EUR and GBP: Euro falls on weak retail sales. Theresa May requests support for her Brexit plan

Today, all attention in the first half of the day was riveted to data on the servant sector in the UK, as well as retail sales in the eurozone. As a result, none of the reports pleased investors, which led to a decline in the euro and the pound against the US dollar after yesterday's small upward correction.

Speech by the British Prime Minister Theresa May on Brexit did not lead to clarity in the future direction of the British pound, but more on that below.

Eurozone

The report on the activity of the services sector in Germany, which in September grew a little slower than previously thought, did not add optimism to euro buyers at the beginning of the European session.

According to IHS Markit, the PMI Purchasing Managers Index for servants fell to 55.9 points against a preliminary estimate of 56.5 points. Composite PMI index of Germany also fell to the level of 55 points from 55.3 points in August.

As I noted above, retail sales in the eurozone declined in August. Fall is observed for the second month in a row. This indicates the fact that the region's economy has not yet recovered after a serious slowdown in the first and second quarters of this year.

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According to the statistics agency of the EU, retail sales in August of this year fell by 0.2% compared with July. Compared to the same period in 2017, sales increased by 1.8%. Economists had forecast retail sales growth in September. In July, retail sales in the eurozone fell by 0.6%, rather than 0.2%, as previously reported.

The statements made today by the representative of the Federal Reserve, Charles Evans, were generally ignored by the market, since they almost coincided with the statements made by the Fed chairman the night before.

Evans wants the Fed to continue a gradual rate hike, as the fundamental factors behind the growth of the US economy are strong in the short term. He also noted the outlook for inflation, in his opinion, they are quite positive and there is no need for a restraining monetary policy.

As for the technical picture of the EUR / USD currency pair, buyers failed to cope with the challenge of breaking through the resistance level of 1.1590, which I paid attention to in my morning review, and weak data led to the return of large sellers of risky assets to the market. The breakthrough of the intermediate support of 1.1535 will only increase the pressure on the euro, which will return the trading instrument to the weekly lows.

The UK and Brexit

A speech by the British Prime Minister Theresa May took place today, in which she urged Brexit to stick to its plan, but did not rule out the possibility of secession from the EU without an agreement. Such statements put even more pressure on the British pound, which by this time had significantly "suffered" after data on activity in the UK services sector.

May also called on the members of her party for unity.

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According to a report by Markit, PMI for the services sector in Great Britain dropped to 53.9 in September of this year, compared with 54.3 in August. Despite the slowdown in activity, finding the index above 50 points still indicates its growth.

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GBP / USD: plan for the European session on October 3. The pound is waiting for PMI data on the service sector

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

Further upward movement in the pound will directly depend on the PMI data on the UK services sector. If the data indicates an increase in activity, a breakthrough of the resistance level of 1.3011 will be a good signal to buy the pound in order to update the highs of 1.3046 and 1.3077, where I recommend fixing the profits. A similar situation will occur with the formation of a false breakdown in the support area of 1.2973. In the case of a large drop in the pound on the data, it is best to return to purchases on a test of 1.2942 minimum, or even to a rebound from 1.2897.

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

The pound sellers will expect a false breakdown and a return below the resistance level of 1.3011, and the expected slowdown in the UK services sector may lead to a larger downward trend with a break of the support level of 1.2973, below which the pound will fall to the minimums of 1.2942 and 1.2897, where I recommend fixing the profits. In the case of GBP / USD growth in the first half of the day above 1.3011, I recommend to take a closer look at short positions from the resistance level of 1.3046 or sell the pound to rebound from a high of 1.3077.

Indicator signals:

Moving Averages

The price has moved above the 30-day and 50-day moving average, which indicates the formation of an upward correction. As long as trading will be above average, the demand for the pound will continue.

Bollinger bands

Bollinger Bands indicator volatility decreases before the release of important data. The break of the upper border of the bands with around 1.3010 will be a signal to the new wave of growth in GBP / USD.

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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 9

Bollinger Bands 20

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Wave analysis of EUR / USD for October 3. Wave pattern transformed

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Wave counting analysis:

In the course of trading on Tuesday, the EUR / USD currency pair lost another 40 percentage points more and broke through the low of the previous downward wave. Thus, the entire wave counting has suffered some refinement. The trend segment between August 15 and September 24 is now viewed as a completed 3-wave structure. If this is true, then now, the pair has moved on to building a descending at least 3-wave structure. The first wave of this structure is supposedly completed, so an increase is now expected within the wave b.

The objectives for the option with sales:

1.1526 - 127.2% of Fibonacci

1.1446 - 161.8% of Fibonacci

The objectives for the option with purchases:

1.1641 - 76.4% of Fibonacci

1.1674 - 61.8% of Fibonacci

General conclusions and trading recommendations:

The currency pair moved to build a downward trend. In general, the wave pattern is ambiguous and the entire trend section after August 15 may still take a more complex form as upward. But now, in any case, it is expected to increase either within the wave b of the new downtrend trend, or within the wave with the uptrend. Thus, I recommend buying a pair with the first targets located around 1.1641 and 1.1674, which corresponds to 76.4% and 61.8% of Fibonacci.

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Wave analysis of GBP / USD for October 3. News background pulls the pound down

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Wave counting analysis:

During the trading session on October 2, the GBP / USD currency pair dropped by another 60 percentage points and moved away from the lows reached. Thus, there are grounds for assuming the completion of the construction of the supposed wave c, 4. If this assumption is true, now the construction of the upward wave 5 of the uptrend trend with the targets located above 33 figures will begin. The news background, however, is currently not in favor of the British currency, and it is this factor that can affect wave counting. There was no pronounced unsuccessful attempt to break through any important Fibonacci level, it also confuses in the question of the completion of wave 4.

The objectives for the option with purchases:

1.3301 - 161.8% of Fibonacci (senior grid)

The objectives for the option with sales:

1.2908 - 76.4% of Fibonacci

1.2786 - 100.0% of Fibonacci

General conclusions and trading recommendations:

The currency pair GBP / USD continues to build the estimated wave c, 4. Thus, now I recommend to remain in sales with targets located near the levels of 1.2908 and 1.2786, which corresponds to 76.4% and 100.0% of Fibonacci. An unsuccessful attempt to break through the mark of 1.2908 will lead at least to the departure of quotes from the lows reached, and at the maximum, to complete the construction of the entire wave 4. The news background is of great importance for the movement of the pair and, as a result, in wave counting.

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Simplified Wave Analysis. GBP / USD review for the week of October 3

Wave pattern graphics H4:

The bearish segment of the pound major chart of April 14 completes the downward correction of the daily scale. The price reached the upper limit of the target zone.

Wave pattern graphics H1:

The rising wave of August 15 has a reversal potential. In recent weeks, the formation of the correction (B) is completed within the model.

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Wave pattern graphics M15:

The wave of September 20 completes the hidden downward wave of the hour scale. The price has reached the estimated zone of probable completion. U-turn signals are not yet observed.

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Recommended trading strategy:

In the coming days, favorable conditions will be created on the chart of the instrument for entering long transactions. Purchasing may be relevant over the coming months.

Resistance zones:

- 1.3210 / 1.3260

Support zones:

- 1.2970 / 1.2920

Explanations of the figures: The simplified wave analysis uses waves consisting of 3 parts (A – B – C). For the analysis, 3 main TFs are used, on each, the last, incomplete wave is analyzed. Zones show calculated areas with the highest probability of reversal.

The arrows indicate the wave marking by the method used by the author. The solid background shows the formed structure, the dotted - the expected movement.

Note: The wave algorithm does not take into account the duration of tool movements over time. To conduct a trade transaction, you need confirmation signals from the trading systems you use!

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

Global macro overview for 03/10/2018

The ADP report figures showed, that the private sector created 230,000 jobs in September. This is one of the highest results this year and higher readings than this appeared only in February or January (although then the report concerned December last year). The published value definitely beats forecasts of analysts who expected an increase of 185,000. Data for August were slightly revised upwards by 5,000 up to 168,000. The USD market does not react too much to data - USD / JPY gained 6 pips by 113.88. Investors approach the report with caution, as recently it was a weak forecast before the NFP report. A month ago, the government's report pointed to an increase in employment by 204 thousand, or about 40 thousand. more than ADP indications. Secondly, the pace of employment has ceased to be a problem for the US economy and more attention is paid to the dynamics of wages.

Employment growth was higher than expected, despite the hurricane Florence, which passed over both Karolines in September. However, the ADP methodology influenced such a result, which does not take into account persons not working under a contract of employment.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market did not react violently to the news and the USD is appreciation a little as the pair is going down towards the technical support at the level of 1.1500. The market conditions are still oversold, so any pull-back above the technical resistance at the level of 1.1627 would be more than welcome. Nevertheless, the momentum remains weak and negative (below its fifty level), so instead of a dynamic spike up the market might just continue the slower horizontal drift.

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EUR / USD: too few arguments for the price increase

The currency pair of euro / dollar this morning tested the 16th figure, showing corrective growth. The EUR / USD bears yesterday could not push the price below the important support level of 1.1520, so the bulls temporarily seized the initiative and tried to return the pair to the previous framework. However, this attempt failed as well. The fundamental background remains quite negative and so far does not have to large-scale price recovery.

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I will note that there is still a reason for cautious optimism. Today, signals have begun to arrive that the Italian authorities are ready to compromise on the budget issue for the next year, namely, in terms of the level of its deficit. So far, this is an unofficial position of Rome. Relevant information was published in the Italian press, and in two influential publications at once.

By and large, this is the predictable ending of a large-scale scandal. On the one hand, the Italians will still significantly exceed the previously anticipated deficit level (0.8%). On the other hand, they will be able to justify the partial failure of their election promises by pressure from the EU leadership. Brussels, in turn, will reduce the risk of a debt crisis without the threat of a political crisis in Italy and the escalation of anti-European sentiment in this country. According to preliminary data, Rome is ready to lower the deficit bar to 2%, although, in my opinion, the final compromise will be slightly lower, at the level of 1.9%.

Against the background of such news, the EUR / USD currency pair jumped to the borders of the 16th figure, but almost immediately retreated. Firstly, the voiced information is unchecked, and, secondly, the position of Brussels on the proposed draft compromise budget is still unknown. It is likely that the parties will until the last take "principled" positions, and only at the last moment will go on mortars. It is worth recalling that the Italians have almost three weeks to approve the draft budget (until October 20), so these games of a political nature can last more than one day and more than one week.

In other words, the European currency gained too weak a trump card to oppose the dollar, which is still gaining momentum. The dollar index is in the region of 95 points, demonstrating the recovery of the currency throughout the market. Against this backdrop, the euro looks too faded and uncertain, especially under the weight of Italian uncertainty and a slowdown in core inflation.

But the US dollar is growing due to the high probability of raising the rate to 2.5% at the December meeting. Yesterday's rhetoric of Fed Chairman Jerome Powell, who spoke at the economic conference in Boston, did not disappoint traders. He did not focus on the August slowdown in inflation and the escalation of the trade war between China and the United States. On the contrary, he voiced very optimistic forecasts regarding the growth of the American economy. According to some experts, Powell is gradually preparing the markets to accelerate the pace of rate hikes next year. Now, the market highly appreciates the chances of a rate increase at the last meeting this year (80%), while the prospects for the next year are rather vague.

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Some are confident that the Fed will raise the rate three times, but most traders doubt this, allowing for two or even one increase. As some currency strategists believe, the Fed chief decided to change market expectations to more "hawkish", thereby reducing undesirable volatility in the future.

His rhetoric has indeed become more rigid in recent times, when negative nuances have been skillfully set off by the sheer success of the American economy. It is worth recalling that at the end of 2017, traders expected only a double increase in the framework of 2018. But when the regulator seriously voiced intentions to raise the rate three or four times, the dollar showed a strong rally (earlier this year), strengthening in pair with the euro by almost a thousand points, from the February level of 1.25 to the May marks in the area of 1.16.

Thus, the US dollar has the potential for its large-scale growth if Powell's rhetoric continues to tighten and the likelihood of accelerated rates of increase in rates in 2019 will increase. Of course, the basic condition for such a scenario is the positive dynamics of key macroeconomic indicators. Therefore, Friday Nonfarms will be of great importance for traders of the pair. If the labor market confirms its "reputation" and the inflation component (average hourly wage) fails, then greenback can continue its attack on all fronts, including in pairs with European currency.

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From a technical point of view, EUR / USD bears have the same task on the agenda. To consolidate below the level of 1.1520 is the lower boundary of the Kumo cloud on the daily chart, which coincides with the bottom line of the Bollinger Bands indicator. If this scenario is implemented, the Ichimoku Kinko Hyo indicator will form the "Parade of Lines" bearish signal, and the pair will most likely mark their presence within the 14th figure, heading towards its base.

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EUR / USD and GBP / USD: the correctional wave of growth of the euro and the pound may continue today

The euro managed to restore some of its positions against the US dollar yesterday after the renewal of the next monthly minimum.

The data released in the afternoon, as well as comments by Fed Chairman Jarom Powell, did not lead to significant changes in the market.

According to the report, the ISM-New York business conditions indicator declined in September this year after reaching maximums in August. According to the Institute for Supply Management ISM-New York, the indicator fell to 72.5 points against 76.5 in August. The decline was due to a change in the expectations of companies regarding future conditions.

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The main support was provided by the employment indicator, which in September, amounted to 73.8 points. The subindex of the current profit of the companies dropped to 78.1, while the subindex of producer purchase prices fell to 75 points.

The speech of the Fed chairman did not lead to a significant strengthening of the US dollar by the end of the North American session on Tuesday.

Most of the speech was associated with inflation and its expectations. Powell said that the outlook for the economy is positive, but inflationary expectations are important. As the Fed chairman noted, the impact of high demand in the labor market on inflation has decreased significantly in recent decades, but the main task of monetary policy is still to contain inflation expectations.

Also, according to Powell, the recent acceleration of wage growth will not lead to overheating of the economy and does not create additional problems, but only has a positive effect on economic growth.

At the end of the speech, the Fed chief said that the natural rate of unemployment may be lower than predicted, and the gradual increase in interest rates reflects efforts to balance risks.

As for the technical picture of the EUR / USD currency pair, the main task of euro buyers will be a breakthrough of resistance around 1.1595, which will lead to the continuation of correctional growth in the trading instrument with a return to the large resistance levels of 1.1620 and 1.1650. Under the euro decline scenario, support will be provided by the area of 1.1540, from which the major players will try to build the lower boundary of the new upward channel, aimed at breaking the current downward trend.

Support for the US dollar can provide data on the ISM index for the non-manufacturing sector, but only if it exceeds the forecast of economists.

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Gold

Quotes of gold soared after increasing concerns about political instability in Italy, which also affected the financial markets.

Gold prices rose 1.3% to 1202, indicating a return of demand for defensive assets after the recent actions of the Italian populist authorities, who decided to increase the budget deficit to finance programs given during the election campaign.

Toward the end of the day, demand dropped slightly after the Italian newspaper Corriere reported that Italy would seek to reduce the budget deficit back to 2% of GDP as early as 2021, which would significantly reduce friction between the country and the EU.

As for the technical picture of gold, then good support levels will be viewed in areas of 1201 and 1197, from where short-term buyers will return to the market. However, the upward potential in gold will be limited to monthly highs in areas 1210 and 1213, above which it was not possible to break through neither in July nor in August of this year.

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The review of the foreign exchange market for October 3, 2018

Yesterday, the dollar continued to strengthen its position largely due to the negative information background from Europe. The focus turned out to be Italy, from where quite alarming rumors were received. A discussion of the budget deficit and the size of the public debt in the Italian parliament. The idea was expressed that Italy could solve all its financial problems if it abandoned the single European currency. The idea of a possible disintegration of the euro area, which will inevitably happen in the event of Italy's refusal from the single European currency, made many nervous. The position of the single European currency was also aggravated by data on producer prices, the growth rates of which slowed down from 4.3% to 4.2%. The slowdown in the growth of producer prices calls into question the possibility of further inflation. Rather, it is necessary to say that inflation in Europe will again slow down, and this already threatens with the fact that the European Central Bank will once again extend the program of quantitative easing.

And in the UK, things are not so happy because of the endless scandals about Brexit, and this time, Boris Johnson, who recently held the post of foreign minister, criticized Theresa May's plan. According to him, what the prime minister is doing is not in the national interest and threatens economic catastrophe. Moreover, if you look at the statistics, the data on real estate prices showed that their growth rates remained unchanged. Frankly, this does not add to the pound of optimism, since the real estate market is extremely important for the investment attractiveness of the British economy. If real estate prices have ceased to grow, then investors are extremely skeptical about the future prospects of the UK.

The ruble also became cheaper yesterday, and, of course, the correction was long overdue, it still needs a reason. This was the reason for the claims that the government of the Russian Federation is developing measures to reject the dollar in foreign trade. Such conversations have been going on for a long time, and, according to statements by a number of Wall Street businessmen who do business with Russia, the Kremlin has been nurturing such plans since the middle of zero. However, this time, Vladimir Putin has already confirmed the existence of such plans. Naturally, such steps add uncertainty and adversely affect the ruble. However, in the long run, this already promises big problems for the dollar, since if one of the largest economies in the world refuses to make payments in dollars, then its position will greatly deteriorate. Another thing is that no country alone is able to abandon the use of the dollar, and since no one joins Russia in this matter, this is extremely bad for the ruble.

But the American statistics were pretty good, as vehicle sales increased from 16.7 million to 17.4 million.

Today in the United States comes a lot of interesting data that can further contribute to the strengthening of the dollar. In particular, ADP data can show employment growth of 185 thousand versus 163 thousand in the previous month. On the eve of the publication of the report of the Ministry of Labor, the employment growth will have a significant support for the dollar, because just yesterday, forecasts for the report content were lowered. However, the index of business activity in the services sector may be reduced from 54.8 to 53.6, and the composite from 54.7 to 53.4. True, preliminary data showed a much larger decrease, so that these data can be perceived with a positive.

As for Europe, the business activity index in the services sector increased from 54.4 to 54.7, while the composite business activity index decreased from 54.5 to 54.1 due to a strong decline in the business activity index in the manufacturing sector. However, in the first half of the day, the single European currency should receive strong support from retail sales data, whose growth rates can accelerate from 1.1% to 1.7%. So, before the release of US statistics, the euro may even strengthen its position, but by the end of the day, the single European currency will be at the level of 1.1550. True, all this is only if the mass media do not exaggerate the topic regarding the fate of the euro area.

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In the UK, there are no statistics, but the endless scandals about Brexit can clearly diversify the boring life of market participants. Moreover, the expectations of American statistics will do their job, so the pound may drop to 1.2975.

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If we talk about the ruble, we have already released data on the index of business activity in the services sector, which rose from 53.3 to 54.7. However, macroeconomic statistics are of little interest to anyone, especially after the Bank of Russia demonstrated that it is not so important for him, raising the key rate solely due to external factors. And, most likely, investors will wait for more specificity regarding Russia's plans to abandon the dollar, and most importantly, the readiness of other countries to support such an initiative. Given that it takes time, market participants will wait for the publication of a report by the US Department of Labor and the dollar will hang at 65.25 rubles per dollar. If new information is received regarding sanctions in respect of the Islamic Republic of Iran, which will lead to another increase in concern in the market, then the dollar will even be able to fall in price to 64.50 rubles.

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EUR / USD. October 3. The trading system "Regression channels". Euro has all the chances to work out the moving

4-hour timeframe

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Technical data:

The senior channel of linear regression: direction - sideways.

The younger linear regression channel: direction - up.

Moving average (20; smoothed) - down.

CCI: -49.0092

The EUR / USD currency pair began the long-awaited correction at the Asian trading session on Wednesday, October 3. Yesterday's speech by Fed Chairman Jerome Powell, by and large, was ignored by traders. During his speech in Boston, Powell reiterated that the rates will gradually increase, the unemployment rate in the next two years will remain low with stable inflation. The head of the Fed did not say anything new, so we didn't see any special market reaction. Another Powell's speech will take place this evening, however, it is unlikely that there will be any fundamentally new information. Also during the day in Europe, indices of business activity in the sectors of production and services Markit and retail sales will be published. The latter figure may have an impact on the course of trading, as it is quite important. Experts predict that retail sales growth in August will be 1.7% y / y. Any value above the forecast can support the euro currency, however, while it is only a correction to the moving average line. In the United States today, Markit and ISM business indices and the ADP report on changes in the number of employees in the private sector will also be published. Employment data may also affect the movement of the pair, but this would require an unexpected report value.

Nearest support levels:

S1 - 1,1536

S2 - 1,1475

S3 - 1.1414

Nearest resistance levels:

R1 - 1.1597

R2 - 1.1658

R3 - 1.1719

Trading recommendations:

The EUR / USD currency pair has begun to adjust. Thus, to open new sell-positions with the target of 1.1536, you should wait until the correction completes, which can be determined by the price rebound from the moving or by turning the Heikin-Ashi indicator down.

Long positions can be opened after traders overcome the moving average line. The goal, in this case, will be the level of Murray "8/8" - 1.1719.

In addition to the technical picture should also take into account the fundamental data and the time of their release.

Explanations for illustrations:

The senior linear regression channel is the blue lines of the unidirectional movement.

The junior linear regression channel is the purple lines of unidirectional movement.

CCI - blue line in the indicator window.

The moving average (20; smoothed) is the blue line on the price chart.

Levels of Murray - multi-colored horizontal stripes.

Heikin Ashi is an indicator that colors bars in blue or purple.

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

GBP / USD. October 3. The trading system "Regression channels". Boris Johnson criticized Theresa May's plan again

4-hour timeframe

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Technical data:

The senior channel of linear regression: direction - sideways.

The younger linear regression channel: direction - up.

Moving average (20; smoothed) - down.

CCI: -78.4459

The currency pair GBP / USD on the night of October 3 made an attempt to start an upward correction. This is signaled by one closed purple bar. Yesterday's Jerome Powell's speech was left unattended by traders, since, by and large, the head of the Fed did not tell anything new about this. Also yesterday, there was a speech by Boris Johnson, who once again criticized May's plan for Brexit and urged parliament to abandon it. According to Johnson, the so-called Checkers Plan will make the British economy vulnerable and dangerous from both a political and an economic point of view. The former head of the British Foreign Ministry believes that the best option would be an agreement on the "Canadian" type. That is, London will be able to independently negotiate with the countries of the bloc. It seems that Johnson seriously intended to take the chair of the British Prime Minister. At least, his frequent criticisms of May are clearly intended to sow additional doubts that May is doing everything right. One way or another, all these political confusions obviously do not add optimism to investors. Thus, in the near future, the pound can continue to exert pressure. Today in the UK, index of business activity in the services sector will be published.

Nearest support levels:

S1 - 1,2939

S2 - 1,2878

S3 - 1.2817

Nearest resistance levels:

R1 - 1.3000

R2 - 1.3062

R3 - 1.3123

Trading recommendations:

The currency pair GBP / USD may begin to be adjusted if the second closed bar of purple color is formed. In this case, the short positions for a while will become irrelevant, but long positions can only be considered after the price is fixed above the moving average.

Sell positions are recommended to open in case of resumption of the downward movement, which can be determined by the blue bars of the Heikin Ashi indicator. In this case, the goal will be the level of Murray "4/8" - 1.2939.

In addition to the technical picture should also take into account the fundamental data and the time of their release.

Explanations for illustrations:

The senior linear regression channel is the blue lines of the unidirectional movement.

The lower linear channel is the purple lines of unidirectional movement.

CCI is the blue line in the indicator regression window.

The moving average (20; smoothed) is the blue line on the price chart.

Levels of Murray - multi-colored horizontal stripes.

Heikin Ashi is an indicator that colors bars in blue or purple.

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

Until the end of the week, the dollar will remain the favorite

Fed Chairman Jerome Powell, speaking at the National Association of Business Economics, confirmed the Fed's policy of gradually increasing interest rates. Powell's confidence is based on some long-term trends that previously in the past fairly accurately reflected the relationship between Fed policy and the real state of the economy. In particular, Powell noted that unemployment in the United States has been at its lows over the past 20 years with stable inflation, favorable conditions will continue until at least 2020, and previously such periods have always been accompanied by accelerated inflation.

In recent decades, the relationship between these indicators has become somewhat weaker, that is, the Fed will focus on high employment, but there will be no rush to raise rates.

Thus, Powell reiterated the firmness of the Fed's course, aimed at a gradual tightening. From the text of the accompanying statement to the last meeting, the "soft" characteristic with respect to monetary policy disappeared, and the text itself was reduced by a third, that is, the Fed does not set itself the goal of informing the market in detail about its plans.

At the same time, despite the fact that the Fed left its forecast for the rate unchanged and focuses the markets on 3 increases in 2019, the CME futures market is far from being so unequivocal. The probability of a December rate hike is just over 80%, that is, the market is not completely sure, and the next increase is expected by most players no earlier than June 2019.

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Thus, the position of the Fed is somewhat different from market forecasts. The Fed assumes that favorable conditions in the US economy will continue until the end of 2020, while some experts expect the inversion of the yield curve in the first half of 2019.

Powell's speech as a whole should support the dollar, but the main factor for strengthening should still be considered the reduction of the Fed balance sheet, withdrawing from circulation excess dollars issued during periods of quantitative expansion. In the 4th quarter, the volume of the monthly reduction increased to $ 50 billion. On Monday, the dollar strengthened slightly after the Fed had withdrawn another 19 billion from circulation the day before.

If the Fed's policy was the only factor determining the demand for the dollar, nothing would hinder its strengthening. However, in recent days, a number of market sectors have begun to grow, which indirectly indicates a weakening of the dollar's position in the medium term. The first growth was oil, and the markets were quick to explain this growth by preparing to leave the Iranian oil market due to sanctions and the likely increase in the supply deficit, but what about other commodity sectors? On Tuesday, gold prices rose noticeably, copper and aluminum quotations reached monthly highs, and in general, the industrial metals sector is recovering at a good pace, which can also mean a decrease in demand for protective assets. Goldman Sachs and Deutsche Bank predict further strengthening of gold, Nordea Bank expects the dollar growth period to end in the coming months, and before the end of the year, the markets will see the dollar index turning down.

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The reason for such skepticism is the expectation that a number of central banks, and especially the ECB, are starting their own exit programs from soft monetary policy, which will help to reduce the yield spread. The second reason, no less significant, is the growing doubts that the Trump administration will be able to reformat foreign trade in its own favor and implement plans to repatriate capital and industrial production in the United States. Tax reform has led to a noticeable reduction in budget revenues, which, in turn, contributes to accelerating the level of public debt and the cost of its services, and compensating mechanisms that the Administration actively promoted by rewriting trade agreements will not be able to produce the expected effect.

In favor of this scenario, the latest ISM report on activity in the manufacturing sector. In September, the PMI index dropped to 59.8 pp versus 61.3 pp a month earlier, business sentiment is worsening. Today, market attention will be directed to a similar report in the service sector.

Before the publication of the labor report on Friday, the dollar will look confident, because at the current moment, the market expectations for a rise in the patch in September are positive.

The currency pair EUR / USD is trying to strengthen on Wednesday morning. However, they are likely to be used for new sales. During the day, the euro may fall to a minimum of 1.1509 week.

The currency pair GBP / USD will also decrease, reaching the level of 1.3030 will be used for sales, likely to decline to 1.2940 and further to 1.2895.

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Market consolidates pending NFP

On Tuesday, the foreign exchange market did not demonstrate an unambiguous dynamics. As before, the influence of multidirectional forces both supports and exerts pressure on the US dollar rate.

On the whole, the dollar remains in favor in the wake of the apparent divergence of the interest rate differential between the Fed and all central banks, whose currencies are the main ones. The dynamics of the ICE dollar index actually remains lateral for six months, which indicates the lack of clear and unambiguous drivers for the growth of the US currency. These include the continuation of the Fed's desire to further raise interest rates, their existing differential in favor of the dollar, as well as its function of a safe haven currency against the background of a high uncertainty factor in the world due to trade wars. And although the States managed to crush Mexico and Canada, having won the dispute, there are still Europe and China. The EU has partially surrendered to the victor's mercy, but the PRC is still opposing, and how it will all end is not yet clear.

Negative for him remains a complex domestic political situation in the United States. The likelihood of D. Trump's impeachment, if he loses the mid-term congressional elections, holds back not only the upward dynamics of the US stock market, but also the dollar. In general, there is a tangle of contradictions, which leads to the fact that investors are cautious in making decisions in the markets.

Today, the attention of the markets will be focused on the publication of these indices of business activity in the services sector of the Eurozone, Germany, Great Britain, and the USA. It is assumed that the German indicator and the eurozone indicator will show the preservation of the growth rate in September of 56.3 and 54.7 points, respectively. At the same time, the British index should be adjusted to 54.0 points from 54.3 points, as well as the American one, to 58.1 points from 58.5 points.

The focus will be more on the publication of data on employment in the private sector from the company ADP. The number of new jobs is expected to increase to 187,000 in September against an increase of 163,000 in August.

We do not expect the market to respond vigorously to data from ADP and figures from indices of business activity indexes in the services sector. Most likely, the overall dynamics of market consolidation before the publication of official data from the US Department of Labor will continue this Friday.

Forecast of the day:

The currency pair AUD / USD is trading above the level of 0.7165. A decline below this mark may be the reason for the price to fall to 0.7130, and then to 0.7100.

The currency pair USD / JPY is trading below the level of 113.85. The persistence of the tension factor in the world, as well as, probably, weak statistics from the United States may push the pair to decline to 113.00.

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Fractal analysis of major currency pairs on October 3

Dear colleagues.

For the currency pair Euro / Dollar, to the level of 1.1605, we expect the registration of the expressed initial conditions for the top. For the Pound / Dollar currency pair, the downward movement is possible after the breakdown of 1.2953 and the level of 1.3055 is the key support. The pair Dollar / Franc currency pair, we follow the development of the ascending cycle of September 21 and we expect further uptrend after the breakdown of 0.9852. For the currency pair Dollar / Yen, the price is still in the correctional area of the upward structure. For the Euro / Yen currency pair, the continuation of the development of the downward structure of September 25 is expected after the breakdown of 130.94. For the Pound / Yen currency pair, the development of the downward structure of September 21 is expected after the breakdown of 146.84.

Forecast for October 3:

Analytical review of currency pairs in the scale of H1:

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For the Euro / Dollar currency pair, the key levels on the scale of H1 are: 1.1605, 1.1571, 1.1553, 1.1516 and 1.1496. Here, the price entered the correction zone and we are waiting for the initial conditions for the upward cycle to be completed. The short-term upward movement is possible in the range of 1.1553 - 1.1571 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 1.1605 and this level is the key support for the downward structure.

The short-term downward movement is possible in the range of 1.1516 - 1.1496. Hence, we expect a key upward reversal.

The main trend is the downward cycle from September 24.

Trading recommendations:

Buy 1.1553 Take profit: 1.1570

Buy 1.1573 Take profit: 1.1603

Sell: 1.1516 Take profit:

Sell: Take profit: 1.1496

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For the Pound / Dollar currency pair, the key levels on the scale of H1 are 1.3114, 1.3055, 1.3018, 1.2953, 1.2908, 1.2867 and 1.2803. Here, we are following the downward structure of September 20th. A downward movement is expected after the breakdown of 1.2953. In this case, the target is 1.2908 and in the range of 1.2908 - 1.2867 is the short-term downward movement, as well as the consolidation. The potential value for the bottom is considered the level of 1.2803, the movement to which is expected after the breakdown of 1.2865.

The short-term upward movement is possible in the range of 1.3018 - 1.3055 and the breakdown of the latter value will lead to a prolonged movement. Here, the target is 1.3114. The range of 1.3114 - 1.3149, before it, we expect clearance of the expressed initial conditions for the ascending cycle.

The main trend is the downward structure of September 20.

Trading recommendations:

Buy: 1.3018 Take profit: 1.3053

Buy: 1.3057 Take profit: 1.3114

Sell: 1.2953 Take profit: 1.2909

Sell: 1.2906 Take profit: 1.2868

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For the Dollar / Franc currency pair, the key levels on the scale of H1 are: 0.9907, 0.9852, 0.9812, 0.9785, 0.9759 and 0.9729. Here, we continue to follow the development of the ascending cycle of September 21. The continuation of the upward movement is expected after the breakdown of 0.9852. In this case, the goal is 0.9907, upon reaching this level we expect a rollback downwards.

The short-term downward movement is possible in the range of 0.9812 - 0.9785 and the breakdown of the latter value will lead to a prolonged correction. Here, the goal is 0.9759 and this level is the key support for the upward structure. Its breakdown will have a downward structure. In this case, the potential target is 0.9729.

The main trend is the upward structure of September 21.

Trading recommendations:

Buy: 0.9855 Take profit: 0.9905

Buy: Take profit:

Sell: 0.9812 Take profit: 0.9785

Sell: 0.9783 Take profit: 0.9760

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For the Dollar / Yen currency pair, the key levels on the scale of H1 are: 114.32, 114.00, 113.83, 113.60, 113.36 and 113.01. Here, we are following the local ascending structure of September 13. The short-term upward movement is possible in the range of 113.83 - 114.00 and the breakdown of the last value will lead to a movement to the potential target of 114.32, upon reaching this level we expect a pullback downwards.

The short-term downward movement is possible in the range of 113.60 - 113.36 and the breakdown of the last value will lead to a protracted correction. Here, the target is 113.01 and this level is the key support.

The main trend: the local upward structure of September 13.

Trading recommendations:

Buy: Take profit:

Buy: 114.03 Take profit: 114.30

Sell: 113.60 Take profit: 113.38

Sell: 113.34 Take profit: 113.07

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For the Canadian dollar / Dollar currency pair, the key levels on the scale of H1 are: 1.2953, 1.2904, 1.2873, 1.2846, 1.2786, 1.2743, 1.2681 and 1.2645. Here, we are following the downward structure of September 27. The short-term downward movement is possible in the range of 1.2786 - 1.2743 and the breakdown of the latter value will lead to a pronounced movement. Here, the target is 1.2681. The potential value for the bottom is considered the level of 1.2645, upon reaching which we expect consolidation in the range of 1.2645 - 1.2681, as well as a rollback to the top.

The short-term uptrend is possible in the range of 1.2846 - 1.2873 and the breakdown of the last value will lead to a prolonged correction. Here, the goal is 1.2904 and this level is the key support for the downward structure of September 27. Its price will have the formation of the initial conditions for the upward cycle. In this case, the target is 1.2953.

The main trend is the downward structure of September 27.

Trading recommendations:

Buy: 1.2846 Take profit: 1.2871

Buy: 1.2874 Take profit: 1.2902

Sell: 1.2784 Take profit: 1.2746

Sell: 1.2740 Take profit: 1.2684

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For the Australian Dollar / Dollar currency pair, the key levels on the scale of H1 are: 0.7261, 0.7236, 0.7221, 0.7186, 0.7168, 0.7144 and 0.7130. Here, we follow the downward structure of September 21. The short-term downward movement is possible in the range of 0.7186 - 0.7168 and the breakdown of the latter value will lead to the development of a pronounced movement. Here, the target is 0.7144. The potential value for the bottom is considered to be the level of 0.7130, upon reaching which we expect consolidation in the range of 0.7144 - 0.7130, as well as a rollback to the top.

The short-term uptrend is expected in the range of 0.7221 - 0.7236 and the breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.7261 and this level is the key support.

The main trend is the downward structure of September 21.

Trading recommendations:

Buy: 0.7221 Take profit: 0.7234

Buy: 0.7238 Take profit: 0.7260

Sell: 0.7186 Take profit: 0.7170

Sell: 0.7166 Take profit: 0.7146

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For the Euro / Yen currency pair, the key levels on the scale of H1 are: 132.44, 131.93, 131.56, 130.94, 130.34, 129.97 and 129.43. Here, we are following the downward structure of September 25th. The downward movement is expected after breakdown of 130.94. In this case, the target is 130.34 and in the range of 130.34 - 129.97 is the short-term movement, as well as the consolidation. The potential value for the bottom is considered the level of 129.43, after reaching which we expect a rollback to the top.

The short-term upward movement is possible in the range of 131.56 - 131.93 and the breakdown of the last value will lead to a prolonged correction. Here, the goal is 132.44 and this level is a key support for the downward structure. Its breakdown will have to develop the ascending structure. In this case, the potential target is 133.10.

The main trend is the downward structure of September 25.

Trading recommendations:

Buy: 131.56 Take profit: 131.90

Buy: 131.95 Take profit: 132.40

Sell: 130.90 Take profit: 130.40

Sell: 130.31 Take profit: 130.00

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For the Pound / Yen currency pair, the key levels on the scale of H1 are: 149.00, 148.50, 148.01, 146.84, 145.89, 144.86 and 144.11. Here, we are following the downward structure of September 21 as the main structure. The continuation of the downward movement is expected after the breakdown of 146.84. Here, the target is 145.89, near this level is the consolidation. The breakdown of the level of 145.89 will lead to the development of a pronounced movement. Here, the target is 144.86. The potential value for the bottom is considered the level of 144.11, upon reaching which we expect a rollback to the top.

The short-term upward movement is possible in the range of 148.01 - 148.50 and the breakdown of the latter value will lead to a deep correction. Here, the target is 149.00 and this level is the key support for the downward structure.

The main trend is the downward structure of September 21.

Trading recommendations:

Buy: 148.01 Take profit: 148.50

Buy: 148.60 Take profit: 149.00

Sell: 146.80 Take profit: 146.00

Sell: 145.85 Take profit: 145.00

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Intraday technical levels and trading recommendations for EUR/USD for October 3, 2018

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On the weekly chart, the EUR/USD pair is demonstrating a high-probability Head and Shoulders reversal pattern where the right shoulder is currently in progress (recent bearish engulfing weekly candlestick).

Recently, the price level of 1.1500 offered temporary bullish recovery. Another bullish movement was demonstrated towards the upper limit of the price range (1.1750). However, the EUR/USD bulls failed to pursue towards higher bullish targets.

Instead, evident bearish rejection is being demonstrated on the daily chart. Recent bearish movement is currently taking place towards 1.1520 (the lower limit of the consolidation range).

As for the bearish side of the market to be dominant, the EUR/USD pair should be able to push below 1.1520. The first bearish target would be located around 1.1420.

Otherwise, the EUR/USD pair remains trapped within the depicted consolidation range (1.1520-1.1750) if no strong bearish pressure is applied against 1.1520.

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Intraday technical levels and trading recommendations for GBP/USD for October 3, 2018

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On September 13, the depicted daily downtrend line which came to meet the pair around 1.3025-1.3090 failed to offer enough bearish pressure on the pair. Since then, the GBP/USD pair has been demonstrating a successful bullish breakout so far.

However, on H4 chart, the market failed to maintain its uptrend within the depicted bullish channel on H4 chart. The lower limit of the depicted channel (which came to meet the GBP/USD pair around 1.3190) failed to offer sufficient bullish demand.

Therefore, the GBP/USD short-term outlook turned to become bearish towards 1.3010 (50% Fibonacci level) and 1.2940 (recent demand level).

As anticipated, the price level of 1.3190 (the backside of the broken bullish channel) offered significant bearish rejection where the depicted recent bearish movement was initiated.

On the other hand, regarding the price levels (1.3010-1.3090) corresponding to 50% and 61.8% Fibonacci levels. Currently, these price levels turned to become supply levels to be watched for bearish price action on retesting.

The current decline below 1.3010 (50% Fibo level) should be defended to pursue towards lower bearish targets. Otherwise, a further bullish advance towards 1.3090 would be expected.

Hence, the GBP/USD pair would have short-term bearish target around 1.2900-1.2940 (the backside of the broken daily downtrend and a prominent H4 demand zone) and possibly around 1.2845 if enough bearish pressure is demonstrated.

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EUR / USD pair: plan for the European session on October 3. Euro buyers expect retail sales in the eurozone

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

To maintain the upward trend in the European currency, buyers need to stay above the support level of 1.1572. The formation of a false breakout on it will be a signal to open new long positions in order to update the resistance levels of 1.1611 and 1.1648, where taking profits are recommended. Good data on retail sales in the euro area, which will be released in the first half of the day, can also support the correction trend in the euro. In case of EUR / USD decline under the support level of 1.1572, purchases can be returned after testing the level of 1.1539 or to rebound from 1.1506.

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

Euro sellers are required to return and consolidate below the support of 1.1572, which will lead to the formation of pressure and update a larger area of 1.1539, from which the bulls will try to build the lower limit of the upward channel. A break of 1.1539 will lead to the resumption of a downtrend with a test of 1.1506 and 1.1448 lows, where taking profits are recommended. If the euro rises in the first half of the day, you can sell on a false breakdown from the resistance level of 1.1611 or rebound from 1.1648.

Indicator signals:

Moving Averages

The price moved above the 30-day and 50-day moving average, which indicates the formation of an upward correction. As long as trade will be conducted above average, the demand for the euro will continue.

Bollinger bands

The break of the upper border of the Bollinger Bands indicator around 1.1590 will be a signal to buy euros. In case of a decrease, the support will be provided by the middle of the bands.

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Description of indicators

  • MA (moving average) 50 days - yellow
  • MA (average sliding) 30 days - green
  • MACD: fast EMA 12, slow EMA 26, SMA 9
  • Bollinger Bands 20
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Forecast for GBP / USD pair on October 3, 2018

GBP / USD pair

On Tuesday, the British pound fell by 59 points under pressure from a stronger dollar and a decline in the UK business activity in the construction sector from 52.9 to 52.1 in September. Support for the balance line on a daily scale was strong enough, the pound could not radically shift the balance downward.

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On the four-hour chart, the Marlin oscillator and price formed a corrective convergence. Growth to 1.3092 is possible, which is a technical level, from which the price made local reversals three times, starting from September 11 that are noted on these levels. The MACD line and the line of balance unfolded upwards (red) tend to the same level. After correction, we are waiting for a new wave of decline to 1.2880.

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Technical analysis of AUD/USD for October 03, 2018

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Overview:

Pivot: 0.7267

The AUD/USD pair will be probably continue to climp from the level of 0.7233 in the long term. It should be noted that the support is established at the level of 0.7233 which represents the 50% Fibonacci retracement level on the H4 chart. The price is likely to form a double bottom in the same time frame. Accordingly, the AUD/USD pair is showing signs of strength following a breakout of the highest level of 0.7260. So, buy above the level of 0.7260 with the first target at 0.7309 in order to test the daily resistance 1 and further to 0.7346. Besides, it might be noted that the level of 0.7379 is a good place to take profit because it will form a double top. On the other hand, in case a reversal takes place and the AUD/USD pair breaks through the support level of 0.7233, a further decline to 0.7153 can occur which would indicate a bearish market.

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Technical analysis of USD/CHF for October 03, 2018

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Overview:

The USD/CHF pair continues to move upwards from the level of 0.9809. Yesterday, the pair rose from the level of 0.9809 to a top around 0.9865. Today, the first resistance level is seen at 0.9865 followed by 0.9922, while daily support 1 is seen at 0.9743 (61.8% Fibonacci retracement). According to the previous events, the USD/CHF pair is still moving between the levels of 0.9809 and 0.9922; so we expect a range of 113 pips.

Furthermore, if the trend is able to break out through the first resistance level at 0.9865, we should see the pair climbing towards the second resistance (0.9922) to test it.

Therefore, buy above the level of 0.9865 with the first target at 0.9922 in order to test the daily resistance 2 and further to 0.9963. Also, it might be noted that the level of 0.9963 is a good place to take profit because it will form a new double top. On the other hand, in case a reversal takes place and the USD/CHF pair breaks through the support level of 0.9809, a further decline to 0.9743 can occur which would indicate a bearish market.

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Fundamental Analysis of EUR/JPY for October 3, 2018

EUR/JPY has been quite volatile amid the nearish bias recently after consistent bullish momentum in the pair since it bounced off the 125.50 area on August. EUR has been the dominant currency in the pair, whereas JPY is to blame for further weakness against the EUR.

This week, despite fresh worse-than-expected economic data from Japan, the JPY growth against EUR remains unaffected. JPY mainly gained momentum after ECB conference which revealed the dovish stance. Besides, the the eurozone released a series of downbeat PMI reports. Today no macroeconomic reports are published, but on Friday Japan's Household Spending report is due which is expected to decrease to 0.0% from the previous value of 0.1%, Average Cash Earnings is expected to decrease to 1.3% from the previous value of 1.6% but Leading Indicators is expected to increase to 104.3% from the previous value of 103.9%.

On the other hand, EUR has been still quite mixed in light of recently published economic data which maintained the indecisive momentum for the currency in the market. Despite the German Unity Day holiday, today Spanish Services PMI report was published with a decrease to 52.5 from the previous figure of 52.7 which was expected to increase to 52.9, Italian Services PMI increased to 53.3 from the previous figure of 52.6 which was expected to be at 52.8, French Final Services PMI increase to 54.8 which was expected to be unchanged at 54.3, and German Final Services PMI decreased to 55.9 which was also expected to be unchanged at 56.5. Moreover, the eurozone's Final Services PMI was published unchanged as expected at 54.7 and Retail Sales report was published with a slight increase to -0.2% from the previous value of -0.6% but failed to meet the expectation of 0.2%.

As Japan presents no economic data till Friday, EUR could take advantage and gain certain momentum. But indecisive readings held the price back in the range with no definite pressure on either side of the market. If Japan's economic reports show better-than-expected figures in the coming days, the bearish pressure is expected to extend further.

Now let us look at the technical view. The price has been quite impulsive with the bullish gains today which started with a bounce off the dynamic level of 20 EMA and 131.00 support area. Despite the long-term bullish pressure, the price has been quite impulsive with the recent bearish momentum which is expected to continue pushing further lower if the price manages to break below 131.00 area with a daily close leading the price towards 129.50 area in the coming days. As the price remains below 132.00 area, the bearish pressure is expected to continue.

SUPPORT: 131.00, 129.50

RESISTANCE: 132.00

BIAS: BULLISH

MOMENTUM: VOLATILE

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USD/CAD analysis for October 03, 2018

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Recently, the USD/CAD pair has been trading sideways at the price of 1.2835. According to the M30 time – frame, I found that potential a bearish flag in creation. My advice is to watch for a potential bearish breakout of the lower diagonal to confirm further downward continuation. Take profit level is set at the price of 1.2784

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GBP/USD analysis for October 03, 2018

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Recently, the GBP/USD pair has been trading downwards. The price tested the level of 1.2965. Anyway, according to the H4 time – frame, I found that price rejected from the key support upward trendline at the price of 1.2945, which is a sign that selling looks risky. The overall trend is bullish and my advice is to go with the direction of the trend. Watch for buying opportunities with the take profit level at 1.3080.

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Bitcoin analysis for October 03, 2018

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Trading recommendations:

According to the H1time - frame, I found that Bitcoin has been trading downwards. As I expected, the price tested the level of $6.361. I found the breakout of the bearish flag and fnished upward correction (abc flat) in the background. My advice is to watch for selling opportunities. The downward targets are set at the price of $6.290 and at the price of $6.075.

Support/Resistance

$6.410 – Intraday resistance

$6.290– Intraday support

$6.290 – Objective target 1

$6.075 – 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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Technical analysis: Intraday levels for EUR/USD, Oct 03/2018

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When the European market opens, some economic data will be released such as Retail Sales m/m, Final Services PMI, German Final Services PMI, French Final Services PMI, Italian Services PMI, Italian Services PMI, and Spanish Services PMI. The US will also present a series of economic reports such as Crude Oil Inventories, ISM Non-Manufacturing PMI, Final Services PMI, ADP Non-Farm Employment Change. So amid such a busy economic calendar, EUR/USD will move with medium volatility during this day.

TODAY'S TECHNICAL LEVELS:

Breakout BUY Level: 1.1606

Strong Resistance:1.1599

Original Resistance: 1.1588

Inner Sell Area: 1.1577

Target Inner Area: 1.1550

Inner Buy Area: 1.1523

Original Support: 1.1512

Strong Support: 1.1501

Breakout SELL Level: 1.1494

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or 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: Intraday levels for USD/JPY, Oct 03/2018

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In Asia, Japan today will not release any economic data. On the other hand, the US will release a batch of economic data such as crude oil Inventories, ISM Non-Manufacturing PMI, Final Services PMI, and ADP Non-Farm Employment Change. So there is a probability the USD/JPY pair will move with medium volatility during this day.

TODAY'S TECHNICAL LEVELS:

Resistance 3: 114.16

Resistance 2: 113.94

Resistance 1: 113.72

Support 1: 113.44

Support 2: 113.22

Support 3: 113.00

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or 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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Fundamental Analysis of GBP/USD for October 2, 2018

GBP/USD has been quite impulsive amid the bearish bias today after being rejected off the 1.3050 area with a daily close recently. After the recent rate hike from 2.00% to 2.25%, USD gained good sustainable momentum in the market against GBP which is expected to extend further in the coming days.

Today the UK Nationwide HPI report was published with an increase to 0.3% from the previous value of -0.5% which was expected to be at 0.2% but Construction PMI report showed a decline to 52.1 from the previous figure of 52.9 which was expected to be at 52.8. Ahead of the high impact Services PMI report tomorrow which is expected to decrease to 54.0 from the previous figure of 54.3, GBP is still quite weak against USD. Besides, any worse-than-expected results may deal another blow to the British currency.

On the other hand, ahead of NFP reports this week USD is trading with higher volatility. Today FED Chairman Powell is going to speak about the centeral bank's plans for further monetary tightening. In light of the recent rate hike from 2.00% to 2.25%, USD gained good momentum against all the majors which is expected to continue further though certain correction and retracement can be observed along the way.

Meanwhile, USD is still quite impressive with the recent gains. On the other hand, GBP has been undermined by weak expectations from the upcoming economic reports. Thus, soft fundamentals are the reason for further bearish pressure in the coming days.

Now let us look at the technical view. The price has been quite impulsive with the bearish gains after rejecting off the 1.3050 area and dynamic level of 20 EMA which is expected to lead to further bearish pressure with target towards 1.2850 and later towards 1.2650 area. As the price remains below 1.3050 with a daily close, the bearish bias is expected to continue further.

SUPPORT: 1.2850, 1.2650

RESISTANCE: 1.3050, 1.3200

BIAS: BEARISH

MOMENTUM: IMPULSIVE

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Fundamental Analysis of USD/JPY for October 2, 2018

USD/JPY has been quite impulsive with the bullish gains.The pair is expected to retrace back towards 113.00 area before pushing higher afterwards. Ahead of the NFP reports this week, USD is expected to lose certain grounds in the process for a short period of time before it resumes the overall upward bias.

As JPY has been quite slow with the progress recently which led the currency to lose some grounds against USD. However, today economic data from Japan revealed mixed results, which lead to certain bearish pressure in the pair throughout the day. Today Japan's Monetary Base report was published with a decrease to 5.9% from the previous value of 6.9% which was expected to increase to 7.1% and Consumer Confidence report was published with an increase to 43.4 from the previous figure of 43.3 which was expected to decrease to 43.0.

On the other hand, ahead of NFP reports this week USD is trading with indecisive momentum. Today FED Chairman Powell is going to speak about the central bank's plans for further monetary tightening. In light of the recent rate hike from 2.00% to 2.25%, USD gained good momentum against all the majors which is expected to continue further though certain correction and retrace can be observed along the way.

Meanwhile, USD is still the strongest currency in the pair whereas JPY is expected to struggle further in the process though certain short-term gains may be observed in the coming days. Ahead of high impact US economic reports, USD is expected to be quite volatile, but better-than-expected figures are likely to trigger more impulsive pressure in the future.

Now let us look at the technical view. The price is currently quite bearish with the momentum which is expected to lead to certain retrace towards 112.50 to 113.00 support area before pushing higher with target towards 114.50-115.00 resistance area in the coming days. As the price is residing quite away from the mean 20 EMA, the price has greater probability to retrace lower before pushing higher to continue with the trend. As the price remains above 112.00 area, the bullish bias is expected to continue.

SUPPORT: 112.00-50, 113.00

RESISTANCE: 114.50, 115.00

BIAS: BULLISH

MOMENTUM: VOLATILE

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Technical analysis of Gold for October 3, 2018

Gold price broke above the short- and long-term bearish channels. Price is back above $1,200. As long as we trade above $1,190, I expect Gold to move higher towards $1,220-30 area.

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Green lines - long-term bearish channel

Red lines - short-term bearish channel

Gold price is trading around $1,203. Gold bulls will need to break above the next resistance at $1,211 in order to continue higher towards $1,220-30 area. Gold price breaking above the bearish channels is a positive sign. A rejection at current levels and a push below $1,200 will not be a positive sign.

The move towards $1,180 was most probably a fake break down. This will be confirmed on a break above $1,211.

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Technical analysis of EUR/USD for October 3, 2018

EUR/USD has touched the support trend line we showed yesterday for the 8th time and prices bounced strongly from 1.1505 to 1.1590. Price is making higher highs and higher lows in short time frames. Bulls need to hold above 1.1534 in order for the bullish short-term trend to remain intact.

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Red line - major resistance

Blue line - major support

EUR/USD is bouncing. Next resistance is at 1.1630. Support is at 1.1530-1.15. The bounce will continue higher as long as price is above 1.1530. I expect EUR/USD to move higher over the coming weeks above the red trend line resistance. The recent low could be an important one, but this will be more certain if price breaks above 1.1630.

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Trading plan for 03/10/2018

Financial markets are still focusing on Italy, although today the reports are positive. Valuation of EUR and other currencies from Europe are improving. The stock market, however, maintains declines. Crude oil is holding fast.

In the morning the EUR jumped after information from Corriere della Sera, according to which Italy will commit to lowering the deficit to 2.0 % GDP by 2021, instead of upholding the deficit at 2.4%. The decision is dictated by criticism from the EU. The draft budget assumes 2.4% in 2019 and 2.2% in 2020. Information weakens worries around Europe, which also helps SEK, NOK and GBP. GBP / USD returned over 1.30. But USD / JPY is still struggling to maintain over 113,60 / 70 support. The Nikkei225 is disturbing in this move because it is falling 0.7% today.

On Wednesday, the 3rd of October 2018, the event calendar is quite busy in important data releases, as there are PMI Services and Composite PMI data to be released from across the Eurozone (Germany, France, Spain, Italy) and the UK. Moreover, during the US session, the US will post ADP Non-Farm Employment Change data, ISM Non-Manufacturing data, Final Services PMI, Composite PMI, and Crude Oil Inventories data. Moreover, there are some spechees scheduled from the FOMC members like Lael Brainard, Charles Evans, Loretta Mester, and Jerome Powell.

AUD/USD analysis for 10/03/2018:

Home building permits in Australia in August fell by 9.4% m / m, totally surprising forecasts set at 1.0 percent. The annual dynamics decreased to -13.6% from 5.4%. The data is relatively old, which reduces the significance for AUD, but points to the problems of the real estate market.

Let's now take a look at the AUD/USD technical picture at the H1 time frame. The market is clearly locked between two main levels now: the technical resistance at the level of 0.7195 and the technical support at the level of 0.7160. The trend at this time frame is horizontal to bearish, but at the larget time frames, the trend remains clearly bearish, and this is why another spike to the downside is being expected aftet the corrective pull-back is finished.

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Bitcoin analysis for 03/10/2018

The Reserve Bank of India (RBI) denied the formal establishment of the unit for research on artificial intelligence and Blockchain technology. This explanation follows the investigation conducted by one of the financial newspapers in India. It appears several weeks after rumors began to circulate that the central bank was to set up an alleged unit to investigate and possibly develop regulations for new technologies. In an article on the alleged creation of an individual, the Economic Times cited two anonymous sources that were "familiar with the plans of the central bank." However, one of the journalists submitted Right To Information (RTI) to confirm the information given in the article and get more information about the new unit. In response, RBI writes: "There is no new unit created formally in the RBI for purposes (Blockchain, Crypto and AI) mentioned in the RTI query".

Thus, while the RBI has set up a unit to "study and provide guidance on the desirability and feasibility of a central bank digital currency", it appears that its position regarding the use of crypto in a more general sense has not become more favorable.

Let's now take a look at the Bitcoin technical picture at the H4 time frame. The price has broken below the local technical support at the level of $6,413 and now is heading towards the level of $6,289 (support). nevertheless, the price will remain inside the horizontal consolidation, as the key level for a breakout is located at $6,056. The market conditions are now oversold slightly at this time frame and the momentum remains neutral.

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Ripple analysis for 03/10/2018

Former US President Bill Clinton spoke at a conference on cryptocurrencies to convey the word of warning to policymakers who want to regulate what he terms promising technological progress. On stage at the Ripple's Swell conference in San Francisco, Gene Sperling, a former White House advisor currently on the board of the Ripple, joined Clinton. Clinton - who was president of the United States in 1993-2001 - was the main speaker at this event.

In recent months, the company has been enthusiastically entering the establishment's circles. Just a few days ago, it was reported that Ripple, together with several other companies, created Securing America's Internet of Value Coalition (SAIV), a support group that will partially pay off its lobbying company in XRP.

During a question and answer session with Sperling, Clinton touched upon many topics, such as the cybersecurity challenges facing the US government. He also discussed topics that go beyond the theme of the conference in the field of financial technology, including laws regarding weapons, foreign policy and his latest published novel.

However, perhaps the most important thing for customers in Swell was Clinton's statement about "disproportion in access" to new, growing technologies, such as Blockchain, in which he compared the current situation to e-commerce solutions in the late 90s: "The more new technologies are developed, such as Blockchain ... AI technologies, robotic technologies ... the more the differences in access will be felt " - he said.

Clinton also admitted that new technologies could be abused, pointing to fears that terrorists or other criminals might use cryptocurrencies to launder money. Referring to similar problems in relation to technologies such as the GPS (Global Positioning System), Clinton noted that one must try to identify the faults in an intelligent manner and that the old regulatory regime cannot be applied to the new technology: "You have to end up killing the hen that folded the golden eggs "- he added at the end of his speech.

Let's now take a look at the Ripple technical picture at the H4 time frame. The market is still moving inside of the downward channel and the technical support at the level of 0.4924 is getting closer. The market conditions are now oversold and there is a developing bullish divergence between the price and the momentum indicator. Please notice, the latest rally at this cryptocurrency might now be over and the strength is still visible in the foreground. The nearest technical resistance is seen at the level of 0.5259.

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