Oil has fallen sharply below $ 78

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After the announcement of Saudi Arabia about readiness to quickly expand the volume of oil production, the price of Brent began to fall sharply. On Tuesday afternoon, December oil was trading below $ 78 a barrel for the first time since September 18. Dips reached 2.38%. WTI became cheaper by 1.89%, to $ 68.05 per barrel, which is the minimum mark since September 14.

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Saudi Energy Minister Khalid al-Falih said that, at the moment, his country has expanded production from 9.8 to 10.7 million barrels per day. He also assured that in the very near future, the figure will be 11 million barrels daily. This bar the Saudis intend to keep in a "sustainable" mode.

The oil company Saudi Aramco has reserve capacity, with which in less than three months, over 1 million barrels can be supplied to the market daily and 12 million barrels a day can be pumped. This was announced today at the Future Investment Initiative forum launched in Riyadh by al-Falih.

After the tragedy of Saudi journalist Jamal Khashoggi, investors began to fear that the Kingdom would reduce the supply of oil as a response to possible sanctions from the American side. It seems that now, these concerns are in the past.

With regard to the restrictive measures of the United States, the market continues to wait for the entry into force of sanctions against Iran in early November. In this regard, the supply of oil to the global market may fall sharply.

Additional pressure on the auto prices has a situation in the domestic American market, where stocks have increased for three weeks in a row. On Wednesday, there are new data on fuel reserves in the United States for the week. It is expected that the figure rose by 3 million barrels.

Negative oil market adds a decrease in key global stock indices. Asian indicators on Tuesday slipped by more than 2%, European losses exceeded 1%, futures for US indices fell by about 1.5%.

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Experts advise the "bulls" on the euro to be patient

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Analysts of the American investment bank JPMorgan Chase said they believe in improving the dynamics of the single European currency against the dollar.

According to them, this will happen only next year, but for now, investors should be prepared for the fact that, together with the dollar, the euro will still update the minimums.

"Eurozone GDP growth slowed down somewhat, and political perturbations and disagreements among members of the euro area were in the center of attention. Under these conditions, the depreciation of the European currency against the dollar can continue, up to the level of $ 1.13 per euro by the end of the year," representatives of the financial institute noted.

"Meanwhile, next year, we are waiting for the recovery of the EUR / USD pair to the level of 1.19. We believe that strengthening the euro position will be helped by narrowing the gap between economic growth rates in the eurozone and the US, as well as a possible change in the percentage differential as the Fed approaches the end of the monetary tightening cycle, and the ECB finally starts to take such steps." They added.

Canadian Imperial Bank of Commerce (CIBC) experts adhere to a similar point of view.

"The fall of the euro against the dollar is likely to continue until the ECB raises interest rates. However, the regulator is unlikely to start tightening monetary policy until the market gets used to the end of quantitative easing and the basic CPI does not rise higher," experts say.

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US companies pay the most for steel in the world - opinion

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According to Joe Hinrichs, head of global operations at Ford Motor Co., due to import duties imposed by the Donald Trump administration, the cost of steel for most US companies has increased significantly. They turned out to be much higher than the competitors, the head of Ford stressed.

Joe Hinrichs notes that current steel costs for Ford have exceeded the expected amounts. "Steel prices have risen significantly from a year earlier. In the US, this metal is more expensive than anywhere else in the world. It is essential that our costs in the sector be competitive." concludes Joe Hinrichs.

Previously, the rapid growth of raw material costs reported Ford CEO James Hackett. Representatives of the management of other major automakers, Volvo and BMW, also reported problems due to import duties on steel and aluminum. These companies pointed to difficulties with the sale of American-made cars because of the decline in their competitiveness. Volvo and BMW management have not paid attention to the expected financial losses. According to experts, the current situation arose due to the high cost of steel for American automakers.

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The ship with the euro goes to the bottom

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The strengthening of the currencies of the EM and Italian assets gave only temporary support to the euro "bulls", allowing the creation of short positions on the rise of the EUR / USD pair, which is not surprising. Moody's has not yet spoiled the rating of Italy and kept it at a stable level, but still can be. The Italian government does not pay attention to the criticism of European officials and continues to insist that by accelerating economic growth, we can wait for the decline in the share of debts in GDP. In the meantime, the draft budget is most likely to be finalized, and in the absence of progress, Rome risks getting penalties. The intensification of political problems in Europe leads to the actions of European "bears". In addition, the US President intends to reduce the influence of politics in the country.

Donald Trump said that after the November elections, Congress will take on the pencil the question of reducing the tax for the middle class by 10%. The Democrats are leading in the midterm elections, so the head of the White House announces a new list of promises. Along with this, Trump has a powerful trump card, an impressive economic growth for two quarters in a row since 2014.

After the truce concluded this summer, America reanimated the process of trade negotiations with the European Union. Washington's principle is "zero tariffs, zero non-tariff barriers and zero subsidies for non-automobile-related industrial goods." The parties have already agreed three times in a few years, but it does not work out, and something suggests that this time, it is unlikely that everything will be easy and simple. In the case of protracted negotiations, the euro will be on the negative wave. The volume of eurozone exports in GDP is higher than in the US.

In the short term, the following factors will be the main driving force behind EUR / USD quotes:

  • announcement of the ECB meeting results
  • output data on US GDP growth for the quarter III
  • Italian asset dynamics

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Recall that last Friday, the yield differential of bonds of Italy and Germany reached a 5-year peak, 341 bp. When expanding the spread to 400 bp, the country's banking system will get a serious blow, according to Credit Suisse. Rome already has 260 billion euros of unpaid loans, and this is the highest result in the European Union.

It is unlikely that the head of the ECB, Mario Draghi, will be profitable to save the sinking ship on board with the euro. In its interests, rather, devaluation, which will create a fertile ground for accelerating core inflation, that is, will allow the regulator to perform the main task.

For the last days, the EUR / USD exchange rate knocks for the second time in a row on support at the level of 1.143–1.145. In the case of its overcoming, the "bears" will be open to 1.13.

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Yellow metal rises in price as global risks ris

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On Tuesday, October 23, experts record the rising cost of gold. Investors prefer the yellow metal as a safe asset because of the growing uncertainty around Italy's state budget and Brexit-related issues.

The cost of the December gold futures on the New York stock exchange Comex increased by 0.29%, to $ 1,228.1 per troy ounce. The price of silver futures for December delivery fell by 0.05% to $ 14.58 per ounce.

According to experts, gold is supported by the uncertainty around the Italian state budget. The European Commission intends to discuss further issues during the evaluation of the draft budget of the country for 2019. Earlier, the ministry criticized the principles of the Italian budget, finding it strongly deviating from the norms of the European regulations. Recall that Italy also has the second largest public debt after Greece in relation to GDP in the amount of 131.8%. Currently, it has increased to a historic high and is 2.3 trillion euros, noted in the Central Bank of Italy.

Market participants choose gold, which is traditionally considered an asset "refuge". During the periods of political tension, the demand for it grows, and during a recession, on the contrary, the level of demand decreases, which leads to cheaper metal.

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Trading Plan for 10/23/2018

What happened yesterday looks more like a panic. At the same time, no macroeconomic data came out, so the reasons should be sought in a different plane. It was also the pound that was falling the most, so you need to look for reasons in the UK. It is obvious that the reason lies in Brexit, and more precisely in the political struggle that has developed around this topic. Last weekend in London, there was a large rally for holding a referendum on an agreement with the European Union, and political opponents of Theresa May said that they need to prepare for a repeated Brexit referendum. In fact, we must admit that Theresa May is in a stalemate. It doesn't matter what she agrees with Europe, as it relies on the support of a minority in parliament. Her political opponents will vote against the agreement. Some are for the reason that it is too soft, and others because it is too hard. Of course, they pursue their political goals, but they threaten Britain with an economic catastrophe. The absence of any trade agreement is much worse than even the worst agreement. Especially for investors who cannot calculate the risks due to the current situation in the United Kingdom. It is also curious that the fall of the pound and the single European currency began immediately, as traders woke up in the United States. This rather indicates that they are not only worried about the vague outcomes of Brexit, but still do not believe that European central banks will begin to tighten monetary policy.

In general, today, there is no serious macroeconomic data. Although data on producer prices in Germany have already been released, and their growth rates accelerated from 3.1% to 3.2%, which inspires at least some optimism in the growth potential of inflation in Europe. This already gives hope that the ECB will, however, curtail the effect of the quantitative easing program. Moreover, a meeting of the Board of the European Central Bank will take place the other day, following which should give a final answer regarding the future of the quantitative easing program. Such a probability is still there, albeit a small one. So, traders will obviously remain cautious, and a rebound in the dollar is likely.

The euro / dollar currency pair, showing an active downward interest, once again returned to the level of 1.1440, slowing down the quote. Probably assume the chute at the level where, in the event of mining, we will be rolled back to the side of 1.1490-1.1450.

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The currency pair pound / dollar for yesterday's trading day slipped more than 120 points, eventually slowing down near the local minimum of 1.2920. Probably suggest a rollback towards 1.3000 due to general overheating.

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Wave analysis of GBP / USD for October 23. The pound is still under pressure due to Brexit

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Wave counting analysis:

In the course of trading on October 22, the GBP / USD currency pair fell by 110 basis points. Thus, in the coming hours, a breakthrough of the 100.0% of the Fibonacci mark can be made, which is the minimum of the expected wave 4. If this happens, the wave marking will require making adjustments. The situation on the pound is not completely straightforward. The situation with Brexit puts pressure on the pound. At the same time, a favorable solution to this issue will support the British currency. An unsuccessful attempt to break through the level of 100.0% may lead to a departure of quotes from the lows reached.

The objectives for the option with purchases:

1.3258 - 0.0% according to Fibonacci

1.3300 - 161.8% of Fibonacci

The objectives for the option with sales:

1.2924 - 100.0% of Fibonacci

1.2832 - 127.2% of Fibonacci

General conclusions and trading recommendations:

The currency pair GBP / USD continues to decline in prices, which may lead to the need to clarify the wave marking. So now I recommend waiting for clarification of the situation. If there is no break of the 1.2924 mark, then the working version, which assumes the construction of an upward wave 3, 5, will be preserved. Then, it will be possible to buy a pair with targets located above the 33 figure.

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Wave analysis of EUR / USD for October 23. The pair is fully working out the scenario.

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Wave counting analysis:

During the trading on Monday, the EUR / USD currency pair lost about 50 basis points. Thus, the estimated wave 2, c, completed its construction. If this is indeed the case, the decrease in quotations will continue with targets located near the level of 127.2% Fibonacci. There are no grounds for refining the current wave marking. So far, the situation is fully consistent with the working version. An unsuccessful attempt to break through the level of 100.0% may lead to a departure of quotes from the lows reached (the pair has already tested this level for strength twice).

The objectives for the option with sales:

1.1327 - 127.2% of Fibonacci

1.1194 - 161.8% of Fibonacci

The objectives for the option with purchases:

1.1578 - 61.8% of Fibonacci

General conclusions and trading recommendations:

The pair allegedly completed the construction of wave 2, c. Thus, now I recommend selling a pair with targets located near the estimated mark of 1.1327, which equates to 127.2% of Fibonacci. For more confidence, you can wait for a successful attempt to break through the mark of 1.1431, which corresponds to 100.0% of Fibonacci.

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Intraday technical levels and trading recommendations for GBP/USD for October 23, 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 pair 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.

Evident bullish momentum was demonstrated above 1.3010 and 1.3100 (61.8% Fibo level) which led to recent bullish movement towards 1.3200 where the current bearish movement towards 1.2940 was initiated.

As for the bullish breakout scenario to remain valid, bullish persistence above 1.3010 (50% Fibo level) and 1.3100 (61.8% Fibo level) is needed to maintain sufficient bullish momentum initially towards 1.3200 and 1.3280.

On the other hand, bearish persistence below the price level of 1.3000 (50% Fibo level) enhances further bearish decline towards 1.2940 and 1.2870.

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Intraday technical levels and trading recommendations for EUR/USD for October 23, 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.

Since June, the EUR/USD pair has been trapped within a narrow consolidation range ( 1.1500 ) and (1.1750).

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 was being demonstrated on the daily chart.

On October 10, a recent decline below 1.1520 found its way towards the price level of 1.1420.

However, Temporary bullish recovery around 1.1430 pushed the EUR/USD pair above 1.1520 until bearish breakdown of 1.1520 occurred again on October 17.

Hence, a descending high was established around 1.1600 enhancing the bearish side of the market.

As for the bearish side of the market to remain dominant, the EUR/USD pair should achieve bearish breakdown below the price level of 1.1400. Next demand level would be located around 1.1275.

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Technical analysis of USD/CAD for October 23, 2018

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Overview:

The USD/CAD pair has broken resistance at the level of 1.3000, which acts as support now. So, the pair has already formed minor support at 1.3000. The strong support is seen at the level of 1.2945 because it represents the weekly support. In the H1 time frame, the RSI and the moving average (100) are still pointing to the upside. Therefore, the market indicates a bullish opportunity at the level of 1.3000. Buy above the minor support of 1.3000 with a target at 1.3089 (this price is coinciding with the ratio of 100% Fibonacci). On the other hand, if the pair closes below the minor support (1.3000), the price will fall into the bearish market in order to go further towards the strong support at 1.2945. Also, the double bottom is seen at the level of 1.2865 on the H1 chart.

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Technical analysis of AUD/USD for October 23, 2018

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Overview:

The AUD/USD pair faced resistance at the level of 0.7146, while minor resistance is seen at 0.7107. Support is found at the levels of 0.7043 and 0.6980. Also, it should be noted that a daily pivot point has already set at the level of 0.7107. Equally important, the AUD/USD pair is still moving around the key level at 0.7107, which represents a daily pivot in the H1 time frame at the moment. The AUD/USD pair continued to move upwards from the level of 0.7043. The pair rose from the level of 0.7043 (this level of 0.7043 coincides with the double bottom) to the top around 0.7146. In consequence, the AUD/USD pair broke resistance, which turned strong support at the level of 0.7146. The level of 0.7043 is expected to act as major support today. From this point, we expect the AUD/USD pair to continue moving in the bullish trend from the support level of 0.7043 towards the target level of 0.7146. If the pair succeeds in passing through the level of 0.7146, the market will indicate the bullish opportunity above the level of 0.7146 in order to reach the second target at 0.7179. However, if a breakout happens at the support level of 0.7043, then this scenario may be invalidated.

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Bitcoin analysis for October 23, 2018

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Trading recommendations:

According to the H4 time - frame, I found that BTC is still trading inside of the tranding range between the price $6.456 (resistance) and the price of $6.319. Since there is a buying climax in the background, my advice is to watch for a potential breakout of support to confirm a further downward movement. If you see a valid breakout of the support, watch for selling opportunities with the downward target at the price of $6.162.

Support/Resistance

$6.456 – Intraday resistance

$6.319– Intraday support

$6.162 – Objective target

With InstaForex you can earn on cryptocurrency's movements right now. Just open a deal in your MetaTrader4. *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Analysis of Gold for October 23, 2018

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Recently, Gold has been trading upwards. The price tested the level of $1,236.00. According to the H4 time – frame, I have found the finished downward correction (regular flat) in the background, which is a sign that buying looks preferable. I also found the breakout of the supply trendline and the Fibonacci expansion 100% ($1,234.30), which is another sign of strength. My advice is to watch for buying opportunities on the pullbacks. The projected upward target is set at the price of $1,266.80 (Fibonacci expansion 161.8%)

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GBP/USD analysis for October 23, 2018

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Recently, the GBP/USD pair has been trading downwards. The price tested the level of 1.2936. Anyway, according to the H1 time – frame, I have found the fake breakout of yesterday's low at the price of 1.2957, which is a sign that selling looks risky. I also found a hidden bullish divergence on the MACD oscillator and the breakout of supply trendline, which is another sign of strength. My advice is to watch for buying opportunities with the upward target at the price of 1.3085.

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GBP / USD. October 23. The trading system. "Regression Channels". Theresa May's optimism astonishes

4-hour timeframe

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Technical details:

The senior linear regression channel: direction - up.

The younger linear regression channel: direction - sideways.

Moving average (20; smoothed) - down.

CCI: -128.0302

The currency pair GBP / USD continues to fall down. As part of a small upward correction, the pair could not even work out the moving average line and resumed the fall with a new force. We believe that the reaction of the currency market reflects the real state of affairs in the best possible way. Recall that Theresa May recently announced that the Brexit agreement is 95% complete. Also, the British Prime Minister opposed the extension of the transition period. Probably, the remaining 5% is an unresolved issue on the Northern Ireland border, which is the cornerstone issue in the negotiations. We believe that Theresa May is at least cunning. The European Union continues to insist on its position, and its representatives have repeatedly pointed out that the likelihood of Britain leaving the EU without a "deal" is greater than ever. Theresa May says exactly the opposite. If we take into account that it is May that needs to reassure the public, then the conclusion is that it is she who is trying to instill optimism in the masses, which has no reason to. Therefore, we continue to believe that the probability of leaving the Kingdom from the EU without any agreements is much higher than with a "deal". It seems that the markets, which continue to get rid of the British pound, think so. Today will be the speech of the head of the Bank of England Mark Carney. It is unlikely that he will not touch on the topic of Brexit, especially given the fact that large-scale rallies against the exit from the EU under the plan of Theresa May are already taking place in London.

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 resumed the increased downward movement and completed the level of 1.2939. If the bears sell this level, the fall will continue with the target of 1.2878 and it is recommended to trade it.

Buy-positions are not yet relevant, as the price is much lower than the MA and at the moment there are no fundamental prerequisites for changing the trend in the instrument.

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 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.

Murray levels - multi-colored horizontal stripes.

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

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EUR / USD. October 23. The trading system. "Regression Channels". The Euro has no reason to grow now

4-hour timeframe

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Technical details:

The senior linear regression channel: direction - sideways.

The younger linear regression channel: direction - down.

Moving average (20; smoothed) - down.

CCI: -110.9747

The EUR / USD instrument on Tuesday, October 23, continues its downward movement after the price rebounds from the moving average line. As we have said, the key factor for traders is now technical, since no new macroeconomic reports were published on Monday, there will be none on Tuesday and Wednesday. We consider the news on the Italian budget and disagreements with the EU government on this issue a bit overvalued. From our point of view, events related to Brexit can now influence the movement of the pair. There is no new data on this topic either. Thus, before the Heikin Ashi indicator turns up, it is possible to maintain previously opened short positions. The bulls did not manage to seize the initiative on the instrument at the time of the last lifting. Thus, the trend for the instrument remains downward. At the moment, there is not a single fundamental factor that could increase the demand for the European currency. Perhaps, the ECB press conference on Thursday will bring some optimism to the market. Although to be honest, there is little hope for that. Thus, it remains only to wait for traders to get saturated with dollar purchases and begin to fix positions on sales. Or when the market comes disappointing information from the States, or, conversely, positive from the EU.

Nearest support levels:

S1 - 1,1414

S2 - 1.1353

S3 - 1,1292

Nearest resistance levels:

R1 - 1.1475

R2 - 1.1536

R3 - 1.1597

Trading recommendations:

The EUR / USD currency pair continues to move down. Based on this, it is now recommended to be in short positions with a target of 1.1414. A reversal of the Heikin Ashi indicator to the top will indicate a turn of corrective movement.

Buy positions are recommended to be considered not earlier than traders overcome the moving average line. In this case, the trend in the instrument will change to ascending, but this will most likely require fundamental factors that are not currently available.

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 the 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.

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

EUR / USD: plan for the European session on October 23. Italian crisis puts pressure on the euro

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

The political crisis of the EU due to a sharp change in the course of Italy puts pressure on the euro, which returned to the lows of last week. The White House is also here with its pressure on duties and trade agreements. At the moment, the buyers' task is a breakthrough of the level of 1.1459, above which you can count on the resistance update near 1.1486, where the 50-day moving average is located and where I recommend fixing the profit. In the case of a decline below the support level of 1.1434, without forming a false breakdown there, since this will be the third test in a row, it is best to open long positions in EUR / USD after updating the minimum of 1.1397 and 1.1351.

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

Euro sellers are required to form a false breakdown and return to the resistance level of 1.1459, which will be the first signal to open short positions. Repeated test of support for 1.1434 will lead to a larger sale of EUR / USD with access to monthly minimums in the area of 1.1397 and 1.1351, where I recommend fixing the profits. In the case of growth above the resistance of 1.1459 in the first half of the day, you can sell the euro to rebound from a maximum of 1.1486.

Indicator signals:

Moving Averages

Trade has moved below the moving average, which indicates a resumption of the downward trend after the Friday correction.

Bollinger bands

The upper limit of the Bollinger Bands indicator near 1.1486 may limit the upward potential. A retest of the lower limit around 1.1445 will be a direct signal to sell the euro.

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Description of indicators

  • MA (moving average) 50 days - yellow
  • MA (moving average) 30 days - green
  • MACD: fast EMA 12, slow EMA 26, SMA 9
  • Bollinger Bands 20
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GBP / USD: plan for the European session on October 23. Brexit issues continue to put pressure on the pound

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

Pound buyers will try to return to the resistance level of 1.2965 in the first half of the day, and only fixing on it will allow us to expect a larger upward correction, which will be limited by the resistance level of 1.3007 and the upper limit of the downward channel, which passes just above this range. In the event of a further decrease in the pound, purchases can only be considered after a false breakdown in the area of 1.2926, and best of all, after updating the monthly lows in the areas of 1.2872 and 1.2831, where you can immediately buy for a rebound.

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

Any negative news related to the British Prime Minister, who may be impeached, or to Brexit, will lead to a further decline in the pound. Repeated test of the support level of 1.2926 will crash GBP / USD already to monthly lows in the area of 1.2872 and 1.2831, where I recommend fixing the profits. In the case of a growth of the pound in the first half of the day, short positions can be searched around 1.3007, where the 50-day moving average is located, or to rebound from a maximum of 1.3052.

Indicator signals:

Moving Averages

Trade returned under 30 and 50 MA, indicating a further drop in the pound.

Bollinger bands

The upside potential is limited by the upper limit of the Bollinger Bands indicator in the 1.2985 area. A break of the lower border around 1.2945 will be a signal to open short positions in a pound.

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Description of indicators

  • MA (moving average) 50 days - yellow
  • MA (moving average) 30 days - green
  • MACD: fast EMA 12, slow EMA 26, SMA 9
  • Bollinger Bands 20
The material has been provided by InstaForex Company - www.instaforex.com

The pound looks weaker than the euro and the dollar

US stock indexes started the week in the red zone, corporate reports of most companies show a drop in quarterly earnings. Partly negative was stopped by good news from China, in particular, after the statement by the head of the People's Bank of China that the regulator would take measures to support the economy, and therefore, there was no reason for concern, but this news had a short-term effect.

Sales were also supported in Asian markets. The Japanese Nikkei lost more than 500 points on Tuesday morning, the Shanghai Composite fell by more than 1.2%, sales are coming amid rising demand for government bonds, which indicates an increase in panic. Recently, the IMF in the next economic review came to the conclusion that economic growth peaked, the reason for which are trade wars, economic uncertainty in Europe and tightening of monetary policy on a global scale.

Uncertainty is manifested in the expectations of the results of elections to the US Congress. By now, the likelihood that Democrats will take control of both the Senate and the House of Representatives has gone up to 80% (according to FiveThirtyEight), and for the dollar, the victory of the Democrats can have pronounced bearish consequences.

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According to Nordea, the likelihood of an increase in dollar liquidity will increase dramatically in Q1 of 2019 due to the fact that the national debt ceiling will be raised before March 1 (which directly follows from the budget agreement between Republicans and Democrats for the 2018 fiscal year). At the beginning of 2017, a similar situation arose. At the end of 2016, there was a reduction in liquidity, signs of a dollar deficit appeared, and similarly, from March 2017, the debt ceiling should have been raised. This process ended with the provision of additional liquidity, which led to a reversal of the dollar index. Now, the situation is completely similar, and it is aggravated by signs of a slowing economy, which increases the chances of repeating this scenario.

Thus, the dollar is still the market's favorite and will objectively remain so in the coming weeks. However, players will regard the probability of a Democratic victory as a sign of the weakening of the dollar and will prepare for a reversal of the trend.

Eurozone

In the eurozone, the focus this week is on the ECB's monetary policy meeting. As expected, this meeting will be largely passing and will not lead to changes in monetary policy.

The indicators of business activity and consumer sentiment are generally stable with a slight downward trend. The inflation rate remains above the target of 2%, but in its structure, a significant part of the energy component, core inflation has decreased in recent months and dropped to 0.9% in September.

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Attention will be focused primarily on the comments of Mario Draghi at the final press conference on inflation and the dynamics of average wages. As for the asset purchase program, the announcement of the official completion of the program is also unlikely to take place; most likely, the final wording of the question will be postponed to December.

Expectations on EUR / USD on Tuesday remain neutral, an attempt to break through support for 1.1432 will almost certainly take place, but it is unlikely to lead to full-fledged movement towards the next support of 1.1380, and more likely another pullback and consolidation.

Great Britain

Pound does not have a strong driver this week. No important publications of macroeconomic data are planned, the Brexit negotiations ended in failure, and now, you need to wait for December or even January for at least some concrete to reappear.

The currency pair GBP / USD is under pressure, support for 1.2919 is already very close and will be broken through with high probability today. Temporary support for the pound can be found at 1.2870 / 79.

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Analysis of the divergence of EUR / USD for October 23. Bearish divergence helped the dollar once again

4h

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A new bearish divergence at the CCI indicator allowed the EUR / USD currency pair to make a U-turn in favor of the US currency and consolidation below the correction level of 61.8% - 1.1497. As a result, on October 23, the process of falling can be continued in the direction of the next Fibo level of 76.4% - 1.1424. Reversing the quotes from the correction level of 76.4% will make it possible to expect a turn in favor of the EU currency and some growth towards the 61.8% level. Fixing the pair below the Fibo level of 76.4% will increase the chances for a further fall in the direction of the next correction level of 100.0% - 1.1303.

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 pair rebounded from the correctional level of 100.0% - 1.1553 and a turn in favor of the US dollar. Thus, today, the fall in quotations can be continued in the direction of the next level of correction 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 reversal in favor of the European currency and we can expect continued growth in the direction of the correction level of 76.4% - 1.1789.

The Fibo grid is built on extremums from November 7, 2017, and February 16, 2018.

Recommendations to traders:

Purchases of the EUR / USD currency pair can be made now with a target of 1.1497 and a Stop Loss order under the Fibo level of 76.4% if the pair bounces the correction level of 1.1424.

Sales of the EUR / USD currency pair can be held with the target of 1.1424 with a Stop Loss order above the Fibo level of 61.8%, as the pair completed closing below the correction level of 1.1497 and with the target of 1.1303 if the closing occurs below level 76.4%.

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Analysis of the GBP / USD Divergences for October 23. The pound has nothing to oppose the dollar

4h

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On the 4-hour chart, the GBP / USD currency pair quotes from the correction level of 23.6% - 1.3067 with a reversal in favor of the American dollar. As a result, the fall in quotations resumed in the direction of the correction level of 0.0% - 1.2662. The ripening divergences today are not observed in any indicator. For a more detailed picture, go to the younger graph.

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, the pair completed under the correction level of 76.4% - 1,3003. Thus, the fall in quotations of the pair continues in the direction of the next Fibo level of 100.0% - 1.2924. The rebound of the course on October 23 from the Fibo level of 100.0% will allow traders to expect a reversal in favor of the US currency and some growth towards 76.4%. There are no emerging divergences today. Fixing the pair below the Fibo level of 100.0% will work in favor of continuing to fall in the direction of the correctional level of 127.2% - 1.2833.

The Fibo grid was built on extremes from October 4, 2018, and October 12, 2018.

Recommendations to traders:

You can make purchases of the GBP / USD currency pair with the target of 1.3003 and a Stop Loss order under the correction level of 100.0% if the pair bounces off the 1.2924 level (hourly chart).

The currency pair GBP / USD can be sold now with targets at 1.2924 and 1.2833 and a Stop Loss order above the level of 76.4%, as the pair completed closing under the Fibo level of 1.3003 (hourly chart).

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The world is on the verge of a new crisis.

Growing tensions in world markets remain the most important factor that threatens the current fragile stability in financial markets.

Given the growth of political risks in the United States in anticipation of congressional elections in November, the debt problems in Italy, which have worsened recently and put pressure on the single European currency, and all this is happening against the background of Brexit and large-scale trade war between the United States and China. One can say that the chaos in the financial markets, produced by Washington, will only increase.

The pressure of this process, accompanied by a rise in interest rates by the Fed, as well as a reduction in its balance, which has somehow been stopped in the expert community, threatens, in our opinion, an increase in the chaos in the financial markets and then dumping the global economy into a new recession. Here, the question arises: What defensive assets will be in demand by investors?

If, during the active phase of the 2008–09 crisis, they were actively buying up government bonds of economically developed countries, gold, Japanese yen, Swiss francs, and, of course, the US dollar, then with the start of a new wave of financial crisis, the preferences of market players may change somewhat. And here, geopolitics and change in the landscape of trade between Europe, China and a number of other countries on the one hand, and the USA on the other, can play a big role.

World markets may not be perceived as a single whole due to the intensification of protectionism and competition, mixed up in a military confrontation. World trade can split into several influential centers, which can lead to a change in preferences among market players to buy certain assets to ensure their risks.

In our opinion, the start of the beginning of the active phase of these processes can be given on the basis of elections to the American parliament. In the meantime, most likely, the relative lull in the currency markets will continue. We expect the overall sideways trend in major currency pairs to continue.

Forecast of the day:

The GBP / USD currency pair is trading above the level of 1.2950. It is adversely affected by the futility of the Brexit's sweetheart solution between the EU and the UK. We consider it possible to sell the pair on growth from 1.3000 or on its decline below 1.2950 with a likely target of 1.2850.

The currency pair NZD / USD is trading above the level of 0.6530. Pressure on it is exerted by growing tensions in trade between the United States and China. From a technical point of view, the pair forms a double top reversal pattern. A breakout at the price of 0.6530 could lead to the resumption of the fall of the pair to 0.6490.

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Simplified Wave Analysis. Review of the currency pair EUR / GBP for October 23

Wave pattern graphics H4:

The perspective trend direction on the cross chart can be traced from April 17th. The wave is rising, a correction has been forming in it in recent months.

Wave pattern graphics H1:

The bearish wave of August 28 reached a zone of potential reversal. The wave structure looks complete.

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Wave pattern graphics M15:

Since October 10, the bull wave develops. Its wave level is still insufficient to change the trend of a wave of a larger scale, but the potential is not fully utilized. In the coming days, it is likely to roll back down.

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Recommended trading strategy:

The conditions for conducting trade deals on large TF pairs have not been formed. In day trading, short-term cross-country purchases are possible.

Resistance zones:

- 0.8920 / 0.8970

Support areas:

- 0.8800 / 0.8750

Explanations to 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

Simplified Wave Analysis. Review of the currency pair USD / CHF for October 23

Wave pattern graphics H4:

The last wave of this scale took the place of a downward correction in the bullish wave D1.

Wave pattern graphics H1:

The high wave level of the price rise that began on September 21 indicates its potential transition to a larger scale of movement.

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Wave pattern graphics M15:

The rising wave from October 15 completes the watch wave model. In the next week, you can wait for the price correction.

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Recommended trading strategy:

Until the end of this month, the course of the pair will be mainly in the "outset". Short-term sales make sense to use only in intraday trading.

Resistance zones:

- 1.0010 / 1.0060

Support areas:

- 0.9840 / 0.9790

Explanations for 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

Forecast for EUR / USD on October 23, 2018

EUR / USD

The beginning of the trading week was very active. The euro was quickly marked in the target range of 1.1544 / 74 and, being delayed by the resistance of the balance lines on the daily and four-hour charts, also quickly began to fall. The final decrease was 48 points. On the daily scale, the price went under the trend line of the price channel. At the four-hour position, it was fixed under the Kruzenshtern trend line. The Marlin indicator on both scales shows a downward trend. The price remains to fulfill the last condition for a further medium-term decline, to consolidate below the signal level of the nearest minimum of 1.1432. After this, the target of 1.1300 opens.

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Forecast for GBP / USD on October 23, 2018

GBP / USD

The British pound lost 104 points on Monday on rumors about the possible resignation of Prime Minister Theresa May. On the daily chart, the price fixed under the red indicator line of balance, which markedly shifted the emphasis to a further decrease in the trend. But to reduce at least to the support of the price channel line (1.2848), it is necessary to overcome the important support of the Kruzenshtern trend line at 1.2934. Before this condition, a correction to the level of 1.3042 is possible, the maximum on August 30. The possibility of such a correction is suggested by the price convergence with the Marlin indicator on the four-hour chart.

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Forecast for USD / JPY on October 23, 2018

USD / JPY

The Japanese yen makes all efforts in the fight against technical resistance, but external forces do not allow it to do so. Yesterday, the price tried to get above the trend line of the price channel and the Kruzenshtern trend indicator line on the daily chart. This morning, the price was again dropped down to the opening level of Monday. At the same time, on the four-hour chart, a price divergence with Marlin oscillator was formed.

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Stock markets do not provide much-needed support for Japanese currency. Yesterday, the American S & P500 fell 0.43%. Today, the Japanese Nikkei 225 has fallen by 2.38% and the Chinese China A50 by 2.01%. The cumulative situation is difficult for the yen. It is now extremely difficult to return to it again over the price channel line. With a break of support for the Kruzenshtern line on the four-hour chart at 117.34, the first goal is opened in a further decline of 111.64. If the price is fixed under it, a deeper drop is possible. The second target is 110.39, at least on September 7.

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Fractal analysis of major currency pairs for October 23

Dear colleagues.

For the Euro / Dollar currency pair, we clarified the targets for the ascending structure of October 16, which we consider as a medium-term one. For the currency pair Pound / Dollar, we continue to follow the downward cycle of October 12 as the main trend. For the currency pair Dollar / Franc, the price forms an upward structure of October 15 and the development of which is expected after the breakdown of 0.9975. For the currency pair Dollar / Yen, we are following the development of the ascending structure from October 15 and we expect further upward movement after the breakdown of 113.05. For the Euro / Yen currency pair, the price forms the potential for the upward movement of October 18 and the development of this structure as a cycle is expected after the breakdown of 130.18. For the currency pair Pound / Yen, we are following the downward structure from October 16 and the level of 145.68 is the key resistance for the bottom.

Forecast for October 23:

Analytical review of H1-scale currency pairs:

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For the Euro / Dollar currency pair, the key levels on the H1 scale are: 1.1547, 1.1516, 1.1494, 1.1474, 1.1448, 1.1428, 1.1380 and 1.1346. Here, we clarified the goals for the downward structure of October 16. We expect the downward movement to continue after the price passes the range of 1.1448 - 1.1428. In this case, the target is 1.1380. The potential value for the bottom is considered the level of 1.1346, upon reaching this value we expect a rollback to the top.

The short-term upward movement is possible in the range of 1.1474 - 1.1494 and the breakdown of the latter will lead to the development of a protracted correction. Here, the target is 1.1516 and this level is the key support for the bottom. Its price passage will have to form an upward structure. In this case, the potential target is 1.1547.

The main trend is the downward structure of October 16.

Trading recommendations:

Buy 1.1474 Take profit: 1.1492

Buy 1.1495 Take profit: 1.1514

Sell: 1.1426 Take profit: 1.1384

Sell: 1.1379 Take profit: 1.1348

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For the Pound / Dollar currency pair, the key levels on the H1 scale are: 1.3120, 1.3096, 1.3043, 1.3004, 1.2945, 1.2896 and 1.2830. Here, we are following the development of the downward structure of October 12. At the moment, the price is in the correction. We expect the downward movement to continue after the breakdown of 1.2945. In this case, the target is 1.2896 and consolidation is near this value. Hence, the likelihood of upward correction development is also high. A potential value for the bottom is considered the level of 1.2830, after reaching which we expect a departure to a correction.

The short-term uptrend is possible in the range of 1.3004 - 1.3043 and the breakdown of the last value will lead to a prolonged correction. Here, the target is 1.3096 and the range of 1.3096 - 1.3120 is the key support for the downward structure. We expect clearance of the expressed initial conditions for the upward cycle.

The main trend is the downward cycle of October 12.

Trading recommendations:

Buy: 1.3004 Take profit: 1.3040

Buy: 1.3047 Take profit: 1.3094

Sell: 1.2943 Take profit: 1.2898

Sell: 1.2892 Take profit: 1.2834

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For the Dollar / Franc currency pair, the key levels on the H1 scale are: 1.0030, 1.0007, 0.9975, 0.9960, 0.9934, 0.9918 and 0.9893. Here, we are following the development of the ascending structure of October 15. The price passage of the range of 0.9960 - 0.9975 will begin the development of an upward trend. In this case, the goal is 1.0007. The potential value for the top is considered the level of 1.0030, after reaching which we expect consolidation, as well as a rollback to the correction.

The short-term downward movement is possible in the range of 0.9934 - 0.9918 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 0.9893 and this level is the key support for the top.

The main trend is the ascending structure of October 15.

Trading recommendations:

Buy: 0.9977 Take profit: 1.0005

Buy: 1.0009 Take profit: 1.0030

Sell: 0.9934 Take profit: 0.9920

Sell: 0.9916 Take profit: 0.9895

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For the Dollar / Yen currency pair, the key levels on the scale of H1 are: 113.53, 113.23, 113.03, 112.90, 112.59, 112.40 and 112.09. Here, we are following the ascending structure of October 15. The movement upwards is expected after the price passes the range of 112.90 - 113.03. In this case, the target is 113.23, and consolidation is near this level. The potential value for the top is considered the level of 113.53, after reaching which we expect a departure to the correction.

The short-term downward movement is possible in the range of 112.59 - 112.40 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 112.09 and this level is the key support for the upward structure.

The main trend: the ascending structure of October 15.

Trading recommendations:

Buy: 113.03 Take profit: 113.21

Buy: 113.25 Take profit: 113.50

Sell: 112.57 Take profit: 112.44

Sell: 112.38 Take profit: 112.15

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For the Canadian dollar / Dollar currency pair, the key levels on the H1 scale are: 1.3250, 1.3199, 1.3161, 1.3127, 1.3085, 1.3060 and 1.3022. Here, we are following the development of the ascending structure of October 16. The upward movement is expected after the breakdown of 1.3127. In this case, the target is 1.3161 and in the range of 1.3161 - 1.3199 is the short-term upward movement, as well as the consolidation. The potential value for the top is considered the level of 1.3250, after reaching which we expect a departure to the correction.

The short-term downward movement is possible in the range of 1.3085 - 1.3060 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 1.3022 and this level is the key support for the upward structure of October 16.

The main trend is the ascending structure of October 16.

Trading recommendations:

Buy: 1.3127 Take profit: 1.3160

Buy: 1.3163 Take profit: 1.3197

Sell: 1.3085 Take profit: 1.3062

Sell: 1.3058 Take profit: 1.3025

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For the currency pair Australian dollar / Dollar, the key levels on the H1 scale are: 0.7130, 0.7105, 0.7088, 0.7059, 0.7034, 0.7017 and 0.6992. Here, we are following the development of the downward structure of October 17. The continuation of the downward movement is expected after the breakdown of 0.7059. In this case, the goal is 0.7034 and in the range of 0.7034 - 0.7017 is the price consolidation. The potential value for the bottom is considered the level of 0.6992, upon reaching which we expect a rollback to the top.

The short-term uptrend is possible in the range of 0.7088 - 0.7105 and the breakdown of the latter value will lead to a prolonged correction. Here, the target is 0.7130 and this level is the key support for the downward structure.

The main trend is the downward structure of October 17.

Trading recommendations:

Buy: 0.7088 Take profit: 0.7105

Buy: 0.7107 Take profit: 0.7130

Sell: 0.7056 Take profit: 0.7034

Sell: 0.7016 Take profit: 0.6992

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For the Euro / Yen currency pair, the key levels on the H1 scale are: 131.08, 130.71, 130.18, 129.74, 129.13, 128.84 and 128.31. Here, we follow the formation of the initial conditions for the top of October 18. We expect the continuation of the movement upward after the breakdown of 129.74. In this case, the goal is 130.18 and consolidation is near this level. The breakdown of the level of 130.20 will lead to the development of a pronounced upward movement. In this case, the goal is 130.71. The potential value for the top is considered the level of 131.08, upon reaching which we expect a rollback downwards.

The short-term downward movement is possible in the range of 129.13 - 128.84. Hence, there is a high probability of a reversal upwards. The breakdown of the level of 128.84 will have to develop a downward trend. In this case, the goal is 128.31.

The main trend is the formation of potential for the top of October 18.

Trading recommendations:

Buy: 129.75 Take profit: 130.10

Buy: 130.25 Take profit: 130.70

Sell: 129.10 Take profit: 128.86

Sell: 128.80 Take profit: 128.40

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For the Pound / Yen currency pair, the key levels on the H1 scale are: 148.35, 147.42, 146.92, 146.22, 145.68, 145.20, 144.91 and 144.34. Here, we are following the downward structure of October 16. The short-term downward movement is expected in the range of 146.22 - 145.68 and the breakdown of the latter value will lead to a movement to the level of 145.20. In the range of 145.20 - 144.91 is the consolidation. The potential value for the bottom is considered the level of 144.34, after reaching which we expect a rollback to the top.

The short-term upward movement is possible in the range of 146.92 - 147.42 and the breakdown of the latter value will have to develop the ascending structure. In this case, the goal is 148.35.

The main trend is the downward structure of October 16.

Trading recommendations:

Buy: 146.95 Take profit: 147.40

Buy: 147.50 Take profit: 148.30

Sell: 146.20 Take profit: 145.70

Sell: 145.65 Take profit: 145.22

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Fundamental Analysis of GBP/USD for October 23, 2018

GBP/USD has been quite impulsive amid the recent bearish bias. The price is expected to maintain bearish momentum in the coming days. Ahead of the crucial event in the UK and macroeconomic reports from the US throughout the week, the pair is set to trade with higher volatility.

The UK presented mostly upbeat economic reports recently. However, GBP could not quite gain momentum against USD that indicates bearish market sentiment on GBP, while also leading to greater gains on the USD side. Today the UK CBI Industrial Order Expectations report is going to be published which is expected to be unchanged at -1 and MPC Member Haldane is going to speak about the key interest rates and the plans on monetary policy. Moreover, Bank of England's Governor Carney is also due to speak today about the Brexit impact on the domestic economy which may lead to certain volatility in the market.

On the other hand, USD may struggle for gains on the back of the recent argument between the FED and President Trump about a pace of monetary tightening. The clash may lead to certain immediate gains but in long term it is expected to slow down the economic growth in a multiple way. The US is due to publish Core Durable Goods Orders and flash GDP reports later this week. Today Richmond Manufacturing Index report is going to be published which is expected to decrease to 25 from the previous figure of 29 and FOMC Member Bostic is going to speak today about the Fed's plans on the pace of rate hikes. His speech is expected to be hawkish.

Meanwhile, the pair is expected to be quite volatile this week on the back of the loaded economic calendar for both the US and the UK. Though GBP has been struggling to maintain momentum, certain bullish pressure is not ruled out in case of solid economic data. Otherwise, USD is expected to continue its impulsive momentum in the coming days.

Now let us look at the technical view. The price is currently residing below 1.3000-50 area from where certain retracement towards the area is expected before the price moves lower towards 1.2850 and later towards 1.2700 area. The price is currently residing at the edge of Kumo Cloud support which is probably going to be broken with a retest before moving lower. As the price remains below 1.3050 area, the bearish bias is expected to continue.

SUPPORT: 1.2700, 1.2850

RESISTANCE: 1.3000-50, 1.3200

BIAS: BEARISH

MOMENTUM: IMPULSIVE and VOLATILE

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Fundamental analysis of EUR/USD for October 23, 2018

EUR/USD has been quite impressive with the recent bearish pressure which engulfed the previous impulsive bullish trend, leading the price below 1.15 with a daily close. As of the recent Italy budget deficit problem, the euro struggled to maintain gains despite the strong bullish momentum it had before the last week's close.

While Italy is refusing to back down on the budget deficit in response to EU of its 2019 spending plans, the market interpreted the information in a dovish manner. However, the government of Italy does not take it as a negative side as they claim that the economic growth is better than expected and structural deficit target may be revised. Still, this fact put the euro under pressure. Today the German PPI report is going to be published which is expected to be unchanged at 0.3% and the Consumer Confidence is also expected to be unchanged at -3. Ahead of the ECB President Draghi's speech this Friday, certain volatility may exist in the market throughout the week for the euro.

On the other hand, the Fed is currently looking forward to another rate hike in the coming week which will lead the interest rate to 2.50% from the current value of 2.25%. Despite the recent argues with President Trump, the interest rate hike may lead to certain gains but in the longer term it is expected to slow down the economic growth in a multiple way. Ahead of the Core Durable Goods Orders and Final GDP estimates, today the Richmond Manufacturing Index report is going to be published which is expected to decrease to 25 from the previous figure of 29 and FOMC Member Bostic is going to speak today about the interest rate decision and future monetary policy which is expected to have the hawkish outcome.

As of the current scenario, EUR may struggle further to gain momentum against USD having certain fundamental difficulties in the process. If USD manages to perform better than expected amid the upcoming economic reports, further impulsive bearish pressure is expected in the pair which will lead to more downward momentum in the coming days.

Now let us take a look at the technical view. The price has breached below 1.15 area with confluence to the dynamic level of 20 EMA recently which is expected to lead to further bearish pressure in the pair. Currently the price is expected to retrace higher a bit towards 1.15 area before it starts to push lower with target towards 1.1430 and later towards 1.1300 area in the future. As the price remains below 1.15 area, the bearish bias is expected to continue.

SUPPORT: 1.1300, 1.1430

RESISTANCE: 1.1500, 1.1600

BIAS: BEARISH

MOMENTUM: VOLATILE

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