Forex analysis review |
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| CAD/CHF approaching resistance, potential drop! Posted: 07 May 2020 07:36 PM PDT
Trading Recommendation Entry: 0.69861 Reason for Entry: horizontal swing high resistance, 78.6% fibonacci retracement, and 78.6% fibonacci extension Take Profit : 0.68783 Reason for Take Profit: horizontal swing low support, 61.8% fibonacci retracement Stop Loss: 0.70223 Reason for Stop loss: 100% fibonacci extension The material has been provided by InstaForex Company - www.instaforex.com |
| CADJPY coming close to descending trendline resistance. A further push down is expected. Posted: 07 May 2020 07:27 PM PDT
Trading Recommendation Entry: 76.364 Reason for Entry: descending trendline resistance, 61.8% Fibonacci retracement Take Profit : 74.973 Reason for Take Profit: Graphical swing low Stop Loss: 77.260 Reason for Stop loss: Graphical swing high The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 06:21 PM PDT 4-hour timeframe
Technical details: Higher linear regression channel: direction - downward. Lower linear regression channel: direction - downward. Moving average (20; smoothed) - downward. CCI: -154.7020 The British pound on the fourth trading day of the week also worked out the lower border of the side channel (the Murray level of "1/8"-1.2268), in which it consolidated in recent weeks, also rebounded from it, and also began an upward correction. Thus, both major currency pairs have 100% worked out their consolidation channels and are now ready to grow to the upper limits of these channels. In the case of the British currency, this is the Murray level of "7/8"-1.2634. It is recommended to consider the option of forming a downward trend not earlier than fixing below the level of 1.2268. But overcoming the moving average line will significantly increase the probability of further upward movement and testing our hypothesis. The results of the Bank of England meeting were disastrous but absolutely expected. What else could you expect from the British regulator, if not failed forecasts for the fall of the economy in 2020? Also, in the near future, the BA Monetary Committee may decide to increase the asset repurchase program from the current 645 billion pounds to 100 or 200 billion. The head of the British Central Bank, Andrew Bailey, confirmed yesterday that he was ready to expand the stimulus package "if necessary." In addition, Mr. Bailey noted government programs to stimulate the economy and noted that "the Central Bank has not yet exhausted its monetary policy tools and will continue to take appropriate measures." "No matter how the economic outlook changes, the Bank of England will always do everything to ensure monetary and financial stability, which is necessary for long-term prosperity and meeting the needs of the UK population," Bailey concluded. At the same time, it is reported that the British government has begun negotiations with America regarding the conclusion of a transatlantic trade deal. We talked about a trade deal with the United States last year. After all, this is what Boris Johnson wanted to achieve by implementing a "hard" Brexit – the ability to independently decide the future of the country and not depend on the EU in any matter. Now, after almost a year, nothing has changed in the intentions of the British government. Boris Johnson again refused to postpone the completion of the "transition period", Michel Barnier accused London of delaying negotiations and the lack of counter-proposals. Now it has become known that London is starting negotiations with Washington. The first round of negotiations begins today and will last for two weeks. As in the case of Brussels, negotiations will be conducted via video link due to the "coronavirus" pandemic. International Trade Minister Elizabeth Truss said that the UnitedStates is a major trading partner of the UK and increasing trade turnover with them will help the country overcome the difficulties caused by Brexit and the COVID-2019 pandemic. Earlier, the UK Department of International Trade estimated that the effect of a trade deal with America could reach 3.4 billion pounds over the next 15 years. The US Chamber of Commerce recommended that the UK conclude a trade agreement with the European Union as soon as possible in order to start promoting US-British business and investment ties as quickly as possible. Meanwhile, in the United States, the total number of cases of infection with "coronavirus" reached 1 million 230 thousand, the number of deaths – 73.5 thousand. That, however, does not prevent Donald Trump from also zealously insisting on ending the quarantine and restarting the economy. The topic of the investigation about China's role in deliberately spreading the virus and not preventing it, as well as misinformation, has subsided a little. The American President promised to provide all the necessary information in the coming weeks. But US Secretary of State Mike Pompeo in one of his last interviews said that he was not sure that the COVID-2019 virus came from a Chinese laboratory. Mr. Pompeo complained that China did not allow American scientists to enter the Wuhan laboratory. The Secretary of State has already forgotten that a week earlier he himself declared "irrefutable evidence" of China's guilt. Thus, even in the highest political circles of the United States, there is no consensus on where the virus came from and what triggered its spread around the world. I must say that the constant contradictory statements on the topic of China's guilt do not add confidence to the American official position and the position of Donald Trump personally. Members of the US government regularly change their own testimony, and more knowledgeable people regularly refute their testimony. For example, the country's chief epidemiologist, Anthony Fauci, has repeatedly refuted Donald Trump's claims regarding the "coronavirus". At the same time, the Chinese Ministry of Foreign Affairs issued an official statement advising Washington to take responsibility for the unsuccessful fight against the epidemic in the United States. According to the Chinese authorities, the United States needs to learn from the mistakes made in the first months of the fight against the virus and focus on correcting the situation and containing the epidemic. Donald Trump just yesterday compared the situation with the "coronavirus" to the attacks on the military base of Pearl Harbor in 1941 and the terrorist attack on September 11, 2001, calling it "much more terrible." Chinese Foreign Ministry spokesperson Hua Chunying responds: "The US claims that the COVID-19 pandemic can be compared to the attacks on Pearl Harbor and the September 11 terrorist attack, but now the US enemy is a virus. The United States needs to work with China to fight the disease instead of being enemies because only the joint efforts of the international community can win the fight against coronavirus infection." The US should focus on the fight against coronavirus, and not blame China for what is happening. As you may have noticed, since the outbreak of the coronavirus, China has been acting in an open, responsible and transparent manner, we have taken the most comprehensive measures to contain the spread of the pandemic, and we are sharing our experience and information with WHO, other countries and regions, including the United States," said Hua Chunying. "China was able to contain the spread of the virus and bring the epidemic under control in just over two months, and the United States has already had more than 1.2 million confirmed cases. What has the US been doing over the past months?" the diplomat summarizes. Yesterday passed for the British pound in multidirectional trading, but technical factors remain the most significant when forecasting movement. We have repeatedly stated that the pound is currently trading in a very wide side channel, as is the euro currency. Yesterday, the pair's quotes fell to the level of 1.2265, and we called the level of 1.2250 - the lower border of the channel. Thus, at this time, the pound/dollar pair can turn up and start moving towards the upper border of the channel - the level of 1.2640. Only a confident overcoming of the area of 1.2200-1.2250 can trigger the formation of a new downward trend.
The average volatility of the GBP/USD pair continues to decline and is currently 106 points. This is not too much for the pound, and there are no signs of increased volatility yet. On Friday, May 8, we expect movement within the channel, limited by the levels of 1.2265 and 1.2477. Turning the Heiken Ashi indicator down will indicate the end of the current correction. Nearest support levels: S1 – 1.2329 S2 – 1.2268 S3 – 1.2207 Nearest resistance levels: R1 – 1.2390 R2 – 1.2451 R3 – 1.2512 Trading recommendations: The GBP/USD pair started an upward correction on the 4-hour timeframe, which may turn into a movement to the level of 1.2634. Thus, traders are recommended to sell a pair with goals of 1.2329 and 1.2268 only if the price rebounds from the moving average or the Heiken Ashi indicator turns down. It is recommended to buy the pound/dollar pair not before fixing the price above the moving average with the first goals of 1.2512 and 1.2573. Explanation of the illustrations: The highest linear regression channel is the blue unidirectional lines. The lowest linear regression channel is the purple unidirectional lines. CCI - blue line in the indicator window. Moving average (20; smoothed) - blue line on the price chart. Murray levels - multi-colored horizontal stripes. Heiken Ashi is an indicator that colors bars in blue or purple. Possible variants of the price movement: Red and green arrows. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 06:21 PM PDT 4-hour timeframe
Technical details: Higher linear regression channel: direction - downward. Lower linear regression channel: direction - downward. Moving average (20; smoothed) - downward. CCI: -56.9734 The EUR/USD currency pair starts Friday, May 8, in a corrective movement that started last night. We have repeatedly warned that on the approach to the area of 1.0750-1.0740 or when working out this area directly, the euro/dollar pair may turn up, since here lies the lower border of the side channel, in which the pair has been consolidating in recent weeks. In practice, it turned out that the quotes worked out the minimum of April 6 – 1.0768 and rebounded from it. Thus, so far, the current movement is identified as a correction, but the probability of overcoming the moving and moving to the Murray level of "2/8"-1.0986 is extremely high. The "coronavirus" epidemic, if it has stopped gaining momentum, has definitely not gone anywhere. Yes, the rate of infection growth has fallen, and the death rate from the "Chinese disease" has also decreased. However, this does not mean that you can now breathe freely. According to the latest research by scientists, the virus does not tolerate sunlight and high temperature. Therefore, in the summer and hot months, it can spread very reluctantly. However, with the arrival of a colder season, it can become active again. There are medications to treat the COVID-2019 virus, but there are no specialized ones. Vaccines have also not yet been invented. This means that at any moment, the whole world or any single country can be covered by a new wave of the epidemic. Especially now, when many countries have begun to relax quarantine measures. We certainly hope that nothing like this will happen. This is in the interests of all humanity. But to rule out such a scenario would be foolish. Recent publications of forecasts from the IMF, ECB, Fed, and other international organizations, rating agencies, financial conglomerates, and banking syndicates, all predict the economies of the UK, the US, and the European Union to fall heavily. In the European Union, we are talking about a minimum of 7.7% in 2020, and in the United States, it may exceed 5%. If the United States does not have problems with financing the economy, small and medium-sized businesses, as well as providing assistance to the American population, all aid packages are accepted and approved by Congress and the Fed, then in Europe, everything is not so simple. The other day, we already mentioned that the German court's ruling casts doubt on the legality of the ECB's actions to buy bonds as part of the economic stimulus program over the past 5 years. However, now, in times of epidemic and crisis, the ECB is conducting several more programs to buy securities through the central banks of all EU member states. So the German court decided to explain the legality of such actions by the ECB within three months. However, officials of the European Central Bank have already said that the ECB does not obey the German court, and there is no ruling of the European court, and it is unknown whether it will. Thus, it is not a fact that this story will get any continuation, and the ECB will be prohibited from conducting similar programs in the future. The main claim of the Germans is that the repurchase of securities of various countries is disproportionate and is aimed at direct financing of debts, which seems to be prohibited by European law. However, in addition, some EU officials believe that the Alliance itself may not survive the "coronavirus" epidemic. Former President of the European Council Donald Tusk in an interview with the German newspaper Der Spiegel said: "We have never faced such a challenge as now, with a pandemic. If we look at southern Europe, we are talking about a disaster. Here everything depends on quick help, as well as on sympathy and solidarity." According to Tusk, Italy, Spain, Portugal, and Greece were completely unprepared for a new crisis and epidemic, because of them, the European Union suffered huge reputational losses. Now it is up to Brussels to pull these countries from the bottom. However, the ECB, the European Parliament, and the European Council are not charitable organizations that can print money in any amount and distribute it left and right. These organizations are backed by the same member states of the European Union. Thus, in fact, more financially stable countries like Finland or Germany will have to pay the bills of Italy, Spain, Greece, and Portugal. Naturally, this approach to solving the problems of the "southern countries" does not suit the "northerners" themselves. "The one who has more should also give more. This is the principle of solidarity. Germany is financially strong and can protect its industry and its companies. Other EU countries do not have this opportunity," says Donald Tusk. The option with "coronabonds" has failed at the moment, since the European Council failed to agree on the issue of securities on behalf of the entire EU for the purpose of their further placement on debt markets. French President Emmanuel Macron holds a similar opinion. He also speaks of solidarity on the part of the Nordic countries (Germany and the Netherlands) in helping the countries most affected by the epidemic. Macron believes that if the aid is not provided, the entire European Union will be at risk of collapse. "If Germany and other financially stable EU countries refuse to support those most affected by the pandemic, it will help to win the populists in Italy, Spain, and France, as well as in other countries that will not receive assistance from the EU in times of crisis," the French President said. "I think that the EU is a political project. We need to provide financial assistance and show solidarity in order for Europe to remain united. In the more affluent European countries have a great responsibility," Macron concluded. Thus, the question now in Europe is the most simple: the Netherlands, Finland, Germany, and others must either pull out the most affected countries at their own expense, or the EU may come to an end. Quite important macroeconomic publications are again scheduled for the last trading day of the week. This time it's all in the United States. Today we will know the official unemployment rate for April, which may rise to 14%. The number of new jobs created outside the agricultural sector (NonFarm Payrolls) – may decrease by 22 million, as well as the average hourly wage with a forecast of +3.3%. It should be noted at once that the latter indicator does not have any special significance at the moment. Nonfarm Payrolls will almost repeat previous reports on unemployment benefit claims and ADP, so it may not arouse any interest from market participants. The unemployment rate of 14% is too optimistic, according to the latest estimates of the number of Americans who applied for benefits. Thus, these reports with very "loud" signs are unlikely to interest traders in practice. For example, yesterday an important report on applications for unemployment benefits was ignored – the dollar continued to grow. The day before yesterday, an important ADP report was ignored – the dollar continued to grow.
The average volatility of the Euro/dollar currency pair as of May 8 is 79 points. Thus, the indicator has decreased slightly and now its value is characterized as "average". Today, we expect quotes to move between the levels of 1.0750 and 1.0908. A downward turn of the Heiken Ashi indicator may signal the end of the upward correction cycle. Nearest support levels: S1 – 1.0742 S2 – 1.0620 S3 – 1.0498 Nearest resistance levels: R1 – 1.0864 R2 – 1.0986 R3 – 1.1108 Trading recommendations: The EUR/USD pair started to adjust. Thus, sales of the pair with targets in the area of 1.0750-1.0740 remain relevant now, if there is a rebound from the moving average line. It is recommended to consider buying the euro/dollar pair not before the price is re-anchored above the moving average line with the goals of 1.0908 and 1.0986. Explanation of the illustrations: The highest linear regression channel is the blue unidirectional lines. The lowest linear regression channel is the purple unidirectional lines. CCI - blue line in the indicator window. Moving average (20; smoothed) - blue line on the price chart. Murray levels - multi-colored horizontal stripes. Heiken Ashi is an indicator that colors bars in blue or purple. Possible variants of the price movement: Red and green arrows. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 05:32 PM PDT EUR/USD 1H Quotes of the euro/dollar pair, as we expected the day before, fell to an ascending long-term trend line drawn at the lows of March 23 and April 24 on the hourly timeframe. The pair did not reach the trend line by just a few points, but this is normal. A reversal occurred when working out the support area 1.0762 - 1.0774. Thus, from a technical point of view, the euro should definitely continue to grow now. In addition, a downward trend line was built and overcome yesterday. This overcoming gives us another signal to change the trend to an upward one. In addition, traders often trade against the main trend on Friday. If the EUR/USD pair has recently fallen, then, most likely, there will be a correctional increase tomorrow. Therefore, we have several factors for the euro's growth on the last trading day of the week. The potential target for moving up is the psychological level of 1.10 and the April 19 high of 1.0990. As we have already said in recent fundamental reviews, market participants are currently ignoring the entire macroeconomic background. Yesterday was no exception, all the macroeconomic reports of the day, including the important report on applications for unemployment benefits in the United States, had no effect on the pair's movement. The dollar started to fall much later than the publication of this report. Several important US data will be released today. We have already said in fundamental reviews that they are unlikely to have any effect on the course of today's trading. Nevertheless, paying attention to them is still worth it. Especially on NonFarm Payrolls and the unemployment rate. In all other respects, tomorrow will have to be not much different from other days. Even if there is any data on the topic of "evidence of China's fault on the issue of" coronavirus " or Donald Trump makes a loud speech again, this is unlikely to again affect the mood of traders. Thus, we believe that today will be exclusively corrective and exclusively technical. Based on the foregoing, we have two trading ideas for May 8: 1) During the last trading day of the week, we expect the euro to grow to the Senkou Span B (1.0873) and Kijun-sen (1.0893) lines. There is also a resistance area of 1.0881 - 1.0894 between these lines, from which the pair has repeatedly rebounded. We do not recommend rejecting these goals, as market participants may not overcome them today or overcome them, but not on the first try. But after consolidating above them, we advise you to open buy orders with the target of 1.0990. The potential Take Profit order in this case will be 93 points. 2) The second option - bearish - suggests a rebound from the area of 1.0873 - 1.0893 with the resumption of the downward movement. However, we recommend that you be extremely careful with this signal, as it may be false. But consolidating below the long-term trend line (and at the same time and below the support area of 1.0762 - 1.0774 and below the support level of 1.0754) will definitely cause a downward trend to form, in which case it will be possible to open sales with the target support level of 1.0645. The potential to Take Profit in the execution of this scenario is 110 points. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 12:25 PM PDT 4-hour timeframe Average volatility over the past five days: 94p (high). The EUR/USD pair spent the fourth trading day of the week in absolutely calm trading. The volatility of the day at the time of writing is not more than 40 points. Thus, traders continue to ignore the entire macroeconomic background, fundamental background, and even the general predisposition of traders and investors to purchases of the US dollar during the crisis does not really help the US currency. In the past few days, the US currency has been growing and one day (today) is not an indication that traders do not want to buy the dollar. However, we have repeatedly said in all previous articles that a fall to the 1.0740-1.0750 region is almost guaranteed, despite the absence or presence of a fundamental background. Just because it's the lower border of the side channel. The lowest day of the day is 1.0777. The pair can move up, without even waiting for the development of the designated area. It can still work out one of the levels of 1.0740 and 1.0750, or even both. However, the main strategy now is to consolidate the euro in a fairly wide side channel (about 250 points). Actually, this is exactly what we are observing now. We do not expect a trend to form until the quotes leave this channel. Today, all the attention of the market was directed to the meeting of the Bank of England and its results. However, the European Union and the United States also had something to pay attention to. Early in the morning, Germany published a report on industrial production for March, which is expected to drop. It fell as well as almost all other indices and indicators in the EU and the US. In annual terms, industrial production decreased by 11.6%, and in monthly terms - by 9.2%. The situation is no better in other countries of the bloc. For example, in France, industrial production fell by 16.2% on a monthly basis. So in Germany, the situation is not as bad as in the countries that have been most severely affected by the coronavirus pandemic. The next report on applications for US unemployment benefits for the week of May 1 was published. The total number of initial applications has increased again, this time by 3.2 million and is now almost 33 million. However, a more significant indicator in the current environment - the number of secondary applications for benefits - rose to 22.65 million applications in the week of April 24. Recall that this indicator lags behind the initial applications for the week. Thus, in a week the number of secondary applications for benefits could grow to 25 or 26 million. We add several million Americans who were unemployed before the pandemic and the crisis, and we get the figure of about 30 million unemployed from the total economically active population of about 160 million. Using simple mathematical calculations, we obtain an unemployment rate of about 18-19%. This is absolutely disappointing, however, as we see, traders are not particularly saddened by such a high level of unemployment. There have been no hints of a decline in the US currency today. The pair will continue to move slowly towards the lower border of the side channel. Thus, the fact that traders continue to ignore any data coming into their possession is obvious. 4-hour timeframe Average volatility over the past five days: 118p (high). The GBP/USD pair is also continuing its downward movement on May 7. The bulls tried to seize the initiative and jumped at the very beginning of the European trading session, during the publication of the results of the meeting of the Bank of England. However, buyers lost all advantage over the next few hours, and the downward movement resumed. The pound/dollar was trading more actively today than the euro/dollar, however, in general, trading was also quite calm. As in the case of the euro, quotes move to the lower border of the 400-point side channel, which runs near the price level of 1.2250. Thus, no more than 60 points remain to pass to this level, which is not an impossible task for the pound. Today was quite an important event in the UK. The meeting of the Bank of England and, looking a little ahead, we finally state the fact that market participants reacted to this event. Nothing else can explain the sharp rise in the pound this morning. However, the fact that there was a market reaction does not mean that this reaction was logical. As we already know, the pound rose in the morning. But on what basis? The key parameters of monetary policy remained unchanged. The British regulator left unchanged the key rate (0.1%), as well as the volume of the asset purchase program (645 billion pounds). The only thing that could be noticed was that two members of the monetary committee voted in favor of expanding the asset purchase program. However, seven voted for its volume to remain unchanged, so nothing has changed. The head of the Bank of England Andrew Bailey made a speech much later on. The regulator's final communique says: "The spread of COVID-19 and the measures taken to combat it have a significant impact on the UK. Economic activity has declined sharply since the beginning of the year, and unemployment has increased significantly." In other words, the BoE limited itself to general phrases and did not share information with market participants about its possible actions in the future and plans to change monetary policy. For example, many traders were interested in whether the British regulator can withdraw its key rate below zero? Instead of orienting the markets, the BoE announced its forecasts on the main indicators of the state of the economy. In accordance with these forecasts, the UK's GDP will decline by 25% in the second quarter of 2020, the unemployment rate will rise to 9%, and by the end of 2020, and a contraction in the economy by a record 14%. This is reported to be the largest decline in GDP over the past 311 years, from 1709. Such a serious decline in the economy, noted in the communique, is inevitable, despite large-scale stimulus programs. In 2021, recovery is expected, with which immediately by 15%. However, firstly, such an option will only be possible if, during 2020, it is possible to defeat the coronavirus or find a vaccine against it, put it into mass production and provide vaccinations to a large part of the world's population. If the pandemic persists, certain restrictions related to quarantine measures will remain. Accordingly, the economy will not be able to earn at full power. Experts also note that the British after the next crisis may start less willing to spend money, which will also negatively affect the prospects for economic recovery. Not to mention the fact that the new trade war between the US and China will affect the entire world economy, respectively, and the British. In general, if a decline of at least 14% is almost inevitable, then the subsequent growth of 15% is a big question. Not a single positive news for the British pound, which grew in the European session. Thus, we do not think that the reaction of the traders was logical. But the subsequent drop in British quotes is more justified. Recommendations for EUR/USD: For short positions: The EUR/USD pair continues to move down on the 4-hour timeframe. Thus, you are advised to sell the euro with targets in the range of 1.0750 - 1.0740, near which a reversal may occur. At the same time, overcoming this range will keep the shorts open with the target of 1.0717. For long positions: Long positions will become relevant with the target resistance level of 1.1063, when the price consolidates above the Kijun-sen line. Recommendations for GBP / USD: For short positions: The pound/dollar also continues to move down. Thus, traders are advised to continue selling the pound with targets at 1.2244 and 1.2215 until the price rebounds from any target or the MACD indicator turns up. For long positions: Purchases of the GBP/USD pair will again become relevant with the goals of 1.2480 and 1.2637 not before consolidating the price above the Kijun-sen critical line. Explanations for illustrations: Ichimoku indicator: Tenkan-sen is the red line. Kijun-sen is the blue line. Senkou Span A - light brown dotted line. Senkou Span B - light purple dashed line. Chikou Span - green line. Bollinger Bands Indicator - 3 yellow lines. The MACD indicator is a red line and a histogram with white bars in the indicators window. Classic support / resistance levels - red and gray dashed lines with price symbols. Pivot level - yellow solid line. Volatility levels are red solid lines. Possible price movement options: Red and green arrows. The material has been provided by InstaForex Company - www.instaforex.com |
| USD/CAD: Unprecedented growth of unemployment in Canada is expected, but the loonie can grow Posted: 07 May 2020 12:25 PM PDT Traders will be focusing on the USD/CAD pair on Friday. The United States and Canada will release monthly labor market data for April. Since the ADP report on private sector jobs turned out to be worse than expected, the US Department of Labor final employment report is also very likely to indicate a significant drop in employment last month. Economists predict a decrease in the number of jobs by 21 853 million, while unemployment in the United States could reach 14%! If the data are confirmed or, moreover, turn out to be worse, then it is worth waiting for new sell-offs in the US stock market. This will cause an increase in domestic demand for the dollar and will cause a drop in commodity prices. In this case, the greenback's position could suffer in the foreign exchange market. Negative numbers from the US labor market will signal a slowdown in the country's economy, which may soon face not just a recession, but also a depression. The dollar index was trading in a narrow range around 100.26 on Thursday. However, it could not hold on to high values during the US session. USDX Following the United States, data on the country's labor market for April will be published by Statistics Canada. Recall that at the very beginning of the year this indicator slightly improved, unemployment rose to 5.6% in February, and jumped to 7.8% in March. Attention, unemployment is projected to increase to 18% in April! The growth of unemployment is a negative factor for the loonie. The expected market jump in the indicator can seriously put pressure on the Canadian dollar, which recently looks quite attractive. If data from the labor market is better than the previous value, then the Canadian dollar should strengthen. Whatever the indicator and reaction of traders, the high volatility of the USD/CAD pair and the entire financial market is ensured. It is better to wait out this storm. In general, the pair maintains a forecast for an increase. This is due not only to the publication of macroeconomic data, but also taking into account the limited prospects for oil growth. Today, the pair was trading in the range between the short-term support level of 1.4015 and the resistance level of 1.4170. A breakdown in one of the parties is likely to determine the further dynamics of the course for several days, and maybe weeks. USD/CAD It is worth noting that in the evening session, the Canadian dollar appreciably strengthened by entering the territory of 1.39 along with the US counterpart. However, tomorrow will be a new day. Purchases above the support level of 1.4015 will look safe. Meanwhile, Reuters predicted the growth of the Canadian dollar, but with reservation. The world economy, for starters, should show signs of recovery along with oil prices. "The loonie should win if the global economy begins to recover in the second half of the year. Although the straight curve implies that WTI will be just over $30 in December, a combination of reduced production and growing demand could push the quote to $45," the strategists write. It is expected that the Canadian dollar will initially drop to 1.42 against the greenback. Then within 6 months it will strengthen to 1.39, and in a year it will reach 1.36. This is 4% higher than in the April forecast. The Canadian dollar's recovery factors include rising prices and the global economy. In addition, Tiff Macklem, who assumes the position of Bank of Canada governor, according to experts, should have a direct impact on monetary policy. The Bank of Canada's response to the coronavirus crisis is expected to shift from financial market support to accelerating economic recovery. However, the recovery may be delayed. Friday's labor market data is likely to show how much. The most successful G10 currency last year - the Canadian dollar - has lost 8% of its value since January. At the same time, experts continue to believe that the loonie will "fight for the best levels observed shortly before the pandemic." The material has been provided by InstaForex Company - www.instaforex.com |
| GBP/USD. Bank of England: everything is bad and it will only get worse Posted: 07 May 2020 12:25 PM PDT According to the results of the so-called "Super Thursday", the British currency tested the 22nd figure. And although the Bank of England did not take any decisions today, the rhetoric of the English regulator put pressure on the pound. In addition, today the market reacted to the negative comments of European Commissioner for Trade Phil Hogan, who criticized the dynamics of the negotiation process between London and Brussels. All these fundamental factors turned against the GBP/USD pair, especially against the background of good positions of the US currency - the dollar index is still above the 100-point mark. However, despite the clearly bearish mood in the pair, today's results probably disappointed both buyers and sellers. In anticipation of tomorrow's releases, traders do not risk opening large positions, preferring to be out of the market. Therefore, the bears were unable to enter the 22nd figure in order to test the nearest support level of 1.2240 (the middle line of the Bollinger Bands on the daily chart) and look at the next price barrier of 1.2150 (the lower border of the Kumo cloud on the same timeframe). Instead of a blitzkrieg, sellers were forced to slowly win back every item from buyers, approaching the indicated level of support. With a high degree of probability, traders will sell this level and go to the bottom of the 22nd figure - the British currency does not have any good reason for its growth. By and large, a correctional growth is possible only in case the dollar weakens. For this reason, many market participants are in no hurry to make trading decisions for the pair - tomorrow's Nonfarm can scare investors away from the US currency, returning GBP/USD to 1.2350 and above. But let's start with the British events. On the one hand, the May meeting turned out to be passing. The BoE left all the parameters of monetary policy unchanged - the interest rate at around 0.10%, the amount of assets repurchased at the level of 645 billion pounds. True, there were some surprises: two members of the Committee unexpectedly voted to increase the program by 100 billion pounds. In pre-crisis times, this fact would have put significant pressure on the British currency, but now, when the country is experiencing a severe economic crisis, an increase in QE is seen by the market in the context of combating the effects of the pandemic. Therefore, immediately after the announcement of the results of the May meeting, the pair jumped to 1.2420. But the subsequent rhetoric of BoE Governor Andrew Bailey, as well as updated forecasts of the central bank enabled sellers to not only return to the 23rd figure, but also update the monthly low. So, according to the results of the current year, the BoE predicts a decrease in the volume of GDP by almost 15% - according to economists of the central bank, this is the most significant economic slowdown since 1709, that is, over the past 311 years (Britain was then plagued by natural disasters and war). Moreover, according to the central bank, large-scale programs to stimulate the economy will not hold back the downward trend of key macroeconomic indicators - the economy will decline by 25% within three months until June, and unemployment will jump to more than 9%. As for the next year, here the BoE expects a sharp economic recovery (by more than 15%), with the weakening of coronavirus restrictions. But this will happen only if Great Britain does not face the second wave of the epidemic in the fall or winter (by the way, scientists do not exclude this scenario). During his press conference, Bailey put additional pressure on the British currency. He said that the decision to expand QE will be made in June, when quarantine measures will be either lifted or significantly weakened. At the same time, he added that the regulator has not yet exhausted the arsenal of monetary policy instruments - "all options remain open". Bailey also quite ambiguously commented on the probability of introducing negative rates. According to him, "in the near future, there is no question of negative rates." Previously, he was more categorical regarding the reduction of rates on negative territory. And although in this case we are talking about subtle changes in verbal formulations, traders drew attention to this nuance. In other words, the May meeting of the English regulator, although it turned out to be de facto passing, still put significant pressure on the pound. The BoE was too pessimistic in its assessments, and this affected the mood of traders. Let me remind you that just yesterday Great Britain overtook Italy in the sad anti-rating for mortality from COVID-19. Although the Cabinet of Ministers of Boris Johnson has developed a three-stage plan for the country's exit from quarantine, it did not help the pound, as the echo of the epidemic will haunt the British economy for several more months. The European Commissioner for Trade, Phil Hogan, added fuel to the fire. Today, he said that Britain is not focused on success in trade negotiations with Brussels. In his opinion, London plans to blame the negative outcome of negotiations on future relations with the EU on a pandemic, although in fact the British are showing infantilism in the negotiation process. Such a comment put additional pressure on the pound. Thus, the GBP/USD pair retains the potential for its decline - at least to around 1.2240 (the middle line of the Bollinger Bands on the daily chart). The next level of support is the 1.2150 mark, but in this case, care must be taken at the bottom of the 22nd figure - the 1.2200 mark may turn out to be too tough for the bears. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 09:23 AM PDT Minuette operational scale (H4) May options for the development of the movement of the dollar index #USDX and the main cross-instruments EUR/GBP, GBP/JPY, and EUR/JPY in the daily timeframe. ____________________ US dollar index In May 2020, the development of the movement of the dollar index #USDX will be due to the development and direction of the breakdown of the boundaries of the 1/2 Median Line channel (100.90-99.90-98.95) of the Minor operational scale -see the details of working out this channel on the animated chart. If the lower border of the 1/2 medium Line Minor channel is broken - the support level of 98.95 - the development of the dollar index movement will again occur in the equilibrium zone (99.55-98.57-97.55) of the Minor operational scale forks, and if there is a breakdown of ISL61.8 Minor (97.55), then the downward movement of #USDX can be continued to the final line of FSL Minor (96.00). A breakdown of the resistance level of 100.90 at the upper border of the 1/2 Median Line channel in the Minor operational scale will make it relevant to develop the upward movement of the dollar index to the borders of the 1/2 Median Line channel (102.20-103.25-104.30) of the Minuette operating scale fork. The layout of the #USDX movement options in May 2020 is shown on the animated chart.
____________________ Euro vs Great Britain pound The development of the movement of the "main" EUR/GBP cross-instrument in May 2020 will be determined by the development and direction of the breakdown of the range:
When the initial line is broken, SSL Minute - the resistance level of 0.8780 - the development of the upward movement of EUR/GBP to the targets:
A breakdown of the LTL control line of the Minuette operational scale fork - the support level of 0.8705 - followed by an update of the local minimum of 0.8670 will direct the downward movement of this cross-instrument to the boundaries of the equilibrium zone (0.8510-0.8380-0.8240) of the Minor operational scale fork. The options for EUR/GBP movement in May 2020, depending on the processing of the 1/2ML Minute channel, are shown on the animated chart.
____________________ Great Britain pound vs Japanese yen The development of the movement of the cross-instrument GBP/JPY in May 2020 will also be due to the development and direction of the breakdown of the range:
Breakdown of the reaction line RL38. 2 Minute - the resistance level of 131.10 will direct the movement of GBP/JPY to the borders of the channel 1/2 Median Line (132.05-134.85-137.45) and equilibrium zones (138.30-141.90-145.45) of the Minuette operational scale fork. If the support level of 129.30 (ISL38.2 Minor) breaks, the movement of this cross-instrument will again occur in the equilibrium zone (129.30 - 125.70 - 122.50) of the Minor operational scale fork. Options for the movement of GBP/JPY in May 2020 are shown on the animated chart.
____________________ Euro vs Japanese yen Range development and breakdown direction:
And it will determine the development of the EUR/JPY cross-instrument movement in May 2020. Breakdown of the resistance level 115.25 return of the development of the EUR/JPY movement to the 1/2 channel Median Line Minor (115.25-116.45-117.65) with the prospect of reaching the borders of the equilibrium zone (118.05-119.15-120.35) of the Minuette operational scale fork. In the event of a breakdown of the initial SSL of the Minuette operational scale fork - support level 114.55 - and the subsequent update of the local minimum 114.40 - the downward movement of EUR/JPY can be continued to the warning line LWL38. 2 (112.50) of the Minor operational scale fork with the prospect of reaching the control line LTL Minor (111.00). The markup of the EUR/JPY movement options in May 2020 is shown on the animated chart.
____________________ The review is compiled without taking into account the news background, the opening of trading sessions of the main financial centers, and is not a guide to action (placing "sell" or "buy" orders). Formula for calculating the dollar index: USDX = 50.14348112 * USDEUR0.576 * USDJPY0.136 * USDGBP0.119 * USDCAD0.091 * USDSEK0.042 * USDCHF0. 036. Where the power coefficients correspond to the weights of currencies in the basket: Euro - 57.6 %; Yen - 13.6 %; Pound - 11.9 %; Canadian dollar - 9.1 %; Swedish Krona - 4.2 V %; Swiss franc - 3.6 %. The first coefficient in the formula brings the index value to 100 on the starting date - March 1973, when the main currencies began to be freely quoted relative to each other. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 08:26 AM PDT The British pound temporarily rose on the decision of the Bank of England on interest rates, but after a more detailed study of the forecasts and the speech of the Governor of the Central Bank, the pound rushed down, breaking through fairly large levels of support. The minutes of the Bank of England meeting show that the decision to keep the key rate at 0.1% was taken with a 9 to 0 vote. None of the Committee made a proposal to lower the interest rate to zero. And if such a decision was fully expected, then the situation is different from the asset purchase program. Despite the fact that the Bank of England left the volume of the asset purchase program at 645 billion pounds, the decision to keep the volume of the quantitative easing program unchanged was made by a vote of 7 to 2. Haskell and Saunders voted for an increase in bond purchases by 100 billion pounds. In their opinion, the increase in stimulus measures will avoid a number of risks associated with the pandemic, but the majority of voters decided to leave the bond purchase program unchanged. No matter how much the British regulator resists, help to the economy will be necessary. Most likely, the Central Bank wants to learn more about the fundamental indicators for the 2nd quarter of this year, when the first outbreak of the pandemic began. This will make it possible to determine more correctly the amount of aid needed for a faster economic recovery. It is expected that by August of this year, the Bank of England will still announce an increase in the purchase program by 200 billion pounds, while in June the program may already be increased by 100 billion pounds. This was directly hinted at by Governor Andrew Bailey during a press conference. As for the forecasts made by the bank's economists, a fairly rapid recovery is expected after a temporary drop in GDP. The reduction in UK GDP in the 2nd quarter of 2020 may vary within 25%, but these figures can be attributed to optimism. As I noted above, the British pound resumed its fall against the US dollar after the speech of the Governor of the Bank of England, who said that he is ready to increase stimulus if necessary, but do not forget about government programs to support the economy, which should reduce the economic damage. Bailey also believes that in the event of a second wave of coronavirus outbreaks, the authorities will again be forced to take isolation measures, which will further damage the economy. The number of deaths from COVID-19 in the UK has risen to 30,076 and is the highest among European countries. Speaking about the possible increase in the asset repurchase program, Andrew Bailey did not talk about the projected volumes. As for the technical picture of the GBPUSD pair, the movement continues along with the trend, and the bears have reached quite large support levels in the area of 1.2270. Only a burst of this range will open a direct path for the trading instrument to the lows of 1.2210 and 1.2160. In the scenario of an upward correction, the major resistance levels will be 1.2350 and 1.2400. EURUSD The European currency continues to trade yesterday's lows, ignoring weak reports on industrial production in the Eurozone, and the Chinese Foreign Ministry advised the US to calm down a little. According to the Federal Bureau of Statistics Destatis, industrial production in Germany declined in March 2020 due to isolation measures and restrictions imposed by the government. Thus, production fell immediately by 9.2% compared to February, while economists expected it to fall by 8.8%. Compared to March last year, production fell by 11.6%. The most affected was manufacturing, where the figure in March fell by 11.6%. Let me remind you that this week also released an indicator indicating a 15.6% drop in orders in the German manufacturing sector in March, which indicates only the beginning of the problems that the country will face after the end of the spread of the coronavirus. Things are not going well in France. According to a report by the statistics agency Insee, industrial production in France in March this year fell immediately by 16.2% compared to February, while economists expected a reduction of 14.5%. Compared to March 2019, production decreased by 7.3%. Most of all, production declined in construction, where the indicator fell immediately by 40.1%, while production in the manufacturing industry fell in March by 18.2%. Meanwhile, the Chinese Foreign Ministry responded to the recent accusations of Donald Trump related to the outbreak of coronavirus in the world. Chinese Foreign Ministry spokesperson Hua Chunying said that the US authorities need to correct the mistakes made in the fight against COVID-19, and focus on containing the epidemic. Trying to blame others is not what the two states need right now. According to the diplomat, on the contrary, the US needs to fight the disease together with China, instead of being enemies. As for the technical picture of the EURUSD pair, the breakout of large support of 1.0785 will only increase the pressure on risky assets, which will lead to a larger sale in the area of the lows of 1.0750 and 1.0720. Growth will be limited by yesterday's resistance of 1.0830, a break in which will open highs in the area of 1.0885 for buyers of risky assets. The material has been provided by InstaForex Company - www.instaforex.com |
| May 7, 2020 : EUR/USD Intraday technical analysis and trade recommendations. Posted: 07 May 2020 08:04 AM PDT
Few weeks ago, the EURUSD pair has expressed significant bullish recovery around the newly-established bottom around 1.0650. Bullish engulfing H4 candlesticks as well as the recently-demonstrated ascending bottoms indicated a high probability bullish pullback at least towards 1.0980 and 1.1075 (Fibonacci Level 50%). Key Supply-Levels in confluence with significant Fibonacci levels are located around 1.1075 (50% Fibonacci) and 1.1175 (61.8% Fibonacci) where bearish rejection was highly-expected upon the previous bullish pullback that took place on March 27. Thus, a bearish Head & Shoulders pattern was demonstrated around the price levels of (1.1000 - 1.1150). Further bearish decline was demonstrated towards 1.0800 where the nearest demand level to be considered was located near the backside of the broken channel (1.0800-1.0750). Evident signs of Bullish rejection have been manifested around the price zone of (1.0800-1.0750) leading to the recent bullish spike up to 1.0990. The short-term technical bullish outlook remains valid as long as bullish persistence is maintained above the recently-established ascending Bottom around 1.0770. Further bullish advancement is expected to pursue beyond 1.1000 towards 1.1175 where 61.8% Fibonacci Level is located. Bullish breakout above 1.1000 was needed to enhance further bullish movement towards 1.1075 and probably 1.1150. However, lack of bullish momentum prevented so. Despite the recent bearish decline, the price zone of (1.0815 - 1.0775) stands as a prominent Demand Zone which may provide quite good bullish support for the pair. Any bearish breakdown below 1.0770 should be market as an Exit signal for all short-term BUY trades. Trade recommendations : Intraday traders are advised to consider the current bearish pullback towards the price zone of 1.0815 - 1.0775 as another valid short-term BUY trade. S/L should be placed at 1.0750 while T/P levels to be located around 1.0930, 1.1000 then 1.1075 if sufficient bullish momentum is maintained. The material has been provided by InstaForex Company - www.instaforex.com |
| May 7, 2020 : GBP/USD Intraday technical analysis and trade recommendations. Posted: 07 May 2020 07:31 AM PDT
Recently, the GBPUSD has reached new LOW price levels around 1.1450, slightly below the solid Previous Weekly Low (1.1650) achieved in September 2016. That's when the pair looked very OVERSOLD around the price levels of 1.1450 where a double-bottom reversal pattern was demonstrated. Bullish breakout above 1.1900 invalidated the bearish scenario temporarily & enabled a quick bullish movement to occur towards 1.2260. Technical outlook remains bullish as long as bullish persistence is maintained above 1.1890-1.1900 (Double-Bottom Neckline) on the H4 Charts. Bullish persistence above 1.2265 has enhanced another bullish movement up to the price levels of 1.2520-1.2590 where significant bearish rejection as well as a quick bearish decline were previously demonstrated (In the period between 14th - 21 April). Currently, A Bearish Double-Top reversal pattern may be in progress. The pair may be demonstrating the right TOP of the pattern. Hence, Bearish persistence below 1.2265 (Reversal Pattern Neckline) is needed to enhance another bearish movement towards 1.2100, 1.2000 then 1.1920. However, recent bullish price action brought the GBP/USD pair back towards 1.2600 where evident bearish rejection was manifested as we expected in previous articles. Intraday traders should be waiting for more bearish pullback towards the price levels of 1.2300-1.2280 where a low-risk short-term BUY trade can be offered. On the other hand, bearish breakdown below 1.2265 confirms the previously-mentioned double-top pattern. This will probably enable further bearish decline eventually towards 1.2020 as a projection target for the reversal pattern. Trade recommendations : Intraday traders were advised to look for bearish rejection around the Depicted SupplyZone (anywhere around 1.2550) as a short-term SELL signal. It's already running in profits. Remaining T/P level to be located around 1.2300 while S/L should be lowered to 1.2500 to offset the associated risk. Conservative BUYERS should be waiting for the current bearish movement to pursue towards the price levels of 1.2300-1.2280 where a low-risk BUY trade can be offered. The material has been provided by InstaForex Company - www.instaforex.com |
| Trading recommendations for the GBP/USD pair on May 6, 2020 Posted: 07 May 2020 07:09 AM PDT From the point of view of complex analysis, we see an intense downward spiral in the structure where speculative positions arose. Movement from the conditional ceiling of 1.2620 led the quote to a mirror level of 1.2350, where it could not resist the wave of short positions, with a local low in the value of 1.2310. Such a move is a good signal in terms of technical analysis, which suggests that the mirror level of 1.2350 is no longer considered an obstacle for sellers, and the downward movement has a chance to work out the tact of April 21 to April 30 by 100 % Recall that the initial support was in the region of 1.2250, after which an upward spiral arose. Now, the output is 85%, which means that downward development still has a chance. From the four-hour period, traders noticed that there were no significant changes in the market, and the structure of fluctuations took the form of a variable corridor 1.2150 // 1.2350 // 1.2620. Based on this analysis, the theory of downward development may fall into a closed chain of oscillations, which will significantly complicate the course of short positions. The global downward trend, which remained unchanged, should also be paid attention to. If we analyze the technical part, we can see that the upward turn on March 20 only had seven days of inertia, after which the movement turned downwards and coursed sideways in the direction of where we're now moving today. It seems that buyers encountered a deterrent factor, otherwise historical lows that were hit just recently would continue to put pressure on sellers. It forced them to actively shift to long positions. As discussed in the previous review, traders continued to work on the decline, and the trading recommendation from Wednesday brought us another income. [We sold positions lower than 1.2400, towards 1.2350.] In terms of volatility, an acceleration was recorded relative to past days, which was quite expected. Yesterday, it was observed that the dynamics of Tuesday had the lowest rate in three weeks, which is a good signal of an upcoming acceleration. Regarding the daily monitoring of volatility, we see a gradual normalization of market activity, which happened not only with the GBP / USD pair, but also with the EUR / USD pair and other trading instruments, which is considered a good signal for the emotional mood of market participants. Volatility detail MARCH: Monday - 165 points; Tuesday - 245 points; Wednesday - 172 points; Thursday - 358 points; Friday - 359 points; Monday - 144 points; Tuesday - 271 points; Wednesday - 676 points; Thursday - 354 points; Friday - 522 points; Monday - 267 points; Tuesday - 296 points; Wednesday - 333 points; Thursday - 452 points; Friday - 352 points; Monday - 148 points; Tuesday - 227 points. APRIL: Wednesday - 108 points; Thursday - 126 points; Friday - 198 points; Monday - 116 points; Tuesday - 217 points; Wednesday - 131 points; Thursday - 122 points; Friday - 42 points; Monday - 87 points; Tuesday - 146 points; Wednesday - 193 points; Thursday - 119 points; Friday - 114 points; Monday - 86 points; Tuesday - 198 points; Wednesday - 111 points; Thursday - 106 points; Friday - 78 points; Monday - 94 points; Tuesday - 113 points; Wednesday - 96 points; Thursday - 213 points. MAY: Friday - 117 points; Monday - 82 points; Tuesday - 69 points; Wednesday - 116 points. The average daily indicator, relative to the dynamics of volatility is 131 points [see table of volatility at the end of the article]. Yesterday's news contained data on business activity in the UK construction sector, where a decrease from 39.3 to 8.2 was recorded in the index for April. In the afternoon, ADP published its US employment report for April, which revealed that employment decreased by 20,236,000, slightly better than the forecasted 20,050,000. Traders ignored this indicator. Meanwhile, UK Prime Minister Boris Johnson is reported to be considering the lifting of quarantine measures as early as May 11. "We will disclose all the details of the government plan on Sunday. We have chosen this date because we want to be sure that scientific evidence confirms the possibility of lifting the restrictions, however, new information will still be available within the next few days. We want to start implementing some of the plans measures on Monday, if we have such an opportunity," Johnson said. Considering Britain's massive number of deaths, we should not expect something sharp to come out on Sunday. We will most likely just see a slight mitigation of restrictive measures. The meeting of the Bank of England has already taken place today, during which it was decided to maintain the base rate at 0.1%, and at the same time, confirmed that quantitative easing now amounts to £ 645 billion, higher than the forecasted £ 625 billion. Such news became a catalyst for the local growth of the English currency. "The majority of the Committee (seven to two) voted to ensure that the Bank of England continues the repurchase program of UK government bonds and investment-grade corporate bonds of the non-financial sector in the amount of £ 200 billion, funded by the issuance of central bank reserves so that the total volume of these purchases reaches £ 645 billion. Two committee members at this meeting called for an increase in the target volume of asset purchases by another £ 100 billion, "the Bank of England said in a statement. At the same time, the Bank of England published forecasts for the UK economy, from which it is expected that the GDP will shrink by 14% in 2020, but grow by 15% in 2021. Unemployment in the country will jump to 8%, and inflation this year will be 0.6%. "The proliferation of COVID-19 and its containment have a significant impact on the United Kingdom and many countries around the world. Economic activity has fallen sharply since the beginning of the year, while unemployment has risen markedly, "said the Bank of England. Today, data on applications for unemployment benefits in the US will be published, which has a forecast of about 3,210,000 new applications and 20,450,000 repeated applications, which will continue to set anti-records. Further development Analyzing the current trading chart, we see high activity during the start of the European session, which was caused by the results of the Bank of England meeting. The local surge over 80 points did not lead to serious changes, and the quote almost immediately went into recovery mode, returning us to the same mirror coordinate at 1.2350. Such course once again proves that downward development may occur. Thus, we can assume that the price fluctuation within the 1.2350 level will remain, in which for the downward move to resume, the quote must consolidate lower than 1.2310. The possibility of a descent to April 21's low is high in this case. Based on the above information, we derived the following trading recommendations: - Consider buy positions from the value of 1.2420, towards 1.2450 - Consider selling positions lower than 1.2310, towards 1.2250. Indicator analysis Analyzing a different sector of timeframes (TF), we see a clear sell signal relative to hourly and daily periods, due to the general market mood. Volatility per week / Measurement of volatility: Month; Quarter year The measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year. (May 7 was built, taking into account the publication time of the article) Volatility is currently 106 points, which is already good and is considered a normal indicator of activity. Thus, we can assume that if the variable pivot point falls, the daily average will exceed. Key levels Resistance zones: 1.2350 **; 1.2500; 1.2620; 1.2725 *; 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **. Support areas: 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1,1000; 1,0800; 1,0500; 1,0000. * Periodic level ** Range Level *** Psychological level **** The article is built based on the principle of conducting a transaction, with daily adjustments The material has been provided by InstaForex Company - www.instaforex.com |
| Short-term Ichimoku cloud indicator analysis of Gold Posted: 07 May 2020 07:05 AM PDT Gold price remains below key short-term Cloud resistance. Bears have the upper hand as long as price is below $1,700-$1,710. Price is approaching key trend line and cloud resistance now and it is important to see how we end the week.
Black line -trend line resistance Gold price is at the major short-term resistance area of $1,700-$1,710. Breaking above this level will open the way for a move towards $1,740 and maybe higher. A rejection at current levels will open the way for a move towards $1,680 or lower. A break below $1,670 will open the way for a move towards $1,630. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 07:01 AM PDT USDJPY has been in a downward sloping trend since mid March when it topped around 111.50. Since then price has been moving lower and today we are going to focus on the bullish wedge pattern that is being formed.
USDJPY has so far retraced 50% of the entire rise from 101.18 to 111.71. Price is moving inside the black wedge pattern. Price is now bouncing off the lower wedge pattern boundary. A daily close above 106.65 and we will talk about more bullish signals as the candlestick will have formed a bullish engulfing pattern.If this is the case I would then expect price to push towards the upper wedge boundary tomorrow. Resistance is at 107 area. A break above it will increase dramatically the chances of a major low. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 06:01 AM PDT
The weekly report on US unemployment has been published, with +3.17 million new applications, which is very negative, since the overall number of unemployed is already at 21 million (16% unemployment rate). Growth does not seem to be decreasing. Such weak data pushes the questions: what will happen to the US economy when the pandemic recedes? How long will the recovery take? Will depression stretch for many years? These questions are all very negative for the US market, thus, a downward turn and a strong fall in the near future is expected. The US market can be sold from the current prices, taking out stops for a maximum of April 29. Euro - a strong rebound to the top is very likely. So far, there is no correction level in the nearest price zone. Open sell positions from 1.0725
Coronavirus in Moscow: Mayor Sobyanin decided to follow New York. The chart above shows the current dynamics of new infections in Moscow. As we can see, there is no decline yet in figures, and a strong new maximum is recorded. Clearly, quarantine needs to be tightened, or at least not weakened. However, Moscow will open all industrial enterprises and construction sites on May 12. As a protective measure, the mandatory wearing of masks and gloves is introduced in vehicles and public places. The dynamics of new cases in mid-May will show whether it will be effective. Sobyanin said that there are at least 300 thousand people infected in Moscow (he didn't specify the source of the data, but probably based on random testing), which means that the country is on the second path of a pandemic slow down, and may soon succeed in stopping the outbreak - at the expense of a significant number of patients. We will not be able to make a forecast until the growth of new cases stops. But we can say that Moscow (and throughout Russia) will reach the maximum figure of "active cases" no earlier than June 7. Take care! The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 05:41 AM PDT EUR/USD
The news background for the EUR/USD pair on Wednesday consisted of several reports from Europe, a summary of forecasts from the European Commission and a relatively important ADP report on changes in the US employment. The latest report did not surprise investors. The markets have long been prepared for the fact that the total number of Americans who lost their jobs amid the economic crisis and the coronavirus lockdown will be at least 20 million. At the same time, I believe that the forecasts of the European Commission did not particularly impress the markets as well. The Commission predicted that the European economy can drop by more than 7%. However, I believe that these forecasts can be corrected at least every month, depending on how things are going with the coronavirus pandemic. Meanwhile, concerns about future relations between Beijing and Washington are increasing. Donald Trump urgently needs to find those responsible for the deaths of more than 70 thousand Americans in the United States, as well as more than 1 million infected. Obviously, this will be China. One of the most effective ways of pressuring Beijing is to remind it about trade duties and tariffs. Most likely, if evidence of China's guilt is found, new tariffs will be imposed. It is not clear what is going to happen with the previous agreement signed in January. However, the United States do not want to violate it. However, Trump is unlikely to leave China in peace. Thus, the world hopes that there will be no second trade war. However, the reality is that not only the United States can blame China. If the world's largest economies begin to feud with each other after or during the Covid-19 pandemic, it will be possible to increase the forecasts of the European Commission twice, as well as similar forecasts of the American economy crash. General conclusion and recommendations: The EUR/USD pair is likely to continue the formation of the upward wave C into B. Thus, Iit is preferable to buy the instrument with targets located around 1.1148, which is equal to Fibonacci retracement of 0.0%, or the peak of the wave A. A successful attempt to break through the low of the wave B can indicate that the markets are not ready to buy the euro. GBP/USD
On May 6, the GBP/USD pair lost 90 basis points and continued the formation of the expected wave C in 2 or B as part of the upward trend section. The pair is expected to fall further with targets located near the minimum of the wave A at 2, or B, or slightly lower. After the wave is formed, I expect the quotes to increase within the framework of the wave 3 or C with targets above the 26th pattern. At the same time, the wave marking can become even more complex, as the markets remain in a state of anxiety and instability due to the COVID-19 epidemic. Fundamental component: The news background for the GBP/USD pair on May 6 was extremely poor. However, the results of the meeting of the Bank of England, which left the key rate unchanged at a minimum level of 0.1%, have been released today. Also, the volume of asset purchases under the quantitative incentive program remained unchanged - 645 billion pounds. As for the interest rate, all 9 members of the monetary committee voted against its change, while only two members of the committee voted in favor of expansion of the QE program. However, two votes were not enough to make a decision. Today, Governor Andrew Bailey will make a statement, which can also spark interest. Elsewhere, a report on claims for unemployment benefits in the US will be released today. General conclusions and recommendations: The GBP/USD pair supposedly completed the formation of the first wave of a new upward trend section. Thus, it is preferable to sell the British pound with targets located around the 22nd pattern, with an eye to the formation of a correctional wave 2 or B. After the completion of this wave, it is better to buy the instrument with targets located above the 26th pattern, and expect the formation of wave 3 or C. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 04:48 AM PDT To open long positions on GBPUSD, you need: If you look at the 5-minute chart, you will see how the morning buy signal above 1.2342 failed to confirm itself, because, after the decision of the Bank of England to leave the volume of the asset purchase program unchanged, the pound strengthened sharply, and then the resistance test of 1.2389, from where I recommended opening short positions immediately on the rebound. Those who did not have a chance to join the pair after returning to the level of 1.2389. I marked the point on the 5-minute chart. However, the buyers did not stand aside, and by the middle of the day, they managed to protect the level of 1.2342, forming a good signal to open long positions in the continuation of the upward correction, which, according to my plan, should have formed after the first breakdown at the beginning of the European session. While trading will be above the range of 1.2342, we can count on a second test and a breakthrough of the resistance of 1.2389, from which GBP/USD will continue to grow to the highs of 1.2446 and 1.2478, where I recommend taking the profits. If the bears are able to regain support for 1.2342, it is best to postpone long positions until the low of 1.2300 is updated, or buy GBP/USD immediately for a rebound from the support of 1.2275, counting on correction of 30-35 points by the end of the day.
To open short positions on GBPUSD, you need: Sellers coped with the task for the first half of the day and did not let the pair above the resistance of 1.2389. However, the market is currently under the control of buyers of the pound, and it will be possible to talk about the continuation of the bear market only after the breakdown and consolidation below the support of 1.2342. This scenario will lead to a larger fall in the GBP/USD to the area of the lows of 1.2300 and 1.2275, where I recommend fixing the profits. The report on the US labor market may lead to another attempt by the bulls to get above the resistance of 1.2389, so it is best to open new short positions from there only after the formation of a false breakout. I recommend selling GBP/USD immediately for a rebound only after testing the highs of 1.2446 and 1.2478, based on an intraday correction of 30-40 points.
Signals of indicators: Moving averages Trading is below the 30 and 50 daily averages, which indicates a further decline in the pound on the trend. Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1. Bollinger Bands If the pound falls in the second half of the day, the lower border of the indicator around 1.2300 will provide support. Repeated testing of the upper limit of the indicator in the area of 1.2385 may lead to a larger increase in the pound. Description of indicators
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| Posted: 07 May 2020 04:46 AM PDT To open long positions on EURUSD, you need: In the morning forecast, I paid attention to purchases after forming a false breakout at the level of 1.0787. If we look at the 5-minute and hour charts, we can see how the bulls managed to achieve a false breakout, but a larger upward correction from this level, at least to the minimum of 1.0831, could not be built. This suggests that there are no willing buyers yet, which may lead to a new sale of the euro in the afternoon. However, as long as the trade is conducted above the level of 1.0787, the buy signal will work out, and a sharp increase to the maximum of 1.0831 is not excluded. You can increase long positions only after fixing above the range of 1.0831, which will lead to a larger upward correction to the maximum area of 1.0882, where I recommend fixing the profits. I also recommend paying attention to the divergence that is formed on the MACD indicator, which will be an additional confirmation of the bullish correction. If the pressure on the euro persists in the second half of the day after the data on the US labor market, then after the breakout of the support of 1.0787, I recommend to postpone long positions to the test of the lows of 1.0755 and 1.0728 and buy EUR/USD from them immediately for a rebound in the calculation of correction of 25-30 points within the day.
To open short positions on EURUSD, you need: Sellers are still in full control of the market and are now aiming to break the low of 1.0787, which was not possible in the first half of the day, even after the terrible reports on industrial production in Germany and Italy, which declined at a larger pace than expected. However, only a real break of the level of 1.0787 will lead to a new wave of selling EUR/USD with access to new areas of 1.0755 and 1.0728, where I recommend fixing the profits. A more pleasant gift for bears will be an upward correction to the resistance area of 1.0831, which may occur today after the release of reports on the state of the US labor market. Only the formation of a false breakout at this level will signal the opening of new short positions in the euro with the aim of returning and breaking 1.0787, as well as updating new weekly lows in the area of 1.0755 and 1.0728. If there is no activity from sellers in the area of 1.0831, and yesterday an attempt was made to continue the bearish trend from this level, it is best to abandon short positions until the test of a larger maximum of 1.0882, where you can sell for a rebound in the expectation of correction of 30-35 points within the day.
Signals of indicators: Moving averages Trading is below the 30 and 50 daily moving averages, which indicates a continuation of the bear market. Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1. Bollinger Bands A break in the lower border of the indicator around 1.0787 will lead to a new wave of falling euros. Description of indicators
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| BTC analysis for 05.07.2020 - Potential for the downside rotation towards the level fo $8.400 Posted: 07 May 2020 04:38 AM PDT |
| Posted: 07 May 2020 04:30 AM PDT Technical analysis:
Gold has been still -trading sideways at the price of $1,694. My advice is to watch for potential breakout of the symmetrical triangle to confirm further direction. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 May 2020 04:23 AM PDT Corona virus news:
Deforestation and other forms of land conversion are driving exotic species out of their evolutionary niches and into manmade environments, where they interact and breed new strains of disease, the experts say. Coronavirus: 'Nature is sending us a message', says UN environment chiefThree-quarters of new or emerging diseases that infect humansoriginate in animals, according to the US Centers for Disease Control and Prevention, but it is human activity that multiplies the risks of contagion. A growing body of research confirms that bats – the origin of Covid 19 – naturally host many viruses which they are more likely transfer to humans or animals if they live in or near human-disturbed ecosystems, such as recently cleared forests or swamps drained for farmland, mining projects or residential projects. Technical analysis: EUR/USD has been trading sideways at the price of 1,0800. Anyway, I found that there is potential for the upside rotation due to the exhaustion of the sellers and the bullish divergence on the oscillators. The material has been provided by InstaForex Company - www.instaforex.com |
| Technical analysis of GBP/USD for May 07, 2020 Posted: 07 May 2020 04:15 AM PDT Overview: The GBP/USD pair is still trading around the daily pivot point of 1.2445. The GBP/USD pair was moving downwards from the level of 1.2445. Last week, the pair dropped from the level of 1.2445 (this level of 1.2445 is coincided with the pivot point) to the bottom around 1.2245. The pair returned to the daily pivot point. So, current price is set at the price of 1.2445. Today, the first resistance level is seen at 1.2445 followed by 1.2556, while daily support 1 is seen at 1.2245. According to the previous events, the GBP/USD pair is still moving between the levels of 1.2445 and 1.2245; for that we expect a a large range in coming hours. If the GBP/USD pair fails to break through the resistance level of 1.2445, the market will decline further to 1.2245. This would suggest a bearish market because the RSI indicator is still in a positive area and does not show any trend-reversal signs. The pair is expected to drop lower towards at least 1.2200 with a view to test the daily major support. On the other hand, if a breakout takes place at the resistance level of 1.2445, then this scenario may become invalidated. The material has been provided by InstaForex Company - www.instaforex.com |
| Trading plan for EUR/USD for May 07, 2020 Posted: 07 May 2020 03:44 AM PDT Technical outlook: EUR/USD has dropped lower beyond our expectations and is trading around 1.0784 levels at this point in writing. Immediate support is seen at 1.0730 levels, followed by 1.0636, while resistance should be strong at 1.1200 respectively. If EUR/USD drops below 1.0730, the fibonacci 0.88 retracement can provide a last support. The overall structure remains constructive for bulls until price stays above 1.0636 levels. According to the price action theory, a break above 1.1020 levels would trigger further buying and push prices higher towards 1.1500 levels. The recent boundary being worked upon is still between 1.0636 and 1.1150 respectively. A break on either side will decide further direction in EUR/USD. Trading plan: Remain long, stop at 1.0630, target is open. Good luck! The material has been provided by InstaForex Company - www.instaforex.com |
| Inappropriate risk: the yen stays afloat Posted: 07 May 2020 03:39 AM PDT Recent statistics reflect a trend that discourages any desire to take risks. According to data released on Thursday, the yen, traditionally used as a safe haven, began to show fluctuations against the dollar. Thus, we can say that the seven-week high has come to an end. The reason is quite simple: investors have lost interest in risky assets in view of the constantly incoming unpleasant statistics on world economic data. In addition, they are under pressure from rising trade tensions, as well as well-justified fears about a slowdown in the Euro zone economy. The last strong level of the yen was consolidated at 106.30 per dollar, which is higher than the previous growth, which reached the level of 105, 985 per dollar. In relation to the European currency, the yen is trading at a price of 114.72 per euro, which is still the maximum value for the last three and a half years. According to analysts, the rise in the yen is due to questions about the ECB stimulus program. In addition, some currency confusion is taking place amid growing tensions between the two leading economies - the United States and China. It can be recalled that the German constitutional court ordered the ECB two days ago to justify purchases made under the bond redemption program within three months. Otherwise, the financial regulator will have to stop participating in the main incentive scheme. The negative mood was supported by news from overseas. While the US President's administration is considering special punitive measures against China, which has become the center of distribution of COVID-19 around the world, Secretary of State Mike Pompeo hastened to return to aggressive criticism of the country with renewed vigor. A drawback was also added by US President Donald Trump himself, who yesterday recalled that he continues to carefully monitor how China fulfills its part of the agreements on the first phase of the trade deal concluded between the countries at the beginning of this year, when the spread of coronavirus infection around the world was not recorded. Chinese analysts also agree that the temporary relaxation of tensions and risky transactions noted last month could not have a long-term perspective. Internal indicators also continue to show negative dynamics so far. Thus, a private business survey reflected a decline in the activity of the services sector in April, despite the fact that the official quarantine was lifted more than two months ago. Another indicator is the Caixin/Markit services sector purchasing managers index (PMI) although it was able to strengthen its position in April, moving from 43 to 44.4 points, it still remained much lower than the country's traditional values in the range from 51 to 55 points. Moreover, weak consumption in China is confirmed by the fact that state imports continue to decline rapidly. The data showed that compared with the same period last year, it decreased by 14.2%, which is a significant drop. At the same time, the decline was even lower than the preliminary forecasts of economists, who did not expect a decline below 11.2%. There are some positive points that do not allow the development of negative dynamics in the worst case scenario. Thus, an increase of 3.5% was noted in the export zone, although it was mentioned earlier that a possible fall would immediately decline by 15.7%. In general, this allowed a little support for the Chinese yuan and the Australian dollar. The first became 0.1% stronger and reached the level of 7.0959, the second - 0.35%, which put it at the level of 0.6438 dollars. However, even this positivity does not allow us to talk about the improvement of global negative trends. The unjustified risk is now inappropriate, which has fatally affected the currencies of emerging markets. The material has been provided by InstaForex Company - www.instaforex.com |
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