The reaction of the New Zealander to the decision of the RBNZ: a good mine in a bad game

The Reserve Bank of New Zealand has realized its intentions and reduced the interest rate by 25 basis points. Although at the April meeting, the regulator actually warned about such a step, the market reaction was quite violent. TheNZDUSD pair collapsed to the area of seven-month lows, that is, to the base of the 65th figure. During the European session, the price won back some of the lost positions, but the mood still remains subdued. After all, judging by the rhetoric of RBNZ members, the regulator is ready to soften the parameters of monetary policy again, if the measures taken do not bring the expected effect. Such prospects will put background pressure on the kiwi, while the prospects for the Northern trend depend entirely on the prospects for US-China trade relations.

It should be noted that just a day before the May meeting of the RBNZ, the Reserve Bank of Australia announced its decision. Contrary to the expectations of many experts, the Australian regulator maintained a wait-and-see position and even voiced optimistic notes on the prospects for the recovery of the national economy. Perhaps for this reason, NZD/USD traders reacted so emotionally to the generally expected decision of the New Zealand Central Bank. The stock market of the island state also played a role. The yield on 10-year government bonds fell to a minimum of one and a half months, thus putting additional pressure on the New Zealand dollar.

Arguing his decision, the Central Bank of New Zealand pointed to several factors, the dynamics of which will determine the fate of interest rates. First of all, it is the country's GDP growth. According to the latest data, this figure came out at 2.3%, showing a significant slowdown for the second quarter in a row. For comparison: in 2016, this indicator fluctuated around 3.9%-4.1%, in 2017 – in the range of 3%-3.4%, and at the end of last year, it fell to a multi-year minimum of 2.3%. As the head of the RBNZ noted, the risk of further decline remains high, against the backdrop of a slowdown in both global growth and economic growth in China and Australia, which are New Zealand's largest trading partners.

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Another factor is the labor market. The situation here is not entirely straightforward. On the one hand, the unemployment rate in the first quarter of this year fell to 4.2%. But on the other hand, this dynamics is not due to the creation of new jobs, and the decline in the share of the economically active population. Thus, the share of the labor force of the total population in the last quarter decreased from 70.9% to 70.4%. Other key components of the New Zealand labor market were also disappointing.

For example, for the first time since the third quarter of 2015, the indicator of employment growth in quarterly terms decreased to a negative area (-0.2%). In annual terms, the indicator came out at 1.5% (the weakest growth rate since the beginning of 2016), thus continuing the downward trend (the indicator falls from the third quarter of last year). Moreover, according to the head of RBNZ Adrian Orr, the pressure on production capacity will weaken, which will affect the labor market accordingly. Orr also drew attention to the slowdown in the growth rate of wages. For three quarters, this figure came out at the level of 0.5%, but at the beginning of the current year, it unexpectedly decreased to 0.3%, contrary to optimistic forecasts of experts. The head of the RBNZ noted that this fact serves as another confirmation that the inflationary pressure this year will grow "very slowly".

By the way, weak inflation is another "headache" of the New Zealand regulator. The consumer price index in annual terms fell to 1.5% (from the previous level of 1.9%). In quarterly terms, the index remained at the level of the fourth quarter, that is, at 0.1%. Core inflation showed a negative trend, falling to one and a half percent – this is the weakest growth rate since last summer.

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Thus, the Reserve Bank of New Zealand today had every reason to reduce the interest rate. The future trajectory of monetary policy will depend on the "three whales" of macroeconomic statistics: employment growth, inflation, and GDP. If the dynamics of these indicators will continue to be negative, the RBNZ may return to the issue of lowering the interest rate in the autumn.

Today's corrective pullback NZD/USD is a "good mine in a bad game", as there is no reason to restore the New Zealander at the moment. The correction is due to two reasons. First, the fact that the rate cut was partly taken into account in prices, so for the further development of the southern trend, an additional information drive was needed (which did not exist). Secondly, quite good statistical data from China was published today. So, during the first four months of this year, China's foreign trade turnover increased by 4.3% - to 9.51 trillion yuan (i.e. 1.41 trillion dollars). Exports grew by 6% (up to 5.06 trillion yuan), while imports - by 3% (to 4.45 trillion yuan). This result had a positive impact on the New Zealand dollar, as the economy of New Zealand is largely dependent on the economy of China.

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But, in my opinion, this price rollback will be short-term. If the US does raise duties on imports from China, and the next round of US-China talks ends in vain, the NZD/USD pair will resume its downward movement to the annual minimum of 0.6522, followed by testing of the 64th figure.

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EURUSD: Traders ignore the excellent report on industrial production in Germany. Iran may return to its nuclear program

The euro remains in a narrow side channel, and data released on industrial production in Germany, which indicate a good start in the 1st quarter of this year, were ignored by traders. Most likely, attention is focused on trade negotiations between the US and China, and the further direction of the EURUSD pair will depend on them. Increasing disputes may lead to a stronger US dollar, while a more positive outcome will support risky assets.

According to the Federal Bureau of Statistics of Germany, industrial production in March increased by 0.5% compared with February. Economists had forecast a 0.5% drop in production in March.

Such a strong divergence of expectations from the final data was due to strong activity in the manufacturing industry as well as the construction sector. Thus, production in the manufacturing industry increased by 0.4%, while production in the construction sector in Germany in March increased by 1.0%.

However, the Bureau noted that despite the good growth, the prospects for German industry remain moderate. Compared to the same period of the previous year, industrial production in Germany decreased by 0.9%.

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The speech of the President of the European Central Bank was ignored and did not concern monetary policy.

As for the technical picture of the EURUSD pair, it continues to be the same as at the beginning of this week. Further prospects for the movement of the trading instrument seem vague. Bears can show themselves after the return and update of the resistance level of 1.1215, while bulls will be clearly set to hold large support of 1.1170, from which an attempt has already been made to build the lower boundary of the new upward channel. The target of buyers is the breakdown and consolidation above 1.1215, which will open a direct road in the area of last week's highs to 1.1260 and 1.1290.

In the first half of the day, a report was also published, which indicated that China's exports in April declined, which in general was highly expected against the backdrop of a trade war between the United States and Beijing.

According to official data, exports in April of this year fell immediately by 2.7% compared with the same period of the previous year, after rising by 14.2% in March. Economists had expected exports to grow by 1.8%. Meanwhile, imports, on the contrary, increased by 4.0% compared to the same period of the previous year after a decline of 7.6% in March. Economists had expected a decline in imports by 2.7%. China's foreign trade surplus in April was $13.8 billion, while economists assumed that the trade surplus would be $33.6 billion.

Oil prices remained in a narrow range after today's statement by the President of Iran. In it, Hassan Rouhani drew attention to the fact that the Islamic Republic may terminate the implementation of certain obligations related to the nuclear deal, which was concluded in 2015. Such statements, of course, will not be ignored by the White House USA. However, this was primarily addressed to all European authorities.

Rouhani reminded the countries of Europe about the concluded agreements, and also gave them 60 days to solve problems in the field of oil supplies and banks, which the EU uses to hide behind imports. The Iranian President also said that if his requests are not heard, Tehran may return to complete the construction of a nuclear facility in Arak, thereby terminating the nuclear deal.

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GBP/USD: a plan for the American session on May 8. The pound continues to decline, beating the entire Friday's growth last

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

The bulls failed to stay above the important support levels that I paid attention to in my morning forecast. The lack of agreements on Brexit between the two main parties of the UK continues to put pressure on the pair. The main task of buyers for the second half of the day is to return to the resistance of 1.3041. Only then can we expect an upward correction in the area of the maximum of 1.3087, where I recommend fixing the profit. Also, the bulls will need a lot of strength to stay in the afternoon above the support of 1.2987, the test of which may take place in the near future. In the scenario of its breakdown, it is best to open long positions on the rebound from the minimum of 1.2946.

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

The bears coped with the morning task and continued the downward correction in the pair, despite the emerging divergence on the MACD indicator. The main goal of sellers for the second half of the day will be to update the minimum of 1.2987, which will push GBP/USD down to the support area of 1.2946 and 1.2905, where I recommend fixing the profits. Also, a good signal to sell will be an unsuccessful attempt to consolidate above the resistance of 1.3041, which will lead to a return to the market of new sellers of the pound.

Indicator signals:

Moving Averages

Trading is below 30 and 50 moving averages, indicating a bearish advantage.

Bollinger Bands

In the case of the pound's company in the afternoon, the average border around 1.3060 will act as resistance.

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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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EUR/USD: plan for the American session on May 8. Calm continues

To open long positions on EURUSD, you need:

The situation has not changed at all, despite the speech of the President of the European Central Bank. The main goal for today remains the range of 1.1214, the consolidation of which will lead EUR/USD to the maximum area of last week to 1.1260 and will retain the upward potential with the test levels of 1.1282 and 1.1301, where I recommend fixing the profit. In case of further decline of the euro, long positions are best to go after the downward correction from the support of 1.1170, provided that a false breakdown is formed, or to rebound from a larger area of 1.1138.

To open short positions on EURUSD, you need:

Bears kept the pair under the resistance of 1.1214. While trading is below this level, the pressure on the euro will remain, which will lead to a decrease and consolidation under the support level of 1.1170, the breakdown of which will push EUR/USD to the minimum area of 1.138 and 1.112, where I recommend fixing the profit. With the euro rising above the resistance of 1.1214 in the second half of the day, against the background of the absence of important fundamental statistics on the US, it is best to open short positions on the rebound from the maximum of 1.1260, but the intermediate resistance can be the level of 1.1240.

Indicator signals:

Moving Averages

Trading is conducted in the area of 30 and 50 moving averages, which continues to indicate the lateral nature of the market.

Bollinger Bands

The volatility of the indicator has decreased, which does not give signals on entering the market.

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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

GBP/USD. May 8th. Results of the day. Laborites and Conservatives can't agree yet

4-hour timeframe

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The amplitude of the last 5 days (high-low): 73p – 64p – 188p – 89p – 91p.

The average amplitude over the last 5 days: 101p (107p).

From our point of view, after the pound quite unreasonably rose to 1.3170 amid expectations of reaching an agreement between Labor and Conservatives, which will gain the necessary number of votes to support the "deal" of Theresa May, traders returned to the pair's sales, as no data confirming the success of the negotiations were received. Thus, the pound is quite logically returning to its initial positions. Moreover, we still believe that the pair may look to the South exclusively in the coming weeks or even months, as the British pound still has no fundamental support. All of Theresa May's plans to "push" her version of the agreement through Parliament are crumbling. The prospect of holding a second referendum is clearly visible, as the political forces of Great Britain cannot agree among themselves. Thus, there is a high probability that the fate of the country will have to be decided by its people. What will happen to Theresa May in this case? Clearly, the collapse of her political career. She never managed to reach an agreement with all the participants of the "deal". Brexit under threat of failure. We also remind you that this is not the first time there is information that Scotland may hold its referendum on independence, and in this case, the UK may suffer serious territorial and economic losses. In general, this whole situation does not bode well for the country, and the British pound will continue to be inclined to fall.

Trading recommendations:

The GBP/USD currency pair continues a perfectly logical downward movement after it overcame the critical line. Thus, the first target for short positions is the Senkou Span B line, and the next target is the level of 1.2908.

Purchase orders can be considered in small lots only after the reverse consolidation of the price above the Kijun-Sen line with the first target of 1.3263.

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

Explanation of illustration:

Ichimoku Indicator:

Tenkan-Sen – red line.

Kijun-Sen – 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:

A red line and a histogram with white bars in the indicator window.

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EUR/USD. May 8th. Results of the day. The market is calm despite fears of a trade war between the US and the EU

4-hour timeframe

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The amplitude of the last 5 days (high-low): 78p – 48p – 70p – 37p – 51p.

Average amplitude over the last 5 days: 57p (57p).

The third trading day of the week is held for the EUR/USD pair in the same weakly volatile trades without a pronounced trend, even intraday, as the day before. No new data concerning the EUR/USD pair were available to traders. Thus, market participants have nothing to react to. As a result, all the lines of the Ichimoku indicator are as close as possible to each other, which signals a flat. The Bollinger Bands narrowed and turned sideways, which also indicates lateral movement. Based on this, it is best to wait until the end of the current flat and then resume active trading. Tonight, the ECB Head Mario Draghi is scheduled for the evening, but this does not mean that he will tell the market something important or at least something new. Thus, the situation in the evening may not change. The rumors about the beginning of a full-scale trade war between the EU and the States are still in full swing. However, there is little official information on this topic. Accordingly, traders are again deprived of the opportunity to "work out information". Also, markets are waiting for information about the negotiations between the US and China on trade conditions that are designed to save both countries from a full-scale trade war. It's hard to say how they will end, but Trump's categorical and radical nature suggests that either China will have to give up again or the negotiations will fail.

Trading recommendations:

The currency pair EUR/USD went to the side channel. Thus, it is not recommended to open any positions, as the probability of a full flat is high. We recommend waiting for the signs of the pair's exit from this channel, and then resume trading.

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

Explanation of illustration:

Ichimoku Indicator:

Tenkan-Sen – red line.

Kijun-Sen – 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:

A red line and a histogram with white bars in the indicator window.

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

Technical analysis of USD/CHF for May 08, 2019

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Overview: The USD/CHF pair continues moving in a bullish trend from the support levels of 1.0123 and 1.0177. Currently, the price is in an upward channel. This is confirmed by the RSI indicator signaling that the pair is still in a bullish trend. As the price is still above the moving average (100), immediate support is seen at 1.0177. Consequently, the first support is set at the level of 1.0177. So, the market is likely to show signs of a bullish trend around 1.0177. In other words, buy orders are recommended above the level of 1.0177 with the first target at the level of 1.0265. Furthermore, if the trend is able to breakout through the first resistance level of 1.0265, we should see the pair climbing towards the point of 1.0314. It would also be wise to consider where to place a stop loss; this should be set below the second support of 1.0123.The material has been provided by InstaForex Company - www.instaforex.com

Weekly review of the pair GBP/USD from May 6 to 11, 2019

Trend analysis (Fig. 1).

In the coming week, the price will move down with the first target of 1.2992 – 21 average EMA (black dotted line).

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Fig. 1 (weekly chart).

Comprehensive analysis:

- Indicator analysis – down;

- Fibonacci levels – neutral;

- Volumes – down;

- Candle analysis – neutral;

- Trend analysis – up;

- Bollinger bands – up;

- Monthly schedule – down.

The conclusion from the complex analysis – a downward movement.

The overall result of the calculation of the GBP/USD currency pair candle on the weekly chart: the price of the week is likely to have a downward trend with the absence of the first lower shadow of the weekly black candle (Monday – down) and the absence of the second lower shadow (Friday – down).

In the coming week, the price will move down with the first target of 1.2992 – 21 average EMA (black dotted line).

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

Weekly review of the pair EUR/USD from May 6 to 11, 2019

Trend analysis (Fig. 1).

In the coming week, the price will move up with the first target of 1.1242 – the resistance line (red bold line).

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Fig. 2 (weekly schedule).

Comprehensive analysis:

- Indicator analysis – up;

- Fibonacci levels – up;

- Volumes – up;

- Candle analysis – neutral;

- Trend analysis – up;

- Bollinger bands – down;

- Monthly schedule – down.

The conclusion from the complex analysis – upward movement.

The overall result of the calculation of the EUR/USD currency pair candle on the weekly chart: the price of the week is likely to have an upward trend with the absence of the first lower shadow of the weekly white candle (Monday – up) and the absence of the second upper shadow (Friday – up).

In the coming week, the price will move up with the first target of 1.1242 – the resistance line (red bold line).

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

Technical analysis of EUR/USD for May 08, 2019

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Overview:

The EUR/USD pair continues to move downwards from the level of 1.1192. Last week, the pair dropped from the level of 1.1192 to the bottom around 1.1111. Today, the first resistance level is seen at 1.1192 followed by 1.1216, while daily support 1 is seen at 1.1111. According to the previous events, the EUR/USD pair is still moving between the levels of 1.1192 and 1.1111; for that we expect a range of 81 pips. If the EUR/USD pair fails to break through the resistance level of 1.1111, the market will decline further to 1.1069. This would suggest a bearish market because the RSI indicator is still in a positive area and does not show any trend-reversal signs. The pair is expected to drop lower towards at least 1.1069 with a view to test the second support. On the other hand, if a breakout takes place at the resistance level of 1.1192 (major resistance), then this scenario may become invalidated.

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

Bitcoin analysis for May 08, 2019

BTC is trading inside of the well-defined trading range. Watch for potential breakout of the resistance or support to confirm further direction.

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Purple rectangle – Resistance $6.270

Green rectangle – Short-term support $5.720

Green lines – Upward channel

According to the Daily time-frame, we found that BTC is trading inside of the well-defined trading range between the price of $6.265 (resistance) and $5.720 support. The BTC tested the upper diagonal of the channel, which is sign that downward correction might come into the play. In case of selling, downward target will be set at $5.720. In case of upward break, upward target will set at $6.750.

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Simplified wave analysis and forecast for USD/JPY on May 8

The current wave model is upward, counting from March 25. In the larger-scale wave, this section began the final part (C). Since April 12, a bearish correction has developed in the wave, which received an additional lengthening yesterday. The structure of the wave looks complete, but the signals of the emergency change of the pair's course are not observed on the chart.

Forecast:

Today, we can count on the continuation of the current decline, until its completion. A strong boundary is the level of the weekly TF, passing through the support zone. By the end of the day, the probability of changing the vector of movement in this area and the beginning of the price rise increases.

Recommendations:

When selling yen, it is better to reduce the lot size used. In the support area, at the first signs of a reversal, it is recommended to complete short trades and start tracking the pair's buy signals.

Resistance zones:

- 110.70 / 111.00

Support zones:

- 109.80 / 109.50

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Explanations to the figures: Waves in the simplified wave analysis consist of 3 parts (A – B – C). The last unfinished wave is analyzed. Zones show areas with the highest probability of reversal. The arrows indicate the wave marking according to the method used by the author, the solid background is the formed structure, the dotted ones are the expected movements.

Note: The wave algorithm does not take into account the duration of tool movements over time.

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

Simplified wave analysis and forecast for GBP/USD on May 8

The last unfinished wave model on the clock TF is the downward wave of March 13. It has a pronounced flat appearance, occupying the place of correction in a larger model. The structure of the wave completed the first 2 parts (A + B). From May 3, a downward section with a reversal potential is formed.

Forecast:

In the next trading sessions, the price of the pound will move up again to the area of the calculated reversal zone. When changing the course, there is a possibility of a short-term puncture of the lower border of the support zone.

Recommendations:

Pound sales are premature. In the next few sessions, it is recommended to either refrain from trading or reduce the lot when buying the instrument. At the same time, it is necessary to take into account the limited potential of price rise.

Resistance zones:

- 1.3180 / 1.3210

Support zones:

- 1.3060 / 1.3030

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Explanations to the figures: Waves in the simplified wave analysis consist of 3 parts (A – B – C). The last unfinished wave is analyzed. Zones show areas with the highest probability of reversal. The arrows indicate the wave marking according to the method used by the author, the solid background is the formed structure, the dotted ones are the expected movements.

Note: The wave algorithm does not take into account the duration of tool movements over time.

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

Simplified wave analysis and forecast for EUR/USD on May 8

On the chart of the euro, intersessional trends are formed by a downward wave of March 20. In the structure, the sequence A-B-C is traced. Within the last segment, the first 2 parts are completed. Since May 1, a downward zigzag of small scale develops, in which a counter rollback has been developing since the end of last week. The price is at the lower limit of the potential reversal zone.

Forecast:

Today, the most likely scenario will be a lateral movement of the price in the area of the reversal zone. By the end of the day, it is expected to complete the entire rollback up and create conditions for changing the direction of price movement.

Recommendations:

In the next sessions, euro purchases are not very promising and may be unprofitable. In the area of the resistance zone, it is recommended to monitor the pair sale signals.

Resistance zones:

- 1.1210 / 1.1240

Support zones:

- 1.1090 / 1.1060

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Explanations to the figures: Waves in the simplified wave analysis consist of 3 parts (A – B – C). The last unfinished wave is analyzed. Zones show areas with the highest probability of reversal. The arrows indicate the wave marking according to the method used by the author, the solid background is the formed structure, the dotted ones are the expected movements.

Note: The wave algorithm does not take into account the duration of tool movements over time.

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

USD/JPY analysis for May 08, 2019

Gold has been trading downwards as we expected. The price tested the level of 109.90. Anyway, we found that sellers are losing down momentum, which may be a strong sign for potential rally in the future.

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Purple rectangle – Intraday resistance 110.17

Blue rectangle – Short-term support 109.90

Blue line – Middle of Keltner Channel EMA 110.15

Yellow horizontal line – Resistance 1

Yellow horizontal line – Resistance 2

According to the H1 time-frame, we found bullish divergence on the stochastic oscillator, which is sign that sellers lost momentum and that buyers may react. Our advice is to watch for confirmation of the bullish trend, which is at least 2 higher lows on the 30M time-frame in order to confirm the bullish trend. Upward references are set at 110.62 and 110.91. Key support is set a the price of 109.90. Watch for buying opportunities.

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

Analysis of Gold for May 08, 2019

Gold did break the key resistance at the price of $1.288 and set the tone for the next few days. Buying opportunities are prefereble.

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Yellow horizontal line – Resistance-Upward objective

Yellow rectangle – Broken resistance now support

Blue line – Middle of Keltner Channel EMA

According to the Daily time-frame, we found that Gold finally managed to break the resistance at the price of $1.288, which is sign that buyers took control from sellers and momentum is up. Also, strong bullish divergence in the background did set the tone for the near-term future. Medium Keltner line acted like resistance but Gold did manage to break it and now the medium Keltner line acting like support. Our advice is to watch for buying opportunities with the target at $1.306. Key support levels are seen at $1.276 and $1.266.

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

GBP/USD. May 8th. The trading system "Regression Channels". Theresa May "calls" to accept her version of the "deal"

4-hour timeframe

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Technical details:

The upper linear regression channel: direction - sideways.

The lower linear regression channel: direction - down.

The moving average (20; smoothed) - sideways.

CCI: -11.2709

On Tuesday, May 7, the British pound adjusted to the moving average line. The further fate of the pound will depend on whether traders can overcome the moving. A rebound from it will mean a possible resumption of the upward movement, although, as we have said more than once, there are few fundamental reasons for strengthening the pound. Meanwhile, British Prime Minister Theresa May continues to persuade parliamentarians of the expediency of accepting her "deal" with the EU. By and large, it has nothing else to do after the EU has made it clear that it will not revise the current version of the agreement. But from the outside, all these beliefs of Theresa May's members of Parliament and the calls to "unite", "forget about differences" in a "difficult period for the country" look a bit comical. The head of the country should find solutions in difficult issues, as well as enjoy the unconditional support of the majority. However, the local elections in the UK, two votes of no confidence, the constant talk of resignation and the inability to bring Brexit to a logical conclusion suggests otherwise. All this drives the UK into an even greater political crisis. Should we expect the growth of the pound in such conditions?

Nearest support levels:

S1 - 1.3062

S2 - 1.3000

S3 - 1.2939

Nearest resistance levels:

R1 - 1.3123

R2 - 1.3184

R3 - 1.3245

Trading recommendations:

The pair GBP/USD continues to be adjusted after Friday's growth. Thus, it is recommended to consider buy orders with the target at 1.3123, as the upward trend continues.

It is recommended to consider sell positions only after fixing the pair below the moving with the first targets at 1.3000 and 1.2939, which is more logical from a fundamental point of view.

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

Explanations for illustrations:

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

The lower linear channel is the purple lines of the 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.

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

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

EUR/USD. May 8th. The trading system "Regression Channels". The euro is not ready for a new fall

4-hour timeframe

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Technical details:

The upper linear regression channel: direction - down.

The lower linear regression channel: direction - down.

The moving average (20; smoothed) - sideways.

CCI: 50.1233

After the EUR/USD pair updated its 1.5-year lows, there are grounds to assume the continuation of the downward trend to new lows. However, as the practice has shown, there are not so many sellers of the euro around these lows. Thus, at the moment, the pair is in a state of uncertainty, as there is still no reason even for medium-term purchases of the euro currency, and few want to sell the pair at 1.5-year lows. Therefore, traders are limited to short-term sales. The situation with the US trade war against the EU also adds uncertainty. In recent days, the attention of traders is more focused on trade relations between China and the United States, but Donald Trump is unlikely to forget about the European Union. There is every reason to assume that any trade conflict with Washington will not be in favor of the European Union, and therefore potentially means a deterioration of the economic situation, which is already not the best. Today, May 8, only Mario Draghi's speech can be noted among the important macroeconomic events. However, the head of the ECB rarely pleases traders with important messages, and the situation in the eurozone is such that nothing new can be said about it. Therefore, it is unlikely that we will hear any fundamentally new information today.

Nearest support levels:

S1 - 1.1169

S2 - 1.1108

Nearest resistance levels:

R1 - 1.1230

R2 - 1.1292

R3 - 1.1353

Trading recommendations:

The EUR/USD currency pair again changed its direction of movement, having fixed above the moving average. Thus, there is a reason to believe that the pair has moved to the flat. So technically now current long positions with the goal at 1.1230, but any position should be opened with the utmost caution.

It is recommended to open sell orders not earlier than reversing the pair below the moving average line with the first target at 1.1169.

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

Explanations for illustrations:

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

The lower linear regression channel is the violet lines of the unidirectional movement.

CCI - the 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.

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

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EURUSD: Euro buyers have another opportunity to resume the upward trend

Yesterday, the European currency fell in the morning after a weak report from the European Commission but returned a number of positions paired with the US dollar after news that China has sent its high-ranking trade representative to Washington to resume negotiations and discuss US demands.

As it became known yesterday, negotiations between the United States and China will begin. Let me remind you that this weekend, Donald Trump promised to introduce duties on Chinese goods, which will take effect this Friday. This promise angered Beijing, who had been thinking about leaving the negotiations for several days but yesterday announced the visit of Deputy Prime Minister Liu He to Washington. Negotiations will begin tomorrow.

It is reported that additional issues related to the negotiations were supplemented by US demands to include in the trade agreement a list of laws and regulations that would require the Chinese authorities to revise them, and make a number of changes for the economy.

As for yesterday's fundamental data, they were not of particular interest to traders. In the second half of the day, a report from Retail Economist and Goldman Sachs was released, according to which sales in US retailers decreased by 1.3% in the week from April 28 to May 4, compared to the previous week. The reduction was directly related to the decrease in the activity of buyers after Easter. For the week ending May 4th, sales increased by 2.6% compared to the same period last year.

A good sign for the economy was the growth of consumer lending in the United States. Despite the fact that lending grew at a slower pace in March, demand for loans remains quite high, which will stimulate retail sales in the future.

According to the Federal Reserve, consumer lending in March 2019 increased by 3.05% per annum and amounted to $10.28 billion compared with February. Economists had expected credit growth of $15.85 billion in March compared to the previous month. Non-renewable loans showed an annual growth of 5.01%.

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The speech of Fed Vice-Chairman Richard Clarida also left the market unattended. The Fed representative once again reiterated that the US economy is in good shape, as evidenced by recent US GDP growth in the 1st quarter of this year, which was quite strong. Clarida also noted that inflation has been weak recently, but this is a temporary factor. According to the Vice-Chairman, the monetary policy is conducted well, and there is no good reason to raise or lower rates.

As for the technical picture of the EURUSD pair, it continues to be the same as at the beginning of this week. Further prospects for the movement of the trading instrument seem vague. Bears can prove themselves after the return and update of the resistance level of 1.1215, while the bulls will be clearly set to hold large support of 1.1170, from which an attempt has already been made to build the lower boundary of the new upward channel. The target of buyers is the breakdown and consolidation above 1.1215, which will open a direct road in the area of last week's highs 1.1260 and 1.1290.

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Analysis of EUR/USD divergence on May 8. The euro is trying to find growth factors

4h

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As seen on the 4-hour chart, the EUR/USD pair rebounded from the retracement level of 100.0% (1.1177) with a reversal in favor of the European currency. Thus, on May 8, the growth process of quotations can be resumed in the direction of the retracement level of 76.4% (1.1241). Today, none of the indicators has any emerging divergences. The closing of the pair under the Fibo level of 100.0% can be interpreted as a reversal in favor of the US currency and expect a slight drop in the direction of the retracement level of 127.2% (1.1102).

The Fibo grid is built according to the extremes of March 7, 2019, and March 20, 2019.

Daily

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As seen on the 24-hour chart, the pair is below the retracement level of 127.2% (1.1285). Thus, the fall of quotations in the direction of the Fibo level of 161.8% (1.0941) may resume at any time. There are also no emerging divergences on the current chart. The consolidation of quotations above the Fibo level of 127.2% will work in favor of the EU currency and the resumption of growth in the direction of the retracement level of 100.0% (1.1553).

The Fibo grid is built according to the extremes of November 7, 2017, and February 16, 2018.

Forecast for EUR/USD and trading recommendations:

Buy deals on EUR/USD pair can be opened with the target at 1.1241 since the pair has completed the rebound from the level of 100.0%. The stop loss order should be placed below the level of 1.1177.

Sell deals on EUR/USD pair can be opened with the target at 1.1102 if the pair closes below the retracement level of 100.0%. The stop loss order should be placed above the level of 1.1177.

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Analysis of GBP/USD divergence on May 8. The pound completed its growth

4h

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As seen on the 4-hour chart, the GBP/USD pair still performed a consolidation under the Fibo level of 76.4% (1.3094), which allows traders to count on the continuation of the fall in the direction of the next retracement level of 61.8% (1.2969). Today, none of the indicators has any emerging divergences. The consolidation of the pair above the Fibo level of 76.4% can be regarded as a reversal in favor of the US dollar and we expect the resumption of the growth of quotations in the direction of the retracement level of 100.0% (1.3296).

The Fibo grid is built according to the extremes of September 20, 2018, and January 3, 2019.

1h

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As seen on the hourly chart, the GBP/USD pair performed a reversal in favor of the pound and closed above the retracement level of 61.8% (1.3069). As a result, the growth can be continued in the direction of the next retracement level of 76.4% (1.3117). There are no emerging divergences on the hourly chart. The closing of the pair under the Fibo level of 61.8% will work in favor of the US dollar and the resumption of the fall in the direction of the retracement level of 50.0% (1.3031).

The Fibo grid is built according to the extremes of April 3, 2019, and April 25, 2019.

Forecast for GBP/USD and trading recommendations:

Buy deals on GBP/USD pair can be opened with the target at 1.3117 and the stop loss order under the retracement level of 61.8%, as the pair closed above the level of 1.3069 (hourly chart).

Sell deals on GBP/USD pair can be opened with the target at 1.3031 and stop loss above the level of 61.8% if the pair closes below the level of 1.3069 (hourly chart).

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Bitcoin. Bitcoin resist even after hacking Binance

The Bitcoin exchange rate managed to hold its position and remains in the area of 6200 USD even after yesterday's news that the largest exchange in terms of daily trading Binance was successfully attacked by hackers. As a result, more than 7,000 bitcoins were stolen from hot wallets (approximately $40 million), while cold wallets were not affected. Currently, the stock exchange suspended the withdrawal of funds for a week.

Signal to buy Bitcoin (BTC):

Buyers continue to look at the level of 6240, the consolidation of which will lead to an update of the highs in the area of 6360 and 6440, where I recommend fixing profits. Also, a good signal to buy is to hold the intermediate support of 6010, but to open long positions immediately on the rebound is best to post a minimum test in the area of 5777.

Signal to sell Bitcoin (BTC):

The formation of a false breakdown at a maximum of 6240 will be the first signal to sell Bitcoin in order to test the support of 6010 and update the minimum of 5777, where I recommend fixing the profit. With further growth in the resistance trend, they settled in the area of 6360 and 5430.

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Wave analysis of EUR / USD for May 8. The tool is in place. Markets in Thought

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Wave counting analysis:

On Tuesday, May 7, trading ended for EUR / USD by 10 bp lower, which in no way affects the current wave counting, which still implies the construction of a downward trend. Doubts in the performance of this option are still associated with the frank reluctance of the markets to continue selling euro currency. The news background for the pair is again neutral. Thus, I recommend considering the peak of the supposed wave 2, 3, 3 as the point from which it is necessary to build on the sales of the pair. A successful attempt to break through this mark will indicate the need to clarify the wave marking.

Sales targets:

1.1097 - 161.8% Fibonacci

1.1045 - 200.0% Fibonacci

Purchase goals:

1.1324 - 0.0% Fibonacci

General conclusions and trading recommendations:

The pair continues to build the downward trend. The current wave counting assumes the resumption of the pair reduction with the targets of 1.1097 and 1.1045, which corresponds to 161.8% and 200.0% Fibonacci. This scenario can be hindered by the reluctance of markets to sell a couple further, as well as uncertainty with the trade wars with China and the European Union initiated by Trump.

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Escalating US-China Trade Conflict Increases Demand for Safe Assets

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The yen has updated a six-week high against the dollar. Growing concerns about the trade dispute between the United States and China are forcing investors to seek refuge and increase the value of safe assets. The trade surplus, which is a major irritant for Washington, increased to $ 21.01 billion in April compared with the previous month, which could provoke a violent reaction from US officials. The threat of further escalation of the tariff war again becomes real, and at the same time it is simply impossible to predict the scenario of what is going on, either positive or negative. The focus is on the negotiations that happened last Thursday and Friday in Washington, where the vice-premier of China will try to save the deal, which will avoid a sharp increase in tariffs on Chinese goods.

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Prospects for the escalation of disagreements between the US and China led to the growth of the yen in recent days, the currency since the beginning of the month has risen against the dollar by more than 1 percent at the moment. Unlike the yen, the currencies of countries whose economies are closely intertwined with the Chinese are rapidly becoming cheaper. The fall of the New Zealand dollar has accelerated the decision of the Central Bank to reduce base interest rates from 1.75 percent to 1.5 percent.

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Although the euro has grown by 0.1 percent, to 1.1213 dollars, it remains within the limits of the recent narrow ranges, since currency traders still have not decided on the inflation prospects of the euro zone economy and the latest events on the front of a trade war. The European Central Bank is likely to keep a close eye on the resumption of the escalation of trade war, since the real economic consequences may be more than significant and will affect its monetary policy.

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Trading Plan EURUSD 05/08/2019

Industry news in Germany showed - unexpectedly for experts - a noticeable increase. In March, German industry showed a growth of + 0.5%, with a forecast of a fall of -0.5%. This is the second month of growth in a row.

According to the US: The head of JPM Dimon said that he considers it very likely that a US-China trade agreement would be concluded and the war would end; he estimated these chances at 80%.

EURUSD: We expect out of range and strong trend.

We buy euros from 1.1220.

We sell from 1.1110.

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Went to growth: the global market for gold and precious metals shows a rise

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Last week, precious metals in the markets fell due to the decision of the US Federal Reserve to keep interest rates at the same level. However, in connection with recent statements by US President Donald Trump about a possible increase in import duties on Chinese goods, they again gained altitude. The current situation has provided significant support to the gold, silver and platinum markets, experts underline.

Analysts believe the current week is not too active due to the upcoming holiday - Victory Day. Last week, experts recorded a decline in stocks in gold, platinum and palladium ETF funds and an increase in stocks in silver ETF funds. During this period, gold and silver prices also increased in China, on the Shanghai Stock Exchange. The reasons for this experts believe a significant weakening of the yuan against the US dollar and the increase in political and trade risks.

According to the report of the World Gold Council (WGC), in the first quarter of 2019, the excess of the yellow metal in the world was 96.7 tons. During the reporting period, the global consumption of this precious metal grew by 7%. Jewelry gold consumption in the world increased by 0.6% year on year. Total investment demand in the world increased by 3.4% year-over-year, summarized in the WGC.

The official demand for the yellow metal from the leading central banks is actively growing. In the first quarter of 2019, it increased by 68%. During the reporting period, the volume of investments in ETF-funds grew by 48.8% year-over-year. The maximum increase in gold reserves has been recorded in the European funds. In the first quarter of this year, world gold production has increased.

Last week, prices for the yellow metal fell to $ 1,268.8 under the influence of a negative US Federal Reserve decision, but later recovered to $ 1,282.5. According to Reuters, a slowdown in the global economy, instability in stock markets, a pause in rising interest rates and the potential weakness of the US currency will lead to an increase in average annual gold prices to the highest level since 2013. According to analysts, in 2019, the average cost of the yellow metal will be at the level of $ 1,322, and in 2020 - at the level of $ 1,369. Gold prices will be supported by rising purchases of precious metals by global regulators, low interest rates and weak economic prospects.

According to experts, the silver market will still remain under pressure due to declining growth in industrial demand. This year, the average cost of white metal will remain at $ 16.05, and in 2020 - at $ 17. Last week, the price of silver in correlation with the market of the yellow metal fell to the level of $ 14,598, from which the correction went up to the level of $ 14,852. At the moment, the ratio of gold to silver is 86.43 points, and the ratio of platinum to silver is 58.839 points.

The past week was not easy for the platinum market, experts say. The market for this precious metal in correlation with the gold market fell to $ 849.8, after which platinum prices recovered to $ 877. According to analysts, the average annual cost of platinum in 2019 is estimated at $ 865, and in 2020 - at $ 925. According to estimates of the World Platinum Investment Council (WPIC), this year the surplus of this precious metal in the market is expected to be 680 thousand ounces.

Experts from leading analytical company Metals Focus draw attention to the fundamental factors in the market of another popular precious metal - palladium, which demonstrate its deficit of 789 thousand ounces this year. The shortage of palladium will persist over the next few years, experts emphasize. At the same time, a decrease in car sales in key markets, in particular in the USA and China, may lead to a collapse in prices for palladium. Recall that this precious metal is very popular in the automotive industry. Last week, prices in the futures market for palladium fell to the level of $ 1,309.5, and then recovered to $ 1,334. This year, the average cost of this metal will remain at $ 1,350, and in 2020 - at $ 1,275.

Currently, the global market for precious metals is on the rise. Experts predict its further gradual growth.

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Wave analysis of GBP / USD for May 8. Jean-Claude Juncker considers the non-interference in the 2016 referendum as a mistake

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Wave counting analysis:

On May 7, the GBP / USD pair lost about 25 bp. Thus, the upward part of the trend, taking its start on April 25, can be completed. However, this does not clarify the wave marking, which remains very ambiguous and interpretable in any direction. The pair moves mainly with three-wave structures without clear trend sections. Nevertheless, I look forward to the resumption of the decline instrument. In my opinion, the news background remains on the side of the US dollar. Despite the fact that the UK government maintains hopes of leaving the European Union, the events of the last 6-8 months show that the probability of abandoning Brexit is rather high. More so, the possibility of holding a second referendum in the country is being discussed at all, since the parliament headed by Theresa May cannot come to the adoption of any option according to Brexit.

Purchase goals:

1.3182 - 61.8% Fibonacci

1,3259 - 76.4% Fibonacci

Sales targets:

1.2867 - 0.0% Fibonacci

General conclusions and trading recommendations:

The wave pattern implies a decline in the pair, and the upward part of the trend can be completed. I do not recommend buying a pair, as the instrument does not have any news support, and negative messages continue to come from the UK. Yet, I expect that the increase of the instrument will be completed near the calculated marks of 61.8% and 76.4% Fibonacci. Meanwhile, the current wave counting does not give a definite answer to the question whether the instrument is ready to build a downward section.

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Fractal analysis of major currency pairs on May 8

Hello, dear colleagues.

For the currency pair Euro/Dollar, the development of the local upward structure from May 3 is expected after the breakdown of 1.1220 and the level of 1.1171 is the key support. For the currency pair Pound/Dollar, the price is in deep correction from the initial conditions on May 3 and the level of 1.3030 is the key support. For the currency pair Dollar/Franc, the continuation of the upward movement is expected after the breakdown of 1.0205. For the currency pair Dollar/Yen, the continuation of the downward cycle of April 24 is expected after the breakdown of 109.92 and the level of 110.49 is the key support. For the currency pair Euro/Yen, the continuation of the downward structure from May 1 is expected after the breakdown of 123.22 and the level of 123.79 is the key support. For the currency pair Pound/Yen, we follow the development of the downward cycle from May 3 and the continuation of the downward movement is expected after the breakdown of 143.53.

Forecast for May 8:

Analytical review of the currency pairs in H1 scale:

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For the currency pair Euro/Dollar, the key levels on the H1 scale are 1.1313, 1.1271, 1.1256, 1.1220, 1.1171, 1.1147 and 1.1117. We continue to follow the upward trend of April 25, as well as the formation of the local structure for the top of May 3. The resumption of the upward structure is possible after the breakdown of 1.1220. The first target is 1.1256. The passage of the price of the range of 1.1256 – 1.1271 will allow us to count on the movement to the potential target of 1.1313.

The short-term downward movement is possible in the range of 1.1171 – 1.1147 and the breakdown of the last value will have to develop a downward structure. In this case, the first potential target is 1.117.

The main trend is the upward structure of April 25, the formation of the local structure of May 3.

Trading recommendations:

Buy 1.1220 Take profit: 1.1255

Buy 1.1271 Take profit: 1.1310

Sell: 1.1169 Take profit: 1.1147

Sell: 1.1145 Take profit: 1.1173

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For the currency pair Pound/Dollar, the key levels on the H1 scale are 1.3318, 1.3247, 1.3222, 1.3185, 1.3131, 1.3074, 1.3030 and 1.2986. We monitor the formation of the local structure from May 3. At the moment, the price is in a deep correction. The passage of the price range of 1.3074 – 1.3030 will lead to the development of a downward structure. The potential target is 1.2986. The continuation of the upward movement is expected after the breakdown of 1.3131. The first target is 1.3185 and the breakdown of which, in turn, will lead to the development of an upward cycle. In this case, the goal is 1.3222 and near this level is the consolidation. The passage of the price of the range of 1.3222 – 1.3247 should be accompanied by a pronounced upward movement to the potential target of 1.3318, from which we expect a rollback to the bottom.

The main trend is the local structure of May 3, the stage of deep correction.

Trading recommendations:

Buy: 1.3131 Take profit: 1.3185

Buy: 1.3187 Take profit: 1.3222

Sell: 1.3072 Take profit: 1.3030

Sell: 1.3028 Take profit: 1.2986

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For the currency pair Dollar/Franc, the key levels in the H1 scale are 1.0264, 1.0242, 1.0227, 1.0205, 1.0182, 1.0169, 1.0153 and 1.0124. We follow the formation of the initial conditions for the top of May 1. The continuation of the upward movement is expected after the breakdown of 1.0205. In this case, the target is 1.0227 and in the area of 1.0227 – 1.0242 is the price consolidation. We consider the level of 1.0264 as a potential value for the top, upon reaching which, we expect a rollback to the bottom.

The range of 1.0169 – 1.0153 is the key support for the upward structure from May 1. Its price passage will have to form the initial conditions for the downward cycle. In this case, the first potential target is 1.0124.

The main trend is the initial conditions for the top from May 1.

Trading recommendations:

Buy: 1.0205 Take profit: 1.0227

Buy: 1.0242 Take profit: 1.0264

Sell: Take profit:

Sell: 1.0150 Take profit: 1.0124

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For the currency pair Dollar/Yen, the key levels in the H1 scale are 110.73, 110.49, 110.31, 109.92, 109.70 and 109.23. We continue to monitor the downward structure of April 24. The short-term downward movement is possible in the area of 109.92 – 109.70 and the breakdown of the last value will lead to a pronounced movement to the potential target of 109.23, upon reaching this level, we expect a rollback to the top.

The short-term upward movement is possible in the area of 110.31 – 110.49 and the breakdown of the last value will lead to a protracted correction. The goal is 110.73 and this level is the key support for the downward structure from April 24.

The main trend is the downward structure of April 24.

Trading recommendations:

Buy: 110.31 Take profit: 110.48

Buy: 110.51 Take profit: 110.73

Sell: 109.92 Take profit: 109.72

Sell: 109.69 Take profit: 109.27

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For the currency pair Canadian Dollar/Dollar, the key levels on the H1 scale are 1.3561, 1.3534, 1.3512, 1.3486, 1.3448, 1.3432, 1.3413 and 1.3375. We follow the initial conditions for the top from May 1. The continuation of the upward movement is expected after the breakdown of 1.3486. In this case, the goal is 1.3512 and in the area of 1.3512 – 1.3534 is the consolidation rates. We consider the level of 1.3561 as a potential value for the top, upon reaching which, we expect a rollback to the bottom.

The short-term downward movement is possible in the area of 1.3448 – 1.3432 and the breakdown of the last value will lead to an in-depth correction. The goal is 1.3413 and this level is the key support for the top.

The main trend is the upward structure from May 1.

Trading recommendations:

Buy: 1.3486 Take profit: 1.3512

Buy: 1.3514 Take profit: 1.3534

Sell: 1.3448 Take profit: 1.3433

Sell: 1.3430 Take profit: 1.3415

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For the currency pair Australian Dollar/Dollar, the key levels on the H1 scale are 0.7134, 0.7112, 0.7079, 0.7051, 0.7003, 0.6984 and 0.6962. We follow the formation of the initial conditions for the top of May 6. The continuation of the upward movement is expected after the breakdown of 0.7051. In this case, the target is 0.7079 and near this level is the price consolidation. The breakout of the level of 0.7079 should be accompanied by a pronounced upward movement. The goal is 0.7112. We consider the level 0.7134 as a potential value for the top, upon reaching this level, we expect a rollback to the bottom.

The short-term downward movement is possible in the area of 0.7003 – 0.6984, hence there is a high probability of a turn to the top. The breakdown of the level of 0.6984 will cancel the upward structure of May 6. In this case, the first potential target is 0.6962.

The main trend is the formation of the initial conditions for the top of May 6.

Trading recommendations:

Buy: 0.7051 Take profit: 0.7076

Buy: 0.7082 Take profit: 0.7112

Sell: 0.7003 Take profit: 0.6986

Sell: 0.6982 Take profit: 0.6962

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For the currency pair Euro/Yen, the key levels on the H1 scale are 124.15, 123.79, 123.53, 123.22, 122.90, 122.64 and 121.92. We follow the development of the downward structure from May 1. The continuation of the downward movement is expected after the breakdown of 123.22. In this case, the target is 122.90 and in the area of 122.90 – 122.64 is the consolidation rates. The breakdown of the level of 122.64 should be accompanied by a pronounced downward movement. The potential target is 121.92, from this level, we expect a rollback to the top.

The short-term upward movement is possible in the area of 123.53 – 123.79 and the breakdown of the last value will lead to a protracted movement. The goal is 124.15 and this level is the key support for the downward structure.

The main trend is the downward cycle from May 1.

Trading recommendations:

Buy: 123.53 Take profit: 123.76

Buy: 123.82 Take profit: 124.15

Sell: 123.20 Take profit: 122.92

Sell: 122.90 Take profit: 122.66

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For the currency pair Pound/Yen, the key levels on the H1 scale are 144.74, 144.42, 144.15, 143.53, 143.01 and 142.71. We follow the development of the downward cycle of May 3. The continuation of the downward movement is expected after the breakdown of 143.53. In this case, the target is 143.01. We consider the level of 142.71 as a potential value for the bottom, upon reaching which, we expect a consolidated movement in the area of 143.01 – 142.71, as well as a rollback to the top.

The short-term upward movement is possible in the area of 144.15 – 144.42 and the breakdown of the last value will lead to a protracted correction. The target is 144.74.

The main trend is the downward cycle of May 3.

Trading recommendations:

Buy: 144.15 Take profit: 144.40

Buy: 144.45 Take profit: 144.74

Sell: 143.50 Take profit: 143.06

Sell: 143.00 Take profit: 142.72

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Indicator analysis. Daily review for May 8, 2019 for the pair GBP / USD

Trend analysis (Fig. 1).

On Wednesday, technical analysis gives a continuation of the downward movement. The first lower target 1.3021 is the rollback level of 50% (yellow dotted line).

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Fig. 1 (daily schedule).

Comprehensive analysis:

- indicator analysis - down;

- Fibonacci levels - down;

- volumes - down;

- candlestick analysis - down;

- trend analysis - down;

- Bollinger lines - up;

- weekly schedule - down.

General conclusion:

On Wednesday, technical analysis gives a continuation of the downward movement. The first lower target 1.3021 is the rollback level of 50% (yellow dotted line).

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Trading recommendations for the EURUSD currency pair - placement of trading orders (May 8)

For the last trading day, the euro / dollar currency pair showed a low volatility of 50 points, as a result of having another decrease in the level of 1.1180. From the point of view of technical analysis, we have a decline to 1.1180, where previously the quotation felt a support. The sequence of moves did not change, and in this coordinate we again stopped and turned around. The news background had a statement from the head of the European Commission, Jean-Claude Juncker, who regrets that he did not interfere in the Brexit referendum when this was possible.

"The mistake I made was that I listened too closely to the British government, Cameron, because the then prime minister asked me not to interfere," Juncker said.

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In turn, Prime Minister Theresa May said that the British would still have to participate in the elections of deputies of the European Parliament, and she regrets that her country will inevitably hold elections, and it is impossible to complete the process of leaving the EU. Returning to the information background, we have published data on the number of open vacancies in the US labor market, where, as predicted, there was growth, but more significant: Previous. 7.142M ---> Prog. 7.350M ---> Fct. 7,488M.

Today, in terms of the economic calendar, we have the publication of the minutes of the ECB meeting on monetary policy, followed by Mario Draghi.

Further development

Analyzing the current trading chart, we see that after the next testing of the earlier point of support, the price returned to the area of periodic resistance 1.1215, slowing down the movement and tracing short positions. It is likely to assume that the quote will again fall to 1.1180-1.11170, and then it is worth analyzing the fixation points and the behavior of the quote.

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Based on the available data, it is possible to decompose a number of variations, let's consider them:

- We consider buy positions in case of a clear price fixing higher than 1.1220.

- Positions for sale are considered in the case of a clear price fixing lower than 1.1170.

Indicator Analysis

Analyzing a different sector of timeframes (TF), we see that in the short term, there has been a downward interest against the background of periodic resistance. Intraday perspective maintains upward interest. The medium-term outlook has replaced the upward interest to neutral.

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Weekly volatility / Measurement of volatility: Month; Quarter; Year

Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.

(May 8 was based on the time of publication of the article)

The current time volatility is 16 points. Volatility may increase at time of publication of the ECB protocol and the speech of Mario Draghi.

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Key levels

Zones of resistance: 1.1300 **; 1.1440; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100

Support areas: 1.1180; 1.1080 *; 1.1000 ***; 1,0850 **

* Periodic level

** Range Level

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Fundamental Analysis of NZDJPY for May 8, 2019

Today's rate cut of New Zealand's regulator weakened the country's currency, so the yen dominates in the pair now.

NZD has been struggling to regain momentum over JPY since the price bounced off the 76.50 area with a daily close. New Zealand's labor figures showed minor wage growth last week. Also, employment is falling, while business sentiment has also remained gloomy, all these added arguments for a rate cut. Today New Zealand's central bank cut its interest rate from 1.75% to 1.50% after keeping it unchanged for 2.5 years. According to the RBNZ, the rate cut was done in order to support the cooling economy and counter global uncertainties. The rate cut immediately pushed the kiwi lower indicating further weakness of the currency. The RBNZ's committee stated that global economic growth slowed down since 2018 and it eased the demand for New Zealand's goods and services. The RBNZ forecasts the rates to be steady at 1.50% and inflation to rise at a slower pace in the upcoming months.

On the yen side, today Japan's Monetary Base report showed a decrease to 3.1% from the previous value of 3.8%, while the reading was expected to be at 3.6%. Additionally, the minutes of the Monetary Policy meeting were also released, the BOJ kept its monetary policy steady despite cutting its assessments on exports and output amid heightening global economic risks. A few Bank of Japan's board members said the regulator must pay attention to the impact that its prolonged ultra-loose monetary policy had on regional banks' profits.

As for the current scenario, NZD is expected to soften against JPY. However, the market sentiment might shift towards NZD for a certain period as the BOJ is still quiet about the issues that need to be solved.

Now, let us look at the technical view. The pair is currently trading at the key support area of 72.50. It is anticipated to move higher towards the dynamic level of 20 EMA before dropping lower again. The price has recently formed Bullish Divergence which indicates the upcoming bullish sentiment. As far as the price remains below the 76.50 area, the bearish bias is expected to continue.

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USDJPY: the yen is preparing to leave the trading range

The threat of the worsening trade war between the United States and China has led to massive sales in stock markets. The US S & P 500 decline 1.7% to 2,884 p. The Shanghai Composite is trading around two-month lows, losing more than 9% in just 3 trading sessions and falling to 2866.7 p. The indices of Asian countries are falling at a faster pace, for which the degree of risk from possible problems in the Chinese economy, is higher than for the rest of the world.

Thus, threats to China increase the likelihood that the US will apply new experience in achieving its political goals to Europe, by increasing import duties on cars of European companies. As a result, nervousness is growing, forcing investors to switch attention to the defensive assets, which traditionally include the Japanese yen.

After two months of decline, the PMI in the manufacturing sector in Japan showed an increase to 50.2 p. Despite the retracement, the volume of the new orders and production continue to decline, and growth, in fact, is due only to increased business confidence, which is based on recently released optimistic forecasts for the semiconductor and automotive sectors of the economy.

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Nikkei comments are cautious and hints at the risks of renewed stagnation in the near future.

For more than two years, the Japanese yen has been trading in a narrow range of 104 - 114 yen per dollar, which is generally uncharacteristic of this generally volatile currency. The reasons why the yen lost its increased volatility follow from the changes that the Bank of Japan has made to its monetary policy, starting a large-scale program in 2013 to find a way out of the deflationary impasse of the Japanese economy. This program has not reached its goals, but has led to the creation of a stable picture of financial flows. The direction of which, in fact, determines the dynamics of USDJPY.

In its recent comments, the Bank of Japan acknowledges that the experiment of significantly easing monetary policy has reached its limit. The inflation forecasts from BoJ for this period up to 2020 remain well below the target of 2%, and there is no reason to expect that they can be adjusted upwards, since the structural changes in the Japanese economy does not give any reason. These factors include, for example, a persistently negative trend in land prices, or the growth potential of the economy as a whole.

At the same time, negative effects accumulate. The reduction of interest rates to negative levels has led to a steady decline in banks' investments in Japanese government bonds amidst the gap between deposit growth and loans.

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The growth rate of deposits significantly exceeds the growth rate of loans, and surplus funds in Japan itself with negative rates have nowhere to invest. As a result, Japanese banks are increasing their investments in foreign assets to compensate for falling revenues.

Thus, a balance of several counter-flows is formed. In addition, Japanese investors are increasing investment in US Treasures, as well as T-bills in France and Italy. The Bank of Japan also notes that as of February 2019 (March data will be published on May 14). Investments in corporate bonds are growing, and there are Japanese banks and funds looking for profitability anywhere, but not in Japan itself, which increases the risks. In this case, Japanese bonds are forced to buy the Bank of Japan, which already owns half of all sovereign debt.

As a result, the negative effects accumulate more and more, but there is still no benefit. The deflationary thinking could not be changed, and the tools are almost exhausted. These considerations push the yen to further weaken, since the withdrawal of investment capital is only increasing. Nevertheless, an upward exit from the range 105 - 115 is more likely in the long term.

Meanwhile, in the short term, the yen has every chance to test the strength of the March minimum at 109.70 and go lower to 108.49, which is facilitated by the approach on Friday, when the US can impose increased duties on Chinese imports. The probability of a stock market collapse contributes to the growth of panic and the demand for defensive assets, among which the yen comes first.

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Fundamental Analysis of NZD/USD for May 8, 2019

New Zealand's central bank lowered interest rates today. This is certainly bearish for NZD. The currency pair is going to follow the bearish bias in the long term.

The Reserve Bnak of New Zealand cut the cash rate rates from 1.75% to 1.50% today after it had been kept unchanged for 2.5 years. According to RBNZ, the rate cut was appropriate to supporting the cooling economy and cushion the domestic economy from global uncertainties. The rate cut immediately pushed NZD lower which is going to extend weakness. The Board stated that global economic growth had slowed down since 2018 which eased the demand for New Zealand's goods and services. Analysts expect the RBNZ to keep rates steady at 1.50% in the medium term. Policymakers are also concerned about an easing pace of inflation.

Softer global economic conditions contributed to the bank's recent shift to the dovish tone. Given employment and inflation outlook, a lower OCR now is most consistent with achieving their objectives and provides a more balanced outlook for interest rates

On the USD side, recently FOMC members Quarles and Clarida spoke about the interest rate situation in the US. They stated that the Federal Reserve does not see a good case for raising or lowering interest rates and its current policy stance could help inflation move toward the central bank's 2 percent target. The Fed held interest rates steady last week and policymakers stressed that the central bank would be patient in making any changes to policy.

On the US-China trade war story, things are getting a bit worse than expected. President Donald Trump threatened to raise tariffs on Chinese imports on the grounds that such measures help the US economy and are mostly paid by China. But on the flip side, such protectionism is going to harm the economy to a larger extent. Trump's administration plans to more than double duties on Chinese imports worth $200 billion. US top officials said that China had given up its commitments having agreed earlier during the trade talks.

To sum up, NZD is expected to lose further ground against USD as the rate cut aroused bearish market sentiment. US CPI reports are due on Friday, though they are expected to be neutral. Until then, the pair is going to trade with higher volatility. NZD is unlikely is gain momentum.

Now let us look at the technical view. The price recently relaxed the impulsive bearish pressure which occurred immediately after the rate cut decision today. This move indicates price corrections and a pullback towards the dynamic level of 20 EMA before proceeding further with the bearish trend with a target towards the support area of 0.6500. As the price remains below 0.6700 area, the impulsive bearish pressure is expected to continue.

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