EUR/USD: plan for the European session on January 27. Ifo report will help euro buyers return to the market. Problem with

To open long positions on EURUSD you need:

Euro buyers will expect a return of resistance at 1.1035, which may coincide with the release of the Ifo report on the business environment indicator, providing bulls with confidence after Friday's divergence, which was formed on the MACD indicator. Consolidation above 1.1035 will lead to an upward correction to the area of 1.1063 and 1.1088, where I recommend taking profit. In the event of EUR/USD decline in the morning, and this option is possible only on condition of weak reports, it is best to look at long positions after updating support at 1.1004 or buy immediately on the rebound from the lows 1.0982 and 1.0964.

To open short positions on EURUSD you need:

Despite all the efforts of the bulls, the euro sellers managed to keep the market on their side last Friday. Today, the bears need to keep the pair below the level of 1.1035, and the formation of a false breakout together with the Ifo report will only increase the pressure on the pair, which will maintain a downward trend and lead to an update of the lows 1.1004 and 1.0982, where I recommend taking profit. If market activity in the direction of euro sales does not follow even after weak data from the German institute, then in this case I recommend that you postpone short positions in EUR/USD until an update of resistance at 1.1063 or sell immediately for a rebound from a high of 1.1088.

Signals of indicators:

Moving averages

Trade is conducted below 30 and 50 moving average, which indicates the preservation of the market on the side of sellers.

Bollinger bands

A break of the upper boundary of the indicator in the region of 1.1035 will lead to a sharp increase in the euro, while the downward trend may be limited in the area of the lower level of the indicator in the area of 1.1015.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - Moving Average Convergence / Divergence). Fast EMA period 12. Slow EMA period 26. SMA period 9.
  • Bollinger Bands (Bollinger Bands). Period 20.
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Trading plan on EUR/USD for January 27, 2020. FRS and other important news.

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In the new week, the market will receive a package of important data:

Wednesday, January 29 - the Fed's decision on rates.

Thursday, January 30 - the first report on US GDP for the 4th quarter.

Friday, January 31 - new data on income/expenses and inflation.

All these data can either strengthen the movement of EUR/USD downwards, or stop and reverse it.

EUR/USD: Euro opened the week in a "downward" state - the decline began after the ECB meeting.

Sell: From 1.1070.

In case of a reversal, buy on the break through of 1.1110.

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Technical analysis of ETH/USD for 27/01/2020:

Crypto Industry News:

According to media reports, the rulers of the ruling party in Japan are working on a proposal to release a national digital currency, which seems to be a response to the fear of Chinese digital yuan.

The planned digital yen would be jointly developed by government and private companies and would be in line with many similar initiatives around the world.

A parliamentary group of 70 legislators from the Liberal Democratic Party is working on the proposal. The group plans to submit a proposal to the government in February.

The implementation of the digital yen will take some time due to the late start of Japan. The decision is a fundamental change for the country - representatives of the central bank did not see "demand" for the central currency of the central bank (CBDC) in December 2019.

Facebook Libra's announcement and the Chinese digital yuan forced central banks around the world to consider issuing their own CBDC. This was the main topic of discussion at the panel of the World Economic Forum on January 23.

However, each initiative aims to solve various problems. Libra is primarily offered as a global and trouble-free payment network, and the goal of the digital yuan is to increase China's financial strength, according to former Bank of Japan board member Takahide Kiuchi.

Japanese Finance Minister Taro Aso expressed concerns that the yuan would become a common accounting currency, which might have partly motivated the creation of the Japanese CBDC. However, Kiuchi believes that the main motivation for the Japanese CBDC is the exclusion from the use of cash. As a country that has already introduced negative interest rates, cash flow prevents this policy from expanding further.

Technical Market Overview:

The ETH/USD pair has bounced from the level of 50% of Fibonacci retacement after the low was made at the level of $154.32 and Bullish Engulfing candlestik pattern was made. So far the bulls have managed to test the short-term trendline form below, but no breakout occured just yet. If bulls will sucesfully break through this trendline, then the swing high located at the level of $178.12 might be tested soon. It is worth to keep an eye on the current developings on the Ethereum market, nevertheless, the larger timeframe trend is still down and all the shorter timeframe moves are still being treated as a counter-trend correction inside of the uptrend until the level of $196.61 is cleary broken.

Weekly Pivot Points:

WR3 - $187.66

WR2 - $177.62

WR1 - $172.55

Weekly Pivot - $163.44

WS1 - $158.80

WS2 - $148.63

WS3 - $143.46

Trading Recommendations:

There is a possibility that the wave 2 corrective cycles are completed at the level of $115.05, so the market might be ready for another impulsive wave up of a higher degree and uptrend continuation. This strategy is valid as long as the level of $146.94 is not violated. Nevertheless, the larger timeframe trend is still down and all the shorter timeframe moves are still being treated as a counter-trend correction inside of the uptrend until the level of $196.61 is cleary broken.

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Upcoming week will be full of events and important economic statistics (we expect further decline in EUR/USD and USD/JPY

The coming week will be full of important events, as well as the publication of economic data that will have a direct impact on financial markets.

The most striking event is expected to be the UK's announcement of its withdrawal from the European Union. It is expected that January 31 will be officially announced. It seems that this quite annoying soap opera is finally ending after the three and a half years that have passed since the referendum on the so-called Brexit, as well as the long and difficult confrontation between the parties for the country's exit from the EU and against it. However, it will be difficult to say how the British economy and sterling will feel after that. All the emotional movements in connection with this topic have long since passed. But it's hard to say how the real picture will turn out.

The second most important meeting will be the Fed and the Bank of England on monetary policy, which will be held on Wednesday and Thursday, respectively. From which, in fact, they do not expect anything special, but they can simply confirm the current monetary rates with their decisions, which will either have a supportive effect on the US dollar and the British currency, or not. Thus, everything will depend on the general alignment of forces in the currency exchange markets, where the dollar is currently receiving support against major currencies in the wake of a fall in demand for risky assets due to the Chinese "snake flu" epidemic, or coronavirus. On this wave, there is also an appreciation of the Japanese yen, Swiss franc and gold, which resumed growth again to a local maximum of January 8 of this year.

On the other hand, the publication of the forecast for the US economy from the Congressional Budget Office will be one of the important events this week. This agency faces the challenge of raising funds to pay off America's bloating budget deficit.

From economic data, first of all, it will be necessary to pay attention to the publication of the values of basic orders for durable goods in the States, which are supposed to grow 0.2% in December against a 0.1% decrease in November. You should also pay attention to the data of the Conference Board consumer confidence index. In addition, the values of consumer and industrial inflation in Australia, the report on inflation in Britain and employment data in Germany will attract attention. Of course, you should also pay attention to the press conference of J. Powell and M. Carney and the outgoing figures of US GDP for the 4th quarter of last year and the index of business activity in the manufacturing sector of China, where the indicator is expected to drop to 50 points in January against the December value at 50.2 points.

Forecast of the day:

EUR/USD remains under pressure in the wake of an inarticulate signal from the ECB about the prospects of monetary policy, as well as expectations of Britain's exit from the EU. We believe that the pair still has prospects for continuing the decline to 1.0980 after breaking through the level of 1.1020.

USD/JPY is trading above the level of 108.95. A decrease in risk demand under the influence of fears of the spread of Chinese "snake flu" may continue to put pressure on the pair. We consider it possible to resume its sales after falling below 108.95 with a local target of 108.45.

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Hot forecast for GBP/USD on 01/27/2020 and a trading recommendation

The media once again broke the picture of the day, and forced the market to go against the wind. Despite the fact that preliminary data on business activity indexes in the UK turned out to be significantly better than forecasts, which already predicted the growth of indexes, the pound fell. The reason lies in reports that appeared in a number of media that the Bank of England may well lower the refinancing rate, already at the end of the next meeting. Although more recently, all forecasts have been revised, and even interest rate futures indicate that this will happen no earlier than mid-summer of this year. Nevertheless, given that the information was distributed by quite influential media, investors were seriously worried, and contrary to common sense, they began to actively get rid of the pound.

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At the same time, there were no reasons to weaken the pound, at least before the US session begins. After all, preliminary data on business activity indices, as mentioned above, turned out to be much better than the most daring forecasts. Thus, the index of business activity in the service sector grew from 50.0 to 52.9, with a forecast of 51.0. The index of business activity in the manufacturing sector, which was supposed to grow from 47.5 to 48.9, increased to 49.8. As a result, the composite business activity index grew from 49.3, not to 50.6, but to 52.4. So the pound, at least before the publication of similar data in the United States, was supposed to grow. Well, or at least not to decline. However, another panic organized by the media confused all the cards.

Composite Business Activity Index (UK):

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If we talk about preliminary indices of business activity in the United States, then they are not so unambiguous, although they are more likely to be positive. The index of business activity in the manufacturing sector, which was supposed to grow from 52.4 to 52.5, unexpectedly dropped to 51.7. But the index of business activity in the service sector, which has a much greater weight, rose to 53.2 instead of falling from 52.8 to 52.7. This is what made it possible for the composite business activity index to grow from 52.7 to 53.1. Initially, it was expected to decrease to 52.5. So for good, the pound should slightly grow, and then go back. But everything turned out somewhat differently due to external factors.

Composite Business Activity Index (United States):

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Today, we can even see the continuation of the Friday scenario, although the pound will support the fact of a rather serious and sudden oversold. The assumption that the pound may continue to decline is based on data on approved mortgages, the number of which may decrease from 43.7 thousand to 42.5 thousand. Given the extremely high importance of the condition of the real estate market for the UK's investment attractiveness, at least reasons for growth, the pound simply will not.

Mortgages Approved (UK):

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Another factor that will work against the pound is the expected 0.8% increase in new home sales in the United States. The number of sales should be 725 thousand, against 719 thousand a month earlier.

New Home Sales (United States):

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In terms of technical analysis, we see that alternating stagnation gave way to a sharp rally, where the quote showed volatility exceeding that of the previous day in just a few hours. In fact, the quote again took a downward position, as a result of which it fell to the area of 1.3055, where it all started.

Considering the trading chart in general terms, we see a characteristic amplitude fluctuation [daily chart], where each subsequent measure is less than the previous one, which signals stagnation.

It is likely to assume that the variable support point of 1.3055 will try to temporarily restrain the ardor of sellers, where, against the background of local oversold, stagnation of 1.3040/1.3065 may form. The best tactic is a wait-and-see attitude regarding price consolidation points.

Concretizing all of the above into trading signals:

- Long positions, we consider in case of price consolidation higher than 1.3065.

- Short positions, we consider in case of price consolidation lower than 1.3035-1.3040.

From the point of view of a comprehensive indicator analysis, we see a continuing downward interest due to the recent impulsive move. In fact, hourly and daily periods signal selling, but minute intervals reflect a slowdown, having a variable signal.

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