BITCOIN Analysis for October 9, 2018

Bitcoin has been quite indecisive with the recent price action. The price jumped higher above $6,600 yesterday. Today, the price reversed its direction, dropping lower at same strength today. The overall trend momentum is seen as neutral in the current market situation. The price has been impulsive amid the bearish pressure, having a bearish Tenkan and Kijun line cross along with Kumo Cloud break below. Nevertheless, the price is still expected to climb higher as it remains above $6,000-6,500 area. The price may correct a bit more in the coming days before pushing higher, whereas a break above $6,600 again is not ruled out which could lead to an impulsive bullish move in the coming days.

SUPPORT: 6,000, 6,500

RESISTANCE: 7,500, 8,000

BIAS: BULLISH

MOMENTUM: VOLATILE

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The dollar is preparing for elections

In the 4th quarter of 2018, the US Federal Reserve will increase the monthly balance reduction to $ 50 billion / month. Accelerating the rate of balance reduction can lead to a lack of liquidity and will contribute to the strengthening of the dollar in the short term, at least before summing up the results of elections to the Congress and in the longer term, before the next Fed meeting in December and the likely correction of long-term forecasts.

Reducing the balance will lead to a reduction in the monetary base.

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The correlation between the EUR / USD rate (in a broad sense, the dollar index) and the monetary base is clearly visible all the last 10 years of the soft financial policy. Expansion of the monetary base as a result of quantitative easing programs has always led to a weakening of the dollar, the periods between the QE waves were characterized by a reverse movement towards the strengthening of the dollar.

At the current stage, the Fed is reducing its balance sheet, but this process will obviously be accompanied by a reduction in the monetary base. This factor is one of the most powerful drivers in favor of strengthening the dollar, along with the yield spread.

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Thus, dollar strengthening is an objective process and directly follows from the Fed policy. Only two factors can stop this strengthening, the policy of normalization by other central banks or the inability of the US economy to withstand the pace of tightening financial conditions.

There are changes on the first point, but they are not significant enough to stop the trend for the dollar. The Central Bank of Japan changed the bond redemption program, which led to an increase in yields, but these measures are more cosmetic and do not pose a threat to the dollar. The Bank of England began the rate growth process, but the growth rates noticeably lag behind the Fed (no more than one increase of 0.25% per year), and, secondly, there is no talk about reducing the Bank's balance sheet. You also need to keep in mind the problems with Brexit, which can lead to a significant deterioration in the trade balance and budget revenues, as well as low GDP growth. The ECB is consistently reducing asset redemption programs, the first rate hike is expected no earlier than the summer of 2019 (and most likely in the fall), and there is no talk about balance reduction.

Thus, the US Federal Reserve Bank is ahead of other central banks for at least 3 years, and therefore there is no threat of a trend reversal on the dollar from this side.

Significantly large concerns are the state of the US economy. Official statistics, reflecting the state of key parameters, confidently positive, consumer confidence at the highs, the labor market is approaching full employment, GDP growth rates are high, ISM business activity indices are at 10-year highs. At the same time, there is one factor that negates all these advantages with the stroke of a pen, these are budget revenues.

According to the CBO, the budget deficit in the fiscal year 2018 reached 782 billion, and this is an adjusted figure, taking into account the output, without them, the deficit would have been 826 billion, or 4.1% of GDP. The cost of interest payments increased by 62 billion, or 20% compared to 2017, in general, the revenue side of the budget is reduced, and the expenditure side increases. The situation is developing so rapidly that the NWO is forced to adjust the long-term forecasts issued in June in the direction of deterioration.

NWO fears that the development of the financial crisis will lead to the refusal of investors to finance government loans, unless they are accompanied by very high interest rates.

The fate of the dollar is decided in the coming months. While the trend to strengthen it is not in doubt, however, it should be supported by strong macroeconomic data, otherwise, a new financial crisis is likely to occur already in the first half of 2019.

EUR / USD

The euro is under pressure, the nearest support is 1.1460, probably a decline during the day to 1.1430.

GBP / USD

The pound has support from rumors about a possible compromise on Brexit, so it will look a little better than the euro during the day. More likely to trade in the range of 1.3030 - 1.3130 with a chagrin to the upper boundary.

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EUR / USD. October 9th. The trading system "Regression Channels". Another weak correction round for the euro

4-hour timeframe

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Technical data:

The senior linear regression channel: direction - sideways.

The younger linear regression channel: direction - down.

Moving average (20; smoothed) - down.

CCI: -47.1642

Despite the fact that on the first working day of the week, no important macroeconomic data was available to traders, the day ended with the growth of the American currency. Only tonight, the pair started a kind of upward correction, but even before the moving prices, the quotes are still far away. In fundamental terms, the second trading day of the week will be a little different from the first. No important macroeconomic reports for today are planned either in the States or in the European Union. Nevertheless, yesterday, we already noted that the most important factor pushing the US dollar up is the general predisposition of market participants to purchases of the American currency. Thus, any signal from the Heikin Ashi indicator for sale will potentially mean a significant new decline in the currency pair. The purple bars of the Heikin Ashi indicator will indicate the pair has entered a correction. However, as long as the price remains below the moving average, the downward trend in the instrument will remain.

Nearest support levels:

S1 - 1,1475

S2 - 1,1414

S3 - 1.1353

Nearest resistance levels:

R1 - 1.1536

R2 - 1.1597

R3 - 1.1658

Trading recommendations:

The EUR / USD currency pair has begun a new round of corrective movement towards the moving average. Thus, traders are advised to wait for Heikin Ashi to turn down to open new short positions with the first goal of Murray level "3/8" - 1.1414.

It is recommended to open long positions after participants have overcome the moving average. In this case, the trend in the instrument will be upward, and the target for the long positions will be the level of 1.1597.

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.

Murray levels - multi-colored horizontal stripes.

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

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Trading plan for the euro on October 9, 2018

Although the USA celebrated Columbus Day yesterday and the Americans rested, the dollar resumed its growth. This is partly due to the continued market reaction to the problems of Italy caused by disputes over the budget deficit, public debt, as well as talk about the rejection of the single European currency. But there were also real reasons for weakening the euro, since the growth of industrial production in Germany was replaced by a recession. A month ago, the German industry grew by 1.5%, and now it shows a decline of 0.1%. Thus, given the weight of Germany, one does not have to hope for the growth of industry in Europe as a whole. And if the German economy has such problems, the ECB will most likely extend the program of quantitative easing.

Today, data on Germany's foreign trade has been released, and although the trade balance surplus has increased from 15.9 billion euros to 18.3 billion euros, there are no many reasons for joy. The fact is that the trade surplus could increase only by reducing imports by 2.7%, while exports declined by 0.1%. No more interesting data comes out today, but the performance of Charles Evans may have an impact on the market. The fact is that from tomorrow, the data on inflation in the USA will start to appear, and its growth is expected. If the Fed representative focuses on this issue in conjunction with the tightening of the monetary policy of the American Central Bank, then all doubts about the rate of increase in the refinancing rate will be removed.

The euro / dollar currency pair continued its downward movement, fixing below the range of 1.1510 / 1.1550. Now, the quotation fluctuates around the value of 1.1460, where it has previously felt a temporary support. It is likely to assume further fluctuations in the region of 1.1460 / 1.1440.

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Analysis of the divergence of EUR / USD on October 9. The bullish divergence stops the US dollar growth

4h

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After the formation of a bearish divergence, the EUR / USD currency pair fell below the correction level of 61.8% - 1.1497. However, the formation of a new bullish divergence allowed the pair to make a U-turn in favor of the European currency and a return to the Fibo level of 61.8%. Fixing quotes on October 9 above the correction level of 61.8% will increase the likelihood of further growth in the direction of the next Fib level 50.0% - 1.1558. A passage of the last low divergence pair will work in favor of resuming the fall.

The Fibo grid is built on extremes from August 15, 2018, and September 24, 2018.

Daily

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On the 24-hour chart, the currency pair closed below the correction level of 100.0% - 1.1553. As a result, the drop in quotations can be continued in the direction of the next correction level of 127.2% - 1.1285. There are no maturing divergences on the current chart. Fixing the pair above the Fibo level of 100.0% can be interpreted as a turn in favor of the euro and rely on some growth in the direction of the 76.4% correction level of 1.1789.

The Fib net is built on extremums from November 7, 2017, and February 16, 2018.

Recommendations to traders:

You can make purchases of the EUR / USD currency pair with a target of 1.1558 with a Stop Loss order below the Fibo level of 61.8% if the pair closes above the correction level of 1.1497.

Sales of the EUR / USD currency pair can be carried out with the target of 1.1424 with a Stop Loss order above the Fibo level of 61.8% if the pair bounces off the level of 1.1497.

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Analysis of the divergence of GBP / USD on October 9. Will the pair break the mark of 1.31?

4h

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The currency pair GBP / USD performed a slight drop after the formation of a bearish divergence at the MACD indicator. However, the pair quotes completed a new close above the correction level of 23.6% - 1.3067. Thus, the growth of the pair resumed in the direction of the correctional level of 38.2% - 1.3316. The new consolidation of quotations under the Fibo level of 23.6% will work again in favor of the US currency and the pair began to fall in the direction of the correction level of 0.0% - 1.2662.

The Fibo grid was built according to extremums of April 17, 2018, and August 15, 2018.

1h

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On the hourly chart, a reversal was made in favor of the British pound after the formation of a bullish divergence in the CCI indicator, and a return to the correction level of 38.2% - 1.3101. Reversing the quotations from the Fibo level of 38.2% will allow traders to count on a reversal in favor of the American currency and a slight drop in the direction of the correction level of 50.0% - 1.3041. There are no ripening divergences today. Fixing the pair above the Fibo level of 38.2% will increase the likelihood of further growth in the direction of the correctional level of 23.6% - 1.3176.

The Fib net is built on extremums from September 5, 2018, and September 20, 2018.

Recommendations to traders:

New purchases of the GBP / USD currency pair can be made with the target of 1.3176 and a Stop Loss order under the correction level of 38.2% if the closing above the Fibo level is 1.3101 (hourly chart).

To sell a pair of GBP / USD currency, it will be possible with the target of 1.3041 and a Stop Loss order above the level of 38.2% if the pair bounces off the Fibo level of 1.3101 (hourly chart).

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Markets calmed down, for how long?

Monday trading in the foreign exchange market was rather calm. The lack of news, both negative and positive, contributed to a certain reduction in tension, which has already become mundane for our time.

The American dollar on the first day of the new week was trading in different directions. It declined slightly against the commodity group currencies, but grew to the euro and the British pound. The most notable was the fall against the Japanese yen. But here, probably, we should speak about the influence of technical factors, and not the reasons for the growth of tension on world markets, which usually supports its course.

In general, according to the dynamics of the ICE Dollar Index, the US currency has grown, although, for the fourth day in a row, it remains in the "outset" above the level of 95.00 points. The dollar is also supported by an upward increase in the yield of US Treasury government bonds. Thus, the beginning of the rally in the yield of 10-year-old treasuries in the last week of August continues steadily. At the time of this writing, it is at the level of 3.242%, adding 0.47%. The yield of this benchmark has already overcome the local maximum of July 2011 and it seems that it will continue to grow steadily in the wake of the exit of capital from treasuries and overflowing it into the shares of companies. It should also take into account the sale of US government bonds in the wake of geopolitical tensions in Russia and China. If the first one almost completely got rid of the bonds, the second one began this process, and its continuation will only increase the growth of the yield of treasuries, leading to an increase in the value of the dollar.

Given these prospects, we believe that the dollar will continue to be in demand against all major currencies. It will also be locally supported by the factor of geopolitical and trade tensions in the world. Most likely, commodity currencies will remain under pressure primarily because of the trade war between the United States and China, and European due to the risk of renewed debt crises in Greece and Italy. Against this background, the IMF has already lowered its forecast for global growth this year and next.

Forecast of the day:

The currency pair EUR / USD is trading below the level of 1.1530. It is still under pressure from lower demand for risk in the markets, as well as the likelihood of a debt crisis in Greece and Italy. We consider it possible to sell the pair on growth from the level of 1.1530 with the target of 1.1445.

The currency pair NZD / USD is trading below the level of 0.6460. It remains under pressure due to tensions between Washington and Beijing. If the pair does not rise above 0.6460.0, it can turn around and fall to 0.6400.

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Forecast for USD / JPY on October 9, 2018

USD / JPY

Despite all the efforts, the Japanese yen did not manage to consolidate above the trend line of the upward price channel (114.55), the reason for which was the fall of the stock market in the last 4 sessions. But the strength of the yen is definitely preserved. This is what Marlin's oscillator tells us on the daily timeframe. It still remains in the growth zone, and also, the price has not yet reached the supports of the Kruzenshtern indicator lines and balance. However, in this case, it is not necessary to rely on the line of balance, as it sharply turned down, and it will have time to meet the price somewhere around 111.77, where it can provide effective support.

But in the stock market, the situation is gradually being corrected. Yesterday, Dow Jones was able to even close the day with growth (0.15%), which did not have time to make a wide market (S & P500 -0.04%). The Japanese Nikkei 225 is losing 1.36% today, but only because Japan had a public holiday on Monday, the markets were closed, and all Chinese indices are growing today, Shanghai Composite 0.50%, China A50 0.49%.

To continue the growth of the yen, it is now necessary to overcome the resistance of the Kruzenshtern trend line on H4 in the area of 113.90. The road to the resistance of the price channel at 114.60 will open. Support for the bottom line of the price channel at 112.64 is still the goal of the bears, formally they have not yet lost the opportunity to increase the decline.

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Fractal analysis of major currency pairs on October 9

Dear colleagues.

For the Euro / Dollar currency pair, the development of the downward structure of October 3 is expected after the price passes the range of 1.1431 - 1.1414. For the Pound / Dollar currency pair, we should expect the continuation of the ascending structure of October 4 after the breakdown of 1.3114. For the currency pair Dollar / Franc, we are following the development of the ascending cycle of September 21 and we expect further uptrend after the breakdown of 0.9965. For the currency pair Dollar / Yen, we are following the downward cycle of October 3 and the continuation of which, we are expecting after the breakdown of 112.70. For the currency pair Euro / Yen, we are following the development of the downward structure of September 25. For the currency pair Pound / Yen, the price forms a downward potential of October 8.

Forecast for October 9:

Analytical review of H1-scale currency pairs:

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For the Euro / Dollar currency pair, the key levels on the scale of H1 are: 1.1594, 1.1564, 1.1527, 1.1498, 1.1455, 1.1431, 1.1414 and 1.1364. Here, the price forms the local potential for the downward movement of October 3. At the moment, we have expanded the potential for this structure to the level of 1.1364. The short-term downward movement is possible in the range of 1.1455 - 1.1431, from here we expect a key upward reversal. The range of 1.1431 - 1.1414, the passage of its price will allow counting on a pronounced movement to the level of 1.1364.

The consolidated movement is expected in the range of 1.1498 - 1.1527 and the breakdown of the last value will lead to a deep correction. Here, the target is 1.1564 and this level is a key support for the downward structure of October 3. Its breakdown will have to form the initial conditions for the upward cycle. Here, the target is 1.1594.

The main trend is the local structure for the bottom of October 3.

Trading recommendations:

Buy 1.1530 Take profit: 1.1562

Buy 1.1565 Take profit: 1.1592

Sell: 1.1455 Take profit: 1.1433

Sell: 1.1414 Take profit: 1.1366

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For the Pound / Dollar currency pair, the key levels on the scale of H1 are: 1.3221, 1.3194, 1.3149, 1.3114, 1.3061, 1.3033 and 1.2990. Here, we are following the development of the ascending structure of October 4. The upward movement is expected after the breakdown of 1.3114, in this case, the target is 1.3149, price consolidation near this level. The breakdown of the level of 1.3150 should be accompanied by a pronounced upward movement. Here, the target is 1.3194. The potential value for the top is considered the level of 1.3221, near which we expect consolidation, as well as a rollback to the top.

The short-term downward movement is possible in the range of 1.3061 - 1.3033 and the breakdown of the last value will lead to a prolonged movement. Here, the goal is 1.2990, up to this level we expect clearance of the expressed initial conditions for the downward cycle.

The main trend is the upward cycle of October 4.

Trading recommendations:

Buy: 1.3114 Take profit: 1.3145

Buy: 1.3150 Take profit: 1.3192

Sell: 1.3060 Take profit: 1.3035

Sell: 1.3030 Take profit: 1.2995

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For the Dollar / Franc currency pair, the key levels on the scale of H1 are: 1.0010, 0.9965, 0.9923, 0.9875, 0.9842 and 0.9793. Here, we continue to follow the development of the ascending cycle of September 21. The short-term upward movement is possible in the range of 0.9923 - 0.9965 and the breakdown of the latter value will lead to movement to the potential target of 1.0010, from this level we expect a rollback downwards.

The short-term downward movement is possible in the range of 0.9875 - 0.9842 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 0.9793 and this level is a key support for the upward structure.

The main trend is the upward structure of September 21.

Trading recommendations:

Buy: 0.9924 Take profit: 0.9963

Buy: 0.9967 Take profit: 1.0010

Sell: 0.9875 Take profit: 0.9844

Sell: 0.9840 Take profit: 0.9796

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For the Dollar / Yen currency pair, the key levels on the scale of H1 are: 113.98, 113.60, 113.28, 112.27, 112.38, 112.18 and 111.77. Here, we are following the downward cycle of October 3rd. The downward movement is expected after the breakdown of 112.72. In this case, the goal is 112.38 and in the range of 112.38 - 112.18 is the price consolidation. The potential value for the bottom is considered the level of 111.77, after reaching which we expect a rollback to the top.

The short-term upward movement is possible in the range of 113.28 - 113.60 and the breakdown of the latter value will lead to a prolonged correction. Here, the goal is 113.98 and this level is a key support for the downward structure.

The main trend is the downward cycle of October 3.

Trading recommendations:

Buy: 113.28 Take profit: 113.60

Buy: 113.63 Take profit: 113.98

Sell: 112.70 Take profit: 112.40

Sell: 112.16 Take profit: 111.80

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For the Canadian dollar / Dollar currency pair, the key levels on the scale of H1 are: 1.3106, 1.3059, 1.3034, 1.2993, 1.2953, 1.2926 and 1.2886. Here, we are following the ascending structure of October 1. The upward movement is expected after breakdown of 1.2993. In this case, the target is 1.3034 and in the range of 1.3034 - 1.3059 is the consolidation. The potential value for the top is considered the level of 1.3106, after reaching which we expect consolidation and rollback downwards.

The short-term downward movement is possible in the range of 1.2953 - 1.2926 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 1.2886 and this level is a key support for the upward structure from October 1.

The main trend is the ascending structure of October 1.

Trading recommendations:

Buy: 1.2995 Take profit: 1.3034

Buy: 1.3060 Take profit: 1.3104

Sell: 1.2953 Take profit: 1.2928

Sell: 1.2924 Take profit: 1.2887

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For the Australian dollar / dollar currency pair, the key levels on the scale of H1 are: 0.7168, 0.7135, 0.7112, 0.7094, 0.7075 and 0.7051. Here, we expect a rollback up and the formation of an ascending structure. The short-term downward movement is possible in the range of 0.7075 - 0.7051, hence a high probability of a reversal upwards. We do not set any subsequent goals for the downward movement until the correction is made.

The short-term upward movement is expected in the range of 0.7094 - 0.7112 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 0.7135 and this level is a key support for the downward structure.

The main trend is the downward structure of September 21, we expect to go into a correction.

Trading recommendations:

Buy: 0.7094 Take profit: 0.7111

Buy: 0.7114 Take profit: 0.7135

Sell: 0.7070 Take profit: 0.7055

Sell: Take profit:

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For the Euro / Yen currency pair, the key levels on the scale of H1 are: 130.94, 130.34, 129.97, 129.43, 129.07 and 128.35. Here, we continue to monitor the downward structure of September 25. The short-term downward movement is possible in the range of 129.43 - 129.07, hence the probability of an upward reversal. The breakdown of the level of 129.07 will allow us to count on the movement towards a potential target of 128.35, after reaching which we expect a rollback to the correction.

The short-term upward movement is possible in the range of 129.97 - 130.34 and the breakdown of the latter value will lead to a prolonged correction. Here, the goal is 130.94 and this level is a key support for the downward structure.

The main trend is the downward structure of September 25.

Trading recommendations:

Buy: 129.98 Take profit: 130.32

Buy: 130.37 Take profit: 130.90

Sell: 129.41 Take profit: 129.10

Sell: 129.03 Take profit: 128.40

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For the Pound / Yen currency pair, the key levels on the scale of H1 are: 149.50, 149.00, 148.50, 147.36, 146.97, 145.94 and 145.41. Here, we are following the formation of the downward structure of October 8. The downward movement is expected after the price passes the range of 147.36 - 146.97. In this case, the target is 145.94. The potential value for the downward structure is considered the level of 145.41, near which we expect consolidation, as well as a rollback to the top.

The short-term uptrend is possible in the range of 148.50 - 149.00. The breakdown of the latter value will have to form the initial conditions for the top. Here, the potential target is 149.50.

The main trend is the formation of the downward structure of October 8.

Trading recommendations:

Buy: 148.50 Take profit: 149.00

Buy: 149.05 Take profit: 149.50

Sell: 146.95 Take profit: 146.00

Sell: 145.90 Take profit: 145.44

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EUR / USD h1. Options for the development of the movement from October 8 to 12, 2018. Analysis of APLs & ZUP

Minuette (h1)

Euro vs US Dollar

Previous review from 10/05/2018 11:08 UTC + 3.

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Further development of the EUR / USD movement will be determined by the direction of the breakdown of the 1/2 Median Line channel borders (1.1463 - 1.1480 - 1.1495) of the Micro operational scale forks.

The markup for testing the 1 / 2 ML Micro channel levels above is presented on an animated graphic.

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The prospect of the development of a downward movement (sell).

The breakdown of the support level of 1.1463 (lower limit of the channel 1/2 Median Line Micro) continued the development of the downward movement of EUR / USD to the borders of the equilibrium zone (1.1435 - 1.1405 - 1.1380) of the Micro forks.

Details are shown on the animated graph.

____________________

The development perspective of the upward movement (buy).

The breakdown of the resistance level of 1.3105 (upper limit of the channel 1/2 Median Line Micro) and the variant of the upward movement of EUR / USD to the targets; initial SSL line (1.1505) forks the Micro; control line UTL Micro (1.1530); local maximum of 1.1550; lower limit of the ISL 61.8 (1.1560) equilibrium zone of the fork of the operating scale Minuette; local maximum of 1.1594; Median Line Minuette (1.1600).

Details are shown on the animated graph.

____________________

The review was compiled without taking into account the news background, the opening of trading sessions of the main financial centers and is not a guide to action (placing orders "sell" or "buy").

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GBP / USD h1. Options for the development of the movement from October 8 to 12, 2018. Analysis of APLs & ZUP

Minuette (h1)

Great Britain Pound vs US Dollar

Previous review from 10/05/2018 11:07 UTC + 3.

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The currency pair GBP / USD, at the time of the review, is in the range:

> resistance level of 1.3105 (lower limit of the channel 1/2 Median Line Minuette);

> support level of 1.3055

> the upper limit of the channel 1/2 Median Line fork of the operational scale Micro;

> the direction of the breakdown of which will determine how further will be the development of the movement of this currency instrument.

____________________

The prospect of the development of a downward movement (sell).

The breakdown of the support level of 1.3055 will make the further development of the movement of GBP / USD within the 1/2 of the Median Line channel (1.3055 - 1.3030 - 1.3010) and the equilibrium zone (1.3020 - 1.2985 - 1.2950) of the Micro c operational scale relevant possible achievement of support levels of 1.2940 (control line LTL forks operating scale Minuette) - 1.2930 (final Shiff Line Micro) - minimum of 1.2921.

Details are shown on the animated graph.

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The development perspective of the upward movement (buy).

The breakdown of the resistance level of 1.3105.

The development of the GBP / USD movement will develop within the borders of the 1/2 Median Line channel (1.3105 - 1.2155 - 1.3210) of the Minuette operating scale with the prospect of reaching the Median Line Minuette (1.3265).

Details are shown on the animated graph.

____________________

The review was compiled without taking into account the news background, the opening of trading sessions of the main financial centers and is not a guide to action (placing orders "sell" or "buy").

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

EUR / USD pair: Euro on the verge of a new fall to monthly lows

The European currency continued to decline against the US dollar and a number of other world currencies, as many investors and traders fear that in the near future the leading rating agencies will lower the credit rating of Italy.

Despite the fact that the Italian government bond market already partially takes into account the reduction of the country's credit rating of Moody's agency by one level, one should not forget about the S & P agency, in which a lowering of the credit rating will lead to an even greater increase in the spread between the yield of government bonds of Italy and Germany. In turn, this will lead to another reduction in risky assets and collapse the European currency at new monthly minimums.

Basic data

As for the fundamental statistics released yesterday, the decline in industrial production in Germany for August this year also had a negative impact on the European currency. As indicated in the report, the construction industry suffered the most.

According to the data of the Ministry of Economics of Germany, the volume of industrial production in August fell by 0.3% compared with the previous month, while economists did not forecast changes in production volumes.

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As I noted above, the volume of production in the construction sector immediately fell by 1.8%, pulling down the main indicator.

The index of employment trends in the US from the Conference Board fell in September of this year. According to the data, the index was 110.77 points the August against the value of 111.18 points. Compared to last year, the index increased by 6.7%.

The presentation of the representative of the Federal Reserve Bank of St. Louis, James Bullard, was perceived as generally positively by the market. Bullard said that economic growth in the United States will continue only under conditions of stronger productivity growth rates, and a demographic factor will affect negatively the growth potential.

Bullard also changed his attitude about raising interest rates while not making any predictions about monetary policy in the future. This indicates the strength of economic growth in recent years has allowed the Central Bank to make the expected rate increases.

As for the technical picture of the EUR/USD pair, buyers hit the restrained support area of 1.1460, while its repeated test may lead to an increase in short positions in risky assets and a further decline of the euro with the trend towards monthly lows of 1.1400 and 1.1355. If buyers cope with the next pressure, their main task today will be returning the trading instrument to the resistance level of 1.1500, which is where the further short-term direction of the market will depend on. An upward potential will also be limited to a maximum of 1.1450.

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

GBP / USD pair for October 8th. Results of the day. The main driver of the growth of the dollar remains the Fed and its monetary

4-hour timeframe

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The amplitude of the last 5 days (high-low): 104p - 108p - 99p - 120p - 119p.

Average amplitude for the last 5 days: 110p (104p).

After a fairly strong growth at the end of the last trading week, the GBP / USD pair began a sharp fall on Monday. It is an official holiday in the United States. They call it Columbus day. it still does not affect the volatility of the currency pair for the worse. On the contrary, we are witnessing quite an active trading in favor of the US dollar, despite the fact for obvious reasons that there are no important publications planned in America today. There is no news in the EU either. It is unlikely that a rather strong drop in the pair can be attributed to the fact that traders once again realized that there is no official information on the progress of negotiations on Brexit. Thus, the growth of the pound on Friday, associated with rumors about reaching certain agreements on the Irish border, was unsuccessful. However, the Euro currency also fell, so this is at least not the only reason for the strengthening of the American currency. Thus, the most likely reason for the growth of the US dollar is the technical as well as the overall market propensity to buy the US dollar after the Fed has raised the key rate once again, and also announced several more monetary policy tightenings.

On the technical side, the pair has completed the critical Kijun-sen line and it can resume the upward movement if it bounces off it. Overcoming this line could trigger the formation of a new downtrend with the first goals of 1.2983 and 1.2939. Also, several more monetary tightenings were announced.

Trading recommendations:

The GBP / USD currency pair has adjusted to the Kijun-sen line. The price rebound from this line will signal the opening of new long positions in small lots with a target of 1.3150. An upward reversal of MACD will confirm the end of the correction.

It is recommended to open shorts in case of overcoming the critical line with targets of 1.2983 and 1.2939. In this case, the "golden cross" will be weakened to the limit, and the upward trend in the instrument will be canceled.

It should be noted.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen - the red line.

Kijun-sen - the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dotted line.

Chikou Span - green line.

Bollinger Bands indicator:

3 yellow lines.

MACD Indicator:

Red line and histogram with white bars in the indicator window.The material has been provided by InstaForex Company - www.instaforex.com

Intraday technical levels and trading recommendations for GBP/USD for October 9, 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.

On September 21, the GBP/USD failed to demonstrate sufficient bullish momentum above 1.3296. The short-term outlook turned to become bearish within the depicted H4 bearish channel to test the backside of the broken uptrend.

Recently, the price level of 1.2900-1.2940 (the backside of the broken uptrend) demonstrated significant bullish recovery which led to the recent bullish breakout of the depicted H4 channel.

As for the bullish breakout scenario to remain valid, the price level of 1.3010 (50% Fibo level) should demonstrate significant bullish pressure for the GBP/USD pair so that further bullish advancement can occur towards 1.3100, 1.3210 and 1.3290.

Any bearish breakdown below 1.3000 invalidates the bullish breakout scenario allowing a further decline towards 1.2910 (previous weekly low).

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

Intraday technical levels and trading recommendations for EUR/USD for October 9, 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).

On September 10, the price level of 1.1500 offered temporary bullish recovery. A quick 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 momentum is being demonstrated on the daily chart. The current decline is currently taking place below 1.1520 (the lower limit of the consolidation range) towards the price level of 1.1420.

As for the bearish side of the market to remain dominant, the EUR/USD pair should achieve bearish breakdown below the price level of 1.1420.

The first bearish target would be located around 1.1275 if sufficient bearish momentum is demonstrated below 1.1420.

On the other hand, re-closure above the price level of 1.1520 brings the EUR/USD pair back inside the depicted consolidation range (1.1520-1.1750) for more sideway consolidations until breakout occurs in either direction.

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

Technical analysis of GBP/USD for October 09, 2018

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Overview:

Pivot: 1.2979

The GBP/USD pair fell from the level of 1.3056 towards 1.2950. Now, the price is set at 1.2959. On the H4 chart, the resistance is seen at the levels of 1.3056 and 1.3176. Volatility is very high for that the GBP/USD pair is still expected to be moving between 1.3000 and 1.2811 in coming days. In the short term, we expect the GBP/USD pair to continue to trade in a bullish trend from the new support level of 1.2979 to form a bullish channel. Besides, it should be noted that major resistance is seen at 1.3056, while immediate resistance is found at 1.2979. According to the previous events, the pair is likely to move from 1.2979 towards 1.2906 and 1.2811 as targets. In the H4 time frame: However, if the pair fails to pass through the level of 1.2979, the market will indicate a bearish opportunity below the level of 1.2979. So, the market will decline further to 1.2906 in order to return to the first support. Moreover, a breakout of that target will move the pair further downwards to 1.2810.

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

Bitcoin analysis for October 09, 2018

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Trading recommendations:

According to the H1 time - frame, I found that Bitcoin is in a consolidation phase for the short term. My advice is to watch for a breakout of the resistance trendline to confirm further upward continuation. The take profit levels are set at the price of $6.659 and at the price of $6.750.

Support/Resistance

$6.617 – Intraday resistance

$6.505– Intraday support

$6.659 – Objective target 1

$6.750 – Objective target 2

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

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

Technical analysis of NZD/USD for October 09, 2018

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Overview:

The Kiwi (NZD/USD) pair fell from the level of 0.6539 to bottom at 0.6483 this week. Today, the NZD/USD pair has faced strong support at the level of 0.6483. So, the strong support has been already faced at the level of 0.6483 and the pair is likely to try to approach it in order to test it again and form a double bottom. Hence, the NZD/USD pair is continuing to trade in a bullish trend from the new support level of 0.6483; to form a bullish channel. According to the previous events, we expect the pair to move between 0.6483 and 0.6390. Also, it should be noted major resistance is seen at 0.6575, while immediate resistance is found at 0.6539. Then, we may anticipate potential testing of 0.6390 to take place soon. However, if the pair succeeds in passing through the level of 0.6539, the market will indicate a bullish opportunity above the level of 0.6539. A breakout of that target will move the pair further upwards to 0.6575. Buy orders are recommended above the area of 0.6539 with the first target at the level of 0.6575; and continue towards 0.6604. On the other hand, if the NZD/USD pair fails to break out through the resistance level of 0.6575; the market will decline further to the level of 0.6390.

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

Analysis of Gold for October 09, 2018

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Recently, Gold has been trading downwards. The price tested the level of $1.182.50. According to the H4time – frame, I found a broken support trendline, which is a sign of weakness. I also found that price is trading inside of the downward channel, which is another sign of weakness. Watch for selling opportunities. The downward take profit levels are set at the price of $1,180.00 and at the price of $1,175.65.

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

USD/CAD analysis for October 09, 2018

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Recently, the USD/JPY pair has been trading downwards. The price tested the level of 112.81. According to the H1 time – frame, I found broken Head and shoulders pattern in the background, which is a sign that sellers are in control. Most recently, I have found the bearish flag pattern in creation, which is another sign of weakness. My advice is to watch for a breakout of the support trendline to confirm further downward continuation. The downward take profit levels are set at the price of 112.82 and at the price of 112.60.

Trading recommendations for today: watch for potential selling opportunities.

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

Fundamental Analysis of GBP/USD for October 9, 2018

GBP/USD has been impulsive amid the bullish pressure recently which led the price to reside above 1.3050 area with a daily close. Currently the pair is trading without a particular direction which might trigger certain corrections along the way. Ahead of macroeconomic reports from the UK and the US this week, the pair is expected to trade with higher volatility.

As the dollar index is holding above the key area, USD is currently leading with an edge which might lead to certain bearish pressure in the pair for a specific period. In light of the recent mixed NFP data and after the rate hike from 2.00% to 2.25%, the US currency gained momentum but could not quite sustain it against GBP quite well. Today USD NFIB Small Business Index report is going to be published which is expected to increase slightly to 108.9 from the previous figure of 108.8 and IBD/TIPP Economic Optimism report is expected to show a decrease to 54.6 from the previous figure of 55.7. Ahead of the high impact economic reports this week including PPI and CPI which are quite optimistic with the expectations, USD might experience a clear advantage for further gains in the process.

On the GBP side, today BRC Retail Sales Monitor report was published with a decrease to -0.2% from the previous value of 0.2% which did not have a serious impact on GBP but made the price a bit indecisive for a while. GBP is expected to struggle a bit further before pushing higher in the coming days ahead of the GDP report on Wednesday, which is expected to decrease to 0.1% from the previous value of 0.3% and Manufacturing Production to increase to 0.1% from the previous negative value of -0.2%.

Meanwhile, mixed results of the US and UK reports are expected to determine trend momentum. Though GBP is expected to struggle for gains and USD is likely to receive solid support, vice-versa results may lead to change in market sentiment and current price action. To sum up, USD may assert its strength over GBP in the coming days.

Now let us look at the technical view. The price is currently residing above 1.3050 with certain retests along the way recently whereas the bearish momentum is still present in the market. As the price residing above the Kumo cloud along with the support of dynamic levels like 20 EMA, Tenkan, and Kijun line, the price is expected to push higher after certain correction and retrace towards 1.3000-50 area before pushing higher with target towards 1.3200 to 1.3300 area in the future. As the price remains above 1.3000 area, the bullish bias is expected to continue.

SUPPORT: 1.3000-50

RESISTANCE: 1.3200, 1.3300

BIAS: BULLISH

MOMENTUM: VOLATILE

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

Technical analysis: Intraday levels for EUR/USD, Oct 09/2018

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When the European market opens, some economic data will be released such as German Trade Balance. The US will release a couple of economic reports as well such as IBD/TIPP Economic Optimism and NFIB Small Business Index. So, amid the reports, EUR/USD will move with low to medium volatility during this day.

TODAY'S TECHNICAL LEVELS:

Breakout BUY Level: 1.1549

Strong Resistance:1.1542

Original Resistance: 1.1531

Inner Sell Area: 1.1520

Target Inner Area: 1.1493

Inner Buy Area: 1.1466

Original Support: 1.1455

Strong Support: 1.1444

Breakout SELL Level: 1.1437

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.

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

Technical analysis: Intraday levels for USD/JPY, Oct 09/2018

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In Asia, Japan will release two macroeconomic reports: the Economy Watchers Sentiment and Current Account. The US will also release some economic data such as IBD/TIPP Economic Optimism and NFIB Small Business Index. So there is a probability the USD/JPY pair will move with low to medium volatility during this day.

TODAY'S TECHNICAL LEVELS:

Resistance 3: 113.61

Resistance 2: 113.39

Resistance 1: 113.17

Support 1: 112.89

Support 2: 112.67

Support 3: 112.45

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.

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

Trading plan for 09/10/2018

On Tuesday there is no improvement in market sentiment, but the situation is not deteriorating. After a long weekend, Japan and Nikkei225 are coming back, but in Shanghai the stock exchange is stable. The fluctuations in the currency market are minimal.

USD / JPY is just over 113 after descending to 112.80 at night. Nikkei225, which opened after a long weekend, today fell 1.2%, which added fuel for bearish moods. Earlier, no good signals were sent to Wall Street, where Nasdaq scored 0.6%, and the S & P500 lost 0.04%.

The currency market was generally stable, which means the USD rally was stopped. EUR / USD is sitting at 1.15, GBP / USD - at 1.31. AUD / USD climbed to 0.7080. There was no reaction in the publication of NAB indices. The business conditions indicator increased to 15 out of 14 (after correction), and the confidence index increased to 6 out of 5. Crude oil WTI grows 0.5%. up to 74.6 USD / b supported by information about a fire in the largest refinery in Canada - Saint John. The refinery processes 300,000 barrels a day.

On Tuesday, the 9th of October, the event calendar is light in important data releases, but the global investors should keep an eye on German Trade Balance data and Canadian Housing Starts data. There are some spechees scheduled for today from BOE Deputy Governor for Monetary Policy Ben Broadbent and BOC Senior Deputy Governor Carolyn Wilkins.

NZD/USD analysis for 09/10/2018:

The ANZ Monthly Inflation Gauge of New Zealand economy rose 0.3% m/m in September (2.9% y/y). On a quarterly basis, the Gauge rose 1.4% in Q3. There is some noise in the quarterly movement, such as payback from a weak Q2 signal and new-look accommodation services. Aside from this, seasonal price rises and ongoing housing-related price pressures are keeping the Gauge ticking along.

Let's now take a look at the NZD/USD technical picture at the H4 time frame. The market is still in the downtrend as the price keeps making new lower lows. The recent high was made at the level of 0.6468, but the bears have pushed the price down quickly from this level. Currently, the price is approaching the technical support at the level of 0.6421 and if this support is violated, then another support can be seen at the weekly timeframe, at the level of 0.6346. Please notice, that the market conditions are now extremly oversold, so a short-term pullback can occur any time soon.

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Bitcoin analysis for 09/10/2018

The creator of the Bitcoin protocol (BTC), Mark Friedenbach, presented the method of Bitcoin scaling at a workshop in Tokyo on October 5, which, according to him, will not require hard work. The new concept presented at the Scaling Bitcoin workshop, titled "Forward Blocks", suggests a significant increase in chain performance by changing the Proof of Work (PoW), which is done as a soft fork, combined with the use of the private book alternatives. The application describes a scaling method that allows you to increase the size of billing transactions to 3584x current levels and improve resistance to censorship by means of chipping. During the presentation, Friedenbach proposed significant improvements in Bitcoin transactions. The so-called "transformation of soft forks" means strengthening the rules of consensus, in which old nodes still see the progress of the chain.

In his presentation, Friedenbach emphasized the role of sharding. The name gained the most popular due to the upcoming major improvements of Blockchain Ethereum (ETH). Declared in relation to Ethereum by co-founder Vitalik Buterin in April 2018, this term means a method of increasing the number of transactions that Blockchain can process. The idea of shaking is that in the case of chain transactions many network computers can share the transaction load between them.

Friedenbach, who was also a contractor for NASA, claimed in his speech that he did not want to initially consider Bitcoin scaling solutions, but he was thinking about the development of a double change PoW, in which a new PoW with soft forks is introduced. By suggesting adding another PoW algorithm, the developer stressed that his work is not a proposal for further changes, but rather an idea that other developers should take into account.

The scalability problem of Bitcoins is one of the main topics of discussion around the main cryptocurrency. In July this year, a group of engineers announced the launch of Bitcoin Operations Technology Group (Bitcoin Optech) to address the issue of scaling the Bitcoin blockchain. The non-profit team is supported by top industry players, such as a PayPal board member. Wencesa Casaresa, member of the board of Kohlberg Kravis of Roberts & Co. Ltd, John Pfeffer and research and development team of Chaincode Lab's cryptocurrencies.

Let's now take a look at the Bitcoin technical picture at the H4 time frame. The market is now trading inside of the resistance zone between the levels of $6,550 - $6, 603 after making a top at the level of $6,615. Currently, the price is trading around the level of $6,550 as the bears are pushing the price lower towards the weekly pivot at the level of $6,487. The larger time frame trend remains down.

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

Elliott wave analysis of EUR/NZD for October 9, 2018

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EUR/NZD has spiked support at 1.7758 and the correction from 1.7929 does not look complete yet. The decline to 1.7929 likely only wave wave blue wave A and blue wave B to 1.7854 should now be expected before blue wave C of blue wave ii takes over and brings prices lower to 1.7705 with an outside chance to dip slightly lower to 1.7652 before blue wave iii takes over for the next impulsive rally towards 1.8030 and 1.8369.

R3: 1.7921

R2: 1.7854

R1: 1.7824

Pivot: 1.7800

S1: 1.7773

S2: 1.7745

S3: 1.7705

Trading recommendation:

We are long half a position from 1.7500 and we will take profit at 1.7840 and then look for a new buying opportunity near 1.7705.

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

Elliott wave analysis of EUR/JPY for October 9, 2018

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A strong break below 130.58 was not our preferred option. This break has more implication for our short-term count. as the decline to 129.49 meant our blue wave (4) is overlapping blue wave (1), which is not allowed under the EWP, so we have changed our short-term count and moved blue wave (1) to be the peak at 133.13 and the ongoing correction is only blue wave (2).

Blue wave (2) has already spiked the 61.8% corrective target of blue wave (1) and blue wave (C) is now equal in length to blue wave (A) indicating a bottom likely is in place at 129.49 and blue wave (3) higher is about to develop.

The first good indication this is the case is a break above resistance at 130.13 and more importantly a break above resistance at 131.42 that confirms blue wave (3) towards 138.10 is developing.

R3: 131.45

R2: 130.88

R1: 130.58

Pivot: 130.13

S1: 129.72

S2: 129.49

S3: 128.99

Trading recommendation:

We bought EUR at 130.70 and have placed our stop at 129.25. If you are not long EUR yet, the buy near 129.75 and use the same stop at 129.25.

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

Technical analysis of Gold for October 9, 2018

Gold was weaker on Monday and fell towards $1,180 support. Price remains inside the bearish channel and the short-term trading range. Key resistance at $1,205-11 remains intact and as long as we remain below it, things for bulls will not be good.

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Red lines- bearish channel

Blue lines - short-term trading range

Gold price has been inside this bearish channel for quite some time. Breaking above $1,205-11 resistance area would be a huge break out event. Price then would be expected to move at least towards $1,220-40 area if not higher. On the other hand, if prices fall below $1,180 and stay below it, my bullish scenario would be canceled.

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

Technical analysis of EUR/USD for October 9, 2018

EUR/USD broke short-term support at 1.1480-1.15 and fell as low as 1.1460. I was expecting a bigger decline towards 1.1420-1.14 and until now we have not seen it. Price bounced back towards 1.15, however trend remains bearish as long as price is below 1.1545.

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Red rectangle - major support and possible reversal zone

Green rectangles - resistance levels

EUR/USD is in a bearish trend. There is no sign of a reversal yet. The first sign of a reversal would be a break above the fist green rectangle resistance. As long as we are below it, I expect prices to continue lower inside the red target area before reversing upwards.

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Global macro overview for 08/10/2018

The behavior of Wall Street on Friday could have been influenced primarily by the bond market, ie their profitability. The behavior of this market should be influenced by the monthly report from the labor market, which was published (as usual on the first Friday of the month). It did not quite happen. The global investors learned that employment in the non-agricultural sector in September increased by 134,000 (180,000 expected). The compliment was employment in the private sector - it increased by 121,000 (versus 185,000 expected). The unemployment rate is definitely less important, but let us note that it amounted to 3.7% (3.8% expected) - the least for 49 years. Investors also pay close attention to the increase in wages, because the higher they will be, the higher the probability of inflation growth and the faster the rate of a rate hike. The wages per hour increased by 2.8% y / y as expected.

Data verification from the previous month raised this data so strongly that added to the numbers from September gave an increase in employment in the cross-section of two months. In addition, the hurricane that attacked the US East Coast in September significantly distorted the data.

Most often (after increased volatility just after the publication of the labor market report) the stock market ends the day with slight changes in indices. Definitely more often, the publication of the report strongly affects the behavior of the currency market. This time the currency market practically did not react and the indices fell. As always, in the end, the scale of decreases was clearly reduced, but NASDAQ drew a double-top formation forecasting bigger drops. The reason for the discount were constantly increases in bond yields.

Let's now take a look at the NASDAQ technical picture at the H4 time frame after the Friday fever is now gone. The Double Top formation is still in play, at least as long as no new high above the level of 8,102 is made. The nearest technical support is seen at the level of 7,982 and in a case of a deeper pullback in the uptrend - at 7,932. Please notice the clear bearish divergence between the price and the momentum oscillator that supports the bearish case for now. The larger time frame trend remains up.

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Global macro overview for 08/10/2018

Friday's US labor market data do not change anything in assessing the Fed's outlook. Salary dynamics in line with forecasts and at the level of 2.8 y / y. The unemployment rate has been lowest for almost five decades. Powerful revisions of data for the previous two months (in total by over 85,000). All this cemented the conviction that weakness is temporary and dictated largely by hurricane Florence.

At the start of the week, volatility should be limited. After all, the macro calendar is practically empty, in the USA Columbus Day and in Japan, the Day of Sport was celebrated. Despite the loosening of the policy by the People's Bank of China (reduction in the reserve requirement), the sentiment is weak - after the Christmas break, Shanghai Composite is down 3.0%.

The day's event in the EM world will be the real reaction of the BOVESPA index (as well as sugar and coffee - raw materials heavily dependent on the BRL valuation) on the result of the presidential election in Brazil. Representing the extreme right, J. Bolsonaro almost won the first round. The polls indicated its growing advantage (which gave rise to a strong rebound), but such high support is not discounted and should prolong the rally.

Throughout the week, fiscal and monetary policy perspectives will remain in the foreground, alongside the assessment of the effects of trade wars. Europe will focus more than the data on the Italian budget and progress in Brexit negotiations. In the US, PPI and CPI inflation figures will be screened for whether they justify an aggressive rate of interest rate increases. In addition, attention is drawn to the trade balance from China in the face of tightened customs policy.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market tried to rally higher but was capped at the level of 1.1550 and then reversed. Currently, the price is trading around the level of 1.1470, just above the technical support at the level of 1.1445. Any violation of this level would likely extend the drop towards the level of 1.1432. Please notice the clear and visible bullish divergence between the price and the momentum oscillator, so the spike up might occur any time now.

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

Weekly review of the pound from 10/08/2018

Over the past week, the pound was able to improve its position quite well, although for almost the entire week it was accompanied by regular statements about Brexit. And the nature of these statements was rather negative. Not only that, they still remember the virtual failure of the negotiations between the UK and the European Union, which ended in almost a scandal. So, Theresa May, who spoke at the conference of the Conservative party, rather aggravated the situation, since the thesis she had spoken about was what will be the interaction of the United Kingdom and continental Europe after the divorce, which rather gave rise to new questions than answers. From her words, it was extremely difficult to understand how the trade would be built, which is the most important issue. And all this is accompanied by constant criticism from the political opponents of the current prime minister of Great Britain. And the accusations are quite sharp, as it is stated that the plan that Theresa May intends to sign will eventually lead to an economic collapse of the United Kingdom. However, the pound quickly received support from the Europeans, as Mr. Barnier, who is responsible for negotiations with the UK from the European Union, said that the parties have reached the final stage of negotiations and will soon sign the final version of the agreement. Although the details of the agreement itself are not yet clear, it is still encouraging. In any case, the parties must somehow regulate their relations after the UK leaves the European Union. If there is no agreement, it is unclear how to build an investment strategy for the largest players. So a bad agreement is better than no agreement at all.

If you look at the data, only one event really had a negative impact on the dollar. To do this, we need to recall the content of the report of the US Department of Labor. In fairness, it should be noted that by the time of its publication, the panic about Italy had somewhat subsided, and market participants could read with peace of mind the content of the report, which caused only tears. The unemployment rate, of course, fell from 3.9% to 3.7%, but this was the only thing to be happy about. The share of the labor force in the total population remained unchanged, and only 134,000 new jobs were created outside agriculture, which is significantly less than the projected 185,000. And last month 270,000 new jobs were created, so the results are extremely deplorable. Average hourly wage growth slowed from 2.9 percent to 2.8 percent. Although other data on the labor market, which were released on the eve of the publication of the report of the Ministry of Labor, were encouraging. In particular, according to ADP, employment grew by 230,000 against 163,000 in the previous month. The total number of applications for unemployment benefits fell by 21,000 due to the fact that the number of initial claims decreased by 8,000, and repeated another 13,000. Also, construction costs increased by 0.1% and factory orders 2.3%. Moreover, sales of vehicles increased from 16.7 million to 17.4 million the index of business activity in the manufacturing sector grew by 54.7 to 55.6, while in services it dropped from 54.8 to 53.5. As a result, the composite index of business activity decreased from 54.7 to 53.9, since the service sector has a much greater impact. But all these data came out when the market was excited by the events in the Italian Parliament. And the significance of the report of the Ministry of Labor is much higher than all these data combined.

If we talk about British data, it clearly did not shine. Of course, the volume of consumer lending increased by 1.1 billion pounds against 0.8 billion in the previous period, and the number of approved mortgage applications increased from 65,156 to 66,440. Also, the index of business activity in the manufacturing sector rose from 53.0 to 53.8. However, the index of business activity in the service sector decreased from 54.3 to 53.9, and in the construction sector from 52.9 to 52.1. Moreover, according to Nationwide, the growth rate of housing prices remained unchanged, and according to Halifax, they slowed from 3.7% to 2.5%. But the state of the real estate market is one of the main criteria for determining the investment attractiveness of the UK and the pound.

Although last week very important data were already released, this will not let us relax, since data on inflation in the US will be released. They will be preceded by data on producer prices, the growth rate of which should remain unchanged. But inflation itself can accelerate from 2.7% to 2.8%, and such a development of events should finally remove all doubts about the Federal Reserve's further actions. If inflation does not slow down, and steadily, the Federal Open Market Commission will continue to tighten monetary policy, in accordance with the previously outlined plans. But commodity stocks in wholesale warehouses may increase by 0.7%, and if the forecast is confirmed, it will mean that they have been growing for eleven consecutive months. So it is safe to worry about the further growth of industrial production and retail sales. The number of applications for unemployment benefits should be reduced by another 2,000 due to a decrease in the number of initial applications for benefits. The number of re-applications may remain unchanged.

Unlike the United States, in the UK almost no significant data is released. Attention should be focused only to industrial production, the growth rate of which can accelerate from 0.9% to 1.1%. Of course, the main driving force is the negotiations on Brexit, and it will have a serious impact. However, after such a busy few weeks, the parties can take a short break, and the market will pay more attention to data. And, as you can see, macroeconomic forecasts favor the dollar more, so the pound may fall to 1.2925.

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EUR/USD. October 8th. Results of the day. There is no news - the US currency is still growing.

4-hour timeframe

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The amplitude of the last 5 days (high-low): 61p - 75p - 129p - 79p - 66p.

Average amplitude for the last 5 days: 82p (85p).

Having worked perfectly within the upward correction of the critical Kijun-sen line, the pair rebounded from it and resumed the downtrend on the first trading day of the week. The first target for the downward movement is the support level of 1.1448. There were no important macroeconomic publications during the day. As you can see, traders quickly recovered from the failure of Nonfarms Payrolls, released on Friday, and not particularly upset because of the low value of this indicator. Thus, most of the market is still looking to the "south". No new data on the trade conflict have been received recently. From the European Union, too, no news, except such "a creak", but the progressing negotiations on Brexit with London. Based on this, there were no special reasons for the strengthening of the US currency today. Nevertheless, the dollar is growing, so the only logical reason for this process may be the general predisposition of the market to buy the dollar. Of course, you can always find a number of indirect reasons, such as the high yield of US government bonds, which increases the demand for the US dollar. Or a well-maintained stock market. However, if these reasons were paramount, the US dollar would always grow. Now the question arises again, what is Donald Trump going to do with the dollar growth that does not stop after the Federal Reserve meeting? Will we see a new scandal involving Trump in the near future, which often has a negative impact on the US dollar?

Trading recommendations:

For the EUR/USD pair, the price bounced off the Kijun-sen line and resumed its downward movement. Thus, it is now recommended to stay in short positions with the target of 1.1448. If this target is overcome, the next target will be the level of 1.1392.

It is recommended to open buy orders only after traders have overcome the Kijun-sen line. In this case, there will be grounds for changing the trend direction of the pair to an upward resistance level of 1,1609 with the first target.

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

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen - the red line.

Kijun-sen - the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dotted line.

Chinkou Span - green line.

Bollinger Bands indicator:

3 yellow lines.

MACD Indicator:

Red line and histogram with white bars in the indicator window.

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Simplified Wave Analysis. USD / JPY review for the week of October 8

Wave pattern on the H4 chart:

The rising wave dominates with a starting point on March 26. A rising high wave level indicates an imminent transition to a larger scale of motion.

Wave pattern on the H1 chart:

From the middle of July, a descending wave in a wrong structure is forming, which will then become a correction.

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Wave pattern on the M15 chart:

A bearish wave forms from the resistance zone on October 4. In the hour-wave model, the plot will become the final part (C).

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Recommended trading strategy:

On a small scale, technical support for intraday can make sales. A lot is more reasonable to reduce. For the purchase of the pair.

Resistance zones:

- 113.90 / 114.40

Support areas:

- 112.10 / 111.60

Explanations to the figures:

The simplified wave analysis uses waves consisting of 3 parts (A – B – C). For the analysis, three main TFs are used. On every last part, the 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 while the dotted shows 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!

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The pound gets rid of the ballast

If you get rid of the ballast, it'll be a lot more fun. Over the past few months, the policy has restrained the offensive outbursts of the bulls on the GBP/USD. While most investors sleep and see the pound rise significantly higher, political risks prevent them from starting to form long positions. In past years, the Conservative Party conference invariably turned into a collapse of the sterling, and Theresa May's statement about the impasse in negotiations with Brussels leads its fans to sad arguments.

This time, nothing extraordinary happened at the Tory's meeting. The prime minister was not allowed to doubt the leadership. At the same time, rumors about the advancement of the Irish border issue led to a decrease in the EUR/GBP to the area of 3-month lows. Investors are playing on the contrast: while the fire of the political crisis in Italy is only heating up, in Britain, on the contrary, everything is moving towards the conclusion of an agreement. According to Reuters, London's new proposal to Brussels avoids large-scale checks on the border with Ireland, which signals progress in the negotiations.

Not the slightest role in strengthening the pound is played by the growth of the yield of British bonds to the area of 2-year highs. If the UK manages to achieve an orderly exit from the EU, the risks of continuing the Bank of England's monetary policy normalization cycle will increase. At the same time, the threat of an acceleration in inflation forces investors to flee from local debt obligations. If we add to this London's desire to take a step from fiscal consolidation to GDP acceleration and the potential growth of bond issuance associated with it, it becomes clear why the debt market rates are steadily moving upwards. Their increase raises the attractiveness of British assets, boosts demand for them and contributes to the revaluation of the sterling.

Dynamics of British bond yields

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At the same time, there are always two currencies in any pair, so the success of one of them does not necessarily lead to a shift in a certain direction. The dollar also looks very attractive at the moment. The futures market increased the likelihood of three acts of monetary tightening of the Federal Reserve in 2019 from 40% to 42%, the duration of employment growth outside the agricultural sector does not get tired of rewriting records (96 consecutive months), and unemployment fell to a low of almost half a century. Against this background, the rise in the yield of US Treasury bonds to the peak in the spring of 2011 should not be surprising.

In the week to October 12, investors working with the GBP/USD will monitor the political situation in Britain, as well as the release of data on GDP of the UK for June-August and US inflation. In May-July, the economy of the United Kingdom accelerated to 0.6%, and if it continues in the same spirit, the pound will receive an additional trump card.

Technically, after a rollback to 50% of the AD wave of the "Bat" pattern, and the rebound from the lower limit of the upward trading channel, the "bulls" on the GBP/USD launched an attack in order to update the September high. If this happens, the chances of implementing the target by 161.8% on the AB=CD pattern will increase.

GBP/USD daily chart

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GBP/USD: plan for the US session on October 8. Buyers take their time to return to the pound

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

Another rumor that the UK will achieve an agreement with the EU no longer provide support to the pound, which forces investors to look at the market soberly. This is reflected in the rate of the British pound. Today only the area of 1.3032 was able to provide support, which I drew attention to in my morning forecast. However, there is also no serious demand for the pound. In case of a decrease below the level of 1.3032, I recommend to return to long positions only to a rebound from the support of 1.2982. The main task of buyers for the second half of the day will be to consolidate above the resistance of 1.3074, which will limit the corrective growth of the pound.

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

A re-test of support at 1.3032 may lead to a new wave of selling of the British pound with the exit already at a low in the area of 1.2982, where I recommend to lock in the profit. In case of an upward correction in the second half of the day, short positions can be returned after updating the resistance at 1.3074, just above which the 30-day moving average is located.

Indicator signals:

Moving averages

The price moved below the 30 and 50 average, but this indicates only a corrective decline in the pound with an attempt to form the lower limit of the upward channel.

Bollinger Bands

The repeated test of the lower border of the Bollinger Bands around 1.3030 will lead to a new huge selling of the pound. The growth will be limited by the middle of the channel around 1.3090.

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Indicator description

  • Moving Average (average sliding) 50 days - yellow
  • Moving Average (average sliding) 30 days - green
  • MACD: fast EMA 12, slow EMA 26, SMA 9
  • Bollinger Bands 20
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