Technical analysis and trading recommendations for the EUR / USD currency pair as of May 18, 2018

In the previous review, we discussed that the "bearish" interest is preserved and the quotation managed to overcome the local minimum from May 9 (1.1821), then after it, working out, according to the principle, the breakout breakdown. Now, we see how it gradually falls below our previously formed breakdown of 1.1762, while maintaining a "bearish" interest. It is possible to assume that the quotation will continue to show a downward mood, where the "last" hope of buyers remains the range level of 1.1700 / 1.1650.

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Trading plan for the US session on May 18 EUR / USD

To open long positions for EUR / USD, you need:

To buy the euro in the second half of the day, it is best to return after updating the lows of the month around 1.1765 and forming a false breakdown there, or to rebound from the support level of 1.1745. The main task of buyers will be to return to the resistance level of 1.1808, which will allow us to expect a larger upward correction to the area of 1.1805.

To open short positions for EUR / USD, you need:

While the trade is below 1.1808, the pressure on the euro will continue, and an unsuccessful attempt to consolidate above this range will serve as a good signal for the opening of short positions, with a view to reducing the month to the low of 1.1765 and updating it in areas 1.1742 and 1.1710, where I recommend fixing the profits. Otherwise, you can sell the euro on a rebound from 1.1850.

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Description of indicators

MA (average sliding) 50 days - yellow

MA (average sliding) 30 days - green

MACD: fast EMA 12, slow EMA 26, SMA

Bollinger Bands 20

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Trading plan for the US session on May 18 GBP / USD

To open long positions for GBP / USD, you need:

Consider buying pound is best after updating the lower boundary of the side channel in the area of 1.3454 or after returning and fixing at morning resistance level of 1.3523, which opens a direct road to the upper boundary of 1.3563, where I recommend fixing the profits.

To open short positions for GBP / USD, you need:

While the trade is below the morning resistance level of 1.3523, the pressure on the pound will be maintained, which will lead to the support of 1.3454, and then to the descent into the region of new lows of 1.3410 and 1.3366, where I recommend fixing the profits. In the case of a GBP / USD return to the resistance level of 1.3523, pound sales are best sought for a rebound from 1.3563 area.

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Description of indicators

MA (average sliding) 50 days - yellow

MA (average sliding) 30 days - green

MACD: fast EMA 12, slow EMA 26, SMA

Bollinger Bands 20

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

Euro received a black mark from Italy

The growth in yields on Treasury bonds, impressed by the strong statistics on US retail sales, the slowdown of the European economy led by Germany in the first quarter and the escalation of political risks after the creation of the coalition in Italy have become the catalysts for the EUR / USD collapse to the lowest level since December. Euro at the end of spring lost all key drivers, which allowed it to strengthen in 2017 against the US dollar by 14%. Then it was about the rapid growth of the European economy, rumors about the normalization of monetary policy, the defeat of eurosceptics in the Netherlands and France, as well as the inflow of capital into the financial markets of the Old World. About a year after the victory of Emmanuel Macron in the presidential election, EUR / USD traded 10 figures higher, but the situation is more like the beginning of 2017. This means that the risks of correction are growing.

Italy, with its unexpectedly formed coalition of "Five Star" and the League has become the catalyst for the collapse of the euro. In the tabloids, there was information that in the preliminary agreement between the parties there was a specific mechanism for leaving the republic from the eurozone and returning to its currency sovereignty. In addition, Rome was going to ask the ECB to write off debts worth € 250 billion. The European Central Bank purchased Italian bonds in the QE implementation process, and the coalition allegedly would refuse to repay them. In the document presented to the general public, these provisions were not found, but the emphasis of the future government on tax cuts and expansion of social spending indicates that it was decided to disregard the methods of fiscal consolidation in favor of economic growth.

Uncertainty about the integrity of the euro area and the violation of EU principles contributes to the flight of capital from the Italian securities markets. The yield of local bonds is growing, their differentials with German counterparts are expanding, which, on the one hand, indicates an increase in political risks, on the other, pushes the quotes of EUR / USD to the south.

Dynamics of EUR / USD and yield differentials of bonds between Italy and Germany

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Everyone perfectly remembers the turmoil that rumors of a large-scale trade war brought to the market. The eurozone with its more than 40% share of exports to GDP is much more sensitive to them than the US and China, which have half the figures. Thus, the escalation of political risks in Italy could change the ECB's planned economic recovery times for the currency block and move the date of completion of the QE and raising the rates for a later period. The Fed, on the contrary, intends to aggressively tighten monetary and credit policy. This is evidenced by an increase in the probability of four increases in the federal funds rate in 2018 from 39% to 52%. The divergence is a powerful trump card in the hands of the "bears" in EUR / USD.

Technically continues the implementation of the pattern "Crab" with a target of 161.8%. It corresponds to 1.15. A necessary condition for the continuation of the southern campaign is a successful assault on 1.176 (78.6% Fibonacci of the last ascending wave).

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Wave analysis of the USD / JPY currency pair for May 18, 2018

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Analysis of wave counting:

In general, it is expected that during the yesterday's trading, the currency pair USD / JPY continued to develop the upward movement and stopped at the level of 110.85 in the afternoon. Thus, we can assume that the currency pair remained in the formation stage somewhat complicating its wave structure of the wave 5, a, 4, C, C, (B). If this is so, then working off the level of the 111th figure can lead to a price turn against the dollar and the beginning of the formation of the future wave b, 4, C, C, (B).

The objectives for the option with purchases:

111.00

111.59 - 76.4% of Fibonacci

The objectives for the option with sales:

109.18 - 50.0% of Fibonacci

108.10 - 38.2% of Fibonacci

General conclusions and trading recommendations:

The upward wave 4, C, C, (B) continues its construction, complicating the internal wave structure. Thus, I recommend buying a pair with targets that are about 111 figures and an estimated level of 111.59, which is equivalent to 76.4% of Fibonacci. I recommend to go back to sales after the completion of wave 4, which can be determined, for example, on the output of the tool from the upward corridor. The MACD divergence warns of the readiness to build a downward set of waves in the near future.

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Wave analysis of the USD / CHF currency pair for May 18, 2018

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Analysis of wave counting:

Despite the existing prerequisites, during the yesterday's trading, the currency pair USD / CHF was not able to determine the direction of the movement, remaining until the end of the day within a narrow price range near the level of price parity. At the same time, it seems that the currency pair will still complicate the wave c, B, (2), A, (B), giving it the appearance of a full five-wave structure. If this is so, then after the completion of the formation of the wave 4, c, B, (2), A, (B), the currency pair may resume the growth of quotations, at least to the level of 1.0100.

The objectives for the option with purchases:

1.0064 - 76.4% of Fibonacci

1.0100 - 1.0150

The objectives for the option with sales:

0.9896 - 61.8% of Fibonacci

0.9761 - 50.0% of Fibonacci

General conclusions and trading recommendations:

The currency pair can complicate the wave c, c, B, (2), A, (B), but now there are no signs of renewing its construction yet. Thus, I recommend now to sell the pair with targets near the estimated mark of 0.9896, which is equivalent to 61.8% of Fibonacci, within the first wave of the future wave 1, C, (2), A, (B). I recommend to return to the pair purchases in case of a successful attempt to break through the level of 1.0064, which corresponds to 76.4% of Fibonacci, with targets in the range of 1.0100 - 1.0150, which will be confirmed by the resumption of the construction of wave B, (2), A, (B).

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Wave analysis of the GBP / USD currency pair for May 18, 2018

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Analysis of wave counting:

During the yesterday's trading, the GBP / USD currency pair could not determine the direction of the movement, remaining until the end of the day within a fairly narrow price range near the level of the 35th figure. The resulting wave situation still allows us to assume that the currency pair continued to make attempts to complete the formation of the wave 5, c, b, B, C, C, (A). At the same time, a somewhat prolonged pause may trigger the resumption of the decline in quotations to 1.3335 and further complicate the internal wave structure of wave c, b, B, C, C, (A).

The objectives for the option with purchases:

1.3647 - 76.4% of Fibonacci

1.3700

The objectives for the option with sales:

1.3459 - 100.0% of Fibonacci

1.3334 - 127.2% of Fibonacci

General conclusions and trading recommendations:

The tool continues to complicate the wave structure of the wave c, b, B, C, C, (A). Now, I recommend to remain in sales with targets that are near the estimated marks of 1.3459 and 1.3334, which corresponds to 100.0% and 127.2% of Fibonacci. An unsuccessful attempt to break through the 1.3334 mark will warn of the readiness of the instrument to build a wave c, B, C, C, (A) with the first targets located around 37 and 38 figures, but there are no signs of starting its construction now.

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Wave analysis of the EUR / USD currency pair for May 18, 2018

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Analysis of wave counting:

After falling to 1.1760 the previous day, during the yesterday's trading, the currency pair EUR / USD took a pause and spent the whole past day in the range near the level of the 18th figure. In this case, the wave c, c, b, (C) has retained the form of a completely completed five-wave structure. If this is the case, then from the low already reached on Wednesday, the currency pair can execute a turn against the dollar and resume the formation of the main upward trend. At the same time, the probability of even more complicating the internal wave structure of the entire wave c, c, c, c, (C) still persists, with the prospect of lowering the quotations at least to the level of 1.1675.

The objectives for the option with sales:

1.1674 - 200.0% of Fibonacci

1.1600

The objectives for the option with purchases:

1.2000 - 1.2200

General conclusions and trading recommendations:

The assumed wave c, B, (C) continues its construction and may become even more complicated. Thus, I recommend selling the pair with targets located near the calculated mark of 1.1674, which corresponds to 200.0% of Fibonacci. The divergence of the MACD warns of the readiness of the instrument to move away from the reached minimum, possibly within the framework of the beginning of the wave d, B, (C).

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Indicator analysis. The daily review of the currency pair GBP / USD for May 18, 2018

Trend analysis (Figure 1).

On Thursday, the price worked out the top in the side channel. On Friday, the market can start moving up, with the first target of 1.3584, a pullback level of 14.6% (yellow dotted line). The complex analysis will more accurately tell where the price will go.

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Fig. 2 (daily chart).

Complex analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - upwards;

- Candle analysis - neutral;

- Trend analysis - down;

- Bollinger lines - up;

- Weekly schedule - down.

General conclusion:

On Friday, on the GBP / USD pair, the upward movement with the first target of 1.3584 is the pullback level of 14.6% (yellow dotted line).

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Indicator analysis. The daily review of the currency pair EUR / USD for May 18, 2018

Trend analysis (Figure 1).

On Thursday, traders continued to work down, although in the side channel. On Friday, the market, with a high probability, can roll back a little up. The support line of the uplink channel (1.661) is very close, and the rollback up may be insignificant. The complex analysis will more accurately tell where the price will go.

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Fig. 2 (daily chart).

Complex analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - upwards;

- Candlestick analysis - up;

- Trend analysis - down;

- Bollinger lines - up;

- Weekly schedule - down.

General conclusion.

On Friday, the market will move up, with the first goal of 1.1880, a pullback level of 14.6% (red dotted line).

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BITCOIN Analysis for May 18, 2018

Bitcoin has been quite bearish recently which lead the price to reside at the edge of $8,000. Bitcoin is currently quite weaker than expected as for retracement along the process. The bullish momentum which started after breaking above $6,500 was quite comfortable with the gains until the recent bearish pressure took over the market. As the bulls are still quite strong having the bears rejecting off the $8,000 price area currently, certain bullish momentum is expected in the coming days which is expected to push the price higher above $8,500 area. As of the current scenario, the impulsive bullish pressure can only be seen after the break above $9,000 with a daily close which will lead the price all the way towards $10,000 price area in the future. As the price remains above $8,000 with a daily close, the bullish bias is expected to continue.

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NZD/USD Intraday technical levels and trading recommendations for for May 18, 2018

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The price zone of 0.7320-0.7390 stood as a significant supply zone during recent bullish pullback. The bulls failed to execute a successful Bullish breakout above 0.7400 during the previous week's consolidations.

The NZD/USD pair had been trapped between the price levels of 0.7170 and 0.7350 until the bearish breakdown of 0.7200 occurred Yesterday.

Since April 13, significant bearish pressure has been applied. This probably turns the short-term outlook for the NZD/USD pair into bearish giving considerable significance to the multiple-top reversal pattern.

That's why a bearish breakdown of 0.7220-0.7170 (neckline zone) was needed to confirm the depicted reversal pattern. Bearish target levels around 0.7050 and 0.7000 have been achieved already.

The bearish scenario needs obvious bearish persistence below 0.7050 to maintain significant bearish momentum towards 0.6860 and 0.6820. That's why the price level of 0.7050 is currently considered a key-level for the NZD/USD bears.

Any bullish breakout above the price level of 0.7050 hinders further bearish decline allowing bullish pullback to occur towards 0.7170-0.7220.

This will probably allow conservative trend traders to wait for a bullish pullback towards the price zone of 0.7220-0.7170 (neckline zone) (significant supply zone) for a valid SELL entry. S/L should be placed above 0.7260.

On the other hand, If bearish momentum persists, the price zone of 0.6820-0.6780 should be watched for bullish rejection and a valid BUY entry.

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Intraday technical levels and trading recommendations for EUR/USD for May 18, 2018

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Daily Outlook

The EUR/USD pair had been trapped between the price levels of 1.2200 and 1.2500 until bearish breakout occurred recently.

Significant signs of bearish reversal were manifested around the price levels of 1.2400. This was manifested in the bearish engulfing daily candlestick of April 20.

The short-term outlook turns to become bearish as long as the EUR/USD pair keeps trading below the broken uptrend as well as the lower limit of the depicted consolidation range remains broken.

Bearish persistence below the price level of 1.2200 allowed further bearish decline towards the price levels of 1.1990 and 1.1880.

As mentioned, the price zone (1.1850-1.1750) offered significant bullish rejection and a short-term bullish pullback for intraday traders.

However, a recent descending high was established around the price level of 1.1990 as the EUR/USD bulls failed to pursue towards higher bullish targets. This applies significant bearish pressure over the mentioned demand zone (1.1700-1.1750).

If bearish momentum dominates, bearish persistence below 1.1700-1.1750 (zone of previous daily lows) will be needed to enhance further bearish decline towards 1.1400 (the previously mentioned monthly key-level).

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Daily review of GBP / USD pair on 18.05.18. Ichimoku Indicator

GBP / USD pair

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The strength of the support levels (the first target benchmark is 1.3516 + monthly Kijun 1.3502) continues to hold the pair in its zone of influence, but do not allow to work out the daily target by 100% (1.3424). The lines of the day cross diverged a considerable distance, while the day Tenkan (1.3533) descended into the zone of inhibition and consolidation, taking a horizontal position. Chikou on the daily chart is approaching the zone of maximum vertical removal. As a result, the expectation of a full-fledged corrective recovery is now more important than a full-scale continuation of the downward trend. Today, we close the week so, perhaps, the activity of players on the rise will be observed only from the next working week. Closing Friday above the supports (1,3502-16-33) may provoke the future retest of the punched levels on the weekly gold cross (1.3640 - 1.3780 - 1.3920). Lower timeframes now also express uncertainty, having the bulk of its elements Ichimoku in the area of 1.3502-33. fastening above the zone and the breakdown of the H4 cloud (1.3562-33) will change the existing balance of forces. It will also allow us to consider new upward guidance points. The closest reference point will be the upward target for the breakdown of the H4 cloud, which will lead the pair to the area of the first resistance of the upper halves at 1.3640 (weekly Fibo Kijun + monthly Tenkan).

Resistance: 1.3533 - 1.3640 - 1.3780.

Supports: 1.3502 - 1.3424.

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Indicator parameters:

all time intervals 9 - 26 - 52

Color of indicator lines:

Tenkan (short-term trend) - red,

Kijun (medium-term trend) - green,

Fibo Kijun is a green dotted line,

Chikou is gray,

clouds: Senkou Span B (SSB, long-term trend) - blue,

Senkou Span A (SSA) - pink.

Color of additional lines:

support and resistance MN - blue, W1 - green, D1 - red, H4 - pink, H1 - gray,

horizontal levels (not Ichimoku) - brown,

trend lines - purple.

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Global macro overview for 18/05/2018

The overnight Japan national CPI data slowed to 0.7% on yearly basis in April, down from 0.9% and below the expectations of 0.8%. That's the second month of decline and it moved further away from Bank of Japan 2.0% inflation target. It's also the lowest level since September 2017 and off recent cyclical high of 1.0% set in February. Overall CPI slowed to 0.6% yoy, down from 1.1% yoy. The other index of CPI, excluding food and energy, slowed to just 0.4% yoy, down from 0.5% yoy.

Recently, BoJ had abandoned the time frame for which the economy will meet the 2.0% inflation target. Moreover, the bank maintained the stance to continue with the ultra-loose monetary policy. Nevertheless, while recent surge in oil price could help raise overall and ex-food CPI ahead, the core CPI data remained worryingly weak. That's why the ongoing BoJ easying program cloud now is continuing without any particular deadline as there is still no inflationary pressures on the horizon.

Let's now take a look at the USD/JPY technical picture at the H4 time frame. The market keeps trading inside of a rising parallel channel and it made another local high at the level of 111.03 in overbought conditions. As long as the price will stay inside of the channel, the outlook remains bullish.The risks to this outlook are any safe haven flows which might see JPY strengthen. The nearest technical supports for the pride are seen at the level of 110.43 and 110.03.

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Bitcoin analysis for May 18, 2018

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Trading recommendations:

According to the H1 time - frame, I found that price is testing supply trendline in the backgorund, which is a sign that buying looks risky. I also found a successful breakout of consilidation zone in the background, which is another sign that sellers are in control. My advice is to watch for potential selling opportunities. The downawrd targets are set at the price of $7.890 and at the price of $7.683.

Support/Resistance

$8.140 – Intraday resistance

$7.890– Intraday support

$7.890 – Objective target 1

$7.683 – Objective target 2

With InstaForex you can earn on cryptocurrency's movements right now. Just open a deal in your MetaTrader4.

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The daily review of EUR / JPY pair on 18.05.18. Ichimoku Indicator

EUR / JPY pair

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Despite the excessive depth of decline, players on the rise managed to maintain a daily short-term advantage on its side on Wednesday. As a result, we are witnessing a new testing of significant resistance levels (131.01-day Senkou Span A + 131.19 weekly Tenkan + 131.33 daily Kijun). Closure of the week above these resistance levels will allow considering the confirmation of rebound from supporting the weekly cloud (Senkou Span A 130.70) and will open new prospects for players to rise. The absence of a result, as well as, the return to the weekly cloud (130.70) and the Bulls' loss of the daily short-term advantage (130.37) can drastically change the situation and create the prerequisites for continuing the decline.

Junior time intervals are now fully adjusted to support the players to rise. The pair went into the bull zone against the clouds and formed upward targets for the breakdown of the H4 and H1 clouds. Under the current conditions, the continuation of the upswing will lead to the fulfillment of the first goal (N1), which will allow us to overcome the cascade of resistance of the upper half and go beyond the weekly Tenkan (131.19) and the daytime Kijun (131.33). Also, the target development for the breakdown of the H4 cloud implies a rise to the next resistance of the site 131.83 - 132.20 (daytime Fibo Kijun + weekly Fibo Kijun).

Changing the balance of power and cancelling the current benchmarks may decrease under the support of 130.70 (Senkou Span B N4 + Tenkan N4 + cross H1 + Senkou Span A weeks) and 130.27 (the lower boundary of the cloud H4 + the final boundaries of the cross H4 + cloud H1 + daytime Tenkan), which will overcome the cascade of resistance of the upper half and move beyond the weekly Tenkan (131.19) and daytime Kijun (131.33). They try to work out the target for the breakdown of the H4 cloud implies a rise to the next resistance of the site 131.83 - 132.20 (daytime Fibo Kijun + weekly Fibo Kijun).

Resistance: 131.01 - 131.19 - 131.33 - 131.51 - 131.83 - 132.20.

Supports: 130.70 - 130.27.

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Indicator parameters:

all time intervals 9 - 26 - 52

Color of indicator lines:

Tenkan (short-term trend) - red,

Kijun (medium-term trend) - green,

Fibo Kijun is a green dotted line,

Chikou is gray,

clouds: Senkou Span B (SSB, long-term trend) - blue,

Senkou Span A (SSA) - pink.

Color of additional lines:

support and resistance MN - blue, W1 - green, D1 - red, H4 - pink, H1 - gray,

horizontal levels (not Ichimoku) - brown,

trend lines - purple.

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Global macro overview for 18/05/2018

The dollar remains strong with the support of yields on government bonds and the macroeconomic background continues to support USD. Slight disappointments in the readings of wage and CPI dynamics were quickly forgotten, but the dollar clearly reacted positively to a good report on retail sales. Investors seem to be underweight in USD and even under a weak justification they will seek opportunities to increase their exposure. If anything could disturb this global change to the dollar, it is a clear disappointment in the US data, however, the closest key publications (ISM, NFP) are only in two weeks.

Political factors are also unable to break the US dollar streak, and those that attract attention are not unfriendly to the dollar. The confusion about the preposterous ideas of Italian populists was a black PR for the EUR, although quick official statement protected the EUR/USD against the dominance of the sellers. Disputes in the British government regarding future trade relations with the EU are swinging only with a pound (albeit in both directions). The dollar is more interested in US trade talks with China and Canada and Mexico (NAFTA), but here the overall tone is positive. In this second topic, although a representative of the White House Lighthizer said yesterday that the parties have not come close to the agreement and there are many areas of dispute, the lack of consensus is a headache for Canada and Mexico, not for the US. In turn, relations with China seem to go towards improvement. Media reported by Deputy Prime Minister Chin Liu He at a meeting with US President Donald Trump he offered to reduce the surplus in trade with the US by 200 billion USD by increasing imports of US products and other activities.

In conclusion, the reduction of the US trade deficit with China by 200 billion USD by 2020 is on the Trump administration's demand list and it can be seen that Trump's unconventional approach can be effective and harmless to the US. In the result, it will likely make the US dollar to appreciate even more in the short and mid-term, together with another increase in the 10-year US Bond profitability.

Let's now take a look at the SP500 technical picture at the H4 time frame. The market is still trading below the key short-term technical resistance at the zone of 273.43 - 274.24 in overbought conditions. The technical support at the level of 269.90 had been tested but holds the line as the consolidation zone between the levels of 269.90 - 274.24 is currently the key technical area at this timeframe. If the US-China deal will be successful, then another attempt to move higher will likely to happen and the level of 274.24 will be tested. On the other hand, a failure in reaching the agreement will likely trigger a move to the downside and the support at the level of 269.90 might be under pressure again.

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Fundamental Analysis of EUR/CAD for May 18, 2018

EUR/CAD has been non-volatile with the bearish gains since it broke and retested of 1.57 price area with a daily close. CAD has been the dominant currency in the pair for months now where EUR has failed to inject certain pullback along the process.

Today EUR German PPI report was published with an increase to 0.5% from the previous value of 0.1% which was expected to be at 0.3%, German WPI report also showed an increase to 0.5% from the previous value of 0.0% which was expected to be at 0.2% and Current Account report was published with decrease to 32.0B from the previous figure of 36.8B which was expected to be at 35.1B. Moreover, today EUR Trade Balance report is going to be published which is expected to decrease to 20.7B from the previous figure of 21.0B.

On the CAD side, today CPI report is going to be published which is expected to be unchanged at 0.3%, Core Retail Sales is expected to increase to 0.5% from the previous value of 0.0% and Retail Sales report is expected to decrease to 0.3% from the previous value of 0.4%.

As of the current scenario, CAD economic reports forecasts are quite optimistic currently which is expected to add to the gains of the CAD further in the coming days. Ahead of the upcoming ECB Monetary Policy Meeting next week, EUR is expected to gain certain momentum in the process which will lead to increased volatility and correction in the process. To sum up, CAD is expected to extend its gain further against EUR before the ECB meeting next week.

Now let us look at the technical view. The price has been quite indecisive with the daily close yesterday where the bullish momentum was not quite as expected. Ahead of the upcoming high impact CAD economic reports to be published today, the price is expected to push lower towards 1.50 area before showing any bullish pressure on the pair. The price has formed a Bullish Divergence along the way which is expected to be activated after 1.50 is retested and rejected with a daily close. As the price remains above 1.50 with a daily close, certain bullish intervention is expected in this pair.

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GBP/USD analysis for May 18, 2018

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Recently, the GBP/USD pair has been trading sideways at the price of 1.3505. According to the H1 time – frame, I found that price is trading inside of the downward channel. My advice is to watch for a potential breakout of the intraday upward trendline to confirm a further downward movement. If you see a valid breakout of intraday trendline, watch for selling opportunities. The downward target is set at the price of 1.3450.

Resistance levels:

R1: 1.3562

R2: 1.3613

R3: 1.3657

Support levels:

S1: 1.3467

S2: 1.3432

S3: 1.3372

Trading recommendations for today: watch for potential selling opportunities.

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Fundamental Analysis of AUD/JPY for May 18, 2018

AUD/JPY has been quite impulsive with the bullish gains recently which led the price to reside above 83.00 area with a daily close. AUD gained momentum over JPY despite mixed economic reports published recently whereas JPY is under pressure in light of the Bank of Japan's long-term plan.

Recently, Australia's Employment Change report was published with a significant increase to 22.6k from the previous negative figure of -0.7k which was expected to be at 19.8k and the Unemployment Rate edged up to 5.6% from the previous value of 5.5%. The mixed readings worked as a fuel to the gains of AUD recently which is expected to keep momentum in the coming days.

On the other hand, today Japan's National Core CPI report was published with a decrease to 0.7% from the previous value of 0.9% which was expected to be at 0.8%.

As for the current scenario, the downbeat economic report from Japan helped AUD to gain more momentum today whereas recent mixed economic reports on Australia's Employment was quite enough to sustain the bullish momentum in the pair. To sum up, AUD is expected to gain further over JPY in the future.

Now let us look at the technical view. The price is currently residing above the dynamic level of 20 EMA as well as 83.00 area from where the price is expected to push higher towards 84.50 in the coming days from where if JPY manages to push lower then certain bearish pressure may be observed in the future. As the price remains above 82.00 support area, the bullish bias is expected to continue further.

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Market equilibrium is not in favor of euro buyers

Good performance in the US economy, albeit not so important, helped to keep the US dollar against its euro and pound, while risky assets continue to remain under pressure amid political tensions in relation with the Italian government.

Let me remind you that Italy's two populist parties, which are developing an agreement on a coalition government, may undermine the strength of the euro. Some experts believe that the new government may require the European Central Bank to write off a significant part of the country's debt, which could seriously affect the position of the European currency on the world market.

Yesterday, the data on the growth of production activity in the area of responsibility of the Federal Reserve Bank of Philadelphia came out in the second half of the day. The increase in activity was due to new orders and higher producer prices.

According to the report, the index of business activity in the region increased to 34.4 points in May 2018 against 23.2 points in April. The index of future business activity fell to 38.7 points in May against 40.7 points in April.

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Data from the Conference Board also managed to support the US dollar, as they pointed to economic trends in the US, which continued to grow in April. According to the report, as in March, the index of leading economic indicators increased by 0.4%, to 109.4 points.

Yesterday's speech by Fed representative Neil Kashkari did not concern monetary policy. Basically, he spoke about the absence of problems and signs of soap bubbles in the financial markets, and also that the high demand in the labor market prompts a greater number of companies to conduct additional training courses for their employees.

As for the technical picture of the EURUSD pair, the next "hovering" in the side channel will rather benefit the sellers of the euro, since the lack of a good demand for risky assets will lead to a new downward wave in the trading instrument on the trend. The breakthrough of support 1.1770 will open a good prospect of a decline to new lows in the area of 1.1740 and 1.1710. You can talk about the upward correction only after a confident return to the middle of the channel 1.1810 and update the upper limit of resistance in the area of 1.1850.

The Japanese yen ignored the data, which indicated that the rate of price growth in Japan slowed in April this year. This happened because of a weak increase in energy prices, and therefore it is not necessary to speak about the achievement of a target inflation rate of 2% in the near future.

According to the report of the Ministry of Internal Affairs and Communications, the basic consumer price index, which does not take into account food prices, in April rose by 0.7% compared to the same period last year.

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Trading plan 05/18/2018

Trading plan 05/18/2018

The general picture: The range.

The market was balanced. The long-term trend of the fall of the US dollar, which lasted from the spring of 2017, was broken because of the Fed's rate hike and US Treasury yield growth,a s well as, the U.S. Treasury yield growth amid the ECB's refusal to tighten monetary policy.

However, after the dollar strengthened by 4.4%, the market is not ready to buy a dollar with the same activity.

The market is waiting for new impulses from the news, but the news background is very weak.

GBP/USD pair: We trade in the range of the breakout.

We are buying from the level of 1.3630.

We are selling from the level of 1.3440.

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USD/JPY analysis for May 18, 2018

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Recently, the USD/JPY pair has been trading upwards. As I expected, the price tested the level of 111.02. According to the H1 time – frame, I found broken intraday bullish flag, which is a sign that buyers are in control. The trend is bullish and the MACD oscillator is rising, which is another sign of strength. My advice is to watch for potential buying opportunities. The upward target is set at the price of 111.40.

Resistance levels:

R1: 111.12

R2: 111.38

R3: 111.90

Support levels:

S1: 110.35

S2: 109.82

S3: 109.56

Trading recommendations for today: watch for potential buying opportunities.

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Fundamental Analysis of EUR/AUD for May 18, 2018

EUR/AUD has recently cleared below the 1.5750 support area with a daily close which is expected to be retested before the price continues its bearish pressure with target towards the 1.52 support area in the coming days. The recent struggle of EUR with the worse economic reports lead AUD to gain certain momentum even with the mixed economic reports results, published recently.

AUD Employment Change report was recently published with a significant increase to 22.6k from the previous negative figure of -0.7k which was expected to be at 19.8k and Unemployment Rate increased to 5.6% from the previous value of 5.5%. The mixed economic result did put the market into quite indecision yesterday, leading to certain correction with the AUD gains.

On the other hand, today EUR German PPI report was published with an increase to 0.5% from the previous value of 0.1% which was expected to be at 0.3%, German WPI report also showed an increase to 0.5% from the previous value of 0.0% which was expected to be at 0.2% and Current Account report was published with a decrease to 32.0B from the previous figure of 36.8B which was expected to be at 35.1B. Moreover, today EUR Trade Balance report is going to be published which is expected to decrease to 20.7B from the previous figure of 21.0B.

As of the current scenario, EUR is expected to gain some momentum over AUD for a certain period, but the amount of sustainability cannot be analyzed yet. Though the struggle of EUR still continue, further bearish pressure is expected in this pair until ECB comes up with better policies next week during the ECB Monetary Policy Meeting Accounts on Thursday. To sum up, AUD is expected to have an upper hand over EUR in the coming days, leading to further bearish pressure in the pair.

Now let us look at the technical view. The price is currently quite impulsive with the bullish gains which are expected to push higher towards the 1.5750 area before proceeding much lower with target towards the 1.52 support area in the coming days. As the price remains below 1.58 with a daily close, further bearish pressure is expected.

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The dollar has everything to continue growing

The continued growth in the yield of US government bonds makes market players very cautious about buying risky assets.

Investors began to take great care in deciding on the purchase of risky assets. First of all, we are talking about the shares of American companies, the dynamics of which directly depends currently on whether the yield of state bonds will grow further or not. The growth of profitability, while waiting the continuation of the interest rate hikes process, negatively affects the attractiveness of share purchases from the trading perspective with attracted cash (leverage), as this increases the value of money and significantly lowers the profitability of transactions. Proceeding from this, we believe that the US stock market will increase as the yield of government securities increases, signaling the end of almost a decade of growth after the acute phase of the 2008-09 global crisis.

Of course, in this situation, the dollar will receive support despite the large budget deficit. If earlier it was supported by the process of raising the interest rates by the Fed, as well as the breakthrough in the US Treasury bond yields to the risk zones above acceptable for the markets, the next factor is the beginning of the capital renewal of American companies from abroad to their homeland. Also, there are about 3.1 trillion dollars in various assets at the moment according to the latest data, including the Treasury which became another major reason for the growth of the dollar.

Assessing such prospects, as well as a clear fall in expectations that the Bank of England, the ECB and other world central banks will actively follow the Fed in resolving the tightening of monetary rates, it can be argued that the US currency is at the initial stage of a serious strengthening against major currencies and especially to EM currencies.

Based on opinions, a new wave of selling risky assets can be expected when the yield of the benchmark of 10-year Treasuries will overcome the level of 3.2%.

Forecast of the day:

The EUR/USD remains in the short-term downtrend. It is consolidating in a very narrow range, as investors expect further growth in the US government bond yields. We continue to hold the view that the pair has the potential to decline to 1.1735.

The GBP/USD is also moving in the "outset" on the wave of the factors listed in the article. The pair still has the potential to decline to 1.3450 after falling below the 1.3500 mark.

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* The presented market analysis is informative and does not constitute a guide to the transaction.

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What in Europe can be optimistic?

EUR / USD

On Thursday, the euro did not demonstrate a clear target to correct the fall from May 14 (or even from April 17), but the spring in this direction is shrinking even more. Evenings were the last opportunity for an early conclusion of the NAFTA trade agreement. But due to the unresolved contradictions on a large number of issues, this agreement can developed in an uncertain future and if there is no agreement before the end of May, which is most likely, the Congress will not have time to ratify it this year.

Italy's trade balance for March came out better than the forecast of 4.53 billion euros against 3.74 billion and 3.10 billion in February. In the United States, the number of applications for unemployment benefits amounted to 222 thousand for the week, compared to 211 thousand. The index of leading economic indicators (CB Leading Index) in April showed expectations of 0.4%. The business activity index in the manufacturing sector of Philadelphia for the current month increased from 23.2 to 34.4 against the forecast of decline to 21.1.

Today, there are no economic data on the US while there will be interesting indicators for the euro area. The euro zone's trade balance for March is projected to decrease from 21.0 billion euros to 20.7 billion, but taking into account yesterday's good trade balance of Italy, we expect the figure to be better than the forecast. The euro zone's balance of payments is predicted to be no worse than the previous month at 35.1 billion. Also, investors are waiting for the early conclusion of a coalition agreement by the Italian parliamentary parties.

We are expecting the euro in the range 1.1890-1.1915.

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* The presented market analysis is informative and does not constitute a guide to the transaction.

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

Fractal analysis: GOLD on May 18

The forecast for May 18:

Analytical review on the scale of H1:

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For Gold, the key key levels on the H1 scale are: 1304.79, 1302.97, 1298.88, 1295.70 and 1286.41. For this tool, we follow the local top-down cycle from May 11th. At the moment, the price is near the limit values for this structure so we expect a rollback into correction and the formalization of the initial conditions for the upward cycle.

Short-term movement towards the top is possible in the area of 1295.70 - 1298.88. The breakdown of the last value will lead to in-depth movement. Here, the target is 1302.97. The range of 1302.97 - 1304.79 is noise. Before reaching this level, we expect the initial conditions for the upward cycle to be formalized.

The main trend is the local structure for the bottom of May 11.

Trading recommendations:

Buy: 1297.70 Take profit: 1298.80

Buy 1296.00 Take profit: 1298.00

Sell: Take profit:

Sell: Take profit:

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Fractal analysis of major currency pairs for May 18

Dear colleagues.

For the EUR / USD pair, the level of 1.1890 is the key support for the downward structure of May 14. For the GBP / USD pair, the downward structure from May 14 resumed its positions on the scale of H1. For the USD / CHF pair, the situation is in an equilibrium state. We expect the cancellation of the downward structure after the breakdown at 1.0042. For the USD / JPY pair, the continuation of the upward movement is expected after the breakdown of 110.96. The level of 110.31 is the key support. For the EUR / JPY pair, the situation has shifted in an upward direction. The development of this level is expected after the breakdown of 131.00. For the GBP / JPY pair, we have expanded the potential for the top to 152.15.

The forecast for May 18:

Analytical review of currency pairs in the scale of H1:

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For the EUR / USD pair, the key levels on the scale of H1 are: 1.1995, 1.1928, 1.1889, 1.1862, 1.1807, 1.1751, 1.1684 and 1.1640. Here, we continue to follow the downward structure of May 14. Short-term downward movement is expected in the area of 1.1807-1.1751. The breakdown of this level, in turn, should be accompanied by a pronounced movement towards the level of 1.1684. Near this level is the consolidation of the price. The potential value for the bottom is the level of 1.1640. Upon reaching this level, we expect a rollback to the top.

Short-term upward movement is possible in the area of 1.1862 - 1.1889. The breakdown of the last value will lead to in-depth correction. Here, the target is 1.1928. This level is the key support for the downward structure from May 14.

The main trend is the local structure for the bottom of May 14.

Trading recommendations:

Buy: 1.1862 Take profit: 1.1887

Buy 1.1892 Take profit: 1.1925

Sell: 1.1805 Take profit: 1.1755

Sell: 1.1748 Take profit: 1.1688

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For the GBP / USD pair, the key levels on the H1 scale are 1.3608, 1.3564, 1.3529, 1.3445, 1.3412, 1.3388, 1.3326 and 1.3285. Here, the price is still in the field of initial conditions for the downward movement of May 14. The continuation of the development of the downward structure is expected after the breakdown of 1.3445. In this case, the target is 1.3412. Near this level is the consolidation of the price. Passing the price of the noise range of 1.3412 - 1.3388 should be accompanied by a pronounced movement towards the level of 1.3326. The potential value for the bottom is the level of 1.3285. After this level, we expect consolidation as well as a rollback to the top.

Consolidated movement is possible in the area of 1.3529 - 1.3564. The breakdown of the last value will lead to the formation of an upward structure. Here, the potential target is 1.3608.

The main trend is the formation of a local structure for the downward movement of May 14.

Trading recommendations:

Buy: Take profit:

Buy: 1.3565 Take profit: 1.3607

Sell: 1.3445 Take profit: 1.3412

Sell: 1.3386 Take profit: 1.3328

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For the USD / CHF pair, the key levels on the scale of H1 are: 1.0083, 1.0067, 1.0042, 1.0022, 0.9993, 0.9979, 0.9955, 0.9933 and 0.9910. Here, the price is in an equilibrium state: the downward structure of May 10 and the formation of the potential for the top of May 14. The continuation of the development of the upward structure is expected after the breakdown of 1.0022. In this case, the target is 1.0042. Near this level is the consolidation of the price. The breakdown at 1.0042 will lead to the cancellation of the downward structure from May 10. In this case, the target is 1.0067. The potential value for the top is the level of 1.0083. Upon reaching this level, we expect a pullback downwards.

Short-term downward movement is possible in the area of 0.9993 - 0.9979. The breakdown of the last value will lead to the development of the downward structure from May 10. In this case, the first target is 0.9955.

The main trend is the equilibrium situation.

Trading recommendations:

Buy: 1.0022 Take profit: 1.0040

Buy: 1.0044 Take profit: 1.0065

Sell: 0.9991 Take profit: 0.9980

Sell: 0.9977 Take profit: 0.9960

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For the USD / JPY pair, the key levels on a scale are: 112.12, 111.82, 111.38, 110.96, 110.54, 110.31 and 110.02. Here, we follow the development of the upward structure of May 4. The continuation of the upward movement is expected after the breakdown of 110.96. In this case,, the first target is 111.38. Near this level is the consolidation of the price. The potential value for the top is the level of 111.82. Upon reaching this level, we expect consolidation in the area of 111.82 - 112.12, as well as a pullback downwards.

Short-term downward movement is possible in the area of 110.54 - 110.31. The breakdown of the last value will lead to in-depth correction. Here, the target is 110.02. This level is the key support for the top.

The main trend is the upward structure of May 4.

Trading recommendations:

Buy: 110.98 Take profit: 111.36

Buy: 111.40 Take profit: 111.80

Sell: 110.52 Take profit: 110.33

Sell: 110.28 Take profit: 110.04

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For the CAD / USD pair, the key H1 scale levels are: 1.2986, 1.2927, 1.2889, 1.2853, 1.2735, 1.2685, 1.2615 and 1.2572. Here, the price has issued a local structure for the bottom of May 15. The continuation of the downward movement is expected after the breakdown of 1.2735. In this case, the target is 1.2685. In this area of 1.2685 - 1.2735 is the consolidation of the price. The breakdown of the level of 1.2685 should be accompanied by a pronounced movement towards the level of 1.2615. The potential value for the bottom is the level of 1.2572. Upon reaching this level, we expect a rollback to the top.

Short-term upward movement is possible in the area of 1.2853 - 1.2889. The breakdown of the last value will lead to an upward structure. In this case, the target is 1.2927. The potential value for the upward trend so far is the level of 1.2986.

The main trend is the local structure of May 15.

Trading recommendations:

Buy: 12853 Take profit: 1.2886

Buy: 1.2890 Take profit: 1.2925

Sell: 1.2735 Take profit: 1.2690

Sell: 1.2682 Take profit: 1.2615

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For the AUD / USD pair, the key levels on the scale of H1 are: 0.7679, 0.7622, 0.7599, 0.7563, 0.7503, 0.7480, 0.7445, 0.7408 and 0.7359. Here, the resumption of the upward trend is expected after the breakdown of 0.7563. In this case, the first target is 0.7599. In this area of 0.7599 - 0.7622 is the consolidation of the price. The potential value for the top is the level of 0.7679. Upon reaching this level, we expect the consolidated movement as well as a possible pullback downwards.

Short-term downward movement is possible in the area of 0.7503 - 0.7480. The breakdown of the last value will lead to the development of the a downward trend. Here, the target is 0.7445. In the area of 0.7445 - 0.7408 we expect short-term movement towards the bottom. The potential value for the downward movement is the level of 0.7359. From this level, we expect a pullback to the top.

The main trend is the upward structure of May 9.

Trading recommendations:

Buy: 0.7563 Take profit: 0.7598

Buy: 0.7624 Take profit: 0.7676

Sell: 0.7503 Take profit: 0.7481

Sell: 0.7478 Take profit: 0.7447

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For the of EUR / JPY pair, the key levels on the scale of H1 are: 132.26, 131.78, 131.40, 130.98, 129.61, 129.18, 128.85 and 128.15. Here, the price entered the equilibrium situation. The continuation of the traffic to the top is possible after the breakdown of 130.98. In this case, the first target is 131.40. In the area of 131.40 - 131.78 is the consolidation of the price. The potential value for the upward structure is, for the time being, the level of 132.26.

The development of the downward movement from May 14 is expected after the breakdown of 129.61. Here, the first target is 129.18. In the area of 129.18 - 128.85 is the consolidation of the price. The potential value for the bottom is the level 128.15. From this level, we expect departure towards correction.

The main trend is the equilibrium situation: the formation of the potential for the bottom of May 14.

Trading recommendations:

Buy: 131.00 Take profit: 131.40

Buy: 131.42 Take profit: 131.75

Sell: 129.60 Take profit: 129.20

Sell: 128.85 Take profit: 128.20

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For the GBP / JPY pair, the key levels on the scale of H1 are: 152.16, 151.36, 150.81, 150.01, 149.00, 148.35, 147.84, 147.00, 145.75 and 145.12. Here, we follow the upward structure of May 8. The continuation of the upward movement is expected after the breakdown of 150.01. In this case, the target is 150.81. In the area of 150.81 - 151.36 is the consolidation of the price. The potential value for the top is the level 152.16. Upon reaching this level, we expect a departure towards correction.

We expect the departure towards the correction zone after the breakdown at 149.00. In this case, the target is 148.35. Short-term downward movement is possible in the area of 148.35 - 147.84. The breakdown of the last value will lead to the development of the a downward structure. In this case, the target is 147.00. Near this level is the consolidation of the price.

The main trend is the upward structure of May 8.

Trading recommendations:

Buy: 150.05 Take profit: 150.80

Buy: 150.84 Take profit: 151.30

Sell: 149.00 Take profit: 148.40

Sell: 147.80 Take profit: 147.00

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Technical analysis of Bitcoin for May 18, 2018

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If we look at the 4-hour chart on Bitcoin, we can see that Bitcoin is trading with a bearish bias. The crypto-currency is already making an upward broadening channel (Weak Bull) and broke its support. Now Bitcoin is trying to test the next support level at $7,433.44 level, but there must be a correction to re-test the previous support level which became the new resistance level (because the stochastic oscillator is already in the oversold condition) at $8064.16-$8,173.44 level. However, as long as the #BTC does not breakout and keeps slightly above $8,463.60, the digital currency is likely to continue the bearish bias and to test the next support level at $7,433.44.

(Disclaimer)

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Technical analysis of USD/IDR for May 18, 2018

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On the weekly chart, we can see that USD/IDR is still moving in a sideways manner with a bullish bias. However, the stochastic oscillator is already making a divergence between the price. This means in a few weeks, a small correction is expected for this pair before they it is going uwardp again. The reason for the upward move is strength of USD. On the other hand, the situation is turbulent in Indonesia due to first the terrorist attack and the Presidential Cycles. Leverage for USD becomes strong. If resistance of 14,133 can be easily breached, the next target will be at 14,784 level.

(Disclaimer)

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

Technical analysis of AUD/USD for May 18, 2018

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Overview:

The AUD/USD pair will continue to rise from the level of 0.7490. The support is found at the level of 0.7490, which represents the 50% Fibonacci retracement level in the H1 time frame.

The price is likely to form a double bottom. Today, the major support is seen at 0.7490, while immediate resistance is seen at 0.7535. Accordingly, the AUD/USD pair is showing signs of strength following a breakout of a high at 0.7509. So, buy above the level of 0.7509 with the first target at 0.7535 in order to test the daily resistance 1 and move further to 0.7550.

Also, the level of 0.7568 is a good place to take profit because it will form a double top. Amid the previous events, the pair is still in an uptrend; for that we expect the AUD/USD pair to climb from 0.7509 to 0.7568 today. At the same time, in case a reversal takes place and the AUD/USD pair breaks through the support level of 0.7490, a further decline to 0.7450 can occur, which would indicate a bearish market.

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Trading plan for the European session on May 18 for the GBP/USD

To open long positions on GBP/USD, it is required:

The return and consolidation at resistance level 1.3529 will be a good signal to buy pound for the purpose of updating the level of 1.3565 and the upper border of the lateral channel 1.3599. Only its breakthrough will lead to a powerful upward impulse with a test of highs, around 1.3648. In case of a pound drop, purchases can be returned on a false sample from support 1.3485 or on a rebound from area 1.3454.

To open short positions on GBP/USD, it is required:

Failure to secure and return to level 1.3529 may lead to another downward wave in the pound, with a view to returning to support 1.3485 and updating the lower border of channel 1.3454, where it is recommended locking in profit. If the pound is rising in the morning, the short positions can be viewed after the resistance update at 1.3565 and on the rebound from 1.3599.

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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 20
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Bitcoin analysis for 18/05/2018

Economist Alex de Vries, who published the article "Bitcoin's growing energy problem" in the scientific journal Joule, told the financial media, that mining Bitcoin will consume 0.5 percent of world energy by 2018.

De Vries concludes that because the Bitcoin network currently consumes about 2.55 GW of electricity and is heading towards 7.67 GW in the future (for reference, Ireland consumes 3.1 GW and Austria 8.2 GW), the network has a big problem, which is growing fast. However, he also notes that solutions such as the Lightning Network can ease the situation.

Extracting Bitcoins requires energy to perform calculations, which in turn give the miners an award in the form of Bitcoin. In mid-February, it was reported that in 2018, Iceland's cryptographic output would absorb more electricity than households. The debate over whether Bitcoin mining is excessively harmful to the environment is perceived by some as irrelevant due to the high demand for Bitcoins in some countries. "Half a percent is quite shocking. [...] This is an extreme difference compared to the ordinary financial system, and this growing demand for electricity will certainly not help us achieve our climate goals" - De Vries said.

He hopes his article will initiate talks on this topic because he thinks the world needs "more scientific discussions about where this network is going."

Let's now take a look at the Bitcoin technical picture at the H4 time frame. The wave a of the corrective cycle has been made and the low was established at the level of $7,900, so now it might be a good time to start a short-term corrective pull-back in the wave b. Nevertheless, to complete the correction there is still the wave c missing and the projected target for this wave is seen at between the levels of $7,712 - $7, 442.

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Trading plan for the European session on May 18 GBP/USD

To open long positions on GBP/USD, it is required:

The return and consolidation at resistance level 1.3529 will be a good signal to buy pound for the purpose of updating the level of 1.3565 and the upper border of the lateral channel 1.3599. Only its breakthrough will lead to a powerful upward impulse with a test of highs, around 1.3648. In case of a pound drop, purchases can be returned on a false sample from support 1.3485 or on a rebound from area 1.3454.

To open short positions on GBP/USD, it is required:

Failure to secure and return to level 1.3529 may lead to another downward wave in the pound, with a view to returning to support 1.3485 and updating the lower border of channel 1.3454, where it is recommended locking in profit. If the pound is rising in the morning, the short positions can be viewed after the resistance update at 1.3565 and on the rebound from 1.3599.

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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 20
The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of EUR/USD for May 18, 2018

EUR/USD remains in a bearish trend. Price made a low this week at 1.17629 and now is trading just above 1.18. EUR/USD is trading below cloud resistance in the 4-hour chart and has important bullish warning divergence signs. There is not trend reversal confirmation yet, but I believe a strong bounce is close by.

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Red lines - bullish divergence

Short-term support is at 1.1780 while resistance is at 1.1840 but the most important resistance is at 1.1920. Bulls need to break above 1.1920 in order to hope for another run higher towards 1.20-1.21. Otherwise a rejection would lead to a lower low towards 1.17-1.1650.

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Trading plan for 18/05/2018

Friday starts stable on the currency market with minor movements among the main currencies. The focus is on the US-China trade negotiations, where chances of agreement are growing. The stock market is moderately optimistic: Shanghai Composite grows 0.3% and Nikkei 225 gains 0.4%. Gold is not going too far to $1,290 and WTI crude is consolidating at 71.60after it has turned back from the test of new highs at USD 72.25.

On Friday 18th of May, the event calendar is busy in important data releases. Germany will post Wholesale Price Index and PPI data. Eurozone will issue Current Account and Trade Balance data. Canada will present Consumer Price Index data. There are three speeches from FOMC members scheduled later for today: Lael Brainard, Robert Kaplan and Loretta Mester.

EUR/USD analysis for 18/05/2018:

The financial media reports that Deputy Prime Minister Chin Liu He, at a meeting with US President Donald Trump, offered to reduce the US trade surplus by USD 200 billion by increasing imports of US products and other activities. The sources, however, did not say what the American side's response was. The reduction of the US trade deficit with China by USD 200 billion by 2020 is on the list of Trump administration demands. Conversations are to be continued on Friday and it will be the main event of the day, which might cause an impact on the market, especially on US Dollar majors and caresses.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market has made a new local low at the level of 1.1742, but since then the bulls are trying to push the prices higher towards the 38% Fibo retracement at the level of 1.1850. Nevertheless, the key zone for bulls is seen between the levels of 1.1879 - 1.1906 and only a clear sustained breakout through this zone will likely help bulls to regain control over the market, at least in a short term. The market conditions are extremely oversold and the growing bullish divergence supports the bullish bias.

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Ichimoku cloud indicator analysis of Gold for May 18, 2018

Gold price remains near its weekly lows. Gold price has reached important support area and could start a reversal from current levels. Gold price is testing important weekly cloud support. I'm bullish at current levels but I would get aggressively bullish above $1,300.

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Red line - long-term resistance

Blue line - medium-term support

Green line -long-term support

Gold price is touching the upper boundary of the weekly Kumo (cloud). This is very important support. This area is also support by the blue upward sloping trend line and by the 61.8% Fibonacci retracement. We have a confluence of support indicators at current levels. I'm bullish at current levels. I expect Gold to reverse to the upside and start a move towards $1,400-$1,425 over the coming months.

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Technical analysis of Dow Jones Industrial Average for May 18, 2018

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After breakout from the Triangle Pattern on the daily chart, Dow Jones Industrial Average is making a higher high and lower low. We know this pattern seems to give a clue for the index close. It is in a correction phase and it is about get back to the bullish bias as long as no breakout has happened. Now, the index is bellow the 23,344 level. There is a high possibility for the index to test the previous resistance at 25,448 as the first target and 25,800 as the second target.

(Disclaimer)

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