The markets breathed a sigh of relief, but for how long? (the probability of correction of the EUR/USD pair and the resumption

On Monday, the tension in the market has somewhat subsided after a report by economic adviser of D. Trump, Larry Kudlow that trade negotiations between the US and China are going well and that duties that will be effective in December can be canceled.

This news caused a surge of optimism and an increase in demand for risky assets. In turn, equity markets in Europe and North America received support as well as government bond yields in economically strong countries. The yield on benchmark of 10-year-old treasuries jumped 0.6% from opening at 1.740% to 1.803%. Against this background, the American dollar also received local support, however, it should be recognized that its increase was only temporary.

After some time, following Kudlow, the Secretary of Commerce of the United States, W. Ross, commented on Fox Business, saying that there is a priority to the quality of the trade deal between Washington and Beijing over the terms of its conclusion. At the same time, he added that the agreement may not necessarily be signed in November at the APEC summit, which will be held in Chile on November 16-17, as it should reflect the "right deal".

At present, given the skepticism of Ross, the dollar was under pressure again and its ICE index corrected down, having lost virtually all of its growth.

Moreover, the events yesterday vividly demonstrated how important the events for the market around the US-China trade negotiations and the fermentation process associated with Brexit.

The quotes of gold, which have been stomping on the spot for the second week, have come under pressure in the wake of Kudlow's message, but the lack of details of the negotiation process, as well as Ross' pessimistic words regarding the prospects of the negotiations themselves, have stopped the process of quotation reduction and even at Asian trading led to their local growth.

In general, assessing the current situation in the markets, we believe that the tension in the markets will remain at least until the end of this month, when the Fed will hold a meeting on monetary policy and at least somehow resolve the issue on Brexit.

Forecast of the day:

EUR/USD is trading below the level of 1.1170. We believe that if the price does not rise above this level, there is a possibility of its correction by 1.1100 before the ECB meeting on monetary policy this week.

Gold on the spot continues to remain in the range 1476.80-1496.85 in the wake of the uncertainty surrounding the developments around Brexit and the US-Chinese trade negotiations. However, if the dollar receives support amid rising US Treasuries, and quotes of the "yellow" metal fall below the lower boundary of the range, then the likelihood of falling quotes will increase, first to 1473.50, and then to 1461.90.

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Analysis of EUR / USD and GBP / USD for October 22. European currencies feel great when Boris Johnson suffers defeat.

EUR / USD

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Monday, October 21, ended for the pair EUR / USD with a decrease of 40 basis points. There are new reasons to assume the completion of the construction of the alleged first wave as part of a new upward trend section. If this assumption is true, then the instrument will begin to decline from current positions with targets located near the 23.6% Fibonacci level.

Fundamental component:

The news background for the EUR / USD pair remains weak and ambiguous. On the one hand, the latest Brexit news was supported along with the pound and the euro, but on the other hand, Brexit is more important for the UK, and not for the EU. Thus, an increase in the Euro currency can be regarded as a reaction of the currency market to a whole set of factors, including Brexit, a double reduction of the Fed's key rate, and worsening economic statistics in America. However, this Thursday, the news background may put pressure on the currency of the European Union, as it is difficult to expect actions from the ECB in the current environment aimed at tightening monetary policy. Thus, this moment can coincide with the construction of the correctional wave b. Until Thursday, the market may be completely calm, as the economic calendar news calendar is completely devoid of.

Purchase goals:

1.1208 - 61.8% Fibonacci

1.1286 - 76.4% Fibonacci

Sales goals:

1.0879 - 0.0% Fibonacci

General conclusions and recommendations:

The euro-dollar pair continues to build a new upward set of waves and is supposedly ready to complete wave a, despite a successful attempt to break through the 50.0% Fibonacci level. The breakdown of the level of 50.0% in the opposite direction will indicate the readiness of the instrument to build the wave b.

GBP / USD

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On October 21, the GBP / USD pair gained several basis points, which keeps the current wave marking intact. The proposed wave 3 or C continues its construction, but also has a high chance of completion near the level of 127.2% Fibonacci. At the same time, the news background continues to force the markets to buy exactly the pound, although it would be hard to believe a few months ago. It is the news background that can continue to have a beneficial effect not on the pound-dollar instrument. A successful attempt to break through the level of 127.2% will lead to a new increase in the pair with targets near the Fibonacci level of 161.8%.

Fundamental component:

The news background for the pound-dollar pair continues to remain favorable, since the prospect of a tough Brexit looming on the horizon for a long time is slowly disappearing. Yesterday, the British Parliament inflicted another defeat on Boris Johnson, without even considering considering his option of an agreement with the European Union. According to the Speaker of the House of Commons, Bercow, the deputies "already said everything on Saturday," so it makes no sense to hold a second vote, essentially on the same issue. Thus, it turns out that the markets will now wait for Brussels to respond to Boris Johnson's request to postpone Brexit to January 2020. Most likely, the EU will approve the request, and it's even hard to imagine what will happen next. There may be re-elections to Parliament, if the deputies themselves agree with this proposal of Johnson, a second referendum is also possible as well as a vote of no confidence in Johnson. There are a lot of options. For the pound, only one point matters - the further Brexit without a deal, the more British currency is in demand.

Sales goals:

1.2191 - 0.0% Fibonacci

Purchase goals:

1.2986 - 127.2% Fibonacci

1.3202 - 161.8% Fibonacci

General conclusions and recommendations:

The pound / dollar instrument continues to build an upward trend. However, an unsuccessful attempt to break the level of 1.2986 indicates that the instrument is ready to decline. Since the news background is now at its most importance, the continuation or completion of the construction of wave 3 or B will depend on it. On the contrary, a breakdown of the level of 1.2986 can be regarded as a signal to buy.

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Indicator analysis. Daily review on October 22, 2019 for the EUR / USD currency pair

Trend analysis (Fig. 1).

On Tuesday, the main lower target is to test the support line - 1.1125 (red bold line), although breaking down is unlikely. From this level, there is a good opportunity to work up with the target of 1.1181 - the upper fractal (red dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- indicator analysis - down;

- Fibonacci levels - down;

- volumes - down;

- candlestick analysis - down;

- trend analysis - up;

- Bollinger Lines - up;

- weekly schedule - up.

General conclusion:

On Tuesday, a downward movement is possible.

The first lower target of 1.1125 is the support line (red bold line).

From this level, you can work up with the target of 1.1186 - the upper fractal (red dashed line).

An unlikely scenario is to break down the support line 1.1125 (red bold line) and move down with the target of 1.1066 - a pullback level of 38.2% (red dashed line).

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Trading plan for EUR/USD for October 22, 2019

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Technical outlook:

The EUR/USD pair rallied to yet another peak yesterday (1.1180), taking out another resistance at 1.1165 levels. Looking at the wave structure and a rally between 1.0879 through 1.1180 levels, a meaningful retracement could be on the horizon soon. We have considered the entire boundary that can be retraced since upside seems to be limited to 1.1200 for now. A corrective drop towards the fibonacci support levels is seen as a high probable direction for now. The support zone begins from 1.1064 and extends up to 1.0994, which is between fibonacci 0.382 and 0.618 levels respectively. Further upside from the current price action always remains a possibility but it is safe to remain aside and wait for a corrective drop, before initiating long positions again. The corrective drop could be a flat or zigzag and the first leg is expected to find support around 1.1064 levels at least. We shall update the wave structure as the price action unfolds accordingly.

Trading plan:

Remain flat for now and await for a meaningful corrective drop.

Good luck!

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Technical analysis of ETH/USD for 22/10/2019

Crypto Industry News:

In a recent press release, Bitmain management confirmed that Bitcoin's latest mining farm was launched in Rochdale, Texas. The 33,000-acre site will initially house a 50-megawatt farm, but its total capacity may increase to six-fold to 300 megawatts in the future, says Bitmain. If it reaches these levels, the Texas facility would become the largest mining farm in the world.

"We are excited to launch this facility, which is essential for Bitmain's global expansion plans. Stable and efficient energy resources in Texas are fundamental to the inevitable growth of the cryptocurrency mining industry," said Clinton Brow.

Work began in 2018 on a 25-megawatt project. The operations will be a joint Bitmain and DMG program that will provide hosting and management services on a daily basis.

The announcement occurs at a crucial moment for Bitmain, which is still implementing its IPO in the United States. In 2019, the overall share of Bitmain in the Bitcoin hash rate also decreased. As noted by Christopher Walken, co-founder of the HASHR8 mining startup, Bitmain pools currently account for about 27% of the total. In January this figure was close to 42%.

Technical Market Overview:

After the recent bullish breakout above the short-term trendline resistance, the ETH/USD pair has made a local high at the level of $177.10. Nevertheless, the bears have increased the activity immediately and now are trying to test the breakout from above. Will that be enough to continue a rally higher or is it just another false breakout? The next few hours might give the answer to market participants. Please keep an eye at the level of $163.98 because it is the key short term technical support for bulls.

Weekly Pivot Points:

WR3 - $203.55

WR2 - $195.01

WR1 - $184.09

Weekly Pivot - $175.68

WS1 - $163.10

WS2 - $154.16

WS3 - $142.73

Trading Recommendations:

The best strategy in the current market conditions is to trade with the larger timeframe trend, which is still up. All the shorter timeframe moves are still being treated as a counter-trend correction inside of the uptrend. When the wave 2 corrective cycles are completed, the market might will ready for another impulsive wave up of a higher degree and uptrend continuation.

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