Preview of the week: Vagaries of "thin" market, Canada and background statistics

The foreign exchange market is gradually falling into pre-holiday suspended animation. During the period of Catholic Christmas, when the main trading floors of the world are closed, traders focus on secondary fundamental factors or related topics that are hypothetical in nature. The "thin" market is particularly sensitive, therefore irregular price fluctuations cannot be ruled out, especially against the background of an almost empty economic calendar.

It is noteworthy that even the following week, which is the New Year's holiday, it will be more eventful than the current one which is the celebration of Christmas season on December 25 and 26 with a complete fall out of the work schedule. While, for example, releases are scheduled for December 31, and from January 2, the market is entirely included in the mainstream which is the publication of the Fed protocol, German inflation, and Nonfarm unemployment. This week, traders, in some parts, prefer to be out of the market summing up the results of the outgoing year and assessing the prospects for 2020.

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Nevertheless, the macroeconomic calendar of the currency market on December 23-27 is not completely empty. For example, the main news for this day will come from Canada where at the start of the American session they will publish key data on the growth of the national economy. Let me remind you that earlier this month, the Bank of Canada surprised the market with its "hawkish" attitude. This is contrary to the expectations of most analysts. The regulator not only did not soften the tone of its rhetoric but also showed optimism regarding the growth prospects of key macro-indicators of the country. Such a scenario was a surprise to the market, so the "looney" instantly collapsed to the base of the 31st figure. True, the bears did not achieve their main goal of reaching the 30th figure, and last week, the bulls seized the initiative amid a general strengthening of the American currency. Today, the looney has a chance to take revenge but only if the release comes out better than expected. According to the consensus forecast, Canada's GDP in October will grow to 0.1% on a monthly basis and slow down to 1.4% annually. It is worth noting that from July to September, the country economy gradually grew from 1.4% to 1.6%, so this rollback will have a negative impact on the Canadian dollar, although this scenario is taken into account in prices. If the release comes out in the green zone, the USD / CAD pair may return to the base of the 31st figure. s GDP in October will grow to 0.1% on a monthly basis and slow down to 1.4% annually. It is worth noting that from July to September, the country economy gradually grew from 1.4% to 1.6%, so this rollback will have a negative impact on the Canadian dollar, although this scenario is taken into account in prices. If the release comes out in the green zone, the USD / CAD pair may return to the base of the 31st figure. s GDP in October will grow to 0.1% on a monthly basis and slow down to 1.4% annually. It is worth noting that from July to September, the country economy gradually grew from 1.4% to 1.6%, so this rollback will have a negative impact on the Canadian dollar, although this scenario is taken into account in prices. If the release comes out in the green zone, the USD / CAD pair may return to the base of the 31st figure.

A pair of EUR / USD today will respond to minor US statistics. First of all, we are talking about data on the volume of orders for durable goods in the United States. In October, the indicator showed positive dynamics, having exited from the negative area (similarly, excluding transport). In November, experts predict conflicting dynamics where the overall indicator would slow down to 0.2% from the previous value of 0.6%, and then grow to 1.5%, without taking into account the transport. If both indicators collapse into the negative area, the dollar may be under pressure. Also, data will be published in the real estate market of the USA today which is about the volume of home sales in the primary market. This figure should recover slightly after the decline in October. However,

On Tuesday, December 24, most European trading floors will be closed for Christmas Eve. During the American session, the only macroeconomic report will be released which is about the Fed-Richmond manufacturing index. It is less influential, like its "brothers" (production indices of New York or Philadelphia), but taking into account an empty calendar can provoke volatility, especially if it deviates from the forecast values. According to the forecast, the index will exit the negative zone and reach the 1st point. This is a rather weak result because, at the beginning of this year, the indicator went in the range of 10-16 points. And if real numbers turn out to be lower than forecasted, then the dollar may again be under background pressure.

As I said above, December 25 and 26 fall out of the work schedule and certain news will come from Japan (for example, the head of the Bank of Japan will speak on Thursday), however, these fundamental factors, as a rule, do not significantly affect the market.

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Nevertheless on Friday, the market "revives" as does the economic calendar, because first of all, the protocol of the last meeting of the ECB is quite interesting. Let me remind you that this was the first meeting chaired by Christine Lagarde. Despite many fears, she did not "drown" the euro as her rhetoric was restrained and balanced. Lagarde made it clear that the regulator will so far take a wait and see attitude, although it is ready to resort to further measures to stimulate the economy. The published protocol will make it possible to understand what moods are in the ECB camp, especially after the release of the inflation data.

In general, it is likely that in the coming days there will be "flat silence" on the foreign exchange market unless the financial world is shocked by any force majeure factor. For example, another Trump mood swings towards China.

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Trading plan on EUR/USD for December 23. The growth of euro is stopped, but not cancelled

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News on Monday morning: China is reducing import duties on a wide range of goods namely frozen meat, pharmaceuticals, and some high-tech goods. This decline comes amidst an attempt by the US and China to finally reach an agreement on a "phase 1" of trade negotiations. Perhaps, this reduction of fees will help stop the Trump-China trade war.

In other aspects, markets stop for the Christmas holidays. Christmas in the West is on December 25 (from 25 to 26).

EUR/USD: Growth is stopped but not reversed.

The euro could not hold above the level of 1.1100, and may experience a new decline.

Continue buying from 1.1035, and stop at the breakeven point of 1.1035.

Possible purchases at a breakthrough of 1.1200 up.

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Technical analysis of ETH/USD for 23/12/2019:

Crypto Industry News:

Paul Gosar, an Arizona congressman, presented a bill ultimately aimed at ensuring regulatory transparency of the cryptocurrency industry in the United States, according to an article by Forbes. The 2020 Cryptocurrency Act sets out which federal agencies should regulate each type of crypto asset.

One of the key things introduced by the bill is the definition of three types of cryptographic assets; cryptocurrency goods, cryptocurrencies, and crypto securities.

Cryptocurrency goods are defined as economic goods or services, stored on Blockchain, convertible and which the market serves regardless of who produced them.

Cryptocurrencies are defined as representations of the US currency or Blockchain-based synthetic derivatives. This includes reserve-secured stablecoins and currencies identified by decentralized oracles or smart contracts.

Crypto-securities include all debt, equity and derivative instruments in the Blockchain chain, other than those that are serviced and registered as money complaint companies.

Each type of crypto-asset would fall under the jurisdiction of another regulatory authority that would act as a "Federal cryptographic regulator" or "Federal regulator of digital resources" for this type. Unsurprisingly, the Futures Commissions Commission (CFTC) would be the agency responsible for cryptocurrency goods, and the Securities and Exchange Commission (SEC) would deal with crypto securities. FinCEN would then be left to settle cryptocurrencies.

Although it remains to be seen how far the bill will go, it will probably receive support from the cryptocurrency industry, which has been demanding clarity for some time.

Technical Market Overview:

The ETH/USD pair has moved higher towards the level of $136.98, but made a local high only at the level of $134.16 so far and is trading currently around the Weekly Pivot located at the level of $129.41. The move-up has been so far made only in three waves, so it is a typical counter-trend move and might terminate soon. The nearest technical support is seen at the level of $127.91 and the nearest technical resistance is seen at the level of $136.98.

Weekly Pivot Points:

WR3 - $170.20

WR2 - $155.54

WR1 - $143.98

Weekly Pivot - $129.41

WS1 - $117.21

WS2 - $102.45

WS3 - $89.76

Trading Recommendations:

The best strategy in the current market conditions is to trade with the larger timeframe trend, which is down. All the shorter timeframe moves are still being treated as a counter-trend correction inside of the downtrend. When the wave 2 corrective cycles are completed, the market might will ready for another wave up.

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GBP/USD and EUR/USD: The approval of the Brexit agreement in parliament without a trade agreement does not please the buyers

The pound ignored Friday's vote, where the British Parliament supported the Brexit agreement proposed by Boris Johnson. 358 votes for the agreement were cast against 234 votes, and the lack of growth of the pound is due to the fact that the victory of the Conservative Party is already clear, and the majority in Parliament will allow the Brexit agreement to pass through it without problems. It is worth noting that the vote in Parliament is important but is not the final step towards UK's exit from the EU on January 31. The final approval will take place in January next year, as the document will have to go through another vote in the House of Commons, followed by approval in the House of Lords.

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Now, all the attention of traders and market participants will be shifted to what path the development of new trade relations between UK and EU will take. If compromises are reached on a number of important issues, this will support the economy in the medium term, as well as return demand for the British pound. A tougher exit scenario without an agreement, or an agreement in the "raw" form that many experts fear, will continue to put pressure on the pound.

Data showing the UK's economy growing at a faster pace in the 3rd quarter of this year than previously thought, supported the pound on Friday. Growth was driven by services and exports, however, it is not necessary to talk about a return to a more or less stable growth rate, as we remember that the December report on the services sector pointed to its reduction, indicating a sluggish economic recovery by the end of this year.

According to the report of the National Bureau of Statistics, UK's GDP in the 3rd quarter of 2019 grew by 0.4% compared to the 2nd quarter, contrasting economists' prediction of growth in only 0.2%. On an annualized basis, growth was 1.7%. In the 3rd quarter, compared to the same period last year, it grew by 1.1%.

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Growth in borrowing demand is also a good signal for the economy. According to the report, net borrowings of the UK public sector gained to 5.6 billion pounds in November, while economists had expected it to amount to 5 billion pounds. In total, during the year, borrowing will amount to 42.4 billion pounds, which is 5.2 billion pounds less. It should be noted that the moderate fiscal stimulus observed throughout this year and fiercely contested by Boris Johnson's opponent Jeremy Corbyn could have a negative impact on the economy, which is already one step away from recession due to uncertainty with Brexit and low global economic growth themes .

As for the technical picture of the GBP / USD pair, the bears almost pushed the trading instrument in December to the lows in the area of 1.2880. Only the level 1.2985 separates them from updating, which sellers will target today. Bulls need to return to the resistance of 1.3075, and a breakthrough of which will hit the stop orders of the bears, leading the GBP / USD to a maximum of 1.3130.

EUR / USD

Demand for the US dollar returned after a series of fundamental statistics that managed to please traders by the end of this year.

According to the report of the US Department of Commerce, the US GDP growth rate in the 3rd quarter of this year remained unchanged at a fairly high level. Thus, the annual GDP growth was 2.1%, which fully coincided with the previous estimate of the Ministry. Let me remind you that in the 2nd quarter of this year, the economy showed growth of 2.0%.

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It is expected that in the 4th quarter, economic growth will slow down, and at the end of the year will be 1.8%.

The US dollar also received support after data indicating that US households increased their spending in November. If everything is clear with expenses, on the eve of New Year, they will be increasing, and this steady growth of incomes confirms the good state of the economy and the labor market. According to the US Department of Commerce, spending in November increased by 0.4% compared to October, and personal income of Americans over the same period added 0.5%. This is in contrast to economists' expectation of household spending to rise 0.4 percent and personal income to rise at only 0.3 percent.

University of Michigan's report on Americans improving their economic prospects also helped the dollar strengthen against the euro and the pound. Households, in particular, were pointed to have improved prospects. According to the data, the final index of consumer sentiment in December rose to 99.3 points, while economists expected it to be at 99.2, as in November. The rise in sentiment is not surprising, as rising incomes have a positive effect on households' attitudes to the economy as a whole.

On the other hand, the activity report from the Federal Reserve Bank of Kansas City, which no one paid attention to, is not so positive. According to the data, the composite index fell to -8 points in December against -3 points in November. The decline was due to low manufacturing activity, which fell for the sixth month in a row.

On Friday, US President Donald Trump made a number of statements on the subject of a trade agreement with China. He noted that he had a very good conversation with Chinese leader XI regarding the trade agreement, and he is pleased that China has started to make large purchases of agricultural products.

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Technical analysis of BTC/USD for 23/12/2019:

Crypto Industry News:

Bitcoin users who use the CoinJoin privacy protection tool to increase the anonymity of their transactions face a serious warning after the Binance exchange has frozen a withdrawal request.

In an ongoing Twitter debate that began on December 19, a user named Catxolotl submitted the information that appeared to correspond with employees of Binance Singapore stating that they had initiated an "investigation" regarding the withdrawal of an unknown amount of Bitcoins.

They said the reason was the use of CoinJoin by Catxolotl through the wallet provider Wasabi. CoinJoin refers to the method of grouping Bitcoin transactions, "mixing" UTXO (unspent transaction outputs) and hiding who sent to which address in order to increase the privacy of all users.

According to Binance, including CEO Changpeng Zhao (known as "CZ"), regulations in Singapore meant that CoinJoin transactions were no longer desirable.

However, at this time Binance Singapore does not tolerate any transactions directly and indirectly related to gambling, P2P, and especially Darknet / Mixer sites.

Technical Market Overview:

The BTC/USD pair has made another wave up with a temporary high located at the level of $7,581. It means, the price has broken back to the channel and broke through the brown trend line resistance. Currently, the market is in the corrective cycle and might soon be testing the nearest technical support located at the level of $7,389. The moves up should be continued once the correction is over. The next target for bulls is seen at the level of $7,710.

Weekly Pivot Points:

WR3 - $8,907

WR2 - $8,106

WR1 - $7,862

Weekly Pivot - $7,117

WS1 - $6,770

WS2 - $6,071

WS3 - $5,771

Trading Recommendations:

The best strategy in the current market conditions is to trade with the larger timeframe trend, which is still down. All the shorter timeframe moves are still being treated as a counter-trend correction inside of the uptrend. When the wave 2 corrective cycles are completed, the market might will ready for another impulsive wave up of a higher degree and uptrend continuation.

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Hot forecast for EUR/USD on 12/23/2019 and a trading recommendation

The United States began full-fledged military operations against the single European currency, having achieved its substantial retreat. After Donald Trump signed the Pentagon budget for next year, which includes the possibility of imposing sanctions on companies involved in the construction of Nord Stream 2, Washington demanded that all work be stopped immediately, threatening companies with the seizure of their property in the United States and the ban to conduct transactions in dollars. The Swiss company Allseas complied with Washington's demand, and not only suspended pipe laying work, but also took its ships away from the area where construction work is being carried out. In any case, the European business, which is the main beneficiary of Nord Stream 2, is clearly very worried and excited.

A reflection of growing fears was the weakening of the single European currency. In turn, the Russian Foreign Ministry said that the United States is striving to deprive European consumers of an uninterrupted source of cheap fuel, and also intends to force Europe to buy expensive American liquefied natural gas, thereby slowing the development of its economy and its ability to compete with the United States. And strangely enough, but the reaction of the euro is only a confirmation of these words. This is confirmed by the words of the deputy representative of the German government, who said that such extraterritorial sanctions affect the interests of German business and constitute interference in the internal affairs of Europe. At the same time, the Russian side assures that the technical means at its disposal allow it to independently complete the construction of Nord Stream-2.

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Meanwhile, in the United States itself, final GDP data for the third quarter was published, finally confirming the fact of a slowdown in economic growth from 2.3% to 2.1%. In other words, the dollar had no objective reasons for strengthening, but the political factor made it possible for it to strengthen its position in relation to the euro.

GDP growth rate (United States):

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Today, despite the fact that the week will almost be inactive, the dollar has a chance to further strengthen its position. The reason for this is not only the firm desire of the United States to stop the construction of Nord Stream 2, but also orders for durable goods, which can show an increase of 1.1%. So, unlike Friday, the dollar will be supported not only by political factors, but also by macroeconomic statistics.

Durable Goods Orders (United States):

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In terms of technical analysis, we see that the EUR/USD pair could not resist and once again plummeted, reaching 1.1065 as a result, and then forming a retreat to the region of the periodic level of 1.1080. In fact, the slowdown at the end of last week served as a kind of platform for strengthening, which, along with the general information background, gave an inertial movement.

In terms of a general review of the trading chart, we see that the recovery process regarding an elongated correction is trying to set a course similar to the one that was at the beginning of last month.

It is likely to assume that the oscillation along the 1.1080 level will remain for some time, where the boundaries of the oscillation are 1.1065/1.1095. Trading operations can be considered in case of a clear breakout of the given framework.

We concretize all of the above into trading signals:

- We consider long positions in case of price consolidation higher than 1.1095/1.1100.

- We consider short positions in case of price consolidation lower than 1.1065/1.1060.

From the point of view of a comprehensive indicator analysis, we see that due to the recent slump, indicators relative to all the main time intervals have taken a downward position.

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Technical analysis of GBP/USD for 23/12/2019:

Technical Market Overview:

The GBP/USD pair rally has been terminated at the level of 1.3512 and since then the market is developing the corrective structure to the downside. Currently, the price has hit the support zone located between the levels of 1.2939 - 1.3039 and is testing this zone in oversold market conditions. The momentum is still weak and negative, but some kind of a bounce might occur soon with a target at the level of 1.3101.

Weekly Pivot Points:

WR3 - 1.3654

WR2 - 1.3526

WR1 - 1.3206

Weekly Pivot - 1.3091

WS1 - 1.2763

WS2 - 1.2640

WS3 - 1.2325

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is up. All downward moves will be treated as local corrections in the uptrend. In order to reverse the trend from up to down, the key level for bulls is seen at 1.2756 and it must be clearly violated. The key long-term technical support is seen at the level of 1.2231 - 1.2224 and the key long-term technical resistance is located at the level of 1.3509.

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Indicator analysis: Daily review on GBP / USD on December 23, 2019

Trend analysis (Fig. 1).

On Monday, the price can make a pullback move up with the first target of 1.3105 which is a pullback level of 23.6% presented in a blue dashed line. If this line is reached, there is a continuation of work upward with the next target of 1.3184 which is a retracement level of 38.2% presented in a blue dashed line.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger Lines - down;

- Weekly schedule - up.

General conclusion:

On Monday, the price may roll back up.

It is unlikely, but another scenario is possible, where, from the support line of 1.2979 presented in a red bold line, work down, with the target of 1.2920 which is a pullback level of 38.2% presented in a red dashed line.

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Indicator analysis: Daily review on EUR / USD on December 23, 2019

Trend analysis (Fig. 1).

On Monday, the price may continue to move down with the first target 1.1041 which is the lower fractal. If this level is reached, the continuation of work down with the target 1.1026 is the support line presented in a red bold line.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger Lines - down;

- Weekly schedule - up.

General conclusion:

On Monday, a downward trend is possible.

An unlikely scenario is possible, where, from a pullback level of 61.8% which is equivalent to 1.1066 presented in a red dashed line, the price will go up to the upper target of 1.1128 which is the historical resistance level presented in a blue dashed line.

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Technical analysis of EUR/USD for 23/12/2019:

Technical Market Overview:

The EUR/USD pair has moved lower towards the level of 1.1064 which is a 61% Fibonacci retracement. So fat the price has bounced from this level, but the bounce was immediately capped by the nearest technical resistance located at the level of 1.1087. Just above this resistance, there are others located at the levels of 1.1091, 1.1096 and 1.1106, so the bulls must put more strength into the up move. The next important technical support is located at the level of 1.1040. Although the higher timeframes trend remains bearish, the global investors must take into account, that the EUR/USD might be finally breaking up from the multi-month Ending Diagonal pattern.

Weekly Pivot Points:

WR3 - 1.1242

WR2 - 1.1207

WR1 - 1.1132

Weekly Pivot - 1.1099

WS1 - 1.1021

WS2 - 1.0984

WS3 - 1.0910

Trading Recommendations: The best strategy for current market conditions is to trade with the larger timeframe trend, which is down. All upward moves will be treated as local corrections in the downtrend. The downtrend is valid as long as it is terminated or the level of 1.1445 clearly violated. There is an Ending Diagonal price pattern visible on the larget timeframes that indicate a possible downtrend termination soon. The key short-term levels are technical support at the level of 1.1040 and the technical resistance at the level of 1.1267.

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EUR/USD: plan for the European session on December 23. Pressure on the euro has returned, but unlikely to last long

To open long positions on EURUSD you need:

Euro sellers coped with the task and made their way below the lower boundary of the triangle, which I paid attention to in my past forecasts, causing the pair to fall. Good data on the growth of American incomes also supported the US dollar, preventing bulls from holding their positions at the lows of the week. Currently, all emphasis is shifted to data on Germany, and to the level of 1.1090, which now acts as a resistance. Consolidation above this range will lead to a larger upward correction to the area of a high of 1.1121, above which it will be quite difficult to break through. In case of preserving pressure on EUR/USD, it is best to return to long positions only for a rebound from support of 1.1060, subject to the formation of divergence on the MACD indicator, or from a larger low of 1.1041.

To open short positions on EURUSD you need:

Sellers will defend the resistance of 1.1090, and the formation of a false breakout there will be a direct signal to open short positions in continuing the downward trend in order to update the lows of 1.1060 and 1.1041, where bullish divergence can be formed on the MACD indicator, so I recommend taking profit there. In the absence of pressure on the euro in the region of 1.1090, it is best to postpone selling until the fundamental statistics on the US economy are released, namely, on the number of orders for durable goods, and open short positions immediately to rebound from a high of 1.1121, since a break above this level will negate all Friday's efforts of euro sellers.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 moving averages, which will act as intermediate resistance for buyers today.

Bollinger bands

Growth can be limited by the upper indicator level in the region of 1.1110, while the lower boundary of the indicator in the region of 1.1060 will support.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - Moving Average Convergence / Divergence). Fast EMA period 12. Slow EMA period 26. SMA period 9.
  • Bollinger Bands (Bollinger Bands). Period 20.
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Elliott wave analysis of GBP/JPY for December 23 - 2019

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GBP/JPY spiked to a high 1.4773 as the Conservative Party won the election and Brexit finally seems to be finalized. The spike to 1.4773 completed red wave v and black wave iii and a correction in black wave iv are now unfolding. The first part of this correction indicates that a minor five wave structure is in place and a zig-zag correction is developing. A wave of this zig-zag is expected to complete in the 1.4136 - 1.4142 area for setting the stage for a rally in wave b towards resistance in the 1.4470 -1.4548 zone before wave c takes over for a second decline towards 1.3982 to complete the zig-zag correction from 1.4773.

R3: 1.4444

R2: 1.4381

R1: 1.4346

Pivot: 1.4304

S1: 1.4230

S2: 1.4172

S3: 1.4142

Trading recommendation:

We took profit on the final 50% at 1.4445 and booked another nice 433 pips and is now waiting for an opportunity to re-enter this market. We will buy 50% at 1.4150 for a corrective ride towards the 1.4470 - 1.4548 target zone.

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Elliott wave analysis of EUR/JPY for December 23 - 2019

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EUR/JPY continues to follow the expected path higher towards 123.55 that ideally will mark the top of red wave iii. In the short-term, we expect blue wave (iv) to be close to completion and a new impulsive rally in blue wave (v) towards 123.08 as the underlying uptrend continues towards 123.55 and in the longer-term even higher than that.

Support is seen at 121.01 which ideally will be able to protect the downside for a break above 121.70 indicating that blue wave (iv) has completed and blue wave (v) is developing towards 123.08.

R3: 122.46

R2. 122.05

R1: 121.70

Pivot: 121.47

S1: 121.16

S2: 121.01

S3: 120.73

Trading recommendation:

We are long EUR from 120.25 with our stop placed at break-even.

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Technical analysis: Important Intraday Levels For EUR/USD, December 23, 2019

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When the European market opens, some economic data will be released such as German Import Prices m/m. The US will also publish the economic data such as Treasury Currency Report, New Home Sales, Durable Goods Orders m/m, and Core Durable Goods Orders m/m, so amid the reports, the EUR/USD pair will move with low to medium volatility during this day. TODAY'S TECHNICAL LEVELS: Breakout BUY Level: 1.1131. Strong Resistance: 1.1125. Original Resistance: 1.1114. Inner Sell Area: 1.1103. Target Inner Area: 1.1077. Inner Buy Area: 1.1051. Original Support: 1.1040. Strong Support: 1.1029. Breakout SELL Level: 1.1023. (Disclaimer)The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis: Important Intraday Levels for USD/JPY, December 23, 2019

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In Asia, Japan will release the All Industries Activity m/m and the US will also publish some economic data such as Treasury Currency Report, New Home Sales, Durable Goods Orders m/m, and Core Durable Goods Orders m/m. 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: 110.00. Resistance. 2: 109.78. Resistance. 1: 109.54. Support. 1: 109.30. Support. 2: 109.09. Support. 3: 108.87. (Disclaimer)The material has been provided by InstaForex Company - www.instaforex.com

GBP/USD testing support, potential bounce!

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Trading Recommendation

Entry: 1.2957

Reason for Entry:

Horizontal pullback support, 38.2%, 78.6% Fibonacci retracement

Take Profit : 1.3242

Reason for Take Profit: 61.8% fibonacci extension

Stop Loss: 1.2757

Reason for Stop loss:

Horizontal swing low support, 50% Fibonacci retracement

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EUR/USD approaching support, potential bounce!

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Trading Recommendation

Entry: 1.10533

Reason for Entry: 61.8% Fibonacci retracement, 127.2% fibonacci extension, horizontal swing low support

Take Profit : 1.11418

Reason for Take Profit:

horizontal swing high resistance, 61.8% fibonacci retracement

Stop Loss: 1.10253

Reason for Stop loss:

78.6% Fibonacci retracement, Horizontal pullback support

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USD/CAD approaching resistance, potential drop!

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Trading Recommendation

Entry: 1.32024

Reason for Entry: 100% Fibonacci extension, horizontal swing high resistance, 61.8% fibonacci retracement

Take Profit : 1.31000

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

Stop Loss: 1.32700

Reason for Stop loss:

horizontal swing high resistance, 76.4% fibonacci retracement

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

Forecast for EUR/USD on December 23, 2019

EUR/USD

Last Friday, the US released good economic indicators, which accelerated the euro's fall. In November, personal incomes of consumers increased by 0.5% against expectations of 0.3%, while expenses increased by the expected 0.4%. The consumer confidence index according to the University of Michigan in the final assessment for December was increased from 99.2 to 99.3 points. At the moment, the euro fell 54 points on trading volumes below average, which partly confirms our assumption that large players want to sell during the holidays this year.

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On the daily chart, the price reached support for the embedded line of the price channel. The price breaks under the indicator line of the red balance, shifting the price balance towards a further decrease. The Marlin oscillator is also signaling that the trend will change into a falling one - its signal line has moved into the zone of negative numbers.

The first goal of the decline is now becoming the level of 1.0966 - September 23 low. Overcoming the level opens the second target of 1.0925 - the lows of September 3 and 12.

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A completely decreasing trend on the four-hour chart, there are no signs of a reversal.

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Forecast for GBP/USD on December 23, 2019

GBP/USD

On Friday, the English Parliament voted in favor of a draft agreement between Boris Johnson and the EU. As it turned out, some of the "gains of the opposition" were removed from the final draft, such as the Parliament's right to participate in the formation of a trade agreement with the EU until the end of the transition period in December next year, moreover, the possibility of extending this period to two years, as expected all this time, was excluded.

UK GDP in the final assessment for the third quarter was 0.4% against the forecast of 0.3%. The balance of payments for the same period increased from -24.2 billion to -15.9 billion pounds. As a result, the pound closed Friday with a decrease of ten points amid the strengthening of the dollar index by 0.28%.

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On the daily chart, the price found support in the area where the MACD indicator line coincides with the Fibonacci level of 161.8%. Consolidating the price at this point (1.2967) will open the second goal of going down to 1.2820 - the reaction level of 138.2%. The signal line of the Marlin oscillator has consolidated in the negative trend zone.

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On the H4 chart, a double convergence forms on the Marlin Oscillator - it is possible to consolidate before the level of 1.2967 to build up forces before attacking the support.

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Forecast for USD/JPY on December 23, 2019

USD/JPY

From the second half of December, consolidation in the Japanese yen has continued over the balance indicator line (red) on the daily chart. According to the oscillator, Marlin continues to form a triple peak as a complex version of divergence. As the price overcomes the support of the MACD line at 109.05, the bulls will finally break down the resistance and the price will go to the nearest target of 108.28 - to support the embedded line of the red price channel.

An alternative scenario involves the pair's growth to the green price channel line to the area of 110.00.

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On the four-hour chart on the 19th, the price went down from the emerging triangle, converting it into an inclined consolidation (flag). The price found support on the MACD line. Consolidation below it (109.28) will make it possible to attack the MACD line of the daily scale (109.05). The Marlin oscillator is indicating that the falling trend could be amplified.

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Overview of the EUR/USD pair. December 23. Dull Christmas and New Year week begins

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - up.

Lower linear regression channel: upward direction.

Moving average (20; smoothed) - down.

CCI: -253.4152

Well, dear traders, although the New Year will come in a week, the beginning of the week can rightly be considered as pre-holiday. Firstly, because it precedes the New Year holidays, secondly, because it will celebrate Christmas, thirdly, because the calendar of macroeconomic events practically does not contain any important events and publications. On Tuesday and Wednesday, Christmas Eve will be celebrated and, in fact, Christmas itself and for these days no publications are planned at all, even secondary ones. Thus, more than half of the days in a week can be considered a weekend even if trading continues. Thus, we can well expect a fall in the volatility of the EUR/USD currency pair (and other pairs and instruments), since most of the traders will leave the market on the eve of the holidays. Accordingly, the market becomes "thin", and trading takes place with low volatility. However, the most important publication awaits us on Monday - orders for durable goods in the US in November. Market participants expect growth of 1.4% M/M compared to the previous month, however, some forecasts predict an increase of only +1.1% M/M, which is still higher than in October. In addition, there are several variations of this indicator, such as orders for goods excluding defense and aviation, excluding transport, and excluding defense. And all other indicators, according to experts, will show a very weak increase, not exceeding 0.1%, and the indicator, excluding defense and aviation, may even decline by 0.3%. Thus, the market reaction to this data can be unpredictable. Although in any case, if forecasts are exceeded, this will provide additional support for the US currency.

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In the meantime, more and more details are being received on the Trump impeachment case. We already wrote that the Democrats brought the procedure to the Senate, but are not in a hurry to hand over the baton to senators, most of whom belong to the Republican Party. It just doesn't make much sense, since the Senate will support Donald Trump by a majority vote. Thus, Democrats should try to get the most out of their struggle with the current US leader. For example, to seek and find new evidence of the guilt of the US president, to find new witnesses who will give new evidence. Then, perhaps, the whole case will be brought to a point where the senators simply can not justify Trump. If there is sufficient evidence and guilt, the Senate may flinch. Thus, now the Democrats have nowhere to rush, and in the meantime, information has arrived that military assistance to Ukraine was blocked by Trump an hour after a telephone conversation with President Vladimir Zelensky. Moreover, a month before this conversation, Trump made official requests to the Pentagon regarding detailed information on the provision of military assistance to Ukraine ...

Thus, interesting news of a political nature can come in the last days of the outgoing year. For example, new information may also appear regarding the negotiation process between China and the United States. However, any such information can have a very indirect effect on the movement of the euro/dollar currency pair. Thus, we expect a fall in volatility and, possibly, even the beginning of a flat movement, although in general we expect the euro to fall further. The question is only whether it will continue in 2019 or will traders have to wait for 2020 already?

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The average volatility of the euro/dollar currency pair continues to decline and is already about 45 points per day. Over the past 30 days, volatility is approximately 43 points a day. Thus, both indicators almost coincide and give us fairly accurate levels on Monday, December 23, - 1.1030 and 1.1120. If macroeconomic statistics from across the ocean turn out to be strong, then it will be possible to expect a fall to 1.1030, however, an upward correction or at least a slight pullback, which can be determined by turning the Heiken Ashi indicator up, is still more likely.

Nearest support levels:

S1 - 1.1047

S2 - 1,1017

S3 - 1,0986

The nearest resistance levels:

R1 - 1,1078

R2 - 1,1108

R3 - 1,1139

Trading recommendations:

The euro/dollar pair maintains the prospects for a downward movement, however, it is also possible for a flat to begin in the near future. Thus, it is now recommended to consider selling the euro while aiming for 1.1047 and 1.1030. The general fundamental background does not remain on the side of the euro, therefore, the fall of the pair is more preferable, most likely, after a correction. It is recommended to buy the euro/dollar pair no earlier than when quotes return to the area above the moving average line.

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

Explanations for illustrations:

The oldest linear regression channel is the blue unidirectional lines.

The smallest linear regression channel is the purple unidirectional lines.

CCI - blue line in the indicator window.

Moving average (20; smoothed) - a blue line on the price chart.

Murray levels - multi-colored horizontal stripes.

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

Possible price movement options:

Red and green arrows.

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GBP/USD. Results of the week. Brexit without agreement with the EU means a "hard" Brexit for the pound

24-hour timeframe

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In recent weeks, when the pound sterling, having no fundamental reasons and reasons, resumed the upward movement, and then, after the parliamentary elections were over and it became clear that Brexit could no longer be avoided, it began a rather strong fall, we repeatedly focused the attention of traders on the fact that Brexit - is in any case for the UK - a negative phenomenon. No matter how Great Britain makes a "divorce" with the European Union, this is a breakdown of all ties in any case, a loss of all agreements in all spheres of life, from production, supply of raw materials, trade operations to immigration and security issues. Thus, the "soft" Brexit was originally planned, that is, Brexit with agreements, as a result of which the economies of both the EU and Great Britain will suffer minimally. However, this kind of package of agreements also means for the UK that it will continue to remain dependent on the European Union in many matters. That is, the softer Brexit, the more relations with the EU will remain, which is completely unsatisfactory for the British, who want complete freedom of action in all matters. Thus, the UK and its government are now facing a dilemma. Or all the same hard Brexit until the end of 2020, which is formally not hard, but without concluding agreements in all areas during the transition period, will be just that in fact. Or at least a minimal package of agreements, so to speak, a basic version. This case will now entirely depend on Boris Johnson, who, recall, was initially not at all against the completely hard Brexit. What is the likelihood that Johnson will try to conclude an agreement with which Britain will suffer the least losses if its main goal is to keep as few dependencies between the Great Britain and EU as possible?

Thus, we already have two potential scenarios. The first is to exit by the end of 2020 without any agreements, without extending the transition period, in fact, according to a hard scenario. Considering the fact that in 11 months it is almost impossible to agree on a huge package of agreements, and work in this direction has not even begun in any case, this option seems most likely. The second option is a basic trade deal with low fees. However, this option is immediately unlikely to be seen, since it will be necessary to follow EU standards in many sectors, which Johnson's government does not want. The third option is a comprehensive trade agreement on the principles of the free market, but in fact this option is still the same EU membership, so the likelihood of this option being fulfilled is even lower than that of the second.

Several experts believe that negotiations between the EU and the UK themselves can be very difficult. One could also say very long, but given the desire of the British prime minister to leave the EU as soon as possible, then most likely they will be completed by the end of 2020. What brings both sides closer to the hard scenario of divorce is the fact that Johnson takes a very principled position, in the style of Donald Trump: either "a deal on our terms" or "no deal". Firstly, this factor will complicate the negotiations, and secondly, the factor of lack of experience in conducting trade negotiations with Britain over the past 40 years. Thus, the parties most likely simply will not be able to agree.

What does all this mean for the pound? Just that the pound will again face problems, like the entire UK economy. Considering how much the pound has fallen in price, how much the British economy has sunk in recent years, and this is still with the UK retaining EU membership, what will happen when the divorce is officially formalized? It is good if it is orderly, but Johnson, with all his looks and actions, shows that there will hardly be a positive outcome in the negotiations. Thus, we believe that the pound has justifiably resumed the downward movement, and should continue it in the short, medium and long term.

At the moment, the pound/dollar pair has already gone far below the Kijun-sen critical line on the 24-hour timeframe, so the first step in the direction of a new downward trend has been taken. Now we are waiting for a decline, at least, in the area of 1.2600 - 1.2800, that is, in the Ichimoku cloud.

Trading recommendations:

On the 24-hour timeframe, the pound/dollar started a strong downward movement. Thus, long positions are not relevant now. It is much more advisable to sell the pound/dollar pair with goals between the levels of 1.2600 and 1.2800. It is recommended to track more accurate goals and the picture on a 4-hour timeframe.

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

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.

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

EUR/USD. Results of the week. Democrats will delay Trump's impeachment. Deal with China will be signed shortly

24-hour timeframe

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The penultimate working week of December 2019, from our point of view, once again showed the strength of the US economy (at least, judging by current indicators) and the weakness of the EU economy. Thus, we can immediately say that the decline in the European currency is absolutely justified. On Monday, it became known that the index of business activity in the service sector, together with the composite index, in the EU fell again and remained in the recession zone. Thus, in the near future there is no sense in counting on strong growth in industrial production and, as a result, other macroeconomic indicators of the EU. On the contrary, all three business activity indexes remained above the key level of 50.0 in the US, recording an increase in growth rates in all sectors of the economy. Actually, on Tuesday, a report on industrial production in the United States confirmed a good condition, showing an increase of +1.1% in November. On Wednesday, inflation in the EU again did not please market participants, because after accelerating a month earlier from 0.7% to 1.0%, this trend could not continue in November. Well, on Friday, GDP in the United States showed an increase of +2.1% in the third quarter of 2019, which is a fairly high indicator. As a result, we do not have a failed important report from across the ocean, and generally weak data from the European Union.

At the end of the trading week, the EUR/USD currency pair fell below the critical Kijun-sen line on the 24-hour timeframe, thus, the general downward trend is now confirmed on the higher timeframe.

Meanwhile, the United States remains under the canopy of the theme of Donald Trump's impeachment. We have already said that the House of Representatives approved the impeachment, but the likelihood that the impeachment will be approved by the Senate is extremely low. In principle, everyone understood this from the very beginning, since 53 of the 100 seats in the Senate are occupied by Republicans. Thus, transferring the matter to the Senate as quickly as possible (as Trump himself wants) to the Democrats makes no sense. It is important for them that the topic with an investigation of Trump's activities and accusations against him be as long as possible on the front pages of all periodicals and online publications. The speaker of the Lower House, Nancy Pelosi, said that she would not forward the case to the Senate and would not allow the appointment of prosecutors. Republicans believe the entire Senate case needs to be agreed upon. In addition, the Democrats want to conduct a full Senate trial with the challenge and interrogation of new witnesses. According to the Democrats, far from all the "dark affairs" of the president are already covered. Thus, purely theoretically, the consideration of the case by the Senate can now be delayed and postponed even until the presidential election in 2020. On the one hand, this can help Democrats downgrade Trump's political ratings, and on the other hand, the longer this case drags on, the better you see the purely political grounds for this trial.

Many political scientists, by the way, believe that Trump is to blame for everything. One can hardly find at least one president around the world who so purposefully and easily spoils relations with everyone, with the media, with intelligence, with other countries and their leaders, allows himself to make contradictory statements, sometimes even outright insults. Thus, Trump simply refers to that small category of leaders who are absolutely not afraid to say what they really think. It is not surprising that Trump has a huge number of ill-wishers, ranging from ordinary US citizens to entire countries. Tolerance is alien to Trump, and the leader of a huge country should respect everyone. It is also worth noting that the impeachment process itself is extremely rare. Republicans openly state that the process of impeachment of Trump began 20 minutes after his inauguration, saying that his ill-wishers (Democrats) from the very beginning planned to remove Trump from his post. However, this scheme is then quite applicable to absolutely any president. If Trump did not give reasons for such actions of his opposition, then so many problems would not exist.

Trump's entire manner of doing business is perfectly reflected in his statement of December 22 regarding the US-China trade conflict. The US president announced progress in negotiations with Beijing, while not missing the opportunity to brag, saying that "we took the toughest measures against China and it was as a result of this that we reached a trade agreement." Trump also said that Beijing is already buying billions of dollars worth of agricultural products.

Based on the foregoing, we believe that the euro's fall will continue in the long term. Moreover, all indicators have currently turned down now on the 4-hour chart, and are also declining on the 24-hour chart. The bulls could not overcome the level of 1.1175, which is clearly seen in the illustration.

Trading recommendations:

The trend for the euro/dollar is currently changing to a downward trend. Thus, the 4-hour timeframe is already working out a downward trend. On the other hand, the higher chart shows a longer-term trend, within which overcoming the Senkou Span B line can significantly increase the pressure of traders on the European currency.

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

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.

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