Daily Forex market analyst, Forex analysis. In this section you will find a fundamental and technical analysis of the Forex market for online trading.
Follow the publications of our experts, and you will be able to objectively assess the situation not only on the international currency market Forex, but on all other world trading platforms. With the help of professional analysis of the foreign exchange market, you can invest your money.
Under pressure, the Chinese yuan will drop below the psychologically important $ 7 a bit later this year or in 2019. This will provoke a further decline in the currency, which the US will not like and will cause a new wave of criticism from their side. The US Treasury said it would continue to "closely" monitor China's monetary policy, although it refrained from calling the Celestial Empire a "currency manipulator" in its semi-annual report presented on Wednesday.
On Thursday, the yuan fell due to sales in the local stock market, the rate dropped to $ 6.94, the lowest level since January 2017. Now, the markets are trying to predict whether the yuan will beat the mark of $ 7, to which it has not dropped the last 10 years.
Some analysts believe that Beijing is trying to prevent a too sharp drop in the yuan, since capital will begin to leave the country. Others say the Chinese authorities may allow the yuan to fall below $ 7.
"As a rule, this level is considered psychologically important, but now that the yuan is dropping from $ 6.3 to $ 6.9 and this does not cause a significant outflow of capital from China, we believe that the Bank of China is confident that they can cope with a further decline below $ 7 without a destabilizing effect," experts of Capital Economics comment on the situation.
In UBS, the decline in the yuan is associated with a slowdown in the economy. Emerging market strategists expect the exchange rate to fall to $ 7.10 over the next six months and reach $ 7.30 over the course of the year.
"In our opinion, there is no reason why the weakening of the yuan should stop at $ 7. This is a psychologically important level, but we believe that the Chinese currency will continue to decline," they explain.
On Friday, the yuan is still at its lowest level since January 2017.
Earlier, experts wrote that the decline of the yuan from June is the result of the first round of trade disputes about tariffs between the United States and China. Another series of reductions could be expected if the 10% tariff, currently introduced by the United States for 200 billion imports of Chinese goods, will increase to 25%.
Here, Washington keeps the situation on the pencil, having planned this action for January. The subsequent decline of the yuan can already be described as a freely floating exchange rate. The decision to allow such a step "is not a response and is not a competitive devaluation," wrote analysts of the Institute of International Finance (IIF).The material has been provided by InstaForex Company - www.instaforex.com.
This week, the dollar-yen pair traded in the 100-point range, but in the end, it completes the five-day trading session almost at the opening positions. Despite the growth of core inflation in Japan, the yen remained under pressure from the US currency, jumping to the middle of the 112th figure. The external fundamental background is of primary importance for the pair, and the structure of Japanese inflation indicates a great influence of the oil market, the quotes of which have gone down again.
In general, the yen is traditionally dependent on the degree of anti-risk sentiment in the market. Therefore, when one of the advisers to the American president this week accused China of ignoring US trade requirements, the Japanese currency "remembered" its status as a defensive asset and strengthened slightly against the dollar. In addition, the growth of the yen contributed to the negative dynamics in the stock markets of Asia, and China in particular. All this allowed the bears USD / JPY to test the 111th figure. Subsequent events have reduced interest in defensive instruments.
First, Beijing assured the public that it would support the national stock market, stopping sales in the stock market if necessary. Such a position calmed panic, and the yen, in turn, began to lose points.
Secondly, the data on the growth of the Chinese economy and the volume of industrial production published today suggest that the protracted trade war is beginning to affect the key macro indicators of the Middle Kingdom. In view of this circumstance, Beijing is again forced to devalue the national currency, thereby supporting exports and partly leveling the imposed duties. This tactic does not solve the root of the problem, but only reduces its consequences (and even partially), so the market again talked about that after the elections to the Congress, which will be held in less than a month. China and the US will sit down at the negotiating table. Such conclusions reduced anti-risk sentiment among traders and the demand for yen fell.
Without the support of an external fundamental background, the Japanese currency immediately loses its position, since it does not have its own arguments for growth. Extremely weak inflation in Japan leaves no hope for bears USD / JPY. The yen remains under the background pressure of the "pigeon" policy of the national Central Bank. Today's release of inflation data served as an extra confirmation of this. Despite the growth in the basic consumer price index (excluding volatile food prices), traders were cool about this fact, especially since the indicator was expected to grow to one percent.
First, the pivotal level of inflation has overcome only half the way to the target two percent level. Secondly, the September CPI growth is explained by the increase in expenditures on petroleum products. In other words, inflation increased only due to "black gold". The cost of the rest of the group of goods increased slightly. It is worth noting that the barrel of the Brent brand fell today under the $ 80 mark, reflecting bearish sentiment. The emotional reaction to the scandal associated with the Saudi journalist subsided somewhat. According to analysts, Saudi Arabia will not use the oil market as a tool of influence in the conflict with the States. Also, the dynamics of quotations of "black gold" was influenced by data from the US. Oil reserves increased by 6.5 million barrels last week, these figures are more than two times higher than the forecasts of experts.
A set of fundamental factors lowered the cost of Brent under the key $ 80 mark. If this trend continues, Japanese inflation indicators may show a reverse trend, replacing weak growth with a gradual slowdown. Here, it is worth recalling that in July, the Bank of Japan expanded the range of the estimated size of the rate, thus admitting the likelihood of monetary policy easing. Therefore, a slowdown in inflation can hypothetically lead to a decrease in the interest rate further into the negative area. The head of the Japanese regulator, Haruhiko Kuroda, is a well-known supporter of the "pigeon" policy, so this scenario is not at all unlikely. At least in the course of his last speeches, he repeatedly pointed out the effectiveness of soft monetary policy. Therefore, in the next year and a half, the regulator can change its parameters except in the direction of easing.
Thus, the risk appetite renewed in the market, paired with the weak data on inflation in Japan, reduced interest in the yen, after which the USD / JPY rate went up again. This week, the situation is unlikely to change drastically (the pair will continue to be traded in the flat), so the main "fighting" for the pair will take place as early as Monday.
Technically, a pair of USD / JPY needs to overcome the border of the 113th figure to confirm the development of the northern trend. If the price rises above 113.05, then the Ichimoku Kinko Hyo indicator will generate a rather powerful bullish signal Parade of lines that will "allow" the pair to grow up to the middle of 114th figure. A reliable level of support is the price of 111.50. At this price point, the upper limit of the Kumo cloud coincides with the lower line of the Bollinger Bands indicator on the daily chart.The material has been provided by InstaForex Company - www.instaforex.com.
Analysts at US investment bank JPMorgan Chase once again calculated the risk of a recession in the United States.
According to experts, the likelihood that in the next two to three years, the US economy could plunge into recession, exceeds 50%.
"According to our estimates, the risk of a recession, or an economic downturn in the United States, within one year is almost 28%, in the next two years, more than 60%, on the horizon of three years, more than 80%," representatives of the financial institution said.
JPMorgan Chase's calculations are based on a macroeconomic model, which, in particular, includes indicators such as consumer and business confidence, the demand for durable goods and the share of construction in the gross domestic product.
Meanwhile, experts from the Federal Reserve Bank (FRB) of New York estimate the likelihood of a recession in the coming year only at 14.5%.
In turn, the head of the Federal Reserve Bank of St. Louis, James Bullard believes that at present, the US economy does not need any stimulation or cooling.The material has been provided by InstaForex Company - www.instaforex.com.
It cost the Federal Reserve to show that it is not going to be led by Donald Trump and is ready at any time to accelerate the process of normalizing monetary policy, as investors turned to the US dollar. According to Randal Quarles, vice-president of the Fed for Supervision, the Central Bank should not pay attention to the temporary difficulties of inflation or other indicators, it must bend its line. The US economy is strong and the probability of a recession is extremely low. Is it possible against such a background that someone can resist the dollar?
The publication of the minutes of the September meeting of the FOMC was a turning point in the fate of the "American" in the week to October 19. The Federal Reserve believes that it can afford to raise the rate above its long-term projected level and make monetary policy moderately tight. For a while. In order not to overheat the economy and prevent the arbitrariness of inflation. The Central Bank is in open confrontation with Donald Trump, who does not tire of criticizing him. According to the President of the United States, his main problem is the Fed. Judging by the dynamics of EUR / USD, the markets are betting on the Federal Reserve and still do not intend to stand on its way. As for the owner of the White House, his intervention, as in the previous cases, had only a temporary effect. Those who learned to use them, bought a dollar in the dips.
Euro does not leave the policy alone. According to a Bloomberg expert survey, events in Italy are the main problem in the eurozone. Trade wars, a slowdown in the GDP of the currency bloc or the Chinese economy, and the difficulties of developing markets seem less dangerous to specialists than the conflict between Rome and Brussels.
Italy put on the table the EU draft budget with a 2.4% deficit of GDP. This is less than in France, Japan or the United States, but three times overrule the obligations of the previous government. The European Union has already expressed its dissatisfaction, noting that the submitted document does not comply with the rules. The markets immediately responded by increasing the yield of Italian bonds and expanding their differential with German counterparts to the maximum level since 2013. This indicates an increase in political risks and is a "bearish" factor for EUR / USD.
Dynamics of yield differential of bonds of Italy and Germany
At the same time, experts polled by Bloomberg expect that the ECB will begin to actively adjust its monetary policy only in 2020. By this time, the federal funds rate may rise to 3.25-3.5%. Divergence in the monetary policy of the Fed and the European Central Bank, as well as the different rates of economic growth in the United States and the eurozone, contribute to the development of a downward trend in the main currency pair. It can accelerate if statistics on US GDP for the third quarter, scheduled for the end of the week by October 26, will show that the United States has maintained momentum.
Technically, a breakthrough of support at 1.143 - 1.144 will increase the risks of activating the AB = CD pattern with a target of 161.8%. It corresponds to a mark of 1.095.
EUR / USD, the daily chart
The material has been provided by InstaForex Company - www.instaforex.com.
To open long positions on EUR / USD, you need:
The buyers managed to keep the support level of 1.1434, which I paid attention to in my morning review, which led to profit taking and an upward correction in euro. Return and consolidation above the resistance level of 1.1456 is a good signal to buy the euro, based on the update of the maximum of 1.1482, where today, I recommend fixing the profits. The breakdown of this area may lead to larger growth in the area of 1.1516.
To open short positions on EUR / USD, you need:
In the morning, the sellers worked out all their goals, which I spoke about in the morning, which led to profit taking. Consider selling euro today in the afternoon is best after the formation of a false breakdown in the area of 1.1482 or to rebound from a maximum of 1.1516. The main task will be to return to the support level of 1.1456, which will keep downward potential in EUR / USD next week.
Trade is conducted under the 30- and 50-day average, which indicates the formation of a downward trend in the euro.
The breakdown of the middle border of the Bollinger Bands indicator in the area of 1.1507 will come to the return to the buyers market and update the above resistance levels.
Description of indicators
An indicator fixing the level of economic growth in China disappointed analysts, although it remained within the official forecast.
According to the report of the State Statistics Committee of the People's Republic of China, in the second and third quarters of this year, the country's GDP growth rate was 6.5% in annual terms. In the first quarter, China's economic growth reached 6.8%, in the second, this figure was 6.7%, and in the third quarter of 2018, only 6.5%, according to the State Statistical Office of China.
According to preliminary estimates, China's GDP in the first three quarters of this year amounted to 65.09 trillion yuan, an increase of 6.7% year over year. The indicator remained in the framework of the preliminary forecast, but did not meet the expectations of experts. At the same time, analysts, warning of a slowdown in growth rates, expected a smaller decline, up to 6.6%.
At the end of last year, the growth rate of China's GDP showed an acceleration of up to 6.9% compared to 6.7% recorded in 2016, exceeding the official forecast of 6.5%.The material has been provided by InstaForex Company - www.instaforex.com.
The focus of the market is Italian problems again. The fall of the euro could be much more serious than previously expected. Brussels took the first formal step, sent a letter with warnings to Rome. Further, there will probably be a rejection of the draft budget and a fine.
The loss of the euro from the opening of trading in Europe amounted to about 35 points. The euro / dollar pair is trading around 1.14.
European Commission officials have significantly changed the tone of communication with the Italian government. They noted that the draft budget is "especially a serious violation" of EU rules due to "unprecedented" deviations from targets. The members of the European Commission set the deadlines for Rome to respond, no later than October 22.
Meanwhile, Prime Minister Giuseppe Conte said that he was not at all worried about the contents of the letter, and assured that Italy would be able to dispel all doubts that arose in Brussels. The government, he said, slightly deviated from the goal. The Italian politician also expects that the European Commission will send similar warnings to Spain, France, and Portugal.
Note that some European leaders attacked the populist government in Rome. The head of the European Union warned that the budget will not be approved. Judging by what is happening, the most indebted region of the eurozone after Greece is waiting for shocks. The Five Stars-League coalitions prepared for a head-on collision with Brussels while discussing the cost plan. Such a prospect frightened the markets.
Friday's ten-year yield approached the highest in the last 4 years. This happened after Conte, a law professor who does not have previous political experience, could not convince his European colleagues that Rome should be allowed to flaunt the disregard of EU fiscal rules.
In addition to world politics, the monetary policy of the Fed and the ECB is pressing down on the euro. The governing council will get rid of negative deposit rates only at the beginning of 2020 and will bring them into positive territory by September of the same year, experts at Bloomberg predict. By that time, the federal funds rate will rise to 3.25%, their gap will widen from 2.25% to 3%. Note, this is a serious "bearish" factor for the euro / dollar pair.
The political crisis in Italy is now considered the biggest problem for the eurozone, while the risks of trade wars are assessed by experts as balanced. In addition, the events in Rome overshadowed information about the slowest economic growth in China in nearly 10 years.The material has been provided by InstaForex Company - www.instaforex.com.
The yield on two-year US government bonds rose to a maximum in 10 years after the publication of the hawkish protocol of the September meeting of the US Federal Reserve.
The published minutes of the last meeting of officials of the US Central Bank indicated a high likelihood of further interest rate increases. Perhaps, once this year and three times in 2019.
On Thursday, October 18, the yield on two-year US bonds reached 2.907%, the highest since June 23, 2008. The yield on ten-year bonds also resumed growth after a correctional decline last week.
The index showing the strength of the US dollar against a basket of six major world currencies is in the highs area since August of this year, at the resistance level of 96.00.The material has been provided by InstaForex Company - www.instaforex.com.
Pessimism regarding global economic outlook has intensified among investors amid growing trade contradictions and expectations that the US Federal Reserve will continue its course aimed at tightening monetary policy, despite the turmoil in stock markets.
This is evidenced by the results of a survey conducted recently by the Bank of America Merrill Lynch (BAML) among the managers of 174 large investment funds with total assets of $ 514 billion.
According to experts of the financial institute, the share of respondents who believe that the global economy is in a late stage of the cycle, followed by a reversal and a slowdown, reached a record high of 85%.
At the same time, 38% of respondents expect a slowdown in global GDP growth over the next 12 months, 35% predict a stagnation in corporate profits, and another 20% predict their decline.
Among the main risks for markets, investors identified trade wars (35%), tightening monetary policy in developed countries, including the United States, and curtailing monetary incentives (31%).
"The overwhelming majority of respondents believe that the S & P 500 index should sink to at least 2500 points before the Fed will refrain from increasing interest rates," said BAML representatives.
"The collapse in the US market in October forced investors to look into the eyes of the four horsemen of the apocalypse. The first is the rising dollar rates, the second is the growing trade wars, and the third is the instability of emerging markets. The fourth, which is still in the shadows, is the crisis around the budget deficit in Italy, which threatens to turn into a debt problem for EU countries," the experts said.
"However, the conditions for a full fall of the markets have not yet matured. According to the survey, investors prefer to keep 5.1% of portfolios in cash. This is 10% more than the average for the last 10 years. Despite the "bearish" view of global economic growth prevailing, there is a high probability that the availability of free funds for investment will give rise to a rebound in the markets," they added.The material has been provided by InstaForex Company - www.instaforex.com.
The dollar continues its victorious march, and yesterday, it was not the Brexit negotiations that supported it, but macroeconomic statistics and statements about the monetary policy of the Federal Reserve System. So, the worst result for the day showed a pound, but not because of uncertainty about the trade agreement with the European Union, but because of the incredibly weak data on consumer activity. After inflation in the UK slowed down unexpectedly, investors pinned their hopes on retail sales, but their growth rates did not accelerate from 3.4% to 3.6%, but slowed down to 3.0%. So, in the British economy, everything is rather sad, as both inflation and retail sales are declining, so it's not clear how economic growth will be ensured. In the USA, very good data on the labor market came out, since the total number of applications for unemployment benefits fell by 18 thousand, while they expected a decrease of only 1 thousand. which decreased by 13 thousand with an expected growth of 2 thousand. The number of initial claims for unemployment benefits fell by 5 thousand, which is slightly better than the forecast of 3 thousand. The speech of James Bullard was also interesting, since for many his words turned out to be a surprise. Indeed, due to a sharp slowdown in inflation, the Fed was waiting for at least some reaction, but a representative of the Federal Commission on Open Market Operations confirmed that the regulator does not intend to revise its plans based on data in just one month. So, we are waiting for the refinancing rate to increase in December, and three more times next year. Although he noted concerns about inflation and added that the Fed will monitor developments.
In Europe, no data comes out, so that all attention to the American statistics, which can stop the triumphant procession of the dollar. The fact is those home sales in the secondary market may decline by 0.7%. Of course, this is not such significant data, but given the serious growth of the dollar in recent days, as well as the absence of other news, market participants will clearly want to take profits. So, the single European currency has every chance of rising to 1.1475.
The pound, on the other hand, has much more reasons for growth, since, besides the same factors that will affect the single European currency, it will be supported by domestic British data. In particular, of interest are data on public sector borrowing, which should increase by 4.6 billion pounds compared to 5.9 billion pounds in the previous month. That is, the growth rate of public sector borrowing is declining, which will be regarded as a reasonable move in the face of uncertainty about the trade agreement between the UK and the European Union. Thus, it is worth waiting for the growth of the pound to 1.3075.
With the ruble, the situation is somewhat different, since, unlike many other currencies, it held up well. This happened because of the tax period, which supported the ruble. After all, companies can receive profits in anything, but the Federal Tax Service takes taxes only in rubles. This factor gradually fades into the background, and since the ruble did not show any particular aspirations for growth, then it is worth waiting for its weakening. The situation is heated by the words of Elvira Nabiullina. The Chairman of the Board of the Bank of Russia said that, if necessary, the regulator will maintain market stability through interventions, including OFZ purchases. In other words, the Bank of Russia does not exclude the possibility of panic in the market, which could lead to a strong weakening of the ruble. Such statements by themselves do not add confidence to market participants, which will have a negative impact on the ruble. So today, it is worth waiting for the growth of the dollar to 66.00 rubles.The material has been provided by InstaForex Company - www.instaforex.com.
Wave counting analysis:
During the trading on October 18, the GBP / USD currency pair lost another 90 basis points more and, thus, continues to build the expected wave 2, in the future 5. However, the news background after the completion of the Brexit negotiations is clearly not in favor of the British pound sterling, so the decline may continue, which may lead to the need to clarify the current wave marking. However, while the working version, involving the construction of an upward wave 3, is preserved. An unsuccessful attempt to break through the 76.4% of Fibonacci level can lead to the completion of wave 2 construction.
The objectives for the option with purchases:
1.3258 - 0.0% according to Fibonacci
1.3300 - 161.8% of Fibonacci
The objectives for the option with sales:
1.3003 - 76.4% of Fibonacci
1.2924 - 100.0% of Fibonacci
General conclusions and trading recommendations:
The currency pair GBP / USD continues to build the estimated wave 2. Thus, I recommend keeping sales open with targets near the marks of 1.3003 and 1.2924. Information from the EU summit does not support the pound, so the decline can continue. For purchases, you need an eloquent signal to complete the construction of wave 2.The material has been provided by InstaForex Company - www.instaforex.com.
Wave counting analysis:
In the course of trading on Thursday, the EUR / USD currency pair lost about 50 basis points. Thus, the pair is supposedly continuing to build wave c. If this is indeed the case, the decline in quotations will continue with targets located near the calculated levels of 127.2% and 161.8% on the Fibonacci grid, built on the size of wave b. An unsuccessful attempt to break through the 100.0% Fibonacci mark can lead to a departure of quotes from the lows reached and the construction of an internal correctional wave c.
The objectives for the option with sales:
1.1327 - 127.2% of Fibonacci
1.1194 - 161.8% of Fibonacci
The objectives for the option with purchases:
1.1622 - 50.0% of Fibonacci
General conclusions and trading recommendations:
The currency pair supposedly completed the construction of wave b. Thus, now I recommend selling the pair with targets located near the estimated marks of 1.1327 and 1.1194, which corresponds to 127.2% and 161.8% in Fibonacci. There are no grounds for assuming a change in the working version. The outcome of the EU summit does not give reason to expect the growth of the pair.The material has been provided by InstaForex Company - www.instaforex.com.
Trading Plan 10/19/2018
The overall picture: A turn towards the dollar.
News in the morning: In the Chinese economy, signs of a slowdown have been noticed. While small, the growth in output has dropped from 6.6% to 6.5%. At the same time, China's top officials in charge of regulating finance and markets made statements, promising support for markets and the economy. China's market grew by + 2.4% in indices.
European currencies are under pressure for two reasons. First, an unsuccessful EU-Britain summit on the terms of relations after Brexit. An agreement could not be reached, we decided to give Britain a long transitional period. The second factor, the expectations of the Fed rate hike strengthened after the Fed minutes
The market turns to wait for the ECB meeting next Thursday.
Pound: We are ready to sell at a break down of 1.2920.
Alternative: Purchase from 1.3260.
The material has been provided by InstaForex Company - www.instaforex.com.
The US dollar continued to strengthen its position against a number of world currencies after the outcome of the failed EU summit on economic issues, as well as against the background of good fundamental statistics on the American economy.
Yesterday afternoon, a report on the US labor market was published, as well as representatives of the Federal Reserve System, who once again spoke of the need to further increase interest rates, which had a positive effect on investor sentiment.
According to the US Department of Labor, the number of Americans who submitted new applications for unemployment benefits last week has declined. Despite this, the shortage of skilled workers is still quite high.
Thus, the number of initial claims for unemployment benefits for the week from October 7 to 13 decreased by 5,000 and amounted to 210,000, while economists also expected that the number of applications would be 210,000.
The speech of the President of the Federal Reserve Bank of St. Louis, James Bullard, led to an increase in the US dollar. Bullard said that the strong economic dynamics justifies the increase in interest rates, which he opposed for a long time.
Despite this, the situation in the economy may change at any time, and these changes will be negative. Even if the economy exceeds economists' forecasts, the Fed should report to the markets about future rate hikes.
The speech of the Vice Chairman of the Fed Quarles also benefited the US dollar, as he confirmed the current rate of the Fed to a gradual policy change due to the fact that the economy is still in good condition.
Quarles drew attention to the fact that it is very difficult to say whether it will be possible to maintain strong economic growth. However, in his opinion, there is some potential for increasing the share of the economically active population.
As for the recession, then, in the opinion of the Fed representative, there is little evidence of risks, and the criticism of US President Donald Trump with respect to the Fed will not prevent him from doing his job.
Today, there was data on the economy of China, whose growth has slowed to the level of the beginning of the financial crisis.
According to the report of the National Bureau of Statistics, China's GDP in the 3rd quarter of this year grew by 6.5% compared with the same period last year, against a growth of 6.7% in the 2nd quarter. Economists had expected a 6.6% increase in GDP in the 3rd quarter. Despite the slowdown, the target levels set by the authorities in the region of 6.5% have been achieved.
The slowdown in industrial production will have a negative impact on economic growth in the future, despite the fact that growth in investment and retail sales has stabilized.
According to the Bureau of Statistics, in September of this year, compared with the same period last year, industrial production grew by 5.8% after rising by 6.1% in August. Economists had expected annual industrial growth to be 6.0%.
Investments for the period from January to September rose by 5.4%, which turned out to be higher than the forecasts of economists, who expected growth of 5.3%. Retail sales in September rose 9.2% after rising 9.0% in August. Economists had forecast growth of 9.1%.The material has been provided by InstaForex Company - www.instaforex.com.
The senior linear regression channel: direction - sideways.
The younger linear regression channel: direction - down.
Moving average (20; smoothed) - down.
The EUR / USD instrument on Friday, October 19, continues its downward movement. After it became known about the failure of the next negotiations between the EU and Britain regarding the conditions of Brexit, and pound sterling, and euro currency remain under market pressure. However, the European currency may in the near future cease to experience the pressure of traders, since it has never reacted at all to any events concerning Brexit. It was in the last days, which could be key for the whole Brexit procedure, that traders sold the euro due to expectations of failure of negotiations. However, in the near future, this topic may lose its relevance to the market. Even after the failure of the negotiations, the EU and British leaders again made optimistic statements that they hoped to reach an agreement. Jean Claude Juncker said that he considered Brexit dangerous without a deal. May is of the same opinion. However, the markets have clearly lost optimism. On the last trading day of the week, the calendar of macroeconomic events in the EU and the USA does not contain anything interesting and remarkable. From a technical point of view, the "Regression Channels" system clearly indicates a downward movement and no correction. Some oversold indicator CCI warns of a possible beginning of the correction.
Nearest support levels:
S1 - 1,1475
S2 - 1,1414
S3 - 1.1353
Nearest resistance levels:
R1 - 1.1536
R2 - 1.1597
R3 - 1.1658
The EUR / USD currency pair continues to move downward, so it is now recommended to stay in short positions with a target of 1.1414. A reversal of the Heikin Ashi indicator to the top will signal the turn of the corrective movement and will serve as a signal to close the sell position.
Orders for the purchase can be considered no earlier than traders overcome the moving average line. In this case, the trend in the instrument will again change to ascending, and the first target will be the level of 1.1597.
In addition to the technical picture should also take into account the fundamental data and the time of their release.
Explanations for illustrations:
The senior linear regression channel is the blue lines of the unidirectional movement.
The junior linear regression channel is the purple lines of unidirectional movement.
CCI - blue line in the indicator window.
The moving average (20; smoothed) is the blue line on the price chart.
Murray levels - multi-colored horizontal stripes.
Heikin Ashi is an indicator that colors bars in blue or purple.The material has been provided by InstaForex Company - www.instaforex.com.
The bearish divergence of the MACD indicator allowed the pair to close below the correction level of 61.8% - 1.1497. As a result, on October 19, the process of falling quotations continues in the direction of the correctional level of 76.4% - 1.1424. Also today, bullish divergence is brewing at the CCI indicator. Its education will allow traders to expect a turn in favor of the EU currency and some growth in the direction of the Fibo level of 61.8%. Rebounding the pair from the correction level of 76.4% will similarly work in favor of the beginning of growth.
The Fibo grid was built on extremes from August 15, 2018, and September 24, 2018.
On the 24-hour chart, the pair consolidated below the corrective level of 100.0% - 1.1553. Thus, the fall in quotations continues in the direction of the next correction level of 127.2% - 1.1285. There are no maturing divergences on the current chart. Rebound of the pair from the Fibo level of 127.2% will allow traders to expect a reversal in favor of the European currency and some growth towards 100.0%.
The Fibo grid is built on extremes from November 7, 2017, and February 16, 2018.
Recommendations to traders:
Purchases of the EUR / USD currency pair can be opened with the target of 1.1497 and a Stop Loss order under the Fibo level of 76.4% if the pair bounces the correction level of 1.1424, especially in the aggregate in bullish divergence.
The EUR / USD currency pair can be sold now with the target of 1.1424 with a Stop Loss order above the Fibo level of 61.8%, since the pair closed below the correction level of 1.1497 and hold them until a bullish divergence is formed.The material has been provided by InstaForex Company - www.instaforex.com.
On the 4-hour chart, the GBP / USD currency pair quotes consolidated below the correction level of 23.6% - 1.3067. Thus, the process of falling quotations can be continued on October 19 in the direction of the next Fibo level of 0.0% - 1.2662. There is a bullish divergence at the CCI indicator. The education will allow us to count on a turn in favor of the British currency and on a return to the level of correction of 23.6%. Fixing the rate above the Fibo level of 23.6% will work in favor of continuing growth in the direction of the next correction level of 38.2% - 1.3316.
The Fibo grid was built according to extremums of April 17, 2018, and August 15, 2018.
On the hourly chart, the pair, after the formation of the bearish divergence at the CCI indicator, performed a reversal in favor of the American currency and consolidation below the correction level of 61.8% - 1.3051. Thus, the fall in quotations continues in the direction of the next Fibo level of 76.4% - 1.3003. There are no new emerging divergences today. Reversing the quotations from the correction level of 76.4% will make it possible to expect a reversal in favor of the British currency and some growth towards the Fibo level of 61.8%. Fixing the rate of the pair under the correction level of 76.4% will increase the chances for a further fall in the direction of the next correction level of 100.0% - 1.2924.
The Fibo grid was built on extremes from October 4, 2018, and October 12, 2018.
Recommendations to traders:
Purchases of the GBP / USD currency pair can be made with the target of 1.3051 and a Stop Loss order under the correction level of 76.4% if the pair bounces off the level of 1.303 (hourly chart).
To sell a pair of GBP / USD, it will be possible with a target of 1.2924 and a Stop Loss order above the level of 76.4% if the pair closes below the Fibo level of 1.3003 (hourly chart).The material has been provided by InstaForex Company - www.instaforex.com.
To open long positions on GBP / USD, you need:
The pound fell after the unsuccessful Brexit talks, as well as the cancellation of the November meeting between representatives of the UK and the EU. Long positions today can only be returned if the support level of 1.3002 is updated with the formation of a divergence on the MACD indicator, which will lead to a sharp increase and closure of short positions in the pound. Otherwise, it is best to open long positions to rebound from the lows of 1.2962 and 1.2926. The main task of buyers will be the return and consolidation above the resistance of 1.3045, which will lead to a correction to the maximum area of 1.3082, where I recommend fixing the profits.
To open short positions on GBP / USD, you need:
An unsuccessful consolidation above the resistance level of 1.3045 with a rebound from the 30-day moving average will be a good sell signal per pound based on the breakdown of 1.3002 support, which will lead to the continuation of the downward trend in GBP / USD with a test of 1.2962 and 1.2926 lows, where I recommend fixing the profits. In the case of growth above the resistance level of 1.3045 in the first half of the day, short positions can be opened immediately to rebound from a high of 1.3082, where the 50-day moving average is located.
Trade is conducted under the 30-and 50-day average, which indicates a further decrease in the pound. In the case of an upward correction, the 30-day average will play the role of good resistance.
Support today may have the lower limit of the Bollinger Bands indicator around 1.2980, which will be a direct signal to the opening of long positions in the pound. In the case of an upward correction, the average border around 1.3045 will act as additional resistance.
Description of indicators
The next failure of negotiations between the UK and the EU on the terms of the country's withdrawal from the union seems to surprise no one, and the British currency and the euro indirectly remain hostages of this phenomenon.
Following the summit of EU and UK leaders, J.C. Juncker stated that he "expects an agreement", but it seems that the negotiating process is less and less "threatening" to reach a compromise in the wake of the remaining real contradictions, which are primarily based on Britain's desire to sit on two chairs. On the one hand, wanting to get preferences from their recent place in the European Union, and at the same time, on the other, while remaining as independent as possible from the decisions taken in Brussels, obliging London to follow a common line of EU member behavior.
The result of the meeting of the leaders of Britain and Continental Europe, as expected by us, had a negative impact on the rate of the British currency, which was under pressure, and, most likely, its decline will continue in the short term. Also, a strong negative for it is the slowdown of inflation, which significantly reduces the prospects for higher interest rates in the near future, as well as a noticeable drop amid the uncertainty about Brexit's retail sales prospects, which was signaled on Thursday.
The volume of retail sales in the UK in September fell more noticeably than expected, by 0.8% against the forecast of a decline of 0.4% and August growth of 0.4%. The core retail sales index also fell sharply by 0.8% against the expected decline of 0.4% and a noticeable increase in August by 0.5%.
Explicit economic problems in the country put pressure on the sterling, which pulls down the single currency rate, since the remaining uncertainty factor in the Brexit issue, though indirect, negatively affects the dynamics of the single currency.
Considering the lack of real prospects for the "amicable" divorce of Britain and the European Union, we believe that the sterling rate will remain under pressure, and the overall negative picture on world markets caused by the trade opposition between Washington and Beijing, the Fed's desire to continue to follow the course of monetary policy normalization is likely to put downward pressure on the GBP / USD pair, which will also weaken the EUR / USD pair.
Forecast of the day:
The currency pair EUR / USD is trading above the level of 1.1445. It can be adjusted upwards to 1.1485. We consider it possible to sell from this mark or after the price crosses the level of 1.1445 with a likely target of 1.1400.
The currency pair GBP / USD is trading above the level of 1.3015. It can also correct up to 1.3045. We believe that it should be sold at about this level with a local target of 1.2950. The same should be done if the price overcomes the 1.3015 mark.
The material has been provided by InstaForex Company - www.instaforex.com.
EUR / USD
On Thursday, the negative news on Brexit and the fall of the British pound became the main driver of the strengthening of the dollar and, in general, investors' withdrawal from risk. The dollar index rose by 0.34%, the S & P 500 stock index lost 1.44%, the yield on 5-year US government bonds fell from 3.062% to 3.027%.
The euro fell by 47 points, entrenched under the embedded trendline of the price channel of the weekly timeframe. Now, the price is between this line with resistance at 1.1485 and the October 9 minimum level at 1.1432. Fixing under this level will open the way to a decline to August minimum at 1.1300, but on Friday, there may be a fixed profit on the market, which will somewhat delay the necessary technical fixation.
In the United States today, data on home sales in the secondary housing market for September are published, the forecast is 5.29 million versus 5.34 million in August, which will allow investors to close their positions without emotion. The range of consolidation in current conditions is presented within 1.1432-1.1485.The material has been provided by InstaForex Company - www.instaforex.com.
GBP / USD
Another page in the sad story about Brexit was turned over yesterday by politicians in Europe and England. It was said in it that the extraordinary November EU summit on this issue was canceled due to the lack of progress in the negotiations. Prime Minister Theresa May has officially recognized the postponement of the final date of the country's withdrawal from the EU a few months later. Against this background, the decline in retail sales in England by -0.8% in September against the forecast of -0.4% looked particularly pessimistic. The pound sterling lost 98 points in a day. According to unstable signs, the price on a daily scale stuck below the indicator line of balance, the fall stopped at the nearest support of 1.3015 (the region of the minimum of October 2017). Fixation below the level will open the downside target of 1.2920, at least October of the current year. This level also coincides with the support of the Kruzenshtern line on a daily scale.
There are no reversal patterns warning of a correction on the four-hour chart, but double convergence of the price with the Marlin oscillator is formed in the hour time, which indicates a possible correction, especially on Friday, when investors can take profits.
In the United States today, data on home sales in the secondary market for September are published, the forecast is 5.29 million compared to 5.34 million in August, which may serve as a reason for a moderate correction.The material has been provided by InstaForex Company - www.instaforex.com.
USD / JPY
The yen got into a difficult political and technical situation. On Thursday, British Prime Minister Theresa May reported that the official date of the country's withdrawal from the EU could be postponed a few months later due to the lack of agreement on the deal so far. The US stock index S & P500 sank 1.44%, the British FTSE 100 lost -0.39%. Today, the Japanese Nikkei 225 is down 1.29%. The Chinese market is feeling much better. The Shanghai Composite is falling by only 0.02%, and this despite the fact that economic growth in the 3rd quarter was the weakest in the last 9 years. GDP was 6.5% y / y against the forecast of 6 , 6% y / y and 6.7% in the 2nd quarter. Also, industrial production slowed down stronger than forecast, the August figure was 5.8% y / y against expectations of 6.0% y / y and 6.1% y / y in July. Retail sales increased, the September data showed an increase from 9.0% y / y to 9.2% y / y.
The yen adjusted down from the nested line of the price channel, having lost 44 points yesterday. The issue of price exiting over resistance (112.72), where the daily scale of the Kruzenshtern trend line is also now, is becoming even more uncertain. Formally, the situation on the daily chart is bearish, since the signal line of the Marlin oscillator is in the zone of decline and the price is below the indicator trend line. The balance is biased towards growth (the price is above the balance line), but it is still weak, since even the opening of the day was below this line.
On H4, the Marlin oscillator line is in the growth zone and is fixed above the balance line, but the price is below the trend line, and this line itself is directed downwards. Leaving the price under the minimum of yesterday, which will mean a price reduction under the balance line on both timeframes, will make it possible to consider the level of 110.39 (September 7 minimum) as the immediate goal of the decline. Fixing the price above 112.72 will allow us to switch back to the growth scenario to the resistance of the graphic trend line to the area of 114.68.The material has been provided by InstaForex Company - www.instaforex.com.
Analytical review on Gold, Silver, and oil
According to Silver, we expect further development of the upward trend from October 11 after the breakdown of 14.73. At the moment, the price is in the zone of initial conditions. According to Gold, we are following the development of the ascending structure of September 28 and we expect further uptrend after the breakdown of 1228.50. According to oil, we continue to monitor the downward structure of October 3 and the subsequent movement downwards is expected after the passage by the price of the range of 68.66 - 68.22.
Forecast for October 18:
H1-scale analytical review:
According to Silver, the main key levels on the H1 scale are: 15.13, 14.98, 14.88, 14.73, 14.58, 14.49, 14.43 and 14.34. Here, we continue to monitor the ascending structure of October 11. The continuation of the movement upward is expected after the breakdown of 14.73. In this case, the target is 14.88 and the breakdown of which will allow us to count on the movement towards 14.98, consolidation is near this level. The potential value for the top is considered the level of 15.13, upon reaching which we expect a rollback to the top.
The short-term downward movement is possible in the range of 14.58 - 14.49 and the range of 14.49 - 14.43 is the key support for the top. Its price will lead to the formation of the initial conditions for the downward cycle. In this case, the goal is 14.34.
The main trend is the rising structure of October 11, the zone of initial conditions.
Buy: 14.74 Take profit: 14.87
Buy: 14.89 Take profit: 14.97
Sell: 14.42 Take profit: 14.36
Sell: 14.34 Take profit: 14.22
According to Gold, the main key levels on the H1 scale are: 1245.82, 1235.96, 1228.48, 1224.37, 1213.81, 1208.96 and 1201.07. Here, we are following the development of the ascending cycle of September 28. The movement upwards is expected after the price passes the range of 1224.37 - 1228.48. In this case, the target is 1235.96, consolidation is near this level. The potential value for the top is considered the level of 1245.82, upon reaching which we expect a rollback downwards.
The short-term downward movement is possible in the range of 1213.81 - 1208.96 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 1201.07.
The main trend is the upward cycle of September 28.
Buy: 1228.50 Take profit: 1235.00
Buy: 1237.00 Take profit: 1245.00
Sell: 1213.50 Take profit: 1209.50
Sell: 1208.00 Take profit: 1202.00
According to #Cl, the main key levels on the H1 scale are: 71.84, 71.16, 70.23, 69.52, 68.66, 68.22, 67.13 and 65.90. Here, we are following the downward structure of October 3rd. A downward movement is expected after the price passes the range of 68.66 - 68.22. In this case, the target is 67.13. We consider the potential level for the bottom to be 65.90, upon reaching which we expect a rollback to the top.
The short-term uptrend is possible in the range of 69.52 - 70.23 and the breakdown of the last value will lead to a prolonged correction. Here, the target is 71.16 and the range of 71.16 - 71.84 is the key support for the downward trend. We expect the initial conditions for the upward cycle to reach it.
The main trend is the downward structure of October 3.
The tool serves to determine the key trend. Its confirmation or cancellation by GOLD. Often has the opposite correlation with GOLD.The material has been provided by InstaForex Company - www.instaforex.com.
For the Euro / Dollar currency pair, we are following the downward structure of October 16 and we expect to continue downwards after the breakdown of 1.1425. For the currency pair Pound / Dollar, we are following the descending structure from October 12 and we expect the continuation of the downward movement after the breakdown of 1.3004. For the currency pair Dollar / Franc, the price forms an upward structure of October 15 and the development of which is expected after the breakdown of 0.9975. For the currency pair Dollar / Yen, the price is in correction and forms a potential for the upside, the uptrend development is expected after the breakdown of 112.72. For the currency pair Euro / Yen, we are following the development of a local downward structure of October 17. After the abolition of the ascending structure, the Pound / Yen currency pair is following the downward cycle of October 16.
Forecast for October 19:
Analytical review of H1-scale currency pairs:
For the Euro / Dollar currency pair, the key levels on the H1 scale are: 1.1528, 1.1503, 1.1484, 1.1448, 1.1425, 1.1392 and 1.1370. Here, we are following the downward structure of October 16. The short-term downward movement is possible in the range of 1.1448 - 1.1425 and the breakdown of the latter value will lead to the development of a pronounced movement. Here, the target is 1.1392. The potential value for the bottom is considered the level of 1.1370, after reaching which we expect consolidation, as well as a rollback to the correction.
The short-term upward movement is possible in the range of 1.1484 - 1.1503 and the breakdown of the latter will lead to the development of a protracted correction. Here, the target is 1.1528.
The main trend is the downward structure of October 16.
Buy 1.1484 Take profit: 1.1502
Buy 1.1505 Take profit: 1.1525
Sell: 1.1444 Take profit: 1.1425
Sell: 1.1422 Take profit: 1.1394
For the Pound / Dollar currency pair, the key levels on the H1 scale are: 1.3120, 1.3071, 1.3043, 1.3004, 1.2945, 1.2896 and 1.2830. Here, we are following the development of the downward structure of October 12. We expect the downward movement to continue after the breakdown of 1.3004. In this case, the target is 1.2945 and the breakdown of which will allow us to expect movement to the level of 1.2896, consolidation is near this value. A potential value for the bottom is considered the level of 1.2830, after reaching which we expect a departure to a correction.
The short-term upward movement is possible in the range of 1.3043 - 1.3071 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 1.3120 and this level is the key support for the downward structure.
The main trend is the downward cycle of October 12.
Buy: 1.3043 Take profit: 1.3070
Buy: 1.3074 Take profit: 1.3120
Sell: 1.3002 Take profit: 1.2947
Sell: 1.2943 Take profit: 1.2898
For the Dollar / Franc currency pair, the key levels on the H1 scale are: 1.0030, 1.0007, 0.9975, 0.9960, 0.9934, 0.9918 and 0.9893. Here, we are following the development of the ascending structure of October 15. The passage of the price range will begin the development of an upward trend. In this case, the goal is 1.0007. The potential value for the top is considered the level of 1.0030, after reaching which we expect consolidation, as well as a rollback to the correction.
The short-term downward movement is possible in the range of 0.9934 - 0.9918 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 0.9893 and this level is the key support for the top.
The main trend is the ascending structure of October 15.
Buy: 0.9977 Take profit: 1.0005
Buy: 1.0009 Take profit: 1.0030
Sell: 0.9934 Take profit: 0.9920
Sell: 0.9916 Take profit: 0.9895
For the Dollar / Yen currency pair, the key levels on the scale of H1 are: 113.31, 112.72, 112.38, 111.77, 111.48, 111.02 and 110.38. Here, we are following the downward cycle of October 3. At the moment, the price is in correction and forms the potential for the top of October 15. The short-term downward movement is expected in the range of 111.77 - 111.48. The breakdown of the level of 111.48 will lead to the movement to 111.02, near this level is the consolidation of the price. The potential value for the bottom is considered the level of 110.38, upon reaching which we expect a rollback to the top.
The consolidated movement is possible in the range of 112.38 - 112.72 and the breakdown of the latter value will lead to a prolonged correction. Here, the goal is 113.31 and this level is the key support for the downward structure.
The main trend is the downward cycle of October 3, the stage of correction.
Buy: 112.38 Take profit: 112.70
Buy: 112.75 Take profit: 113.30
Sell: 111.75 Take profit: 111.50
Sell: 111.46 Take profit: 111.04
For the Canadian dollar / Dollar currency pair, the key levels on the H1 scale are: 1.3188, 1.3149, 1.3131, 1.3099, 1.3060, 1.3038, 1.3008, 1.2991 and 1.2959. Here, we are following the development of the ascending structure of October 16. The upward movement is expected after the breakdown of 1.3099. In this case, target is 1.3131 and in the range of 1.3131 - 1.3149 is the consolidation. The potential value for the top is considered the level of 1.3188, after reaching which we expect a departure to a correction.
The short-term downward movement is possible in the range of 1.3060 - 1.3038 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 1.3008 and the range of 1.3008-1.2991 is the key support for the upward structure of October 16. Its price passage will have to develop the downward movement. Here, the target is 1.2959.
The main trend is the ascending structure of October 16.
Buy: 1.3100 Take profit: 1.3130
Buy: 1.3150 Take profit: 1.3186
Sell: 1.3060 Take profit: 1.3040
Sell: 1.3036 Take profit: 1.3010
For the currency pair Australian dollar / Dollar, the key levels on the H1 scale are: 0.7211, 0.7188, 0.7156, 0.7130, 0.7092, 0.7073. Here, the price entered the equilibrium state. The short-term upward movement, as well as consolidation is expected in the range of 0.7130 - 0.7156. The breakdown of the level of 0.7158 should be accompanied by a pronounced upward movement. Here, the target is 0.7188. The potential value for the top is considered to be the level of 0.7211, upon reaching which we expect consolidation.
The price at 0.7092 - 0.7073 will lead to the development of the downward movement. Here, the goal is 0.7040, up to this level we expect registration of the expressed initial conditions for the downward cycle.
The main trend is the equilibrium situation.
Buy: 0.7130 Take profit: 0.7152
Buy: 0.7158 Take profit: 0.7185
Sell: 0.7190 Take profit: 0.7073
Sell: 0.7070 Take profit: 0.7042
For the Euro / Yen currency pair, the key levels on the H1 scale are: 129.42, 129.05, 128.79, 128.35, 128.11, 127.74, 127.54 and 127.07. Here, we are following a small local downward cycle of October 17th. The downward movement is expected after the price passes the range of 128.35 - 128.11. In this case, the goal is 127.74 and in the range of 127.74 - 127.54 is the price consolidation. The potential value for the downward movement is considered the level of 127.07 and the movement to which is expected after the breakdown of 127.50.
The short-term upward movement is possible in the range of 128.79 - 129.05 and the breakdown of the last value will lead to a prolonged correction. Here, the goal is 129.42 and this level is the key support for the downward structure.
The main trend is the local downward cycle of October 17.
Buy: 128.80 Take profit: 129.00
Buy: 129.07 Take profit: 129.40
Sell: 128.10 Take profit: 127.80
Sell: 127.52 Take profit: 127.10
For the Pound / Yen currency pair, the key levels on the H1 scale are: 147.42, 146.92, 146.51, 145.68, 145.20, 144.91 and 144.34. Here, after the abolition of the ascending structure, we are following the downward movement of October 16. The downward movement is expected after the breakdown of 145.68. In this case, the target is 145.20, and in the range of 145.20 - 144.91 is the consolidation. The potential value for the bottom is considered the level of 144.34, after reaching which we expect a rollback to the top.
The short-term upward movement is possible in the range of 146.51 - 146.92 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 147.42 and this level is the key support for the downward structure of October 16.
The main trend is the downward structure of October 16.
Buy: 146.51 Take profit: 146.90
Buy: 146.95 Take profit: 147.40
Sell: 145.65 Take profit: 145.20
Sell: 144.90 Take profit: 144.40The material has been provided by InstaForex Company - www.instaforex.com.
To open long positions on EUR / USD pair, you need:
All hopes for a deal between the EU and the UK during the EU summit did not bring results, which pulled the European currency down. At present, it is best to return to long positions after the formation of a false breakdown in the support area of 1.1456 or to rebound from the low of this month in the area of 1.1434. The main task of buyers is to return and consolidate above the resistance of 1.1482, where the 30-day moving average limits the upward potential.
To open short positions on EUR / USD pair, you need:
Euro sellers are can return after unsuccessful fixing above the resistance of 1.1482. Otherwise, you can open short positions after the test and breakdown of support 1.1456, which will lead to another major wave of sales of the European currency with a minimum of 1.1434 and update it to 1.1397, where profits are recommended. If the EUR / USD pair rises above 1.1482 in the first half of the day, it is possible to open short positions immediately to the rebound from the resistance of 1.1516.
Trade is conducted under the 30- and 50-day average, which indicates a further decline in the euro. The 30-day average will play the role of good resistance.
The lower limit of the Bollinger Bands indicator in the area of 1.1434 will limit the downward potential. The upper limit is at the level of 1.1500, which will limit the upward potential in euros in case of a correction.
Description of indicators
MA (moving average) 50 days - yellow
MA (moving average) 30 days - green
MACD: fast EMA 12, slow EMA 26, SMA 9
Bollinger Bands 20The material has been provided by InstaForex Company - www.instaforex.com.