Trading plan for Gold for December 18, 2019

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Technical outlook:

This analysis a more detailed review for Gold on a 4H time frame. Continuing our discussions from yesterday, the metal is working on a recent downswing between $1520 and $1445 levels respectively. Since the intermediary trend has been corrective (lower) since $1557, resistance can be defined at $1520 while interim support (potential remains for yet another low) is at $1445 levels respectively. The counter trend rally since $1445 lows has managed to test 50% retracement of the above downswing at $1486 until now. Please note that probabilities remain for a push through $1491 which is 61.8% retracement before continuing lower again. Furthermore, the down trend line connecting highs since $1557 levels is also passing through $1491 levels and would provide resistance for a potential bearish bounce. On the flip side, if prices manage to break above $1520, it will be confirmed that gold is heading higher and is safe to buy on dips. For now, a safe trading strategy is to sell on rallies through $1491.

Trading plan:

Sell around $1491, stop at $1520, target below $1445

Good luck!

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Trading plan for EURUSD for December 18, 2019

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Technical outlook:

EURUSD is consolidating in a potential contracting triangle since hitting 1.1200 highs last week. It is seen to be trading around 1.1135 levels at this point of writing. It may break through 1.1200 level before producing a meaningful correction. Looking at the short term wave structure since 1.0981 lows, the euro has been under bulls' control of printing new highs and lows. It may reach 1.1230 level at least before correcting lower. Trading point of view, it is recommended to initiate fresh long positions here and also look to add further for higher targets. Probability remains high for a meaningful low to have been in place at 1.0981 levels as well and yet another push through 1.1200 would confirm the same. The trading strategy continues to be buying on dips and the entire structure looks constructive for bulls. Until prices stay above 1.0879 levels, EURUSD is expected to print higher levels towards 1.1500 at least.

Trading plan:

Long again and also look to add @ 1.1135, stop @ 1.0879, target is open.

Good luck!

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Trading plan on EUR/USD for December 18. The euro keeps growing.

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The British pound has shown a significant pullback as news of Prime Minister Johnson's desire to rule out any possibility of postponing Brexit was released. The euro, meanwhile, is still holding up.

There is no strong news yet, but a new wave of growth, a breakthrough up to 1.1200 and consolidation above, is expected with the euro.

Keep purchasing at 1.1035.

Possible purchases on the breakthrough of 1.1200.

In case of a decline to 1.1035, close purchases and sales.

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Indicator analysis: Daily review on December 18, 2019, on GBP / USD currency pair

Trend analysis (Fig. 1).

On Wednesday, the price may continue to move down with the first target support level of 1.2937 presented in a red bold line. If successful, the next lower target which is 1.2920 is a retracement level of 38.2% presented in a red dashed line.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - down;

- Bollinger Lines - down;

- Weekly schedule - down.

General conclusion:

On Wednesday, the price will continue to move down.

Another scenario is unlikely but possible. That is, from the level 1.3081 - 21, the average EMA is working up as presented in a black thin line, and the target 1.3284 is the resistance line presented in a black bold line.

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Indicator analysis: Daily review on December 18, 2019, on EUR / USD currency pair

The pair moved upward in the side channel on Tuesday. The price also moved up and tested the historical resistance level of 1.1166 presented in a blue dotted line and then rolled back down. On Wednesday, strong calendar news is expected for the euro at 08:30, 09:00 and 10:00 Universal time and for the dollar at 15:30 Universal time.

Trend analysis (Fig. 1).

On Wednesday, the price may begin to move down with the first target 1.1117 which is a pullback level of 38.2% presented in a red dashed line. If this level is reached, you can work on the top with the target 1.1176 which is the upper fractal.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - up;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

Wednesday is a downward trend.

An unlikely scenario is possible and that is, from a pullback level of 1.1117 presented in a red dashed line, the price will go down to the lower target 1.1091 which is a pullback level of 50.0% presented in a red dashed line.

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Hot forecast for GBP/USD on 12/18/2019 and trading recommendation

Boris Johnson made a commotion in the markets once again. However, with a negative result for the pound this time. The unexpected proposal by the British Prime Minister to submit to the House of Commons a bill prohibiting the extension of the transition period after Brexit was received by investors extremely negatively. The reason is that if there will remain some unresolved issues between the United Kingdom and the European Union during the year, and this is how much the transition period should last, then nothing will be done with this. Moreover, there is a very high probability that these issues will be just the trade, as well as the border between Ireland and Northern Ireland. Thus, the British business will suffer the most from this, which is reflected in the pound, which rapidly went down.

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At the same time, the pound had reasons to decline if you look at macroeconomic statistics. Although, not when it happened. After all, the data on the labor market in the UK, which were published about the same time when the pound declined, turned out to be at least neutral. Yes, the growth rate of average wages has slowed, and more than expected. Thus, if you look at salaries in their pure form, that is, without bonuses, then their growth rate decreased from 3.6% to 3.5%, which coincided with forecasts. But the growth rate of the average wage, taking into account premiums, decreased from 3.7% to 3.2%, with a forecast of 3.5%. However, this was offset by the fact that the unemployment rate remained unchanged, rather than rising as expected. In addition, employment has not decreased by 10 thousand, but increased by 24 thousand. So in general, the data are relatively good, since the slowdown in wage growth may well be due to employment growth.

Employment Change (UK):

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However, the weakening of the pound stopped, just before the publication of statistics in the United States, and after that, it remained at the reached values. We can say that American statistics justified the hasty weakening of the pound, as it turned out to be better than the boldest forecasts. Indeed, as expected, the number of new construction projects increased, but not by 2.5%, but by 3.2%. Nonetheless, the complete surprise was the increase in the number of building permits issued. After all, it was supposed to decrease by 3.2%, but it turned out that it increased by 1.4%. Thus, a decline in construction volumes should not be expected. Moreover, we have here the industrial production. The decline rate of which was supposed to increase from -1.3% to -1.6%, suddenly showed a slowdown in the decline to -0.8%. To simply put it, American statistics clearly presented a pleasant surprise.

Industrial Production (United States):

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Today, great interest is caused by data on inflation in the UK, which can show its decline from 1.5% to 1.4%. This will mean that inflation has only been doing what is decreasing since August. Investors do not really like such tricks, as this leads to an increase in the payback period of investments. Due to this, a further decline in inflation is an excellent reason to weaken the pound even more.

Inflation (UK):

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In terms of technical analysis, we see that the GBP/USD pair continues to follow in a downward direction, resulting in the complete refinement of the past rally and control rapprochement with the previously passed psychological level. In fact, we see the back of the V-shaped model, where the base plays a variable fulcrum. The total size of the model was about 440 points, and the formation time was less than a week.

Considering the trading chart in general terms, we see a rapid upward move, which basically has an emotional component, which is not a stable material of the structure.

It is likely to assume that the downward interest will continue to focus on the interest of market participants, where the psychological level of 1.3000, which is given special attention, will serve as a possible support.

Concretizing all of the above into trading signals:

- Long positions are considered in case of price fixing at higher than 1.3140.

- Short positions are considered in case of price fixing at lower than 1.3070.

From the point of view of a comprehensive indicator analysis, we see that indicators are gradually moving into the sales area, relative to all the main time sections.

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GBP/USD and EUR/USD are consolidating, the probability of resumption of growth remains high

On Tuesday, the economic data published in the United States looks quite stable and without a noticeable deviation from forecasts. As a result of which stock indices are close to the record levels reached the night before. Moreover, industrial production in November showed an increase of 1.1% after two months of decline, the economic optimism index from IBD / TIPP showed 57p - the highest since May, the dollar remains in consolidation mode against most currencies G10.

The markets are trying to assess the prospects for the development of trade negotiations between the US and China, since the demand for the dollar as the main refuge currency directly depends on their success. However, there is some lull in the markets, while players prefer to be careful. Perhaps, some clarity will come on Friday.

EUR/USD

The industrial decline in the eurozone did not end - this is the main conclusion of the publication on Tuesday of the PMI Markit indices. On the other hand, the composite index remained stable at 50.6p, which indicates a slight expansion, but it was achieved solely due to the services sector, which showed growth to 54.2p, and production PMI fell to 45.9p.

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The optimism that currently dominates the markets, based on the reduction of uncertainty due to the Brexit factor and the conclusion of the first phase of the US-China trade deal, has not yet been reflected in the PMI reports. The fourth quarter appears to be weak for the eurozone.

The ECB left the monetary policy unchanged at the last meeting, but announced its readiness to adjust its instruments. Perhaps this is what is happening - both inflation and economic growth are so unconvincing that there are reasons for another rate cut in March.

Technically, EUR/USD remains in the bullish channel, despite a shallow correction. The growth of the euro is supported by weak prospects for the dollar and an improvement in the prospects for global recovery. Now, support 1.1110/15. If the euro goes a little lower, then the chances of going sideways will increase. If support persists, then an attempt is likely to return to zone 1.1175 / 85.

GBP/USD

The pound is ready to begin a corrective reversal after the rapid growth before the election, for which there are several reasons.

Firstly, it is a weak economic growth. PMI indices published on Monday showed a slowdown in business activity across the entire spectrum of the economy - the index fell from 48.9p to 47.4p in the manufacturing sector, while in the services sector, it declined from 49.3p to 49p. The probability of seeing negative GDP growth rates in the 4th quarter increased, that is, the NIESR forecast of zero growth may be too optimistic.

Secondly, wage growth is slowing. Growth for 3 months through October inclusive amounted to 3.5% excluding bonuses, but 3.2% with bonuses. As we can see, both indicators are worse than forecasts and worse than data a month ago.

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The reduction in uncertainty gives a chance that growth will resume, but it is unlikely to end up sustainable since the growth in real wages (and adjusted for inflation is only 1.5% taking into account premiums) is ahead of productivity growth and growth in labor costs.

Thirdly, the political uncertainty, which would seem to have decreased after the convincing victory of the conservatives in the general election, is returning as negotiations with the European Union regarding the future trade agreement come to the fore. Moreover, negotiations will begin immediately after January 31, since the parties will have only 11 months to work out a full agreement, which is clearly not enough, given the world experience in developing such agreements. In turn, Boris Johnson introduced a bill to parliament that limits the possibility of extending the transition period, which increases the chances of breaking up relations without any agreement at all.

Technically, GBPUSD has not yet exhausted the strength of the upward impulse. Strong support is in the zone of 1.2960 / 3010, which will decide whether the pound will go into correction or continue to increase. Thus, the chances of resuming growth are still higher than the development of correction.

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Technical analysis: Important intraday Level For EUR/USD, December 18,2019

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When the European market opens, sucheconomic data as Final Core CPI y/y, Final CPI y/y, German Ifo Business Climate, and German PPI m/m will be unveiled. The US will publish the Crude Oil Inventories report. So, amid the reports, EUR/USD will move in a low to medium volatility during this day.TODAY'S TECHNICAL LEVEL: Breakout BUY Level: 1.1202. Strong Resistance: 1.1196. Original Resistance: 1.1185. Inner Sell Area: 1.1174.Target Inner Area: 1.1148. Inner Buy Area: 1.1122. Original Support: 1.1111. Strong Support: 1.1100. Breakout SELL Level: 1.1094. (Disclaimer)The material has been provided by InstaForex Company - www.instaforex.com

USD/JPY. Preview of the Bank of Japan December meeting

The yen is trading restrained, being within the 109th figure in anticipation of the December meeting of the Bank of Japan. As you know, the Japanese currency is primarily affected by the external fundamental background, while the most worrying issues for traders (trade war and Brexit) have received temporary permission at the moment. As a result, the yen froze in place, awaiting the outcome of the last meeting of the Japanese regulator this year.

Throughout 2019, the head of the Bank of Japan Haruhiko Kuroda repeated with enviable regularity that the Central Bank was ready to apply further easing of monetary policy, expanding incentives and lowering the interest rate. However, verbal interventions had little effect on the position of the Japanese currency - the market was mainly used to such rhetoric, which had no practical consequences. In addition, recent trends in the Japanese economy suggest that the regulator is unlikely to realize its threats at the December meeting, especially given the fiscal stimulus from the state against the backdrop of a temporary armistice of the United States and China in a trade conflict.

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Let me remind you that GDP increased immediately by 1.8% in annual terms during the third quarter. This result surprised investors, because the Japanese economy grew only by 0.2% according to initial estimates, while most experts expected to see growth of 0.6%. Nevertheless, the revised data exceeded even the most optimistic forecasts. Now, if we talk about quarterly calculation, then the situation is similar - according to revised data, the country's GDP grew by 0.4%, whereas initially it was reported only 0.1% growth. The structure of indicators indicates a significant increase in business investment - this indicator jumped 1.8% in quarterly terms with a growth forecast of 1.4%. The consumption level also increased. This indicator rose to 0.5% in the third quarter.

Meanwhile, inflation also showed positive dynamics in the last study period, although not as strong as GDP indicators. Thus, the consumer price index excluding the cost of fresh food (the main indicator for the Japanese regulator) in October increased by 0.4% year on year after rising 0.3% in September. However, this dynamics did not come as a surprise to most experts, since the indicator reached the forecast level.

According to some experts, a sharp increase in consumer spending in Japan is a temporary phenomenon, as this trend was recorded in anticipation of an increase in sales tax from 8% to 10% (the tax took effect on October 1). The last time this tax was raised 5 years ago, after which consumer sentiment worsened significantly. This time, the cabinet of ministers envisioned such a scenario: the government exempted a certain list of food products and soft drinks from the increased rate. However, there is a risk that consumer demand will show a downward trend in the near future, leaving the Japanese economy without a "driving force" (about half of the country's GDP falls on private consumption).

Nevertheless, recent inflationary data (which covered the period of the increased tax effect) showed minimal, but still positive dynamics. Therefore, the Bank of Japan may take a wait-and-see attitude on this issue at tomorrow's meeting.

In addition, it is worth recalling that the country's prime minister presented a package of fiscal incentives totaling $ 120 billion in early December. However, Shinzo Abe did not give any details, limiting himself to general phrases. Now, it is only known that the expenses will be distributed according to the supplementary budget for the current fiscal year (which ends in March) and for the budget for the next fiscal year (which accordingly begins in April 2020). In spite of that, the head of the Japanese government promised to tell in more detail about the stimulus package after it was approved at a cabinet meeting.

Thus, recent macroeconomic reports and the actions of the Japanese government can positively affect the position of members of the Bank of Japan in general, and Kuroda in particular. Most likely, the head of the Central Bank will repeat his rhetoric, which he announced at the end of November in the national parliament. He said that the regulator will continue to implement "aggressive monetary easing" and will take new measures if necessary. According to Kuroda, most of his colleagues support the idea of expanding incentives and lowering rates further into the negative area - but only if there is "a real threat to the economic momentum necessary to achieve the inflationary goal". By the way, in one of the subsequent speeches, the head of the Bank of Japan noted that in his opinion, the global economy has been showing "positive signals" recently, and the forecast for next year is "pretty good." He can also voice this speech at tomorrow's press conference.

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The yen may ignore the December meeting, considering that the Bank of Japan takes a wait-and-see attitude (which is most likely), and Kuroda announces the usual rhetoric. Meanwhile, i the Japanese regulator clearly announces further easing of monetary policy, the USD/JPY pair will react with significant growth, gaining a foothold in the 110th figure. Perhaps, the most unlikely scenario is one in which the yen will rise in price tomorrow. For example, if the Bank of Japan unexpectedly declares that ultra-soft credit policy is weak and that there are corresponding side effects, while allowing part of its incentive program to be curtailed. Such a scenario is extremely unlikely, although such thoughts have recently been voiced by one of the members of the Governing Council of the Central Bank of Japan (Maokoto Sakurai). However, his position is unlikely to be supported by colleagues – at least in the last meeting this year.

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Technical analysis: Important Intraday Levels For USD/JPY, December 18, 2019

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In Asia, Japan will release the Trade Balance and the US will publish some economic data such as Crude Oil Inventories. So there is a probability the USD/JPY pair will move with low to medium volatility during this day. TODAY'S TECHNICAL LEVELS: Resistance. 3: 110.02. Resistance. 2: 109.80. Resistance. 1: 109.56. Support. 1: 109.32. Support. 2: 109.11. Support. 3: 108.89. (Disclaimer)The material has been provided by InstaForex Company - www.instaforex.com

Fractal analysis of the main currency pairs for December 18

Forecast for December 18:

Analytical review of currency pairs on the scale of H1:

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For the euro / dollar pair, the key levels on the H1 scale are: 1.1261, 1.1239, 1.1198, 1.1156, 1.1134, 1.1103, 1.1078 and 1.1046. Here, the price is in the correction zone from the ascending structure on November 29. Meanwhile, consolidated movement is expected in the range of 1.1134 - 1.1156. The breakdown of the latter value will lead to movement to the level of 1.1198. Price consolidation is near this level. The breakdown of the level of 1.1200 will allow you to count on movement towards a potential target - 1.1261, upon reaching this level, we expect consolidation in the range of 1.1261 - 1.1239.

Short-term downward movement is expected in the range 1.1103 - 1.1078. The breakdown of the latter value will have the downward structure development on December 13. In this case, the potential target is 1.1046.

The main trend is the upward structure of November 29, the correction stage

Trading recommendations:

Buy: 1.1134 Take profit: 1.1154

Buy: 1.1158 Take profit: 1.1196

Sell: 1.1103 Take profit: 1.1080

Sell: 1.1076 Take profit: 1.1046

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For the pound / dollar pair, the key levels on the H1 scale are: 1.3264, 1.3193, 1.3146, 1.3035, 1.2988 and 1.2901. Here, we are following the development of the downward cycle of December 13. Short-term downward movement is expected in the range 1.3035 - 1.2988. The breakdown of the latter value will allow us to count on movement to a potential target - 1.2901, when this level is reached, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 1.3146 - 1.3193. The breakdown of the last value will lead to a long correction. Here, the target is 1.3264. This level is a key support for the downward structure.

The main trend is the descending cycle of December 13

Trading recommendations:

Buy: 1.3146 Take profit: 1.3190

Buy: 1.3195 Take profit: 1.3264

Sell: 1.3035 Take profit: 1.2990

Sell: 1.2986 Take profit: 1.2903

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9915, 0.9870, 0.9845, 0.9789 and 0.9745. Here, we are following the development of the downward structure of November 29. The continuation of movement to the bottom is expected after the breakdown of the level of 0.9789. In this case, the potential target is 0.9745. We expect a rollback to correction from this level.

Short-term upward movement is possibly in the range of 0.9845 - 0.9870. The breakdown of the latter value will lead to in-depth movement. Here, the target is 0.9915. This level is the key support for the downward structure of November 29.

The main trend is the downward structure of November 29

Trading recommendations:

Buy : 0.9845 Take profit: 0.9870

Buy : 0.9872 Take profit: 0.9913

Sell: 0.9786 Take profit: 0.9745

Sell: Take profit:

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For the dollar / yen pair, the key levels on the scale are : 110.52, 110.20, 109.96, 109.62, 109.23, 109.08 and 108.85. Here, we are following the formation of the initial conditions for the top of December 12. The continuation of the movement to the top is expected after the breakdown of the level of 109.62. In this case, the target is 109.96. We expect a short-term upward movement, as well as consolidation in the range of 109.96 - 110.20. For the potential value for the top, we consider the level of 110.52. Upon reaching which, we expect a rollback to the correction.

Short-term downward movement is expected in the range 109.23 - 109.08. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 108.85. This level is the key support for the upward structure from December 12.

Main trend: initial conditions for the top of December 12

Trading recommendations:

Buy: 109.63 Take profit: 109.96

Buy : 109.98 Take profit: 110.20

Sell: 109.23 Take profit: 109.08

Sell: 109.06 Take profit: 108.85

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3256, 1.3217, 1.3196, 1.3146, 1.3118, 1.3094 and 1.3034. Here, we continue to monitor the long-term descending structure of December 3. The continuation of movement to the bottom is expected after the breakdown of the level of 1.3146. Here, the target is 1.3118. Price consolidation is in the range of 1.3118 - 1.3094. For the potential value for the bottom, we consider the level of 1.3034. Upon reaching which, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 1.3196 - 1.3217. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.3256. We expect the expressed initial conditions to formulate for the upward cycle up to this level.

The main trend is the long-term descending structure of December 3

Trading recommendations:

Buy: 1.3196 Take profit: 1.3215

Buy : 1.3218 Take profit: 1.3252

Sell: 1.3145 Take profit: 1.3119

Sell: 1.3092 Take profit: 1.3040

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6957, 0.6932, 0.6900, 0.6879, 0.6863, 0.6832, 0.6808, 0.6791 and 0.6765. Here, the price is in an equilibrium situation: the ascending structure of December 10 and the descending of December 13. The continuation of the movement to the bottom is expected after the breakdown of the level of 0.6832. In this case, the target is 0.6808. Short-term downward movement, as well as consolidation is in the range of 0.6808 - 0.6791. For the potential value for the bottom, we consider the level of 0.6765. Upon reaching which, we expect a pullback to the top.

Short-term downward movement is expected in the range of 0.6863 - 0.6879. The breakdown of the last value will lead to an in-depth correction. Here, the target is 0.6900. This level is a key support for the downward structure and its breakdown will lead to a pronounced movement. Here, the first goal is 0.6932.

The main trend is the equilibrium situation.

Trading recommendations:

Buy: 0.6863 Take profit: 0.6876

Buy: 0.6880 Take profit: 0.6900

Sell : 0.6832 Take profit : 0.6808

Sell: 0.6807 Take profit: 0.6793

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For the euro / yen pair, the key levels on the H1 scale are: 122.87, 122.39, 122.04, 121.80, 121.38, 121.00 and 120.52. Here, the price is in correction from the rising structure on December 9 and forms the potential for the bottom of December 13. The continuation of the movement to the bottom is possibly after the breakdown of the level of 121.38. Here, the first goal is 121.00. Price consolidation is near this level. The breakdown of the level of 121.00 will lead to a pronounced downward movement. Here, the potential target is 120.52.

Consolidated movement is possibly in the range of 121.80 - 122.04. The breakdown of the last value will have the subsequent development of an upward trend, where the first goal is 122.39. This level is the key resistance for the top.

The main trend is the upward structure of December 9, the correction stage

Trading recommendations:

Buy: 122.41 Take profit: 122.85

Buy: Take profit:

Sell: 121.38 Take profit: 121.05

Sell: 121.00 Take profit: 120.60

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For the pound / yen pair, the key levels on the H1 scale are : 145.45, 144.52, 143.90, 142.86, 141.96, 141.40 and 140.31. Here, we are following the development of the downward cycle of December 13. The continuation of the movement to the bottom is expected after the breakdown of the level of 142.86. In this case, the goal is 141.96. Short-term downward movement, as well as consolidation is in the range of 141.96 - 141.40. For the potential value for the bottom, we consider the level of 140.31. Upon reaching this level, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 143.90 - 144.52. The breakdown of the latter value will lead to an in-depth correction. Here, the goal is 145.45. This level is a key support for the descending cycle of December 13.

The main trend is the descending cycle of December 13

Trading recommendations:

Buy: 143.90 Take profit: 144.50

Buy: 144.60 Take profit: 145.40

Sell: 142.84 Take profit: 142.00

Sell: 141.40 Take profit: 140.35

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USD/CAD approaching resistance, potential drop!

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Trading Recommendation

Entry: 1.32024

Reason for Entry:

61.8% Fibonacci retracement, 78.6% fibonacci extension, horizontal swing high resistance

Take Profit : 1.31000

Reason for Take Profit: 78.6% Fibonacci retracement, 100% fibonacci extension, horizontal pullback support

Stop Loss: 1.32700

Reason for Stop loss:

76.4% Fibonacci retracement, horizontal swing high resistance

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EUR/USD approaching support, potential bounce!

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Trading Recommendation

Entry: 1.11073

Reason for Entry: 38.2% Fibonacci retracement, horizontal overlap support, 78.6% fibonacci extension, breakout level

Take Profit : 1.11868

Reason for Take Profit:

horizontal swing high resistance

Stop Loss: 1.10616Reason for Stop loss:

61.8% Fibonacci retracement

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USD/JPY approaching support, potential bounce!

Trading Recommendation

Entry: 109.378

Reason for Entry: 61.8% retracement, 100% Fibonacci extension

Take Profit : 109.666

Reason for Take Profit: horizontal swing high resistance

Stop Loss: 109.190

Reason for Stop loss:

horizontal overlap support, 38.2% retracement, 100% extension

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Forecast for AUD / USD on December 18, 2019

AUD / USD

On Tuesday, the Australian dollar fell 32 points, breaking the support of the embedded price channel line on the daily chart. Under the pressure of technical divergence, we are waiting for the price reduction to the first target 0.6815, to the MACD line. Overcoming this line opens the second target of 0.6700 which will support the embedded line of the price channel.

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On a four-hour chart, the price has fixed below the MACD line, the Marlin oscillator is in the negative zone. We look forward to further price reductions.

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Forecast for EUR/USD on December 18, 2019

EUR / USD

On Tuesday, the euro traded at the Fibonacci level of 110.0% once again, which was helped by good data on the eurozone's trade balance - volume in October amounted to 24.5 billion euros against the expectation of 19.7 billion. In the USA, the macroeconomic factor was not weaker: industrial production in November increased by 1.1% against the forecast of 0.8%; while the foundations were laid for new houses of 1.37 million y / y against the expectation of 1.34 million y / y. Therefore, investors preferred to take profits after a week of previous growth.

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According to information from Japanese agencies, direct sales of the euro began during the Asian session today, as evidenced by higher trading volumes than on Monday. On the daily chart, divergence according to Marlin takes on a more pronounced form. Thus, we are waiting for the euro to decline to support the nested price channel line in the region of 1.1062.

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On the four-hour chart, the signal line of the Marlin oscillator penetrates into the zone of negative values - which is technically into the zone of a declining trend. Now, we are waiting for the trend to strengthen with price fixing below the MACD line (1.1133).

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Forecast for GBP/USD on December 18, 2019

GBP / USD

Yesterday, the pound fell by 202 points, blocking not only Friday's growth, but also at least December 5. On the daily chart, divergence has formed on the Marlin oscillator, while the signal line is attacking the boundary with the territory of the "bears " The nearest goal of the price is the area of coincidence of the Fibonacci level of 161.8% with the indicator line of MACD - 1.2965. Now, we expect a further decline in the pound to the most significant Fibonacci levels: 123.6% at the price of 1.2730 and 100.0% at the price of 1.2582, with the break down of the support.

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On the four-hour chart, the price is developing under the indicator lines of balance and MACD. Meanwhile, the Marlin indicator is in a downward position.

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EUR/USD. December 17. Results of the day. Saving the European currency depends only on the States and Donald Trump

4 hour time-frame

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Amplitude of the last 5 days (high-low): 35p - 75p - 51p - 93p - 35p.

Average volatility over the past 5 days: 58p (average).

On Tuesday, December 17, the currency pair EUR/USD, continues, albeit not strong, but growth is approaching local maximums again, and around which, it has turned down several times. During the second trading day of the week, not a single important macroeconomic report was published either in the United States or in the European Union. Thus, in principle, the strengthening of the euro can be called unfounded. Nevertheless, a report on industrial production in the United States is still planned for today, which has a rather high forecasted values, but it is not known whether the market will follow it, as we have already noted that the euro does not always respond to macroeconomic statistics now. At the same time, the euro has managed to maintain its position so far which it won from the US dollar with great difficulty, while the pound quite logically began to fall into the abyss. Although, we still believe that the euro will begin to decline again sooner or later and this will not be an on-correction correction, but a strong downward trend. In yesterday's article, we already listed the reasons that are the basis for strengthening the American currency. Today, we'll try to understand the question - are there any reasons for the euro to strengthen?

At first glance, the answer is almost unequivocal - no. Macroeconomic statistics in the Eurozone continue to disappoint even the most optimistic traders, the ECB monetary policy remains "ultra-soft", and rates remain "ultra-low," and even this is not enough to prevent the European Union economy from showing signs of slowdown. In the United States, everything is much better with both "numbers" and monetary policy. But what's worse in the States is only with a geopolitical issue, as well as a purely political one. Thus, we believe that only a new escalation of trade wars between the United States and other countries can adversely affect the exchange rate of the American currency. In addition, we believe that only a severe political crisis can negatively affect the dollar. Thus, in order to count on a long and serious growth of the European currency, we need either the impeachment of Donald Trump, or the igniting of new trade wars around the world by the odious President in these conditions.

With the impeachment of Trump, everything is easy and complicated at the same time. The main problem remains in the US Senate, most of which consists of Republicans, who, of course, will not vote for Trump's resignation. However, at the same time, their decision should be justified, and not just from the category of "we do not want to vote for impeachment." Thus, much will depend on the explanations themselves of the decision of the US Senate to refuse approval of the impeachment of the president. However, we still believe that impeachment will not happen. This whole story, inflated by the democrats, is aimed only at achieving one goal - to lower as much as possible the political ratings of Donald Trump, to show as many of his "bad" sides as possible before the 2020 presidential election. The US president is certainly to blame, since he simply "framed" and gave the Democrats a chance to unleash all this political battle. So, will the Democrats be able to reach their goal? We will find out later.

As for trade wars, the connection here between them and the depreciation of the dollar should go through macroeconomic statistics and the Fed. The more the States is involved in trade wars, the greater the probability that their economies will suffer, and the greater the probability that the Federal Reserve will cut its key rate, which will reduce the investment attractiveness of the United States and reduce the willingness of investors to invest in American companies and deposit their funds to American banks, and the more statistics worsen, the more the Fed (in theory) will lower its key rate. Thus, no matter how trivial it may sound, the general economic situation in the United States should become worse than in the European Union in order for the euro to begin to rise in price. As we all understand, it is still very, very far during this time. That is why we believe that the general fundamental background remains unambiguously In favor of the dollar, and it is the US currency that will continue to rise in the long term. The only reason why the US currency has "taken a break" is the inability to constantly move the pair in one direction.

From a technical point of view, the upward movement has resumed now, but it is unlikely to be strong and will go beyond the previous local maximum. Tomorrow will be the speech of the ECB President Christine Lagarde and the publication of the consumer price index in the EU. Potentially, both of these events can put pressure on the euro. Thus, we are waiting for the pair to turn down and resume the downward movement today or tomorrow.

Trading recommendations:

EUR/USD is trying to resume the upward movement. Thus, long positions formally remain relevant with targets at the resistance level of 1.1196 and 1.1202, although we recommend to be wary of opening long positions. In addition, it is recommended to sell the euro/dollar pair after breaking through the Kijun-sen line, in small lots, with the first targets - volatility level of 1.1086 and the Senkou span B line.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicators window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movements:

Red and green arrows.

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GBP/USD: Euphoria caused by the Tory victory ends. What to expect next from the pound?

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The euphoria caused by the victory of the Tories in the early elections in the UK, has virtually came to an end. Apparently, the prospect of an orderly Brexit was completely won back at the moment when it became known that the conservatives had gained enough seats to form a parliamentary majority. Against this background, the GBP/USD pair tested the resistance of 1.3500, however, it failed to gain a foothold above.

Now, fixation by investors of the results of the elections, as well as news that the head of the British Cabinet of Ministers Boris Johnson intends to exclude the possibility of extending the transition period after the country's exit from the European Union, led to a correction in GBP/USD.

In addition, the Prime Minister seems to drive himself into a corner. Once he promised to withdraw Misty Albion from the EU before October 31 or die in the gutter, he is now going to put an end to the retreat if it is not possible to agree with Brussels. This circumstance resuscitates the idea of a "hard" Brexit and puts pressure on the pound, but it is worth recognizing that the current situation is far from September. Investors still believe that the "divorce" will take place before January 31.

What to expect further from the pound?

According to a Reuters insider, serious sellers are near the $ 1.35 level, so you should not depend on breaking through it in the next two to three weeks.

Obviously, it is necessary to improve macro statistics in the UK, which has recently left much to be desired to continue the GBP/USD rally.

On the other hand, Societe Generale experts doubt that the British government will succeed in patching up holes that have arisen due to severance of ties with the EU, but there is hope that a gradual increase in business activity, a still strong labor market, and the fiscal stimulus promised by B. Johnson will be able to contribute to reducing the difference between potential and actual GDP, which will support the bulls on GBP/USD.

As for the Bank of England, the regulator is unlikely to want to step on the old rake again. Mark Carney and his colleagues lowered the interest rate immediately after the Brexit referendum in 2016, fearing the consequences of a break with the EU for the British economy. Now, they are unlikely to soften monetary policy, but rather prefer to see how an orderly Brexit will affect GDP.

If we add the factor of capital inflow to the passive position of BoE and to the improvement of macro statistics in the UK, given the fact that British stocks now look cheap compared to their American counterparts, the forecast of HSBC experts at 1.45 for the GBP/USD pair does not look like something out of a number of fiction. In this regard, consolidation in the range of 1.3000-1.3350 makes sense to use for the formation of medium - and long-term long positions.

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GBP/USD. Johnson's populist move scared the British currency

Today, the pound was under pressure from a fundamental background - both from the side of macroeconomic reports and from the future prospects of Brexit. The British currency could not withstand the onslaught and collapsed against the dollar by almost 200 points, heading towards the 31st figure. For the first time since the announcement of the results of the parliamentary elections, the GBP/USD pair has shown such a powerful downward movement.

The usual pessimism returned to the market regarding further relations between London and Brussels - and this despite the 100% probability that the new composition of the House of Commons will approve the long-suffering agreement with Europe. But now, the market is discussing more distant prospects, evaluating the "negotiability" of the parties in the transition period. Today, Johnson took the first step in this direction, which seemed very "unfriendly" to traders. Although, according to some experts, the prime minister begins to artificially escalate the situation, while resorting to banal political blackmail.

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He used similar mechanisms in the previous months of his reign, instilling fear of the "hard" Brexit. In his opinion, Brussels made certain concessions only after he saw the seriousness of his intentions. According to him, Theresa May was ready "indefinitely" to prolong the negotiation process, so the Europeans firmly stood their ground, not fearing the consequences of the chaotic Brexit. However, the European Union "showed flexibility" in the negotiations as soon as the negative scenario began to take on real features, which Johnson took advantage of when he concluded the deal. At least, the current prime minister sees the situation exactly like that. Therefore, in preparation for a months-long transition period, he begins to "tighten the screws" ahead of time, occupying the most advantageous (in his opinion) position in the negotiations.

So, today, it became known that Johnson's Cabinet of Ministers plans to legally exclude the possibility of prolonging the transition period after the approval of the Brexit deal. Members of the government made corresponding changes to the bill regulating the process of the country's exit from the Alliance. These amendments suggest that the transition period will end on December 31, 2020 and will not be extended regardless of the outcome of the negotiations.

On the one hand, conservatives with these amendments fulfill their party promises - Boris Johnson's election rhetoric was based on Britain leaving the EU as soon as possible. The impressive result obtained by the conservatives in the elections obliges the prime minister to pass from words to deeds, which he actually did. At the same time, he demonstrated to Brussels the seriousness of his intentions regarding his further actions. For several months, Johnson warned that he intends to withdraw the country from the European Union "with or without a deal." Now, this threat has survived reincarnation. However, we are talking about the timing of the transition period in this case. During 2020, London and Brussels need to conclude a free trade agreement, but many investors doubt that the parties will have time for such a relatively short time to find a common denominator, especially given the hard line of the British Prime Minister.

In particular, the EU's chief negotiator, Michel Barnier, said a few months ago that some points of future relations would have to be coordinated "for several years". If Britain does not have time to find a common denominator with the EU and refuses to extend the transition period, then the country will be forced to focus on the conditions of the WTO, with all the ensuing consequences. In addition, Mark Carney has repeatedly warned that this scenario will be one of the worst for the British economy.

Against the backdrop of such prospects, the pound collapsed throughout the market, including paired with the US currency. Today, the labor market data that were released put additional pressure on the Briton. And although unemployment remained at the same level (3.8% with a forecast of growth of up to 3.9%), the number of applications for unemployment benefits increased significantly - to almost 29 thousand (with a forecast of 20 thousand). Salaries are also disappointing. In October, the average earnings level (including premiums) grew to just 3.2% - this is the weakest growth rate since April this year. However, this indicator came out better than expected without taking into account premiums, being at around 3.5%. Unfortunately, this fact did not help the pound, which continues to fall to the basket of major currencies.

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However, the "political factor" may have a short-term effect on the market. The above amendments are likely to be adopted already at the end of this week, but this does not mean that Britain will draw the final line, indicating the deadline for the transition period. Obviously, if necessary, it will be possible to amend the text of the adopted law, thereby prolonging the transition period. After all, it is worth recalling that Johnson at one time almost swore to his party members that he would not postpone Brexit's term - but, after a few months, he still agreed to this step. Therefore, in this case, a similar scenario is not ruled out.

In other words, we are dealing with the populist behavior of an experienced politician, who marked the start of the next stage of negotiations with Brussels. But the transition period is still more than a year away, so the devaluation of the pound is now clearly too early.

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GBP/USD and EUR/USD: Slowing wage growth in the UK is another bad signal for the economy. The ECB could cut rates in March

The pound is under pressure again and continues its downward correction after the rapid growth that occurred against the backdrop of the victory of the Conservative Party of Great Britain in parliamentary elections. Yesterday's weak report on the service sector, together with today's data on the UK labor market, where there was a sharp increase in the number of applications for unemployment benefits, intensified discussions once again about the likely reduction in interest rates in the UK next year. The unemployment rate itself remained unchanged from August to October 2019.

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The problem, in addition to the growth in the number of applications, was also represented by the growth rate of wages, which turned out to be the lowest between March and May. This suggests a weakening inflationary pressure, which can also strengthen discussions on lowering interest rates without fears of a sharp inflation jump.

According to the data, the unemployment rate was 3.8%, and unemployment among women fell to 3.5%. However, applications for unemployment benefits in the UK in November rose by 28,000, turning out to be much worse than the forecasts of the economists. In total, the number of unemployed in the UK fell by 13,000 from August to October 2019 according to the MOT.

As I noted above, the pressure on the pound was exerted by the report on the slowdown in wage growth, which will negatively affect retail sales by the end of the year. Thus, wages increased by only 3.2% compared to the same period of the previous year, while the indicator increased immediately by 3.6% in the previous three-month period. Due to this, economists expected higher wage growth. In this case, the average weekly earnings rose from August to October by 3.5% against 3.6% in the previous three-month period. Now, reducing the number of vacancies is an alarming signal for the economy, as many employers refrain from making decisions on hiring new employees.

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If we consider the slowdown in wage growth in the context of increasing inflationary pressure, the probability of reducing, if necessary, the Bank of England interest rates increases significantly. However, it is worth recalling that during the last meeting, the English regulator, on the contrary, stated that it was ready to raise interest rates, provided that Brexit did not have too negative an impact on the country's economy.

In addition, pressure on the pound is also linked to increased fears that the UK might exit the EU at the end of next year without a new trade agreement. This is discussed in more detail in my previous reviews. The actions of Boris Johnson indicate this precisely so far after the victory of his party in the elections. If a crude agreement is signed with a number of shortcomings, the country's economic prospects will be overshadowed, and the pound will return to the downward channel at the beginning of next year, as additional measures of stimulating the economy by the Bank of England will be required.

As for the technical picture of the GBP/USD pair, the correction has reached quite important levels, from which profit-taking on short positions is noticeable, as well as the gradual return of large buyers to the market. Meanwhile, support 1.3160 is a quite important level, on which a further upward trend may depend. Bulls, in turn, need a return to resistance 1.3220, which will give buyers confidence and throw a pair of back to the highs of 1.3270 and 1.3320.

EUR/USD

The European currency continues to trade in a narrow side channel after the evidence that the positive balance of foreign trade in the eurozone increased this year in October. However, this was only able to keep EUR/USD from another decline, while large players do not seek to return to the market. According to the report, the balance rose to 28.0 billion euros against 13.2 billion euros in October 2018, which is clearly a good indicator.

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Meanwhile, S&P Global Ratings predicts that the European Central Bank will lower its deposit rate by another 10 basis points next year in March if the situation in industry and the economy does not improve. Apparently, the asset repurchase program will also be expanded. Currently, the deposit rate is at the level of -0.5%.

Today, data on industrial production in the US for November of this year are expected, and a statement by Mark Carney, Bank of England Governor, will also take place late at night.

As for the technical picture of the EUR/USD pair, it remained virtually unchanged. At the moment, the bears will strive to push the trading instrument below the support of 1.1110, which will lead to the lows of 1.1070 and 1.1040. On the other hand, problems for euro buyers may begin in the resistance area of 1.1165, with an upward correction, which can be continued anytime soon. Thus, larger players will prefer protection level 1.1200, which is a kind of psychological level. Its breakthrough will lead to the continuation of the upward trend of the European currency.

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EUR/USD: throne under the dollar began to wobble, but the dollar has no plans to say goodbye to it

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The supporters of the single European currency hope that the signing of a trade deal between Washington and Beijing will help to restore the eurozone economy, however, data on the business activity of the currency block for December showed that it is too early to talk about it. On the other hand, the fans of the dollar are dreaming of continuous economic expansion and new highs of the S&P 500 index. But unfortunately, no matter how strong the stock market, the inversion of the yield curve of the treasuries still leads to a recession, which could be seen, for example, twelve years ago.

Meanwhile, the PMI in the manufacturing sector in Germany amounted to 43.4 points in December against 44.1 points recorded in November. This was the first reduction in the indicator over the past three months. Its European counterpart is declining for the eleventh consecutive month. At the same time, the modest value of the composite PMI index of 50.6 indicates that the economy of the currency block in the fourth quarter will expand only by 0.1% and it is clear that it is not in a hurry to recover. Thus, it is still difficult to count on the V-shaped GDP movement in the eurozone given that many US duties on Chinese imports remain in force.

It is obvious that the trade war between the US and China caused the greatest damage to open economies, where the share of exports in GDP is significant. A clear example of this is Germany.

The disruption of the supply chain associated with the protectionist policies of Donald Trump has led to a slowdown in international trade. The leading dynamics of this indicator over the American purchasing managers index, as a rule, leads to EUR/USD rally , and vice versa. Due to the fact that the dollar usually strengthens if the US economy outperforms its global counterpart. The same can be said of international trade.

The fate of the dollar will also depend on which indicator grows faster - the American PMI in the manufacturing sector or global trade.

As a result, the USD index slipped to five-month lows amid de-escalation of the trade conflict between the US and China, as well as clarification of the situation around Brexit.

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Positions of the dollar have not looked so uncertain since the beginning of 2018, and thus, more and more strategists are waiting for a further weakening of the American currency, but not everyone is sure of this.

In particular, Goldman Sachs experts advise the "bears" on the dollar to "hold their horses."

"For the further significant decline in the dollar, the euro should strengthen significantly, and this seems unlikely so far. The euro faces obstacles due to the risk of introducing new US tariffs on European goods. Despite the fact that Washington and Beijing have agreed on the first part of the deal, this is just a small step towards ending the trade war. However, investors may gain more confidence in dollar shorts to a wide range of currencies if economic growth outside the US accelerates." they said.

In addition, the yield curve of American Treasuries inverted about four months ago, which usually with a time lag of twelve months signals the onset of a recession in the United States. Now, when US stock indices do not stop updating historical highs, and the Fed is talking about the strength of the economy, this seems unlikely, but the situation may change by August.

If the European economy begins to recover, and US GDP is facing a recession, the EUR/USD pair will confidently move up to 1.15. On the contrary, if the economy of the currency bloc continues to slow down, and the US GDP grows steadily and outpace international trade, the pair may return to 1.08–1.09 again.

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Four reasons to buy oil

The quotes for Brent and WTI futures soared to September highs, thanks to the OPEC + agreement, the willingness of the United States and China to sign a Phase 1 trade deal, positive macroeconomic statistics on the Celestial Empire and the victory of the Conservative Party in the parliamentary elections in Britain. The last time the variety of North Sea was above $ 65 per barrel was during the attacks on Saudi Arabia, and if it was a shock during the first half of autumn, then now, it is a set of events that is quite logical from the point of view of fundamental analysis.

Let investors doubt that an increase in OPEC + liabilities from 1.2 to 1.7 million b / s will be able to ensure stable price increases, however, according to the cartel itself, the agreement will balance the market in 2020. In addition, the Organization of Petroleum-producing Countries, and the IEA believe that the decline in international trade has reached a low point. The deal on the extension of the Vienna agreement to reduce production is very constructive according to Black Gold Investors. It helps smooth out the factor of increasing shale oil production in the USA. At the same time, further dynamics of black gold will depend on global demand.

In this regard, Washington and Beijing's willingness to sign a trade agreement and positive macro statistics from China support the Brent and WTI bulls. The Celestial Empire, according to the White House, is ready to increase imports of American goods to $ 200 billion in two years, including imports of agricultural products - to $ 40-50 billion. In response, the States reduced tariffs from 15% to 7.5% by $ 120 billion in supply from China and have not introduced new ones since December 15. US stock indices saluted information about the imminent conclusion of the agreement with new historical highs. Thus, it is interesting that speculators on the eve of an important event increased their net longs by WTI by 52%, by Brent - by 13%.

Dynamics of speculative positions in oil

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Moreover, oil bulls were supported by the acceleration of Chinese industrial production and retail sales from 4.7% to 6.2% and from 7.2% to 8% in November. China is the largest consumer of black gold, so the positivity from its economy, as a rule, contributes to higher prices. Indeed, the Asian country imported 11.8 million b/d of oil in November, breaking the record set by the United States in June 2005 at 10.77 million b/d.

Dynamics of American and Chinese oil imports

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At first glance, such a factor as the victory of the Conservatives in the parliamentary elections in Britain is not able to influence the situation in the black gold market. In fact, reducing the risks of a disorderly Brexit to a minimum in the medium term should support both the pound and the euro. A significant share of these currencies in the structure of the USD index means that a decrease in political risks in Foggy Albion will negatively affect the US dollar. Moreover, as Brent and WTI are traded in US currency, its weakness will contribute to the continuation of the rally of the main grades of oil.

Technically, the chances of implementing the target by 88.6% for the Double Base pattern increased after Brent went beyond the green triangle and consolidated above support at $ 63.8 per barrel.

Brent daily chart

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