Bitcoin analysis for December 08, 2017

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Bitcoin (BTC) has been trading downwards. The price tested the level of $13,696. Deutsche Bank has issued a market briefing for 2018. The document, created by Chief International Economist Torsten Slok, lists 30 possible threats that could disrupt global markets next year. Alongside entries like "North Korea" and "Brexit", is bitcoin. Its inclusion shows the extent to which the banking sector is eyeing the revitalized digital currency. While some institutional investors see bitcoin as an opportunity, many more consider it a threat. The technical picture is bullish.

Trading recommendations:

According to the 15M time frame, I found a potential double bottom formation and a broken supply trednline, which is a sign that selling looks risky. I also found a hidden bullish divergence on the moving average oscillator, which is another sign of strength. My advice is to watch for potential buying opportunities.

Support/Resistance

$17,120 – Intraday resistance (price action)

$16,065 – Objective 1

$17,120 – Objective 2

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Global macro overview for 08/12/2017

The volume of British industrial production remained just at the September levels, which was widely expected by the surveyed market participants (consensus: 0.0% m / m). The factory production was just above expectations, which increased its annual dynamics by 1.2 pp up to 3.9%. A slight dose of surprise was provided by net exports, as the trade deficit widened by only GBP 328 million to GBP 10,771. A quite disturbing component turns out to be construction production, which in October recorded a monthly decline of 1.7%. against the expected increase of 0.1%.

The British Pound remains insensitive to the above data, thus expecting new reports related to the Brexit negotiations. Cable in the last few hours has recorded about 60 pips downslide. This fall is behind the headline of Bloomberg, who reports that it is unlikely that a trade agreement between the EU and Great Britain will be reached by March 2019.

Let's now take a look at the GBP/JPY technical picture at the H4 time frame. The bulls were able to push the price higher to the new highs at the level of 153.38, but the market quickly reversed and now is trading just above the technical support at the level of 151.91. The clear bearish divergence between the price and momentum oscillator support the bearish bias as the GBU remains highly sensitive to the Brexit negotiations rumors and news.

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GBP/USD analysis for December 08, 2017

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Recently, the GBP/USD pair has been trading downwards. The price tested the level of 1.3403. According to the 30M time – frame, I found that price broke the pivot level at 1.3426, which is a sign that sellers are in control. I also found a broken upward trendline in the background, which is another sign of weakness. My advice is to watch for potetnial selling opportunities. The downward targets are set at the price of 1.3370 (pivot support 1) and at the price of 1.3260 (pivot support 2).

Resistance levels:

R1: 1.3532

R2: 1.3590

R3: 1.3697

Support levels:

S1: 1.3370

S2: 1.3260

S3: 1.3202

Trading recommendations for today: watch for potential selling opportunities.

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EUR/USD analysis for December 08, 2017

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Recently, the EUR/USD pair has been trading downwards. The price tested the level of 1.1731. According to the 15M time – frame, I found an intraday trading range between the price of 1.1747 and the price of 1.1730. Since the trend is bearish, my advice is to watch for potential breakout of 1.1730 for selling opportunities. The downward targets are set at the price of 1.1715 and at the price of 1.1665.

Resistance levels:

R1: 1.1800

R2: 1.1825

R3: 1.1843

Support levels:

S1: 1.1755

S2: 1.1745

S3: 1.1715

Trading recommendations for today: watch for potential selling opportunities.

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Trading plan for EUR/USD and USDX for December 05, 2017

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Technical outlook:

The EUR/USD pair drops closer to 1.1700 levels, just a few pips away now from the expected levels. The structure still remains intact for bears to continue dropping lower but it is recommended to take profits around the 1.1680/1.1700 levels. Please also note that fibonacci 0.618 support comes in around the same price hence an interim bounce can be expected before the drop may continue. The wave count also suggests that the pair is either carving out a corrective A-B-C drop or it would continue dropping and unfold as an impulse. Please keep the bigger picture in mind that EUR/USD may drop towards 1.14 and lower as well as discussed during early this week. Support comes in around 1.1700 levels, while resistance lies around 1.1850 levels.

Trading plan:

Please remain short and look to take maximum profit at 1.1700 levels.

US Dollar Index chart setups:

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Technical outlook:

The US dollar index is approaching our soft targets defined around 94.10/20 levels as discussed earlier. Please look to take maximum profits around those levels and be prepared for a corrective drop to go long again. Also note that the Fibonacci 0.618 resistance of earlier drop is also passing through 94.10 levels and a temporary bearish reaction is expected there. The wave structure also indicates that the index is carving out an A-B-C corrective rally from 92.50 levels or it is unfolding into a 5 wave impulse. Let us remind to please keep the bigger picture in mind that indicates the US dollar index may be ready to push through 95.00 and higher levels after a corrective drop. Resistance is seen at 94.20 while support lies at 92.50.

Trading plan:

Please remain long and look to take maximum profits around 94.10/20 levels.

Fundamental outlook:

Watch out for US Non farm payrolls coming in at 08:30 am EST

Good luck!

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Intraday technical levels and trading recommendations for NZD/USD for December 8, 2017

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Daily Outlook

A recent bullish breakout above the downtrend line took place on May 22. Since then, the market has been bullish as depicted on the chart.

This resulted in a quick advance towards the next price zones around 0.7150-0.7230 (the key zone) and 0.7310-0.7380 which was temporarily breached to the upside.

Recent bearish pullback was executed towards the price zone of 0.7310-0.7380 (newly-established demand zone) which failed to offer enough bullish support for the NZD/USD pair.

Re-consolidation below the price level of 0.7300 enhanced the bearish side of the market. This brought the NZD/USD pair again towards 0.7230-0.7150 (the key zone) which failed to pause the ongoing bearish momentum.

An atypical Head and Shoulders pattern was expressed on the depicted chart which initiated bearish reversal.

As expected, the price level of 0.7050 failed to offer enough bullish support for the NZD/USD pair. That's why, further bearish decline was expected towards 0.6800 (Reversal pattern bearish target).

Evident signs of bullish recovery were expressed around the recent low (0.6780). That's why, a bullish pullback was expected towards 0.7050.

On the other hand, an inverted Head and Shoulders pattern is being established on the chart indicating bullish reversal.

That's why, the price zone of 0.6800-0.6830 can be considered for a short-term BUY entry. S/L should be placed below 0.6770. T/P level remains projected towards 0.7050.

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Intraday technical levels and trading recommendations for EUR/USD for December 8, 2017

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Monthly Outlook

In January 2015, the EUR/USD pair moved below the major demand levels near 1.2050-1.2100 (multiple previous bottoms set in July 2012 and June 2010). Hence, a long-term bearish target was projected toward 0.9450.

In March 2015, EUR/USD bears challenged the monthly demand level around 1.0500, which had been previously reached in August 1997.

In the longer term, the level of 0.9450 remains a projected target if any monthly candlestick achieves bearish closure below the depicted monthly demand level of 1.0500.

However, the EUR/USD pair had been trapped within the depicted consolidation range (1.0500-1.1450) until the current bullish breakout was executed above 1.1450.

The current bullish breakout above 1.1450 allowed a quick advance towards 1.2100 where the recent evidence of bearish rejection was expressed (note the previous monthly candlestick of September).

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Daily Outlook

In January 2017, the previous downtrend was reversed when the Inverted Head and Shoulders pattern was established around 1.0500. Since then, evident bullish momentum has been expressed on the chart.

As anticipated, the ongoing bullish momentum allowed the EUR/USD pair to pursue a further advance towards 1.1415-1.1520 (previous daily supply zone).

The daily supply zone failed to pause the ongoing bullish momentum. Instead, an evident bullish breakout was expressed towards the price level of 1.2100 where the depicted Head and Shoulders reversal pattern was expressed.

If the recent bearish breakout persists below 1.1700 (the neckline of the reversal pattern), a quick decline should be expected towards the price zone of 1.1415-1.1520 (initial targets for the depicted H&S pattern).

Bearish target for the depicted Head and Shoulders pattern extends towards 1.1350. However, to pursue towards the mentioned target level, significant bearish pressure is needed to be applied against the mentioned zone (1.1415-1.1520).

However, the recent price action around the zone of 1.1520-1.1415 indicated evident bullish recovery. This hinders further bearish decline as long as the recent low around 1.1550 remains unbroken.

Trade Recommendations

The price levels around 1.1900-1.1950 were suggested for a valid short-term SELL entry. It's already running in profits.

S/L should be lowered to 1.1870 to secure some of the profits. T/P levels to be located at 1.1700 and 1.1590.

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Global macro overview for 08/12/2017

Partial data from the US labor market indicates a solid pace of employment growth in November. The unemployment rate at 4.1 % is already at the level that the Fed forecasts for the next two years, so a further drop will be an argument for more hawkish comments. However, the salary growth remains the most important factor, where expectations are high. However, the sensitivity of the US Dollar will be higher in case of a weaker reading.

In October, non-farm payrolls (NFP) employment increased by as much as 261,000, reflecting recovery after weak data in September, when the effects of hurricanes in the southern US regions disturbed statistics. The data coming in November suggests that the strong posture of the labor market has been sustained. Employment rates in the Fed branch index of Philadelphia or ISM indices remain high. The ADP report published on Wednesday pointed to a solid increase of 190,000 jobs in the private sector. Hence the consensus for NFP is set high, at 195,000.

The sensitivity of the market to employment data remains low, as the healthy growth rate of jobs has been maintained for many months. Signs of a slowdown (ie: a reading closer to 150,000) will not be a big disappointment, as at this stage of the business cycle, there will be justified signs of inhibition caused by difficulties in finding a qualified workforce. Higher values (above 250,000) will be more important if the reduction in the unemployment rate translates into an effect. In October, the index fell to 4.1% from 4.2% in September. Descent to 4.0% would mean that the unemployment rate is already below FOMC forecasts for 2018-2019. The scenario of two or three increases in the Fed's interest rates in 2018 would be more likely. For USD it would be a positive impulse, so it is likely to appreciate further across the board.

The stronger-than-forecast wage growth will have a clear positive impact on USD regardless of the NFP indications and the unemployment rate, as it will provide arguments for the hawks in the Fed that wage pressure in the economy is intensifying and will soon be reflected in the acceleration of inflation. In this case, the data will be the foundation for building expectations of maintaining the Fed's hawkish bias at the next week's meeting with the prospect of three hikes in 2018.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The nearest technical support is seen at the level of 1.1713 as the price is moving down in a parallel channel. If the NFP Payrolls data will be better than expected, then the price might slide even lower towards the level of 1.1691 and even 1.1622. If the NFP Payrolls data will be worse than expected, the market might reverse and quickly cover the lost ground to hit the technical resistance at the level of 1.1807 and head even higher to 1.1941.

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Bitcoin analysis for 08/12/2017

The British State Treasury is planning to introduce regulations on Bitcoin and other cryptocurrencies. The agency is increasingly concerned about the possibility of using digital currencies in illegal activities, such as money laundering and tax evasion, due to their increasing popularity.

According to the planned legislation, which is to cover the entire European Union, cryptocurrency traders will be forced to disclose their identity and report any suspicious activities. Such a move by the UK government may cause confusion among industry players, as most of the stock exchanges in the country are already in line with existing customer-awareness regulations (KML) and money laundering laws (AML).

The proposed regulation can be implemented by the British Government immediately due to the rapidly growing digital currency market in the country. The constant increase in their prices on the market, in particular Bitcoin, which attracted many people, may encourage further investment. The constant lack of applicable regulations regulating the trade and use of cryptocurrencies may cause the degree of risk to increase.

According to the spokesman of the British Ministry of the Treasury, a new regulation on cryptocurrencies may be implemented by the end of 2018. However, the date of introduction of the regulation may be changed, and the details of the proposed regulations are not yet specified. It is also expected that in the near future more regulations related to digital currencies will be introduced in various EU countries.

Let's now take a look at the Bitcoin technical picture at the H4 time frame. The price has made a new all-time high at the level of $16,628 and now the internal corrective cycle is in progress. The local support at the level of $14,066 holds the line very well so far. From the Elliott Wave Theory point of view, there is still one more wave to the upside missing - wave (v). No indication of an uptrend change so far.

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Trading plan for 08/12/2017

In the foreground, there was a substantial growth of imports (17.7% y/y, consensus: 13.0%), which proves the high demand of Chinese producers for goods used in production processes. The export volume was also surprising, as from year to year it recorded as much as 12.3 percent jump. The scale of surprise clearly reflects deviation from market expectations, which just before the publication were at a modest level of 5.3 percent. At present, Tokyo's Nikkei 225 and Hong Kong's Hang Seng gain 1.4% from yesterday's close and 1.2% respectively. The Shanghai Composite Index (0.7%) is slightly less impressive, whose potential increase is trying hard to limit the companies from the banking sector.

On Friday 8th of December, the main event of the day is the US jobs data release including NFP Payrolls, Average Hourly Earnings, Unemployment Rate and Participation Rate. Besides this data, market participants will keep an eye on the UK Industrial Production and Visible Trade Balance.

GBP/USD analysis for 08/12/2017:

The end of the week on the currency market will not be particularly lazy. The name of the most important event of the Friday session is NFP Payrolls data (198k expected, 261k prior). The incoming "soft-data" clearly gives optimism before the latest estimates of the employment changes, thus increasing the likelihood of the unemployment rate dropping to around the level of 4.0%. The most interesting cards should be handed out to the pound sterling, which for a fraction of a second has become a beneficiary of a breakthrough in the Brexit negotiations.

Let's now take a look at the GBP/USD technical picture at the H4 time frame. The price has bounced from the lower channel line that corresponds to the technical support at the level of 1.3321. The oversold market conditions helped bulls to reach back the 78% Fibo at the level of 1.3521, but no new high has been made yet. The key level for bulls remains at the level of 1.3551.

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Market Snapshot: USD/JPY breaks above the resistance

The price of USD/JPY has broken above the 61% Fibo at the level of 113.24 and hit the technical resistance at the level of 113.44. The next target for the bulls is 78% Fibo at the level of 113.90. The strong momentum supports the temporary bullish outlook.

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Market Snapshot: Gold has fallen even deeper

The price of gold has violated another technical support and felt as low as $1,243 in extremely oversold market conditions. Currently, the nearest technical resistance is seen at the level of $1,251 - $1,254 and due to the oversold markets conditions the bounce might occur anytime soon.

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Ichimoku indicator analysis of USDX for December 8, 2017

The Dollar index continues higher as expected but we could see a pull back towards 93 today or Monday. Trend remains short-term bullish. We could see a short-term pullback for a higher low before the continuation of the bigger bounce higher towards 96.

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Black lines - bullish channel

The Dollar index is testing upper channel boundary resistance. Trend is bullish. We could see a pullback towards cloud support at 93.40-93 but overall I believe we have started our next leg up towards 96. Important support is at 93 by the Ichimoku cloud. Bulls do not want to see this level broken downwards.

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The weekly candle remains bullish as price is at its weekly highs. Price has started the reversal from last week off the 61.8% Fibonacci retracement as expected. The Dollar index is approaching important weekly resistance at 93.85-94.40. A break higher will confirm our view for a move towards 96. However I do not believe the move will reach the target straight away.The material has been provided by InstaForex Company - www.instaforex.com

Ichimoku indicator analysis of gold for December 8, 2017

Gold price remains in a bearish trend and moving lower still. Price has reached our target area but we could see a strong bounce today after the NFP announcement. I do not prefer to remain short at current levels.

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Gold has made an equal extension downwards to the first leg down from $1,297. Gold price remains in a bearish trend in the short-term. Gold price has resistance at $1,254 and next at $1,260. Gold could bounce today after the NFP.

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On a weekly basis Gold price has reached our target of the upper Kumo (cloud) boundary at $1,247. Gold price should bounce strongly from current levels. For a new upward move to be confirmed, Gold price must close on a weekly basis above $1,290.The material has been provided by InstaForex Company - www.instaforex.com

Burning Forecast 08/12/2017

Burning Forecast 08/12/2017

EURUSD: Buy with a spread from 1.1815

In the center of attention - the report on employment in the USA today at 12.30 London time

We expect strong data, in this case, it is likely that the euro will continue to move downwards - hold positions for selling, but we can sell only from the rollback.

It is, however, possible to reverse the scenario - in the event of an unexpectedly weak data.

In this case: Buy for a breakdown upwards at 1.1815, stop-loss at 1.1770, target of 1.1915.

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Elliott wave analysis of EUR/NZD for December 8, 2017

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Wave summary:

We continue to look for renewed downside pressure towards at least 1.7077 and below will call for a decline to 1.7000. Short-term resistance is seen at 1.7265, which we expected will cap the upside, but in the case of a break above here, backup resistance is seen at 1.7308.

R2: 1.7308

R2: 1.7265

Pivot: 1.7195

S1: 1.7155

S2: 1.7100

S3: 1.7077

Trading recommendation:

We will sell here at 1.7200 with our stop placed at 1.7275.

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Elliott wave analysis of EUR/JPY for December 8, 2017

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Wave summary:

EUR/JPY is currently testing resistance near 133.35, which we expect will be able to cap the upside for renewed downside pressure towards 132.21 and below here will add downside pressure towards important support at 131.14, that needs to be broken to confirm that wave (D) has completed and wave (E) lower to the ideal target at 123.43 is developing.

R3: 133.75

R2: 133.50

R1: 133.35

Pivot: 133.08

S1: 132.67

S2: 132.31

S1: 131.67

Trading recommendation:

We are short EUR from 133.75 with our stop at break-even.

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Technical analysis of EUR/USD for Dec 08, 2017

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When the European market opens, some Economic Data will be released, such as French Industrial Production m/m, French Gov Budget Balance, and German Trade Balance. The US will release the Economic Data, too, such as Prelim UoM Inflation Expectations, Final Wholesale Inventories m/m, Prelim UoM Consumer Sentiment, Unemployment Rate, Non-Farm Employment Change, and Average Hourly Earnings m/m, so, amid the reports, EUR/USD will move in a medium to high volatility during this day.

TODAY'S TECHNICAL LEVEL:

Breakout BUY Level: 1.1823.

Strong Resistance:1.1816.

Original Resistance: 1.1805.

Inner Sell Area: 1.1794.

Target Inner Area: 1.1766.

Inner Buy Area: 1.1738.

Original Support: 1.1727.

Strong Support: 1.1716.

Breakout SELL Level: 1.1709.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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Technical analysis of USD/JPY for Dec 08, 2017

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In Asia, Japan will release the Economy Watchers Sentiment, Average Cash Earnings y/y, Final GDP Price Index y/y, Current Account, Bank Lending y/y, and Final GDP q/q data, and the US will release some Economic Data, such as Prelim UoM Inflation Expectations, Final Wholesale Inventories m/m, Prelim UoM Consumer Sentiment, Unemployment Rate, Non-Farm Employment Change, and Average Hourly Earnings m/m. So, there is a probability the USD/JPY will move with a medium to high volatility during this day.

TODAY'S TECHNICAL LEVEL:

Resistance. 3: 113.92.

Resistance. 2: 113.70.

Resistance. 1: 113.48.

Support. 1: 113.20.

Support. 2: 112.98.

Support. 3: 112.76.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of NZD/USD for December 08, 2017

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Overview:

  • The resistance levels are seen at the price of 0.6880 and 0.6895. The level of 0.6944 represents the double top on the H4 char. Also, it should be noticed that the NZD/USD pair has fallen below 0.6944 hours after hitting a new all-time high in December. The pair has already formed minor resistance at 0.6895 and the strong resistance is seen at the level of 0.6944 because it represents the weekly resistance 1. Hence, major resistance is seen at 0.6944, while immediate support is found at 0.6831. If the pair hits below the price of 0.6831, the NZD/USD pair may resume its movement to 0.6816 to test the daily support 2. Consequently, the NZD/USD pair is trying to test a major resistance level and it remains to be seen whether bulls have enough power to push for new highs in coming hours. The NZD/USD pair to move between the levels of 0.6940 and 0.6816. The RSI is still calling for a strong bearish market. The current price is also below the moving average 100. As a result, sell below the price of 0.6940 with targets at 0.6831 and 0.6816. However, stop loss should always be taken into account; accordingly, it will be useful to set the stop loss above the last bullish wave at the level of 0.6963.
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Technical analysis of USD/CHF for December 08, 2017

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Overview:

  • The Swissy (Franc) hit the new high at the level of 0.9950. Also, it should be noted that the USD/CHF pair is down more than 20 pips after hitting a new high. The USD/CHF pair continues to move upwards from the level of 0.9806. Yesterday, the pair rose from the level of 0.9806 to the top around the area of 0.9921 (pivot). Today, the first resistance level is seen at 0.9972 followed by 1.0037, while daily support 1 is seen at 0.9886. According to the previous events, the USD/CHF pair is still moving between the levels of 0.9886 and 1.0037; for that, we expect a range of 151 pips (1.0037 - 0.9886) in coming hours. If the USD/CHF pair fails to break through the support level of 0.9886, the market will rise further to 0.9972. This would suggest a bullish market because the RSI indicator is still in a positive area and does not show any trend-reversal signs. The pair is expected to climb higher towards at least 1.0037 with a view to testing the double top. On the contrary, if a breakout takes place at the support level of 0.9890, then this scenario may become invalidated.
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USD/JPY profit target reached perfectly, prepare to sell

The price has shot up and reached our profit target. We look to sell below 113.20 resistance (Fibonacci retracement, Fibonacci extension, horizontal overlap resistance) for a push down to at least 112.04 support (Fibonacci retracement, horizontal overlap support).

Stochastic (34,3,1) is seeing major resistance at 97% where we expect a corresponding drop from.

Sell below 113.20. Stop loss is at 113.61. Take profit is at 112.04.

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USD/CAD right on resistance, remain bearish

The price has shot up and reached our profit target perfectly. We prepare to sell on major resistance at 1.2859 (Fibonacci extension, Fibonacci retracement, horizontal overlap resistance) for a push down to at least 1.2708 support (Fibonacci retracement, horizontal pullback support).

Stochastic (34,3,1) is seeing major resistance at 98% where we expect a corresponding drop from.

Sell below 1.2859. Stop loss is at 1.2900. Take profit is at 1.2708.

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Daily analysis of major pairs for December 8, 2017

EUR/USD: A "sell" signal has been generated on the EUR/USD; owing to the perpetual bearish movement that has been witnessed since the beginning of this week. The EMA 11 has crossed the EMA 56 to the downside and the Williams' % Range period 20 is in the oversold region. Price is expected to journey further downwards towards the support lines at 1.1750 and 1.1700, today or early next week.

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USD/CHF: Since the gap-up that was seen at the beginning of this week, this currency trading instrument has gone upwards by 140 pips. Price is now approaching the resistance level at 0.9950, and it would soon breach it to the upside as it targets another resistance level at 1.0000, which is the ultimate target (a psychological level).

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GBP/USD: There is a "buy" signal on the GBP/USD, as the price went upwards on Thursday, creating that buy signal. There is a Bullish Confirmation Pattern in the 4-hour chart, which means the price could go towards the distribution territories at 133.50, 134.00 and 134.50 today or early next week.

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USD/JPY: This market has gone upwards, and that has led to a bullish bias in the market, as the price has gone markedly upwards. The EMA 11 is above the EMA 56, and the RSI period 14 is above the level 50. Further northwards journey is a possibility, and it is not logical to seek short trades now.

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EUR/JPY: It might be prudent to stay away from this cross, since the recent bearish signal that was generated on it has been rendered ineffectual by the price action of December 7. In fact, there is no clear directional bias at the present. The market is quite choppy – but a clean perpetual movement would soon help create a direction in the market.

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Daily analysis of USDX for December 08, 2017

USDX is extending the recovery phase above the resistance level of 93.60 and it's now targeting the 94.00 psychological zone. Fractals have been formed between Tuesday and Wednesday sessions and it's an indicator that the index could remain supported in order to reach the critical level mentioned above. MACD indicator is entering the neutral territory.

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H1 chart's resistance levels: 93.60 / 93.98

H1 chart's support levels: 92.70 / 91.85

Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the USD Index breaks with a bearish candlestick; the support level is at 92.70, take profit is at 91.85 and stop loss is at 93.53.

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Daily analysis of GBP/USD for December 08, 2017

GBP/USD remains in a bearish corrective move below the 200 SMA at H1 chart and the closest support lies at 1.3303. If the pair manages to break it, then we would expect another leg lower to test November 28th lows around 1.3228. However, if it manages to break Wednesday's highs, the next hurdle should be the 1.3541 level.

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H1 chart's resistance levels: 1.3417 / 1.3541

H1 chart's support levels: 1.3303 / 1.3228

Trading recommendations for today: Based on the H1 chart, buy (long) orders only if the GBP/USD pair breaks a bullish candlestick; the resistance level is at 1.3417, take profit is at 1.3541 and stop loss is at 1.3298.

The material has been provided by InstaForex Company - www.instaforex.com

Euro and pound take a pause

Eurozone

The first signs of a decline in activity in the eurozone increase the chances of a reversal in the main currency pair in favor of the dollar.

The confidence index of Sentix investors decreased in December to 31.1 points, which is lower than the forecast of 33.6 points and lower than the level of November reading of 34 points. Activity is still at a record high, but there are not enough objective factors to support growth. PMI indexes from Markit for November in the sector of services and manufacturing were respectively 56.2p and 57.5p, which corresponded to the forecasts and the result of October. Activity, therefore, is still high, but growth has stopped.

Producer price growth slowed to 2.5% in October against 2.8% a month earlier, retail sales in November decreased by 1.1%, and annual growth was only 0.4%, which is clearly not enough to rely on consumer spending growth and as a consequence - increase in inflation.

Inflation remains below the target, but the ECB believes that inflation will continue to grow, but many observers note that there are few objective prerequisites for the growth of consumer prices. Danske Bank believes that the core inflation in 2018 will not exceed 1.1% and this point of view is shared by many.

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On December 14, the ECB meeting on monetary policy will take place. Until recently, the mood was quite optimistic, with players expecting the ECB will announce a more aggressive exit from soft monetary policy. However, a deterioration in the overall picture with consumer demand increases the likelihood of more cautious forecasts. Upping the rate in the next year's perspective is not expected, which automatically indicates an increase in the yield spread in favor of the dollar.

The probability of returning EURUSD to 1.20 looks idealistic at the current moment. A more reasonable scenario is the decline to the November low at 1.1550, followed by its update and a move to 1.14 over the medium term. The dynamics of the euro will depend on the publication on Friday of the report on employment in the US, expectations on which are optimistic and do not contribute to the return of bullish sentiment on the euro.

United Kingdom

Business activity in the services sector of the UK declined in November to 53.8p against 55.6p a month earlier, and this is well below the forecasts of 55.0p.

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Economic growth in the country is slowing, and the UK is among the group with the weakest GDP growth among EC28. The reason was voiced repeatedly - high inflation combined with low growth rates of average wages lead to a decrease in consumption, which is the main engine of economic growth. Exit from this situation is not visible in the short term, and therefore the forecast for GDP growth rates remains unfavorable. The Bank of England sees it at 1.5% in 2018, which is clearly not enough for sustainable development.

The development of the Brexit situation is far from ideal, much will depend on whether it will be possible to reach a consensus on the first phase of negotiations before the EU summit on December 14.

The Bank of England is unlikely to raise interest rates further in the foreseeable future, which worsens the pound's position relative to the US dollar. The highs set in September at 1.3656 is highly unlikely to be updated in the medium term, the pound will seek a strong support line of 1.30, and most likely it will not stand.

Oil

Oil dropped significantly on Wednesday, Brent lost 2.5%, losing the driver for growth. The first sign of the approaching correction was the report of the US Energy Ministry, which reported an increase in production of 9.707 million barrels per day, as well as the record reserves of gasoline, which indicates a reduction in demand.

The decline did not lead to panic, as the correction after the OPEC+ meeting was expected, and now oil will spend some time in the lateral range until new drivers are developed.

The material has been provided by InstaForex Company - www.instaforex.com