EUR/USD: plan for the US session on May 22. The euro remains in the channel before important elections

To open long positions on EURUSD, you need:

A small consolidation above the resistance of 1.1166 leaves hopes for buyers to return to the maximum of this week in the area of 1.1187, where I recommend fixing the profits, as it will be quite difficult to break higher. When the correction down in the afternoon and return to the support of 1.166, the same morning minimum of 1.1143 will serve as a support for buyers. Otherwise, it is better to open long positions on the rebound from the area of 1.112.

To open short positions on EURUSD, you need:

Bears need to return to the support of 1.11166, which will retain the downward potential and will lead to a further decline in EUR/USD to the support area of 1.143 and 1.112, where I recommend fixing the profits today. In the scenario of further growth of EUR/USD, the formation of a false breakdown in the resistance area of 1.1187 will be the first sell signal. Short positions can be opened immediately to rebound from a maximum of 1.1205.

Indicator signals:

Moving Averages

Trading is conducted in the area of 30 and 50 moving averages, which indicates a slowdown in the downward trend.

Bollinger Bands

The volatility of the indicator is low, which does not give signals to enter 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
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Fall game: gold is getting cheaper, but is ready to soar up at any time

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Last week, prices for major precious metals such as gold, silver, platinum, and palladium showed a significant decline. The reason for this was the strengthening of the US dollar. At the same time, yields on US and European bonds fell, which put pressure on the value of precious metals. They fell, but not for long, analysts say.

Over the past week, the price of yellow metal decreased from $1305 to $1275 per ounce. According to experts, the low demand for physical metal and the neutral position of most regulators have a negative impact on the price of gold. Last week, silver prices held near the level of $14.79 but fell sharply to the level of $14.40 last Thursday. Experts believe that the reason for this was the escalation of the trade conflict between the United States and China.

The complex geopolitical situation in the Middle East, on the contrary, contributes to the growth of gold prices in the region. In China, particularly in Shanghai, prices for major precious metals declined due to a slight drop in demand last week. The rate of the Chinese currency has stabilized, but trade and political risks remain, analysts say.

Experts call the current week a week of Central Banks due to the numerous speeches of the heads of leading regulators and their representatives. Experts believe that the publication of the minutes of their meetings may increase volatility in world markets. Over the past week, the gold reserves in all ETF funds of precious metals have significantly decreased. According to the Commodity Futures Trading Commission (CFTC), last week there was an increase in short positions in gold, while the advantage of short positions is maintained only in this metal.

Many experts believe that the cheapening of the yellow metal is a temporary phenomenon. It is sure to show itself, and the price of gold will go up. However, analysts find it difficult to answer in what period of time this can happen.

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GBP and EUR: Theresa May is playing with the markets, offering unrealistic alternatives

Yesterday, British Prime Minister Theresa May blew up markets with claims that she admits the possibility of holding a second referendum on Brexit. And until the traders grabbed a "piece of cake" of a pound from the very lows and tried to open long positions, made a series of "but", due to which the bullish movements quickly ended. Despite the fact that Theresa May presented a new plan, designed to provide Parliament with support for her divorce proposal package with the European Union, she also stated that she was not opposed to holding a second referendum on Brexit, but on the condition that her plan would be adopted by Parliament.

Also, the British Prime Minister agrees to make other concessions in order to convince opposition-minded legislators, however, all this only after the ratification of her proposal. In other words, nothing has changed, as it is unlikely that the British Parliament will agree to such an alternative, and the meaning of the fourth vote on this topic is completely lost.

As for the technical picture of the GBP/USD pair, after an unsuccessful attempt to increase, the pressure on the pound returned. A breakthrough of the lower border of 1.2685 may lead to a new, larger will of sales of the trading instrument with the renewal of lows in the area of 1.2615 and 1.2500, where I recommend fixing the profits. If the bulls manage to stay above the support of 1.2685 today, it will be a good signal for the future upward correction of the pound.

The data on the US economy did not have much impact on the market, as well as the statements of the Fed representatives.

According to the report of the National Association of Realtors, sales in the secondary housing market in the United States in April of this year decreased by 0.4% compared with the previous month and amounted to 5.19 million homes per year. Economists had expected sales to grow by 2.7%, to 5.35 million homes. Compared with the same period of the previous year, sales in April fell by 4.4%. The NAR noted that the housing market shows weak dynamics compared with other sectors of the economy, and this is provided that mortgage rates remain at a low level.

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The speech of the President of the Federal Reserve Bank of Boston, Eric Rosengren, was mainly related to interest rates and inflation. In his opinion, there is currently no reason to change interest rates now, as the current Fed policy helps to return inflation to the target level of 2%.

Rosengren also believes that import duties imposed by US President Donald Trump may accelerate the return of inflation to a target level of 2%. However, the trade conflict between the United States and China is a negative risk to the prospects for the US economy.

As for the technical picture of the EURUSD pair, the further downward movement will depend on the support level of 1.1140, a breakthrough of which will only increase the pressure on risky assets and lead to an update of the minimum of 1.1110. The growth of the euro will be limited to the upper limit of the side channel in the area of 1.1190.

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Simplified wave analysis and forecast for EUR/USD and AUD/USD on May 22

EUR/USD

For the short-term scale of the euro from March 20, the direction of movement is set by a downward wave. Its latest plot counts from May 13. In the wave, the correctional part of the movement (B) of the wrong kind is formed. Yesterday's rise completed its structure. The subsequent bearish segment of the chart has a high wave level.

Forecast:

In the next trading session, a general flat mood is expected. The formation of a reversal pattern will occur in a narrow price corridor between the meeting zones. In the American session, volatility is likely to increase.

Recommendations:

Short-term purchases of the euro today are possible on small TF. A more competent tactic is to refrain from trading until the end of the upward rollback, with the search at the end of the entry point to a short position.

Resistance zones:

- 1.1190 / 1.1220

Support zones:

- 1.1140 / 1.1110

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AUD/USD

Since April 17, the main trend vector "Aussie" is directed to the "south" of the chart. The wave is at the end of a larger bearish structure, hence the impulsive nature of the movement. The preliminary calculation gives a reference point of the upper limit of the target zone within the price figure. In the last section of May 7, the first 2 parts (A + B) were completed.

Forecast:

Today, the flat mood of the pair is most likely. "Sideways" is expected, but a short-term rise to the resistance zone is not excluded. Return to the main course of the pair can be expected at the end of the day or tomorrow.

Recommendations:

Due to the unpredictable scale of the rollback, purchases today are quite risky. The best solution would be to skip the rollback phase upwards and look for sale signals at its end.

Resistance zones:

- 0.6930 / 0.6960

Support zones:

- 0.6870 / 0.6840

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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.

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Bitcoin to surge higher above $8,000? May 22, 2019

Bitcoin has not managed yet to maintain a rally and surge above $8,000 again forming a major False Breakout.

Bitcoin has been extremely bullish since early April when it was trading at just over $4,000. A few negative incidents and a bit of mainstream FUD have done nothing to temper the momentum which has sent BTC to 2019 highs of $8,250 twice in the past week. The current daily volume is $25 billion, still higher than it has been for most of the past 12 months. Even though the price is stuck below $8,000, we know that corrections are necessary for healthy markets.

At the moment, the next level of resistance that BTC must surge above is seen around $8,200, and if this level is broken, the cryptocurrency may move higher towards $9,000 and later towards $9,300 as well. It now appears that the lower $9,000 region is Bitcoin's monthly resistance level, which means that it will require a significant amount of buying pressure to be broken above.

As for the current scenario, the price is dipping below $8,000 indicating an upcoming upward momentum. As far as the price remains above the $7,500 area with a daily close, the bullish bias is expected to continue targeting $9,000 and later Bitcoin can move towards the round number of $10,000.

SUPPORT: 7,250 / 7,500

RESISTANCE: 8,000 / 8,300 / 8,500 / 9,000

BIAS: BULLISH

MOMENTUM: VOLATILE

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The dollar has cut gold wings

As soon as gold spread its wings, they were immediately clipped by rising US stocks and the dollar. The 90-day postponement for Huawei counterparties was regarded by investors as a certain thaw in US-Chinese relations. In addition, officials from the White House continue to assert that the deal will ultimately be concluded and the ambassador to China in the United States says that Beijing is ready to resume negotiations. Perhaps the situation is not as critical as is commonly believed?

According to JP Morgan, trade wars are a long-running topic. Already in summer and industrial production around the world will face another round of weakness, which will adversely affect stock indexes. Their rally from the beginning of the year looks excessive. Investors were too self-confident about the imminent termination of trade friction and completely forgot about hedging risks. In May, the situation radically changed. Even the growth of the S & P 500 forces them to increase the share of safe havens in case of unforeseen circumstances. In such an environment, the position of the yen and gold should improve.

Dynamics of gold and Japanese yen

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What is happening at the end of May while it goes against the recommendations of JP Morgan? Donald Trump and his team managed to stabilize the stock market, which perceives the slightest positive as a reason for growth and is not particularly sensitive to bad news. At the same time, increasing political risks in Europe are putting pressure on the euro and the pound, helping to strengthen the USD index. The combination of a strong dollar and S & P is a deadly mixture for gold, but the precious metal problems do not end there.

According to Commerzbank, one of the reasons for the depressed mood of the bulls on XAU/USD is the weak yuan. China is the largest consumer of gold and the USD/CNY rally makes its import to the Middle Kingdom more expensive. However, judging by the activity of central banks, they may well compensate for the potential reduction in demand for precious metals in Asia. In April, the People's Bank of China and the Bank of Russia bought 15 tons each. Kazakhstan's gold reserves increased from 11.63 million to 11.79 million ounces, and Turkey's reserves by 50 thousand ounces.

Gold does not help even the next inversion of the yield curve. In May, the differential rates between 10-year bonds and 3-month bills once again slipped into the red zone. The indicator accurately determined the future recession from 1975. Nevertheless, the difference in the yield of 10 and 2-year securities has not yet been marked by negative values, which allows Bloomberg experts to shift the expected time of the decline of the US economy from 2020 to 2021.

Dynamics of yield curves in the US

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In the short run, the XAU/USD dynamics can be affected by the contents of the minutes of the Fed and the ECB, as well as the data on European business activity for May and the results of the elections to the European Parliament. If under the influence of weak statistics and growing political risks, the EUR/USD pair drops to 1.1 while gold risks continuing the downward movement.

Technically, a breakthrough of the lower limit of the consolidation range of $1265-1310 per ounce will allow the "bulls" of precious metals to count on the implementation of target by 161.8% using the AB = CD pattern.

Gold daily chart

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Bitcoin. The formation of the side channel is a good sign for buyers

The formation of a side channel at current levels is a good sign for bitcoin buyers.

Signal to buy Bitcoin (BTC):

Bitcoin buyers face a level of 8100, the breakthrough of which will provide good demand and lead to new annual highs in the area of 8440 and 8700, where I recommend fixing the profit. Of course, the main goal will be the test of the psychological mark of 9000 USD. In the down scenario, there is a support level of 7650, but it is best to open long positions immediately on a rebound from a minimum of 7250.

Signal to sell Bitcoin (BTC):

Bears should wait for the formation of a false breakdown in the resistance area of 8150, and it is best to try to return Bitcoin to the support level of 7650, from where the demolition of a number of stop orders will collapse the cryptocurrency rate to the area of minimums 7260 and 6820, where I recommend fixing the profit.

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Overview for GBP/USD on May 22. The forecast for the system "Regression Channels". Theresa May's new attempt to push her

4-hour timeframe

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Technical data:

The upper linear regression channel: direction – down.

The lower linear regression channel: direction – down.

The moving average (20; smoothed) – down.

CCI: -97.0078

Watching Theresa May's performances in recent months, as well as her actions, one gets the impression that the Prime Minister is deceiving herself. Yesterday's information that May is ready to make concessions in the form of allowing Parliament to vote for the second referendum looks absurd, given its condition that the Parliament will accept its "deal" with the EU. Why then do we need a second referendum if the Parliament accepts a completely unchanged agreement with the EU on the fourth attempt? Thus, Theresa May is making a "veiled", from her point of view, an attempt to win over more votes for her project, using a tool that supports a sufficient number of parliamentarians. Only the second referendum is needed to the deputies, most likely, in order to cancel Brexit. According to most British analysts, the fourth attempt to adopt an agreement on Brexit will also fail, because it is already clear that there are no changes in the document, and Theresa May is simply trying to push the "deal" through Parliament. Yesterday's correction of the pound/dollar to the moving average looks like an accident. The GBP/USD pair is still prone to fall, and the last bars of the Heiken Ashi indicator is colored in blue. The market still leaves the pound sterling as an outsider, and there are no bulls on the pound now.

Nearest support levels:

S1 – 1.2695

S2 – 1.2634

S3 – 1.2573

Nearest resistance levels:

R1 – 1.2756

R2 – 1.2817

R3 – 1.2878

Trading recommendations:

The pair GBP/USD continues its downward movement. Thus, short positions with targets at 1.2695 and 1.2634 are now relevant, before Heiken Ashi's indicator turns up, which will indicate a new round of upward correction.

It is recommended to consider long positions after the consolidation of the pair above the moving average with the targets at 1.2878 and 1.2939. However, at the moment, there are almost no bulls on the market.

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

Explanation of illustrations:

The upper linear regression channel – the blue line of the unidirectional movement.

The lower linear regression channel – the purple line of the unidirectional movement.

CCI – 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.

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Overview for EUR/USD on May 22. The forecast for the "Regression Channels". Mario Draghi is unlikely to surprise markets

4-hour timeframe

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Technical data:

The upper linear regression channel: direction – down.

The lower linear regression channel: direction – up.

The moving average (20; smoothed) – down.

CCI: -86.8916

Yesterday, the EUR/USD currency pair adjusted within just one hour to the moving average line, rebounded from it and maintained a downward trend. Thus, the bears remain "at the helm" of the market, and the next attempt of bulls to seize the initiative failed. We once again note that even when the bulls manage to overcome the moving, that is, the trend is changing to an upward one, this does not mean that the bulls have gained enough strength. As we have said more than once, in 2019, the trend is clearly downward, and each subsequent price high is lower than the previous one. In this regard, the euro/dollar does not change anything. This means that market participants can still expect the pair to decline under the previous low (1.1111). In fundamental terms, today we should pay attention to the speech of the ECB head Mario Draghi in Frankfurt, which will be held in just an hour, as well as the evening publication of the minutes of the meeting of the Federal Open Market Committee. Both of these events may not have any impact on the course of trading, since it is not the fact that Draghi will report anything interesting, and the Fed's protocols usually contain information known to everyone for a long time. Nevertheless, surprises are possible, and during these events, it is recommended to be ready for an increase in volatility, and for a sharp reversal of the EUR/USD quotes.

Nearest support levels:

S1 – 1.1139

S2 – 1.1108

S3 – 1.1078

Nearest resistance levels:

R1 – 1.1169

R2 – 1.1200

R3 – 1.1230

Trading recommendations:

The EUR/USD currency pair resumed its downward movement after a minimal correction. Thus, it is now recommended to trade short positions with targets of 1.1139 and 1.1108.

It is recommended to consider long positions on the euro/dollar pair with extreme caution and small lots, not before fixing the price above the moving average line with the first target of 1.1230.

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

Explanation of illustrations:

The upper linear regression channel – the blue line of the unidirectional movement.

The lower linear regression channel – the purple line 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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What will be said on the "minutes" of the Fed?

High-profile geopolitical events overshadowed the debate about the fate of the Fed interest rate. The growth of anti-risk sentiment supports the US currency, despite the controversial macroeconomic statistics of the United States. The dollar enjoys the status of a defensive asset, playing the role of a kind of "security island" for investors. And yet, despite the deepening trade conflict between the United States and China, monetary policy prospects should remain in sight of traders. Indeed, over the past year and a half, Beijing and Washington have repeatedly "beat the pots" and left the negotiation process, but after a while, they still sat down at the negotiating table. If such a scenario is realized this time, the focus of the market will shift again to the Fed.

In this context, today's release is important. We are talking about the minutes of the last Fed meeting, which was held in early May. It is worth recalling that this meeting left a rather ambiguous impression. After the publication of the accompanying statement, the dollar collapsed throughout the market but Jerome Powell's subsequent comments were in favor of the US currency. First of all, the head of the Fed has smoothed over the "sharp corners" of the accompanying statement, refuting market rumors about the next steps of the regulator towards easing monetary policy. At his traditional press conference, he stated that he currently does not see compelling reasons for changing the base interest rate both upwards and downwards.

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On the one hand, he acknowledged that core inflation declined "quite unexpectedly," but this dynamic is due to "temporary factors in his opinion. Such rhetoric of Powell surprised market participants as his words went against the rhetoric of the accompanying statement. According to the text of the final communique, the Fed members do not consider the current trend to be "temporary" since, in their opinion, we can speak of a stable trend here. In other words, Fed members do not share the optimistic position of the head of the regulator. Today's protocol will make it possible to understand how deeply Fed members are concerned about the weak dynamics of inflation growth in the context of monetary policy prospects. If the majority of them voiced "dovish" rhetoric, the dollar can be under some pressure as rumored.

But here it is worth mentioning right away that today's release may have a limited impact on the market if only traders see nothing "supernatural" there. First, after the May meeting, many Fed members have already expressed their position on the current situation based on more recent data. In particular, Jerome Powell yesterday spoke out against lowering interest rates (at least in the short term) due to the high level of corporate debt. Many Fed members, in addition to such consistent "dovish" like Bullard or Kashkari, also spoke in favor of maintaining a waiting position.

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As for statistics, the situation here is ambiguous. Against the background of strong growth in the labor market and the GDP indicator, the inflation dynamics still leaves much to be desired. In particular, the US consumer price index showed a controversial result. It rose to two percent in annual terms but did not reach the forecast level of 2.1% and showed a negative trend in the indicator on a monthly basis. The index dropped to 0.3% instead of the expected growth to 0.5%.

Core inflation also turned out to be motley while the indicator rose to 2.1% on an annualized basis, as predicted by the experts. Then in monthly terms, the core index unexpectedly slowed down to 0.1% instead of the expected growth to 0.2%. Also in May, another alarming signal was sounded in the form of weak wage growth. Contrary to the positive forecasts of most analysts, the indicator remained at the level of March, where it grew by 0.2% in monthly terms and by 3.2% in annual terms. Experts expected an increase of 0.3% and 3.3%, respectively. In general, the result is not the worst but in this case, the trend itself is important, which is, to put it mildly unconvincing.

Thus, today's release may remind traders of the weak side of the US economy: inflationary indicators still show disappointing dynamics, despite the growth of other key macroeconomic indicators. The minutes of the May meeting of the Fed will make it possible to understand how strongly the regulators are concerned about this fact and how many of them are ready to consider the option of easing monetary policy in the foreseeable future. If the protocol rhetoric does not like dollar bulls, the EUR/USD pair will have a chance to develop a corrective movement with the first target of 1.1190 (the Bollinger Bands middle line on the daily chart) and the subsequent target of 1.1220 (Tenkan-sen and Kijun-sen lines).

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Forecast for EUR/USD and GBP/USD on May 22. A short spurt up ended with an equivalent fall for the euro and the pound

EUR/USD – 4H.

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Yesterday, the euro/dollar pair performed a return to the retracement level of 100.0% (1.1177), after the formation of a bullish divergence at the CCI indicator, a retreat from this level and a reversal in favor of the US currency. As a result, on May 22, the process of falling of quotations can be continued towards retracement level of 127.2% (1.1102). Despite the bullish divergence, traders again showed a very weak desire to buy the euro. This is exactly what the rebound from the Fibo level of 100.0% indicates. Important news affecting the euro or the dollar did not appear yesterday. In general, the desire of traders to actively trade is low. Closing the pair above the Fibo level of 100.0% will still work in favor of the euro and will allow traders to expect some growth in the direction of the retracement level of 76.4% (1.1241). Today will be an important speech by ECB President Mario Draghi. This will happen at 07:30 GMT. Mario Draghi can touch on issues of monetary policy, trade relations with America and other important issues, and traders can note the opening of purchases or sales, which will lead to increased activity in the Forex market.

The Fibo grid built on the extremums of March 7, 2019, and March 20, 2019.

Forecast for EUR/USD and trading recommendations:

The EUR/USD pair continues to show a desire to continue the process of falling (rebound from the Fibo level of 100.0%) towards the level of 1.1102. Thus, I recommend selling the euro for this purpose, with a protective order above the Fibo level of 100.0%. I recommend buying the pair after the close above retracement level of 100.0% to the level of 1.1241.

GBP/USD – 4H.

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The pound/dollar quotes returned to the retracement level of 38.2% (1.2765), rebound from it and turn in favor of the US currency. The picture is identical to the picture of the euro/dollar pair. The sellers of the pound keep the market in their hands. Yesterday's outburst of emotions could be just an accident, an attempt of buyers to quickly and sharply change the trend for the pair. Thus, on May 22, the GBP/USD pair is expected to continue falling in the direction of the retracement level of 23.6% (1.2639). I draw your attention to the release of news about inflation and the retail price index for April in the UK today. The inflation forecast is high – 2.2%, which may cause a new demand for the pound sterling. Although the US currency still looks much stronger, mainly due to the situation around Brexit.

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

GBP/USD – 1H.

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The hourly chart for GBP/USD also shows the resumption of the fall after the growth to the nearest Fibo level. However, on the hourly chart, the further fall of the pound/dollar pair depends on the willingness and ability of traders to close under the retracement level of 161.8% (1.2673). If the closure is completed, the fall will continue in the direction of the retracement level of 200.0% (1.2554). Theresa May said yesterday that the second referendum on Brexit is possible, but there are a lot of different "ifs" for its holding. And of course, the main condition for its implementation should be the adoption of its agreement by the Parliament in the first reading. Thus, traders did not consider this speech as a positive moment for the pound sterling and are preparing for new sales of the weakest currency of 2019.

The Fibo grid is built on the extremes of April 25, 2019, and May 3, 2019.

Forecast for GBP/USD and trading recommendations:

The GBP/USD pair continues the process of falling, so I recommend to sell the pair with the target of 1.2554 with the stop loss order above the level of 161.8% with the target of 1.2554. I recommend buying the pair in very small volumes at the rebound from the Fibo level of 161.8% (hourly chart) with a target of 1.2782 and a protective order at the level of 161.8%.

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Trading Plan for EUR/USD pair on 05/22/2019

The big picture: Theresa May failed to inspire optimism in European currencies.

On Tuesday, British Prime Minister Theresa May presented a new, final Brexit plan.

This plan even allows for a second referendum.

However, having seen the details of the plan, the experts decided that this attempt would not be successful and May is likely to be forced to resign this summer.

On Tuesday, the pound and the euro rose in the short run - but retreated back.

EUR/USD: We are waiting for a break below the zone of 1.1110 - 1.1130 and the beginning of a strong downtrend.

We sell from 1.1130.

Alternative: We buy from 1.1225.

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Technical analysis of EUR/USD for May 22, 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.

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Review of EUR / USD and GBP / USD pairs on 05.22.2019: Total failure

Of course, the dollar is clearly overbought and its weakening against the background of unexpectedly poor statistics on home sales in the secondary market, which decreased by 0.4% instead of growing by 2.7% should not be surprising. But not so much. Also, not for such a short time because almost immediately everything returned to where it began. Thus, the reason for the unexpected fall and almost instantly followed by the strengthening of the dollar is clearly not in the statistics on the sale of dilapidated huts in the United States of America.

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And oddly enough, the reason lies in the next round of palace intrigues that swept the United Kingdom. It all started with rumors that Theresa May is rushing to the House of Commons to present a new version of the "divorce" agreement with the European Union. The very idea that this whole epic is finally coming to a denouement, and a good one, began to push the pound up. Well, he has already pulled the single European currency but rumors, such rumors. Theresa May has not yet completed her historic speech as the pound rushed down and pulls again the single European currency. She did not demonstrate any agreement, stating only that the option had already been prepared and agreed by the Cabinet of Ministers. In fact, for most of his speech, the Prime Minister urged parliamentarians to accept the version of the agreement that she would put to the vote in early June, although, none of the parliamentarians have yet to see the agreement itself. Hence, everyone could see that Theresa May was also going to face a cruel defeat in the House of Commons for the fourth time, especially since right away the representatives of the Conservative Party declared that they would vote against the agreement.

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Moreover, they are much more concerned with the issue of Theresa May's resignation, on which they insist. Of course, Boris Johnson did not stand aside because he had already become prime minister in his thoughts. He said that there is nothing to pull the cat by the tail and it is time to move out of the European hostel and without the "divorce" agreement. Theresa May herself once again vowed with all she could that she would resign immediately after voting on the deal with the European Union. But in any case, it is obvious to all that Great Britain will leave the European Union without any agreement since both the conservatives and the laborists declared their intention to vote against what Theresa May will provide them. Laborites are generally handsome as they intend to disclaim all responsibility for the consequences, and if earlier they insisted on a repeated referendum. Now, they offer to submit the divorce agreement to the referendum. So to say, people decide whether to accept it or not. Accordingly, Laborites can declare with a clear conscience that it is not they who are to blame for the worsening economic situation in the United Kingdom in the future like it was the will of the people. True, it is not clear why then this parliament is needed and what people's deputies are doing there. Therefore, all of these clearly leads everyone to bewilderment. There is no clarity about what will happen tomorrow and oh how frightening is this for investors.

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Today, the pound may get an opportunity for more sustainable growth as inflation can accelerate from 1.9% to 2.2%, which will lift investors' mood a little. Also, do not forget that the minutes of the meeting of the Federal Commission on Open Market Operations are being published today. The intrigue lies in the fact that the Federal Reserve outlined its plans for the pace last year and timing of raising the refinancing rate. The question is, why are you saying this if the plans include raising this rate itself? Apparently, the word about raising or lowering the refinancing rate can generally be removed from the content of the protocol and the Federal Reserve can be understood since the situation has since somewhat deteriorated, which was largely due to the apparent increase in tensions between the United States and China. In a situation where the Celestial Empire raises customs duties on goods from the United States, raising the refinancing rate is a rather strange decision in response to similar steps by the White House. But investors have long been laid in the value of the dollar with all the previously planned steps to tighten monetary policy.

It turns out that the content of the text of the minutes of the meeting of the Federal Commission on Operations in the open market can seriously disappoint investors and they will temporarily forget about the damned Brexit, remembering the urgent affairs. Hence, the single European currency has good chances to grow to 1.1175.

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The pound will grow a little more fun as it continues to decline due to complete confusion with Brexit. However, inflation data will affect investor sentiment. Well, the content of the text of the minutes of the meeting of the Federal Commission on Open Market Operations will put everything in its place. Thus, the pound has good chances to grow to 1.2750.

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Technical analysis of NZD/USD for May 22, 2019

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Overview:The NZD/USD pair is showing signs of weakness following a breakout of the lowest level of 0.6571. On the H1 chart, the level of 0.6571 coincides with 38.2% of Fibonacci, which is expected to act as minor resistance today. Since the trend is below the 38.2% Fibonacci level, the market is still in a downtrend. However, the resistance is seen at the level of 0.6571. Furthermore, the trend is still showing strength above the moving average (100). Thus, the market is indicating a bearish opportunity below the above-mentioned support levels, for that the bearish outlook remains the same as long as the 100 EMA is headed to the downside. Therefore, resistance will be found at the level of 0.6571 providing a clear signal to buy with a target seen at 0.6500. If the trend breaks the first supprt at 0.6500, the pair is likely to move downwards continuing the bearish trend development to the levels 0.6469 and 0.6424.The material has been provided by InstaForex Company - www.instaforex.com

Watching the European elections and preparing for another UK referendum

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The US dollar continues to strengthen in relation to its main competitors, which are under pressure from political and economic factors. On Tuesday, the USD index hit the highest level since April 25.

"Greenback is still ahead of most of its G10 competitors, as key countries face pressing economic and political problems, while the Fed ignores calls for lower interest rates, as the US economy remains stable," said Vin Qin, currency strategist at Brown Brothers Harriman.

"Bull drivers for the dollar now come from outside the United States. Events in other regions suggest that the subject of divergence is alive and well. So, the Reserve Bank of Australia made it clear that it could lower the interest rate next month. In Japan, the central bank continues large-scale incentives. The Turkish Central Bank, in turn, relaxed the policy, while the weak statistics from Thailand and Korea emphasizes that the divergence and includes EM, "he added.

This week, in addition to the trade relations between Washington and Beijing, the European parliamentary elections, which will be held from May 23-26, are in the focus of attention.

Populists ruling in Italy have already declared that they may violate the EU budget rules. If they show strong results in the upcoming elections, the yield of Italian government bonds may increase sharply, and the volatility will increase. The victory of their allies in ideology on the other side of the Old World could harm the pound and the euro, increasing the likelihood of the implementation of the "tough" Brexit and complicating the situation for those who want to maintain closer ties with Europe.

New government in Italy

It is expected that the Italian party "League of the North", one of the leaders of which is Matteo Salvini, can increase the number of its seats in the European Parliament from the current 6 to 27. This result can either strengthen the tough position of the Italian authorities in discussions about the budget deficit with Brussels, or destroy ruling coalition in the country.

"I am waiting for a tangible protest vote. If the League of the North returns with the result, which polls are mainly hoping for, and we get similar results in other places, this will lead to a very interesting state of affairs in terms of budget rules, "said James Atie of Aberdeen Standard Investments.

While for JPMorgan Chase, the baseline scenario is the collapse of the Italian government in the summer, Goldman Sachs relies on the country's ruling coalition to continue and continue to oppose the EU budget constraints.

Party Brexit

Initially it was assumed that the United Kingdom by now would already withdraw from the EU, but the impasse with the promotion of the "divorce" agreement in the British parliament led to the fact that the country was forced to participate in the elections to the European Parliament, which will start tomorrow. According to recent polls, the Brexit party, founded by Nigel Faraj, who opposes relations with the EU, can show better results, and the UK-ruling Conservative Party is in danger of being defeated.

"A major victory of the Brexit Party may lead to an increase in calls for T. May to leave the post of prime minister, which, in turn, may cause the pound sterling to fall by 2% against the dollar. There is a possibility that T. May will be replaced by a supporter of the "tough" Brexit, "Nomura experts believe.

In the evening, the GBP / USD pair soared by more than 100 points and updated local maxima in the region of 1.2810. The driver of such a movement were reports about the possibility of holding another Brexit referendum. However, the British currency quickly lost its positions against the dollar.

Scotiabank considers a decline in investor optimism to be quite natural.

"While the idea itself looks quite positive for the pound sterling and is likely to be favorably received by the EU, the issue is still not resolved. May is ready to give a voice to the people, so that he will decide the fate of the transaction she is promoting, and this requires that parliamentarians first approve it. Such an opportunity will be presented to them by the first week of June, "representatives of the financial institute stated.

"At the same time, T. May's approach to obtaining support from members of the House of Commons raises questions. In her speech, the Prime Minister tried to respond to the concerns of each of the parties - Brexit supporters of the same party, the Democratic Unionist Party of Irish and Labor Party advocates for the protection of workers' rights and environmental protection. However, such a position threatens that no one will be satisfied, and T. May will once again fail the vote, "they added.

The complexity of the euro

The single European currency is still trading against the US dollar near two-year lows.

In addition to fears about sluggish inflation in the EU and a stalling economic growth in the region, an increase in populism on the continent becomes an additional factor of pressure on the euro.

According to the UBS Group, any indication that populism in Europe is likely to have peaked could lead to a stronger euro, especially with respect to such protective currencies as the Swiss franc.

Other market participants are less confident in the prospects of the single European currency. In particular, Aberdeen and JPMorgan occupy short positions in the euro against a basket of currencies, including the US dollar and the Japanese yen.

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GBPUSD to rebound ahead of UK CPI today? May 22, 2019

GBP has been weakened by USD after rejecting off the 1.30 area with a daily close. Certain spikes were observed not long ago. However, GBP was not able to sustain momentum and fell.

The UK economy is going through hard times now as most of the British companies are cancelling their projects. Brexit uncertainty and worries about a deal or no deal withdrawal are weighing down the US economy. In case of no deal scenario, the the business sector index is likely to fall sharply. Business investment was plummeting throughout 2018 as companies waited for clarity on Brexit. Brexit supporters think that the UK should leave the EU now with no agreement because it is likely to boost the business sector which will revert to trade on World Trade Organization terms. Earlier, this month, BoE Governor Mark Carney said the business investment was likely to continue to be weak, but that there should be an improvement – and reduced reliance on consumers – if Brexit took place smoothly. Moreover, Britain's political unrest is rising as Theresa May is facing pressure to abandon her Brexit deal and quit as British prime minister within days.

Today, the UK CPI report is going to be published. The reading is expected to increase to 2.2% from 1.9%. The PPI Input is expected to rise to 1.1% from -0.2%. The public sector Net Borrowing is expected to grow to 5.2B from 0.8B and the Core CPI is expected to go up to 1.9% from 1.8%.

The US dollar is pressured following the release of weak economic data. However, it managed to sustain momentum over GBP. The disappointing report on existing home sales may be due to the record high home prices than lack of supply. Recently, US Existing Home Sales report idicated a decrease to 5.19M from 5.21M. The reading was expected to grow to 5.35M. Additionally, the Fed discussed a better way to manage the U.S. economy to hit the central bank's inflation target is to tolerate much higher price increases in some years to counter the weaker ones. The Fed has failed for a decade to even reach that 2% level could leave people skeptical it is serious about even more aggressive strategies. That is just one of many hurdles policymakers noted recently that face any overhaul of the central bank's policy framework.

New strategies were debated at the Fed would make up for low inflation with faster inflation in the future, possibly prices increase of as much as 3 or even 4% in some years, Evans said, a level he said markets may be skeptical the Fed would ever allow. Moreover, according to FED member Rosengren uncertainty surrounding the U.S.-China trade dispute adds downside risk to his forecast for the economy, giving the central bank another reason to be patient as it keeps interest rates steady. This week Core Durable Goods Orders report is going to be published. A decrease to 0.1% from 0.3% is expected. Report on the Durable Goods Orders indicated a drop to -2.0% from 2.6%. Today, traders are awaiting FOMC meeting minutes. Commentary reiterating officials' wait-and-see approach amid a raft of global uncertainties may cool rate cut hopes.

In case of strong economic data, the pound sterling is likely to bounce off. The US dollar may retreat following the weak economic data. Thus, certain correction and volatility are expected.

Now let us look at the technical view. The price showed increased volatility yesterday with a strong bullish rejection off the 1.28 price area which is still quite indecisive as a daily close above 1.2750. It is expected to lead to further upward pressure for Mean Reversion towards the dynamic level of 20 EMA. As the trend is bearish and impulsive with the downward pressure, a break below 1.2700 area with a daily close will lead to further continuation of the bearish pressure in the process. As the price remains below 1.30 area with a daily close, the bearish bias is expected to continue.

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Trading recommendations for the GBPUSD currency pair - placing trade orders (May 22)

For the last trading day, the currency pair pound / dollar showed high volatility of 127 points, resulting in a wide amplitude, which, in principle, did not lead to anything solid. From the point of view of technical analysis, we see an amazing amplitude - high 1.2811 and low 1.2684, where, as a result, the quote crept in almost the same place where it started. The gaps on the background of the information flow did not change the overall picture. The short positions in the form of bearish interest prevail in the market, which reflects the fastest recovery. What happened on the market? Overlapping each other informational news flow and now in order. Yesterday, statistical data on sales in the secondary housing market were published in April in the United States, where they were waiting for growth from 5.21M to 5.35M, and as a result, it was reduced to 5.19M. At the same time, it became known that at 15:00 Universal time, Prime Minister Theresa May will speak at the British Parliament. On low volumes that we saw last day, speculators quickly pushed through the quotation, statistics on the US, frankly, was not very good, while Theresa's unscheduled speech with the promise of a possible new proposal about Brexit played out the speculators' imagination, as a result - the initial surge upwards. Next, we see a sharp recovery quotes, the reasons? Everything is quite simple, this promise comes from the background of information, in particular, the very speech of the Prime Minister and the developing noise on it.

The new version of the agreement, with the old ones, made several concessions to the Labor Party on two basic requirements: the Customs Union with the European Union and the need for a new referendum. These demands were put forward by the Labor Party during the recent inter-party negotiations. The new agreement also contains Theresa May's previous promises to include provisions that harmonize workers' rights and environmental protection with EU rights.

A few minutes after May's speech ended, the backlash began. Laborists insist that this agreement be brought to a general referendum, without agreeing it in parliament. At the same time, Boris Johnson, so to speak, the future candidate for the place of Theresa May, traditionally, said: "I will not vote for it ...".

As a result, against the general information background, the pound quickly slipped to the marks of the beginning of the day and continued to decline smoothly.

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Today, in terms of the economic calendar, we have data on inflation in the UK, where they expect an acceleration of 1.9% to 2.2%, which is quite positive news amid the overbought pound. Although, there is a possibility of whether this news will play, but do not forget about the general negative background in Britain. Next, we have a key event. The publication of the minutes of the meeting of the Federal Commission on open market operations. Everything is ambiguous here, since everyone is concerned about the fate of the refinancing rate. But for a long time, the Fed representatives have been moving away from a solid answer, referring to what will be seen. For this reason, it will not be so that the words regarding the rate will be removed from the protocol altogether. Thus, the news will be in the background, and the dollar may lose its position against the background of positive statistics from the UK and general overheating.

Further development

Analyzing the current trading chart, we see that bearish interest still prevails in the market and the quotation is rapidly going down, overcoming the minimum of the past day. It is likely to assume that the previously projected coordinates in the face of the level of 1.2620 is a very real mark. However, we should not forget about the upcoming statistics for Britain. Thus, we are waiting for a convergence with 1.2620, then we can analyze the fixation points and the news background. In case of retention of downward interest and price fixing lower than 1.2600, a further decline towards 1.2500 can be considered.

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consider them:

- Positions to buy will be considered, even in the case of any slowdown in working out near the level of 1.2620, with support for the news background.

- Sell positions are held towards the level of 1.2620. Further analyze the behavior of quotes and fixation points.

-

I would like to retreat a little from the above and suggest that you look at the daily GBPUSD chart, what do you see? Unreal reduction, without any kickbacks and corrections, oversold is overwhelming, and if it were not for the informational background, we can quickly corrected, do not forget about it.

Indicator Analysis

Analyzing a different sector of timeframes (TF), we see that indicators in the short, intraday and medium term remain in a downward phase against the general background of the market.

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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 22 was based on the time of publication of the article)

The current time volatility is 50 points. Against the background of the news background, volatility may remain high.

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Key levels

Zones of resistance: 1.2770 **; 1.2880 (1.2865-1.2880) *; 1.2920 * 1.3000 **; 1.3180 *; 1,3300 **; 1.3440; 1.3580 *; 1.3700

Support areas: 1.2620; 1,2500 *; 1.2350 **.

* Periodic level

** Range Level

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The absence of a signal in the Fed's report on lowering rates in the future will support the dollar: We expect EUR/USD and

Tensions on world markets eased somewhat after the States temporarily relaxed restrictions on the Chinese company Huawei, although, of course, the final cessation of confrontation can not be said yet.

We have repeatedly pointed out earlier that in the past six months as the global financial markets have been experiencing a most difficult situation, which is difficult to recall in the past twenty years. The struggle of the United States to restore its political and economic influence in the world led to an increase in tension and various conflicts in both the international and economic spheres. Larger-scale trade wars, such as between Beijing and Washington, or no less significant, but not taking place so vividly between Europe and the States. All of these make investors around the world nervous, which raised the degree of volatility. Stock markets react sharply not only to any positive or negative news but also to rumors and speculation. Of course, this has a devastating effect on the markets that have been playing "guessing game" in recent months.

However, assessing possible prospects, we believe that in the foreign exchange market, the strengthening of the dollar in the short term will continue unlike the stock market and commodity markets. There is one main reason for this.

First and foremost, the Fed has not given a clear and clear signal to the markets that can lower interest rates this year. Recently, members of the Fed and its head, Jerome Powell, have increasingly begun to point out the possibility of renewed inflation in the country. As we noted earlier, this is the main reason why the regulator took a pause in monetary policy decisions. This is already an important factor supporting the dollar since it can lead to the absence of the expected prospective decrease in interest rates and as a consequence, to the continued growth of the dollar rate. Moreover, in this situation, the uncertainty of other central banks, whose currencies are traded on Forex against the dollar, either stopped their desire to raise interest rates or started lowering them. They want to make their exports more competitive in the world market.

Assessing this state of affairs, we believe that the absence of any hints at the likely rate cut in the foreseeable future in the Fed meeting today with May will have a supporting effect on the US dollar rate.

Forecast of the day:

The EUR/USD pair is consolidating below 1.1155. The "soft" speech of the ECB President Draghi regarding the prospects for the bank's monetary policy will put pressure on the pair and it may continue to fall to 1.1125.

The GBP/USD pair is also declining, remaining under the pressure of uncertainty due to the uncertainty of the consequences of Brexit in Britain. We consider it possible to sell the pair with a probable local target of 1.2575.

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Burning forecast EURUSD 05/22/2019

On Tuesday, the EURUSD rate made an attempt to grow - this was fuelled by the pound's growth on reports of the possibility of a new referendum on Brexit.

However, the sellers immediately stopped trying.

It is very likely that we are waiting for an attempt to break through the support zone of 1.1110 - 1.1130 and the beginning of a big downward trend.

We sell from 1.1130.

Alternative: buy from 1.1225.

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Wave analysis of EUR / USD and GBP / USD for May 22. UK prepares for change of prime minister

EUR / USD

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On Tuesday, May 21, trading on the currency market for the EUR / USD pair ended with a decrease of several base points, although during the day market activity was not weak and the instrument made a good movement up and then down. However, in general, the wave pattern has not changed at all, and it cannot even be supplemented now. This is for the better, as it convinces us of the correctness of the current wave marking, which assumes the continuation of the construction of a downward trend segment. The unsuccessful attempt to break through the level of 100.0% according to Fibonacci indirectly indicates the readiness of the market for new sales of the pair. Thus, the bears continue to move the pair down, based on the absence of a positive news background for the euro. Indeed, how can the demand for the euro appear if no good news comes from the European Union? Tonight, Mario Draghi and the markets will scrupulously search in his words for hints on the parameters of the new LTRO program, which will re-stimulate the EU economy. Any weakness in Draghi's rhetoric will help with building wave 3, 3, 3.

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 euro / dollar is still in the process of building a downward trend. Now, I recommend the bears to remain on the instrument with targets at 1.1097 and 1.1045, which corresponds to 161.8% and 200.0% Fibonacci. I recommend transferring a restrictive order to the level of 100.0% Fibonacci.

GBP / USD

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On May 21, the GBP / USD pair lost more than 100 bp from the high of the day, and Theresa May made a "smart" proposal to the parliament. According to her, she is ready to consider the possibility of holding a second referendum if the parliament supports her agreement on Brexit. Many parliamentarians are skeptical about such a proposal, and there is every reason to assume that they will not meet the premier. Moreover, there is reason to expect that the fourth vote on the Brexit agreement will fail, because nothing in the agreement itself changes. Theresa May is likely to retire this summer, regardless of the outcome of the fourth vote. Her successor might be Boris Johnson who can initiate new negotiations with the European Union. And the pound sterling continues to fall, since it has no other way now. Now, the dollar does not even need the news background from America for it to continue its growth. Now, the Forex market is definitely in a bearish mood.

Sales targets:

1.2675 - 161.8% Fibonacci

1.2554 - 200.0% Fibonacci

Purchase goals:

1.3175 - 0.0% Fibonacci

General conclusions and trading recommendations:

The wave pattern of the pound / dollar instrument implies a continuation of the instrument decline within the wave c. Thus, now, I still recommend selling the pound with targets located near the calculated marks of 1.2675 and 1.2554, which corresponds to 161.8% and 200.0% in Fibonacci. An unsuccessful attempt to break through the 161.8% mark may lead to a departure of quotes from the lows reached.

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Indicator analysis. Daily review for May 22, 2019 for the currency pairs EUR / USD and GBP / USD

On Tuesday, the market for both currencies moved in the side channels, and this is the merit of fundamental analysis. The pair GBP / USD has fulfilled the rollback upwards of 14.6% - 1.2756 (yellow dotted line) and then continued to move downwards. On the other hand, the EUR / USD tested the support line - 1.1146 (blue thin line) once again. However, the news drove the price upwards again. On Wednesday, strong calendar news come out at 8.30 14.30 and 18.00 Universal time.

EUR / USD pair

Trend analysis (Fig. 1).

Today, the price after testing the support line 1.1146 (blue dotted line), can continue to move downwards with the target of 1.1125 - the lower boundary of the Bollinger Line indicator (black dotted line) and move further downwards with the target of 1.1112 - lower fractal.

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Fig. 2 (daily schedule).

Comprehensive analysis:

- indicator analysis - down;

- Fibonacci levels - down;

- volumes - down;

- candlestick analysis - up;

- trend analysis - down;

- Bollinger lines - down;

- weekly schedule - down.

General conclusion:

On Wednesday, we are waiting for the continuation of the downward movement. The first lower target of 1.2662 is the pullback level of 76.4% (blue dashed line) and further down to the lower boundary of the indicator "Bollinger lines" (black dashed line) - 1.2616.

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GBP/USD: plan for the European session on May 22. Theresa May's trick did not please the buyers of the pound

To open long positions on GBP/USD you need:

Yesterday, Theresa May announced that it was possible to hold a new referendum on Brexit, but on the condition that Parliament approves her agreement. This did not please the buyers of the pound, who quickly left the market. At present, it is best to return to long positions on a false breakdown in the support area of 1.2687 or to rebound from a larger level of 1.2614. The target of the bulls for today will be the resistance 1.2747, consolidating on which will lead to the formation of a large upward correction with the update of the highs of 1.2808 and 1.2858, where I recommend to take profits.

To open short positions on GBP/USD you need:

A breakthrough and consolidation below the support of 1.2687 will lead to a new wave of short positions in GBP/USD with a rise to the lows of 1.2614 and 1.2564, where I recommend taking profits. In case the pound grows, after the release of data on inflation in the UK, a better scenario would be to sell from a resistance of 1.2747, provided a false breakdown, or to rebound from a high of 1.2808, as it was yesterday, after Teresa May's speech.

Indicator signals:

Moving averages

Trading is below 30 and 50 moving averages, which indicates the bearish nature of the market.

Bollinger bands

A break of the lower boundary of the indicator around 1.2665 will be a signal to open short positions in the pound in the expectation of a continued decline. The upper limit in the 1.2747 area 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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There are no reasons for optimism: the euro and the pound continue to decline

The trade dispute between the United States and China does not yet show any signs of a possible completion in any foreseeable future. On Tuesday, stock markets reacted with a rise in response to the Trump administration's intention to issue Huawei a temporary work permit until August 19, which is likely to be the deadline for finding an acceptable solution.

China has not yet activated its asymmetric response mechanisms, which gives hope that a full-fledged war can be avoided, but China has such answers.

Today, the FOMC meeting minutes will be published, as the markets focus will be on the Fed's neutral position on the rate in the coming months, particularly on the issue of excess reserves of commercial banks and prospects for further balance reduction.

The dollar looks like a favorite against most currencies on Wednesday morning but weak volatility is unlikely to allow it to show a strong movement.

EUR/USD pair

According to the European Commission, the level of consumer confidence rose slightly from -7.3p to -6.5p in May. Despite the fact that the indicator is in the negative zone, it is still above the long-term average, while in the last 3 months stabilization is visible after a prolonged fall in 2018.

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The euro still manages to stay above the April low of 1.1109 but the chances of a turn up are still weak. There is no reason or the ECB to curtail the incentive program while market expectations exclude any steps in this direction until the end of 2020.

Today, there is no strong news in the euro area. The main reference points will be on the speech of Draghi, which will be held at the farewell event on the departure of the ECB chief economist Peter Praet. On Thursday, reports from Markit and Ifo in the eurozone are expected, which can bring the euro out of sleep. While it is necessary to assume that EUR/USD pair remains under pressure, the nearest support of 1.1141 and 1.1134 will be passed in the coming hours with a high probability directed towards 1.1109 with serious intent to leave below.

GBP / USD pair

The volume of industrial orders in the UK fell to -10p in May, which is the minimum since October 2016. Perhaps, this is the response of the industry to the Brexit question. The period of uncertainty has been extended until October and the return of investment to the industry is postponed. Enterprises are forced to accumulate significant funds and resources in case of emergencies, which hinders the growth of jobs and investment in new industries. According to the CBI, the uncertainty should be removed as a matter of urgency.

Another attempt to break the deadlock was proposed by Theresa May, who intends to submit to the House of Commons another bill on the UK leaving the EU. If the government project is approved by the Parliament, it will be possible to hold a second referendum. Be that as it may, political tensions will continue at least until June when a vote will be taken in parliament.

Elections to the European Parliament will start today in the UK, which could turn into a serious defeat for the conservatives that could increase the pressure on May in favor of her resignation.

The pound continues to be under pressure because it can not rely on any political or economic factors. Inflation expectations are currently at the lowest level since March 2016, and the Bank of England has no reason to hint at possible normalization of monetary policy.

The GBP/USD pair has come close to annual lows and support at 1.2650/60 and a break below this level is possible. Today, data on inflation in April will be published. if they turn out to be worse than expected, the current momentum will allow it to go lower and the pound does not have serious support up to 1.2429.

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Forecast for Oil (CL) on May 22, 2019

Oil (CL)

On the daily chart, the price consolidated below the MACD line (blue indicator). The Marlin oscillator signal line turns down without leaving the zone of a downward trend, which is the zone of negative numbers. Taking a new decline line as a continuation of the trend from April 23-24, the price may overcome the 100.0% Fibonacci level at May 6 low of 60.04. The closest medium-term goal is the Fibonacci level of 110.0% on the price of 59.39. Then other levels of this technical tool are opened successively at 58.31 (123.6%), 57.53 (138.2%), and 55.98 (161.8%).

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On the four-hour chart, the price is held by the indicator line of balance and the Fibonacci level of 61.8%. The support is strong, exactly from the same point of support, where the price turned up on May 20 (green arrow). But in the current situation, we are waiting for a breakthrough of the support at the Marlin oscillator, leaving the negative zone. The reason may be today's data on stocks in the United States.

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EUR/USD: plan for the European session on May 22. The euro is preparing for a new wave of decline

To open long positions on EURUSD you need:

Volatility is very low, and, most likely, the pressure on the euro will continue. It is best to return to long positions after updating a large support level at 1.1143, provided that a false breakdown is formed there, or to rebound from a new low of 1.1112. The main goal of the bulls will be to consolidate above the resistance of 1.1166, where you can expect to form an upward correction with a return to a high of 1.1187, above which you can reach the resistance of 1.1205, where I recommend to lock in the profit.

To open short positions on EURUSD you need:

Sellers are required to return to a support of 1.1143, which will be the first signal to open short positions in EUR/USD based on maintaining the downward momentum and updating major support levels in the area of 1.1112 and 1.1079, where I recommend taking profits. If the euro rises in the first half of the day and consolidates above the resistance of 1.1166, it's best to return to short positions after updating highs of 1.1187 and 1.1205.

Indicator signals:

Moving averages

Trade is conducted in the region of 30 and 50 moving averages, which indicates market equilibrium.

Bollinger bands

Volatility is very low, which does not provide signals for 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
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GOLD to rebound off $6500? May 22, 2019

GOLD remained unchanged and indecisive below $1276 area sustaining the bearish momentum. Gold prices are likely to advance $1265 support area.

Due to economic and political turbulence, investors often seek protection from the safe-haven gold. However, gold didn't manage to gain ground. The bullish bias is still prevailing in the market as the price remains above $1250 area with a daily close. The price is still residing inside the Bullish Flag pattern which indicates further bullish momentum. The price manages to remain inside the pattern, a break above is reachable.

US-China trade tension has eased after the U.S. temporarily lifted curbs on China's Huawei Technologies. Nevertheless, Chinese President Xi Jinping hinted recently that the trade war with the U.S. would not end in the near future. The US-China trade tension is expected to weaken the USD gains as the impact of the trade war is also going to hurt the US economy significantly.

May's FOMC meeting is highly anticipated by the traders. Commentary reiterating officials' wait-and-see approach amid a raft of global uncertainties may cool rate cut hopes. That seems inherently USD-supportive, with haven demand acting as a further accelerant as markets pining for policy support tilt into the risk-off territory. Gold is vulnerable in this scenario.

As of the current scenario, the price is expected to push lower towards $1265 area before pushing higher again with a target towards $1276 and later if it is broken above with a daily close, further upward pressure with a target towards $1300 is expected.

SUPPORT: 1250, 1265

RESISTANCE: 1276, 1300

BIAS: BULLISH

MOMENTUM: VOLATILE

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EURJPY: JPY to gain momentum over EURO, May 22, 2019

EURO has bounced off on fresh economic reports. The single currency managed to gain momentum over JPY, but such bullish momentum is seen as part of retrace while the bearish trend is still quite strong.

Recently, EURO German PPI report has been published. It indicated an increase to 0.5% from the previous figure of -0.1% which was expected to be at 0.4%. Report on the Eurozone Current Account sunk to 24.7B from the previous figure of 27.9B which performed better than expected. The Consumer Confidence index also showed growth to -7 which was expected to be unchanged at -8. Eurozone is struggling with the economic slowdown because of Brexit uncertainty and the European Union Elections. The parliamentary election is expected to have a big impact on the gains of the euro. Eurosceptic parties are widely expected make a strong showing, which could hamper approval of the next European Commission president and budget.

European Central Bank Vice President Luis de Guindos recently stated that with Eurozone growth slowing, several countries should force their banks to build extra capital buffers to mitigate the risk of unexpected shocks. The slower growth momentum being observed increases the risk of tail events, in other words, shocks that are unlikely to occur, but would have a significant impact on the financial system and the economy if they did.

Japan's economy is affected by the trade war decision. US auto imports restrictions are expected to impact the US and global economy adversely. Bank of Japan's board member Harada recently stated that the central bank must ramp up stimulus "without delay" if a slowdown in the economy hampers the achievement of its price target. The tax rate hike is likely to come into force from October 2019. Harada showed deep concerns about the weakening of exports and output. If the trend continues, it will damage the economy as well as job growth rate and consumption rate significantly. Harada said those who argued that the BOJ's ultra-loose policy was ruining financial institutions ignored the benefits of monetary easing to the economy.

Today Japan's Core Machinery Orders report was published. It demonstrated a significant growth to 3.8% from the previous value of 1.8% which was expected to decrease to 0.0%. The report on Trade Balance also showed an increase to -0.11T from the previous figure of -0.15T which was expected to be at -0.12T.

JPY asserted strength following the release of strong economic data. The Eurozone, however, is struggling with the slower growth but positive economic signals ahead of Parliamentary Election. Volatility in the pair EUR/JPY is expected.

Now let us look at the technical view. The price managed to gain certain bullish momentum rejecting off the 122.50 support area with a daily close recently. The price is currently being held by the dynamic level of 20 EMA as resistance which is expected to lead to the continuation of the bearish momentum which could lead the price lower towards 122.50 area. If it is broken with a daily close, further bearish momentum is expected to with a target towards 120.00 support area in the future.

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Control zones for EUR/USD pair on 05/22/19

Last week's bearish momentum remains the basis for building a trading plan. It is important to note that the formation of a medium-term accumulation zone has already been taking place for the fourth week. Yesterday's low was close to the flat bottom, which may cause the appearance of demand and the formation of a corrective upward movement.

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Today's growth to the 1/4 WCZ of 1.1186-1.1182 and the formation of the "false breakdown" pattern will allow you to enter a short position. If the closing of today's American session happens above the level of 1.1186, this will indicate a change in dynamics and tomorrow, you will need to search for purchases in case of depreciation. The probability of implementing this model is 30%, which makes it auxiliary. Within a medium-term flat, a buy-in operation from the lower range can give a good risk-to-reward ratio, which eliminates the low probability of finalizing.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The area formed by marks from the important futures market, which changes several times a year.

Monthly CZ - monthly control zone. The area is a reflection of the average volatility over the past year.

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Technical analysis of Bitcoin for 22.05.2019

Crypto Industry News:

Craig Wright filed a copyright registration in the United States for the Whitepaper of Bitcoin by Satoshi Nakamoto.

Court documents show that the copyright office in the US received Wright's registration as the author of the whitepaper, as well as most of the original code used to build Bitcoin. An Australian entrepreneur has long claimed to have written a cryptocurrency plan under a known pseudonym.

A press release on May 21 stresses that US officials have received confirmation that Wright is indeed Satoshi Nakamoto, but this news was met with skepticism by some commentators on the cryptography community.

According to a press release, Wright takes steps to establish himself as the creator of Bitcoin "after he was scared to see that his original Bitcoin project was devastated by groups of developers." It is believed that Wright plans to assign copyright registrations to the Bitcoin Association.

The businessman is currently the main researcher at the nChain startup. He is known for attracting controversy - the main cryptographic platforms have recently begun boycotting Bitcoin SV, Bitcoin Cash hard-fork, which the entrepreneur supports.

Technical Market Overview:

The BTC/USD pair has been trading inside of a tight narrow range located between the levels of $7,617 - $8,155. The volatility is now limited as the traders wait for a breakout in either direction. From the Elliott Wave Principle point of view, the market is now in the wave B of the overall corrective cycle after the bottom of the wave A was made at the level of $6,986. It means, there is still wave C to the downside missing in order to complete the corrective cycle in wave 2, so the breakout should be to the downside.

Weekly Pivot Points:

WR3 - $10,110

WR2- $9,180

WR1 - $8,627

Weekly Pivot - $7,705

WS1 - $7,135

WS2 - $6,315

WS3 - $5,743

Trading Recommendations:

The best trading strategy in the current market conditions is to sell the local pull-backs with a tight protective stop loss just above the high at the level of $8,309 in anticipation of the wave C of the overall corrective structure. Please pay attention to the technical support at the level of $7,584 as any violation of this level will accelerate the sell-off towards the next technical support at the level of $7,032.

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Technical analysis of Ethereum for 22.05.2019

Crypto Industry News:

The Japanese House of Representatives has taken over the new cryptographic regulation in the upper house of the national parliament, according to the Nikkei news agency. The lower house reportedly cryptographically amended the existing financial law of the Chamber of Councilors at a recent plenary session.

According to Nikkei, changes to two Japanese financial regulations - the Act on financial instruments and the stock exchange and the Payment Services Act - are aimed at strengthening local regulations regarding the process of trading in cryptocurrencies. The changes are reportedly expanding the regulation by adding provisions on cryptocurrency margin trading.

The new law also includes changing the terminology associated with cryptography, changing the term virtual currencies to "cryptographic assets".

Japanese legislators for the first time introduced crypto margin trading regulations in March 2019. The Japanese Cabinet has approved a draft of changes to the Japanese financial instruments and payment services regulations, limiting the leverage on the cryptocurrency deposit market by two to four times more than the initial deposit.

Technical Market Overview:

The ETH/USD pair still continues the wave 4 correction and the most likely pattern here is a Triangle pattern, which is very typical for this corrective cycle. After the corrective cycle in wave 4 is completed, there is still one more wave up missing in order to complete the whole impulsive wave. The local technical resistance is located at the level of $263.42 and the local technical support is seen at the level of $245.00. Please keep an eye on the short-term trend line dynamic support as any violation of this support might lead to sooner than expected down move towards the level of $226.17

Weekly Pivot Points:

WR3 - $390.48

WR2- $336.28

WR1 - $299.99

Weekly Pivot - $239.34

WS1 - $205.35

WS2 - $147.46

WS3 - $113.47

Trading Recommendations:

The best trading strategy in the current market conditions is to buy the local pull-back as wave 4 is in progress in anticipation of the wave 5 to the upside. It might take some time for the wave 4 to complete, so it does not have to be a day-trading strategy. Please pay attention to the technical support at the level of $226.17 as any violation of this level will accelerate the sell-off towards the next technical support at the level of $212.12.

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Technical analysis of GBP/USD for 22.05.2019

Technical Market Overview:

The GBP/USD pair has made another attempt to bounce from the extremely oversold market conditions, but the rally was quickly capped and the Fakey candlestick was made (also it looks like a Pin Bar) with a local high at the level of 1.2811. It means the bulls are still too weak to break through the technical resistance zone located between the levels of 1.2772 - 1.2788. The market is now moving sideways very close to the level of 1.2688, which is the next target for bears.

Weekly Pivot Points:

WR3 - 1.3212

WR2- 1.3121

WR1 - 1.2880

Weekly Pivot - 1.2790

WS1 - 1.2532

WS2 - 1.2453

WS3 - 1.2198

Trading Recommendations:

The best trading strategy in the current market conditions is to sell the local pull-backs with a tight protective stop loss. Due to the oversold market conditions please pay attention to the candlestick trend reversal patterns and market trend reversal patterns. The next target for bears is seen at the level of 1.2668.

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Technical analysis of EUR/USD for 22.05.2019

Technical Market Overview:

The EUR/USD market is still hovering around the technical resistance zone located between the levels of 1.1167 - 1.1174 with no intention of breaking higher so far. There were some attempts to rally but were quickly capped by the bears. The short-term outlook remains bearish and there is no signs or any trend reversal for now. The next target for bears is seen at the level of 1.1135 and 1.1111.

Weekly Pivot Points:

WR3 - 1.1317

WR2- 1.1287

WR1 - 1.1208

Weekly Pivot - 1.1178

WS1 - 1.1099

WS2 - 1.1069

WS3 - 1.0986

Trading Recommendations:

The best trading strategy in the current market conditions is to sell the local pull-backs with a tight protective stop loss. Due to the oversold market conditions please pay attention to the candlestick trend reversal patterns and market trend reversal patterns. The next important technical support is located at the level of 1.1111 and this is the next target for bears.

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Trading plan for EURUSD for May 22, 2019

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Technical outlook:

The EUR/USD pair rallied through 1.1188 levels yesterday before pulling back lower again. Please note that immediate resistance at 1.1183 levels was taken out. The recent pullback is stalling around 1.1155 levels, indicating a potential rally ahead. It may still be too early to project an upside movement at this moment but considering the flat corrective drop from 1.1260 levels earlier and the entire wave structure, we still maintain our projection towards 1.1320 levels. If predictions come true, prices must stay above 1.1111 levels, marked as interim low here. Take into account that a break above 1.1260 levels from here would trigger further buying towards 1.1320 levels, which is also the fibonacci 0.618 resistance of drop between 1.1450 and 1.1111 levels respectively. As an alternate, if prices break below 1.1111 levels, look for further downside below 1.0900 levels going further. Please watch out for prices to break above its immediate resistance line for bulls to remain in control.

Trading plan:

stop at 1.1111; target at 1.1320

Good luck!

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Elliott wave analysis of GBP/JPY for May 22, 2019

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GBP/JPY is breaking above minor resistance at 140.51 indicating that the wave 2 has completed and the wave 3 higher is developing. In the short-term, minor support at 140.18 will be able to protect the downside for a firm breakout above minor resistance at 140.51 and, more importantly, a breakout above resistance at 141.74 for a continued upward movement to 142.21 and 143.72 as the next minor hurdles on the way towards 151.50.

At no point can a breakout below support at 139.63 be allowed as it will call for more downside pressure.

R3: 141.74

R2: 141.10

R1: 140.82

Pivot: 140.50

S1: 140.16

S2: 139.63

S3: 139.53

Trading recommendation:

We are long GBP from 139.80 and we will move our stop higher to 139.60

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