlines:The yuan drop this week is one to pay attention toECB’s Kazaks: A rate hike is possible as soon as JulyBOJ to continue with bond market intervention through to next weekNo such thing as good or bad when it comes to exchange rate, says Japan govt officialUS MBA mortgage applications w.e. 15 April -5.0% vs -1.3% priorGermany March PPI +4.9% vs +2.6% m/m expectedEurozone February industrial production +0.7% vs +0.7% m/m expectedEurozone February trade balance -€7.6 billion vs -€27.2 billion priorMarkets:JPY leads, USD lags on the dayEuropean equities higher; S&P 500 futures up 0.1%US 10-year yields down 5.4 bps to 2.861%Gold up 0.2% to $1,954.10WTI up 1.5% to $104.06Bitcoin up 2.0% to $42,140The yen weakened to its lowest level in two decades in Asia Pacific trading but caught a bid after hitting an air pocket with USD/JPY sliding from a high of 129.40 to a low of 127.60 in European morning trade.The pair is still down nearly 120 pips now to 127.70 levels as we see a bit of a retracement amid fears of intervention and profit-taking on the way up towards the 130.00 level.The drag in the pair is also weighing on the dollar across the board as we see the bond market selling also take a bit of a breather. 10-year Treasury yields are down over 5 bps to 2.86% after having hit a high of 2.98% during the early stages of the week.The dollar drag helped to see EUR/USD climb to 1.0840 before hawkish remarks by ECB policymaker Kazaks on a July rate hike helped to prop up the euro to 1.0865 though that jump has since abated. GBP/USD is up 0.5% to 1.3050-60 as buyers continue to hold a defense of the 1.3000 level.Elsewhere, AUD/USD is seeing a decent jump of 0.9% back above 0.7400 to 0.7430-40 levels as buyers seize back some near-term control in the pair. Put together the near-term dollar charts and that hints at a bit of a breather in the recent dollar momentum.There isn’t much leading the change in narrative though we are seeing USD/JPY be rather overstretched so perhaps that calls for a bit of a correction. Besides that, the usual drivers are still at play i.e. the bond market and inflation vs central bank debate.

The European Central
Bank kept its benchmark interest rates unchanged, as widely expected and stuck
to its decision to end the stimulus program in the third quarter of this year
but did not provide any further details that disappointed markets, as many expected
a hawkish reaction in light of surging inflation that prompted a number of
major central banks to start tightening policies.

 

The ECB’s President Christine Lagarde
pointed to growing uncertainty on the war in Ukraine, as the main obstacle, but
said that the central bank will maintain optionality, gradualism and
flexibility in conducting its monetary policy.

 

The end of asset
purchases could come at any time in the third quarter but without any further
information about the timing, as well as no timeframe for when the central bank
would start to raise rates, adding that rate hike could occur weeks or even
months after the stimulus ends and when the ECB gets there.

 

Unexpectedly dovish
stance suggests that the European Central bank is diverging from its all major
peers, as the US Federal Reserve and The Bank of England already started to
tighten their policies after nearly three years, with the US central bank
leading on expectations for eight or more hikes in next two years.

 

The most recent action
in increasing the cost of borrowing, was seen from the central banks of New
Zealand, Canada and South Korea.

 

The policymakers were
split, as hawks, including governors of Germany, Austria, Netherlands and
Belgium, made the case for rate hikes, arguing that inflation could rise
further, with households and the economies overall being already strongly hit
by rising energy prices, draining
household savings and growing uncertainty.

 

On the other side,
doves supported their decision by the notion that most of the inflation is a
result of an external supply shock, therefore the price pressures will fade over
time.

Lagarde supported the
central bank’s decision to stay on hold, by the situation in Ukraine, as all 19
economies of the eurozone are heavily exposed to the conflict that further
damages the confidence and adds to persisting supply disruptions that started
during the coronavirus pandemic.

 

The bloc’s members are
also strongly concerned about the reverse impact of sanctions imposed on
Russia, as the newest plan to add Russian oil and natural gas to the list of
banned items imported from Russia, as the bloc is so far lacking unity on this
matter, with strong dissonant tones coming from Germany, the EU’s largest
economy, Hungary and Slovakia.

 

If all members agree on
imposing sanctions on energy from Russia that would further undermine the
already fragile bloc’s economy, not recovered from the pandemic and sent most
of the countries of the union into recession, a scenario that all want to
avoid.

Lagarde stressed that
the EU economy’s development will be strongly dependent on how the conflict
evolves that results in the central bank’s prolonged ‘sit and wait’ policy
which continues to damage the confidence and darkens the outlook, as economists
already lowered bets on a rate hike by the end of the year.

 

The ECB currently faces two opposing economic
forces as the recent surge in inflation, which rose to a record high at 7.5%,
collides with the central bank’s
purchases of nearly 5 trillion euros of public and private debts in the past
few years, aiming to revive inflation which was stubbornly low since 2015 until
recently.

 

Continuation of pumping
money into the economy, although the ECB signaled it will end purchases
sometime in the third quarter, will continue to fuel the inflation which is
already at the historical high and threaten of further undermining the economic
growth that would push the bloc’s economy into recession.

 

On the other side, the
European Central Bank fears that raising interest rates in a situation when the
economy has not recovered from a strong contraction during Covid pandemic,
could produce a negative effect.

 

Overall, the EU is in a
difficult situation, as five top German economic agencies sharply lowered their
forecasts for the GDP growth of the bloc’s largest economy which is expected to
reflect on the whole union’s economy, with a dramatic warning that the economy
would fall into recession as the EU would sanction itself by imposing sanctions
on Russian energy.

Prior -1.3%Market index 374.0 vs 393.5 priorPurchase index 254.0 vs 261.8 priorRefinancing index 1,023.2 vs 1,109.0 prior30-year mortgage rate 5.20% vs 5.13% priorThe long-term mortgage rate climbs to a 12-year high and that is proving to be a drag on demand conditions as mortgage applications slump once again. Both purchases and refinancing activity fell on the week as the run up in home-financing costs is weighing heavily on sentiment.

Nothing major on the board today although there are some decent expiries around 1.0790-10 for EUR/USD but not of much interest in my view.The order board for tomorrow is more interesting with large expiries seen closer to 1.0900-05 for the pair, so that will be one to watch if the slight upside push today stays the course.Besides that, it is again worth taking note that there aren’t any significant expiries for USD/JPY between 125.00 to 130.00. That adds to the suggestion that it leaves room to roam for the pair as the volatile swings continue in the past few days.For more information on how to use this data, you may refer to this post here.

Investors looking to invest long-term need to buy and hold
assets for years or even decades. Determining which long-term investments best
suit you will ultimately depend on your risk tolerance and financial goals.

 

To help you decide,
here are a few long-term investment options you can consider.

 

Stocks

 

Stocks are perhaps the
top choice for investing long term. With stocks, there are several investment
options. You can bet on individual stocks, or you can choose equity index funds
and exchange-traded funds (ETFs), which many investors usually go for.

 

Stock-focused funds,
such as the S&P 500 index fund, allow you to own small portions of
different stocks simultaneously. Plus, your portfolio gets the fund’s
diversification benefit, reducing the risk of any investment that is making you
lose money.

 

Another long-term
investments under stocks are growth funds which are ETFs or mutual funds that
invest in growth stocks.

 

Instead of
dividend-paying companies, growth funds focus on companies with excellent
earnings or revenue growth. That means growth funds generate returns for
investors through quick price appreciation. 

 

On the other hand,
value funds invest in companies considered undervalued in price based on
fundamental factors.

 

Value funds can provide
stability to your portfolio since they focus on steadier, well-established
firms with long records of paying consistent dividends, despite the possibility
that their future growth could slow down.

 

Growth funds tend to
perform well when interest rates are low, and economies are expanding.
Meanwhile, value funds have proven to do well when the economy is shrinking,
and the funds utilized by growth companies to support their development have
run out.        

 

Cryptocurrencies

 

Investors willing to
take the risk can consider holding some crypto investments for the long term.
However, that approach may seem unideal, knowing that cryptocurrencies have
only been present for more than ten years and are highly volatile.

 

Still, there are
certain cryptocurrencies that you can buy and hold for long periods. You can
put money into a few individual coins, or you can consider other options to
enter the crypto market.

That said, you always
need to practice caution when investing in cryptocurrencies because not only
are they very volatile, their value is also unproven. Therefore, a good move
you can do is to put only a small portion of your investment dollars into these
digital assets.

 

Bonds

 

Bonds are another
long-term investment option to consider, especially if you want something less
risky than stocks and stock-focused funds. Indeed, bonds are less risky as they
provide a steady flow of income and holders the right to receive payment before
stockholders if the company goes bankrupt.

 

Government bonds tend
to be the safest ones, while company bonds can be classified into low-risk,
high-quality, and junk bonds with attractive interest rates and a high risk of
default.

 

Many choose bond funds
over individual bonds, as these bonds can be pretty difficult to purchase, and
individual investors need to have some diversification.

 

Moreover, the income
from bonds is relatively small at the moment, with the current interest rates
being considerably low. Several investors expect interest rates to climb soon,
which is likely to cause numerous bonds to drop in value.

 

Nevertheless, excellent
long-term bonds can still offer
income for investors while dealing with less volatility than stocks. Some
of the excellent long-term bonds funds include bonds funds and ETFs, and
government bonds, such as Treasury inflation-protected securities (TIPS) and I
bonds.

On
of the basics
of tech analysis is the notion of trend. Trend is the main direction of
price movements over a certain timeframe. The price never goes strictly up or
down, instead, it goes wave-like, yet the chart can give a general picture of
where the price aims.

Trend
direction

The
market distinguishes an uptrend and a downtrend. In graphic analysis, trends
are drawn by trendlines called the support line for an uptrend and the
resistance line for the downtrend.

An
uptrend is alteration of ups and downs, peaks and bottoms, each next one being
higher than the previous one. Here is an example of an uptrend on a screenshot.

As
seen in the picture, peaks and bottoms alter but successively growing bottoms
confirm an uptrend. A line drawn through the extremes of the bottoms is called
a support line.

A
downtrend is alteration of ups and downs, peaks and bottoms, each next one
being lower than the previous one. Here is an example of a downtrend on a
screenshot.

As
seen in the picture, peaks and bottoms alter but successively decreasing peaks
confirm a downtrend. A line drawn through the peaks is a resistance line. The
steeper the trendline inclines, the brighter and stronger is the trend.

A
flat means price movements in a strict range, without a clear trend. For
example, the price fluctuates in a 10-points range for a certain time.

Trend types

Trends
can also be characterized time-wise. There are long-term, medium-term, and
short-term trends.

A
long-term trend can happen on a yearly, monthly, or weekly timeframe. A
medium-term trend – on a D1 or H4, and a short-term one – on H1 and smaller. Hence,
talking about a trend, it is important to specify the timeframe. As long as the
trend consists of impulses and corrections, it will look differently depending
on the timeframe.

For
example, if we talk about a long-term uptrend that, indeed, appears on MN, we
should remember that at a certain point the price can be in a correction. So,
on a D1, the trend can be descending.

And
if that downtrend on the D1 is also correcting, on H1, the trend can be
ascending.

Apart
from uptrends and downtrends, the market can give the price no distinct
direction. This is a flat. In such times, the price moves in a channel or range
from its upper border to the lower and back.

Bottom line

Always
remember that trading the trend is normally more profitable. Hence, trend
trading systems are extremely popular among equally beginners and experts. The
main problem can be waiting for a trend to start because most of the time the market remains in a flat. However, patience will pay
the trader a hundred times.

By
RoboForex
Analytical Department

Pivot points
are mostly used by day traders. It’s a technical indicator which, through a
calculation of the previous day’s data like the high, the low and the closing
price, displays levels on the chart that could be used as support and
resistance.

 

Generally,
you have the central pivot point (P) and then the possible resistance and
support levels (R4, R3, R2, R1, S1, S2, S3, S4). Calculations can be applied
also to the previous week or month’s data in which case you would have weekly
and monthly pivot points, but the most used ones are the daily ones.

 

daily pivot points

 

Pivot points
can be used for confluence with other technical concepts or indicators to find
possible tradable levels and for stop loss placement. For example, you may want
to go long and see if there’s a good level of support where you can enter. You
find a nice previous swing point level that is in the same area of the pivot
point (P), and on top of that you also have a moving average.

 

So, you
found this nice confluence zone and the only thing you need to do is to open
your trade and place you stop loss below that area, so if the price starts to
go against you, then your trade setup would be invalidated.

 

Trade Setup on the confluence zone

 

As always,
don’t trade based solely on technical analysis but get your trade idea from
fundamental analysis first. Once you have your direction, switch to the chart
and start to structure your trade.

 

This article
was written by Giuseppe Dellamotta.

China continues to remain the big unknown for the outlook this year. The COVID-19 spread and lockdowns have thrown a big curveball to the global outlook in the past two months and there’s still little certainty on how all of it will end for the time being.Add to the fact that Chinese authorities remain rather coy about providing all out support, it makes for a tricky period when viewing the domestic Chinese economy.