Technical analysis of GBP/USD for 31/01/2020:

Technical Market Overview:

The GBP/USD pair has bounced towards the level of 1.3101 after a Pin Bar candlestick pattern has been made at the level of 1.2988. If this support level is clearly violated, then the sell-off will continue towards the level of 1.2939. The weak and negative momentum supports the bearish outlook, but the global market participants await the Brexit anyway and the market reaction to today's historical event. Please be warned that the high-risk event (Brexit) will occur soon.

Weekly Pivot Points:

WR3 - 1.3380

WR2 - 1.3270

WR1 - 1.3179

Weekly Pivot - 1.3070

WS1 - 1.2967

WS2 - 1.2843

WS3 - 1.2751

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is up, so all downward market moves will be treated as local corrections in the uptrend. In order to reverse the trend from up to down in the longer term, 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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EURUSD and GBPUSD: US economy is slowing down. Pound ready to grow, but there are some nuances

The US dollar fell against the euro and the British pound amid a report on the growth of the US economy, which showed the weakest expansion since 2016. The main problem was the slowdown in consumer spending growth, as well as the reduction in investment by companies, which remained rather sluggish in the fourth quarter of 2019. The restraint of consumer spending due to the slowdown in global economic growth also did not make it possible for growth to become stronger. The only decoration of the report was the decrease in the trade deficit, which was achieved thanks to trade duties and the protectionist policies of the US White House administration.

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According to the US Department of Commerce, gross domestic product grew by 2.1% in the fourth quarter of 2019, and expansion was up 2.3% for the whole of 2019. Economists had expected the economy to add the same 2.1% in the fourth quarter as in the third quarter. As I noted above, export growth and a sharp decline in imports were offset by a slowdown in consumer spending and a drop in company investment. Compared with the same period of the previous year, GDP grew by 2.3%, which also coincided with the forecasts of economists.

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Data on the US labor market has been ignored, even though the number of Americans applying for unemployment benefits for the first time has declined. According to a report by the US Department of Labor, the number of initial jobless claims for the week from January 19 to January 25 was reduced by 7,000 and reached 216,000. Economists predicted that the number of applications would be at 215,000. The moving average for 4 weeks fell to 214,500.

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And if, after the data on US GDP, buyers of risky assets became even more active, the report on the decrease of consumer prices in Germany quickly brought to naught all efforts. Falling prices are pushing Germany further and further away from the European Central Bank's inflation target at just below 2.0%. According to a report by the Federal Bureau of Statistics Destatis, preliminary CPI of Germany fell by 0.6% in January 2020 compared with the previous month, which fully coincided with the forecasts of economists. Harmonized by EU standards, the German CPI index fell immediately by 0.8% with a forecast decline of 0.7%. Compared to the same period of the previous year, the index grew by 1.7%, while the harmonized CPI index added 1.6%.

Inflation data will be released in the eurozone today, where a slight increase is expected, which may support the euro in the short term.

As for the technical picture of the EURUSD pair, the gradual blurring of important levels indicates the absence of major players in the market. On the one hand, there is clearly not enough people who want to take the risk and buy the euro in the current conditions to sell the pair above 1.1030, on the other hand, there isn't anyone who is eager to buy the US dollar after such a downward trend in the absence of new guidelines. The breakdown of support of 1.1005 will again return the market the location of the bears, which will push the trading instrument to the lows of 1.0960 and 1.0910. If the bulls turn out to be stronger, then consolidating above 1.1030 will lead to the updating of the highs of 1.1060 and 1.1090.

GBPUSD

The British pound is preparing for a new wave of growth above the resistance of 1.3105, which was repeatedly tested by large buyers yesterday amid the growth that occurred after the Bank of England kept interest rates unchanged.

The BoE left the key interest rate at 0.75% yesterday. This decision was made with a vote ratio of 7-2. The number of votes cast to keep the key rate unchanged was 7, and the number of votes cast to increase the key rate was 0.

The data on the growth of consumer confidence in the UK in January of this year retained the chance to continue the upward trend. The British are more optimistic in January this year than in December last. The growth of optimism is associated with the resolution of the Brexit issue on the eve of Britain's exit from the EU.

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According to Gfk research company, the consumer confidence index rose to -9 points in January 2020. The company notes that the rise in the index was due to Boris Johnson, who received legislative support for his plan for Brexit. But do not forget that there are a lot of difficulties ahead in discussing the trade deal with the EU. The governor of the BoE even mentioned this yesterday during his speech. Mark Carney noted that he expects to conclude a deep free trade agreement with the EU since 2021, but does not build hopes that negotiations will go very smoothly, as a number of requirements need special coordination. Prime Minister Boris Johnson has time until the end of this year, as from January 1, 2021, the UK will no longer be subject to EU trade rules.

As for the technical picture of the GBPUSD pair, it remained unchanged. Yesterday, I paid attention to the daily chart, where, at the level of 1.2290, the lower boundary of the triangle formed on December 23, 2019 passed, the break of which would lead to a very large fall of the pound at the beginning of this year. Now the task of the bulls is to break through the upper boundary of this triangle, which is visible in the area of 1.3133. Consolidation on this range will quickly return the pound to the highs of 1.3265 and 1.3316. We can expect a return to 1.3400 and 1.3520 in the longer term.

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Technical analysis of EUR/USD for 31/01/2020:

Technical Market Overview:

The EUR/USD bounce has been capped at the level of 1.1040, so the next trading range is being established as the liquidity dries up in the last days of January. The market conditions are extremely oversold on this timeframe, but due to the weak and negative momentum that is still hovering below its fifty level, the odds for another leg down are still high. The next target for bulls, if the breakout is genuine, is seen again at the level of 1.1040 and 1.1065, but the real gamechanger is seen at the level of 1.1076. Please notice that the downside is limited by the lower channel line as well, so the support might help the price to move higher, but the market moves should be limited ahead of a high-risk event today - Brexit.

Weekly Pivot Points:

WR3 - 1.1171

WR2 - 1.1139

WR1 - 1.1072

Weekly Pivot - 1.1044

WS1 - 1.0977

WS2 - 1.0946

WS3 - 1.0872

Trading Recommendations:

Not much has changed since the last week in a bigger perspective. Still, 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 1.0981 and the technical resistance at the level of 1.1267.

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Trading plan on EUR/USD for January 31, 2020. The Chinese virus is still the main topic, but the panic has receded

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The coronavirus and the epidemic in China is still the number 1 topic. The number of deaths rose to 213, while the number of infected people rose to 9,600. Nevertheless, the growth rate of the infected people is slowing down, and it is likely that the epidemic will be localized. The United States has advised its citizens not to travel to China.

Despite the difficult situation, the US market showed strong growth on Thursday, as a strong report on GDP growth for the 4th quarter was released. It recorded an increase of 2.1%, which is above economists' forecast.

At the same time, the pound showed a strong daily growth, reacting to the Bank of England keeping the rate unchanged (the market expected a rate cut).

EUR/USD:

The fall has stopped, but there is no signal for growth yet.

Keep selling from 1.1084.

Sell from 1.0990 for a breakout.

Buy from 1.1110 for a breakout.

Today, at 14:30 London time, data on inflation in the United States will be released.

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GBP/USD: plan for the European session on January 31. Pound continues to knock at 1.3102 resistance. Do not expect a strong

To open long positions on GBP/USD you need:

From a technical point of view, after yesterday's sharp increase in the pound, which was based on the Bank of England's decision to leave interest rates unchanged, even the 7 to 2 ratio did not change, nothing happened. Buyers also continue to knock on the 1.3102 resistance, but there is no need to talk about maintaining a strong upside potential. It may well turn out that after the breakout of 1.3102 in the first half of the day, only yesterday's high will be updated, on which everything will end. Therefore, you need to open long positions for the breakout at 1.3102 very carefully and with a short stop. Only a real consolidation above the resistance of 1.3102, with a trade at this level, will open a direct path to the highs of 1.3133 and 1.3172, where I recommend taking profits. A more optimal scenario for GBP/USD purchases will be implemented after a downward correction and the formation of a false breakout in the support area of 1.3065. But I recommend buying GBP/USD immediately for a rebound only from a low of 1.3030.

To open short positions on GBP/USD you need:

I do not recommend rushing to sell the pound today. It is best to wait for a false breakout in the resistance area of 1.3102 and see how the pair will behave after updating yesterday's highs. Failure to consolidate and return to 1.3102 will be the first signal to open short positions in the calculation of a technical correction down to a support level of 1.3065, near which I recommend taking profits. In the event of further growth above the high of 1.3102, it is best to go back to short positions to rebound from 1.3133 and from the January level of 1.3172, from which the pound has been falling for the last six trading days. Pay attention to the daily chart that the upper boundary of the triangle passes in the area of 1.3133, which can determine the further medium-term direction of the pair. Therefore, the bears will not give up this level so easily.

Signals of indicators:

Moving averages

Trade is conducted above 30 and 50 moving averages, which indicates that the pound could continue growth.

Bollinger bands

Growth will be limited by the upper level of the indicator in the region of 1.3127, and support, in the event of a fall, will be provided by the lower boundary of the indicator in the region of 1.3045.

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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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EUR/USD: plan for the European session on January 31. Euro buyers do not have enough strength to continue growth. Good eurozone

To open long positions on EURUSD you need:

Yesterday, the bulls launched an attack of level 1.1030, but nothing good came of it. On the other hand, it's already a good thing that they stayed above 1.1010. Volatility is quite low and plays on the side of euro buyers so far . Today, buyers need good inflation in the eurozone, which is projected to grow, which will lead to a breakthrough and consolidation above the resistance level of 1.1038 and strengthen the bullish momentum, which is aimed at the level of 1.1060, where I recommend taking profit. It would also be nice to get good data on eurozone GDP growth for the fourth quarter of this year. In case the euro declines, support will be provided by the 1.1009 area, but opening long positions from there would be best provided that there is a false breakout, since breaking through this range will lead to a break in the upward correction and return new sellers to the market. In this case, I recommend looking for purchases of EUR/USD only after updating the lows around 1.0983 and 1.0964.

To open short positions on EURUSD you need:

Sellers are in no hurry to return to the market, but serious demand for the euro is also not observed. Today, the task of the bears will be to form a false breakout in the resistance area of 1.1038, and poor data on inflation in the eurozone will quickly push the euro to support 1.1009, on which the further direction of the market depends. Consolidating below this range will increase pressure on EUR/USD, which will open a direct path to the area of levels 1.0983 and 1.0964, where I recommend taking profits. If the bullish scenario I mentioned above is realized, then you can count on short positions after the breakout of resistance 1.1038 only from a high of 1.1060. Good data on the income and expenses of Americans are unlikely to seriously affect the technical map in the afternoon.

Signals of indicators:

Moving averages

Trade is carried out in the region of 30 and 50 moving average, but the advantage remains on the side of buyers of the euro.

Bollinger bands

A break of the upper boundary of the indicator in the region of 1.1038 will lead to an increase in demand for the euro. A break of the lower boundary at 1.1009 will increase the pressure on the pair.

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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 January 31 - 2020

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We have seen the expected corrective rally and a new impulsive decline to below 140.80 into the ideal target-zone between 139.29 - 139.83 as expected.

We were looking for a corrective rally to 142.73 This rally has overcome this target and has peaked at 143.00. We are now looking for a break below minor resistance at 142.44 and more importantly a break below support at 142.07 to confirm the decline to 140.80 on the way lower to the target-zone.

R3: 143.55

R2: 143.32

R1: 143.00

Pivot: 142.71

S1: 142.44

S2: 142.22

S3: 142.07

Trading recommendation:

We remain short from 143.95 with our stop at break-even.

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Elliott wave analysis of GBP/JPY for January 31, 2020

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We have see the expected corrective rally and a new impulsive decline to below 140.80 is expected into the ideal target-zone between 139.29 - 139.83.

We where looking for a corrective rally to 142.73, this rally has exceeded this target slightly and seems to have peaked at 143.00 and we are now looking for a break below minor resistance at 142.44 and more importantly a break below support at 142.07 to confirm the decline to 140.80 on the way lower to the target-zone.

R3: 143.55

R2: 143.32

R1: 143.00

Pivot: 142.71

S1: 142.44

S2: 142.22

S3: 142.07

Trading recommendation:

We remain short from 143.95 with our stop at break-even.

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Trading plan for USD/CHF for January 31, 2020

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Technical outlook:

USD/CHF seems to have completed its downswing at 0.9613 levels and is now looking to produce a counter-trend rally towards 09850/60 levels, Please note that fibonacci 0.618 retracement of the entire drop from 1.0023 through 0.9613 is seen at 0.9850. Hence, the probability of a bearish bounce around those levels remain high. Looking at the recent wave structure from 0.9613 lows, the USD/CHF pair has managed to produce the first leg of a proposed counter-trend rally. Prices have found resistance at the fibonacci 0.382 retracement of the previous drop, before pulling back sharply. USD/CHF is seen to be trading around 0.9706/08 levels at this point in writing and should be looking to rally further up to 0.9850/60 levels as highlighted on the chart. Please also note that there seems to be a strong fibonacci convergence seen at 0.9760 levels and there could be a sharp bearish reaction. Resistance remains at 1.0023 levels and the bearish structure remains intact until prices stay lower.

Trading plan:

Aggressive: Buy @ 0.9700/10, stop @ 0.9600 and target @ 0.9850

Conservative: Sell @ 0.9860, stop @ 1.0023, target below 0.9600

Good luck!

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Trading plan for USDJPY for January 31, 2020

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Technical outlook:

USDJPY has formed a meaningful top at 110.30 level. The pair is expected to hold below this mark. The overall structure remains bearish with the primary boundary defined between 112.40 and 104.50 respectively. Please note that the counter trend rally seems to be completed at 110.30 also close to the 61.8% Fibonacci retracement levels. The single currency pair is seen to be trading around 109.10 levels at this point in writing. it may carve a lower high around 109.50/60 levels. The recent down swing can be defined between 110.30 and 108.58 and USDJPY may pullback towards 109.66 levels before declining again. The immediate price support is seen at 107.50/60 and a break below that would confirm that bears are in control. Downside targets remain below 104.50 levels.

Trading plan:

Look to sell around 109.50/60, stop above 110.70, target below 104.50

Good luck!

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Elliott wave analysis of EUR/JPY for January 31 - 2020

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EUR/JPY is correcting in wave iii. It may lift to the 120.79 - 121.09 before tuning lower towards the ideal target-zone for wave v between 118.85 - 119.24. Wave iv will move slightly above resistance at 120.43 before tuning lower towards the expected target-zone from where a new impulsive rally is expected.

R3: 121.09

R2: 120.79

R1: 120.43

Pivot: 120.20

S1: 119.90

S2: 119.75

S3: 119.50

Trading recommendation:

We are looking for a buying opportunity near 119.24

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Trading plan for EURUSD for January 31, 2020

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Technical outlook:

EURUSD seems to have finally bottomed at 1.0992. The immediate resistance for the short term has also been taken out and the single currency pair had rallied through 1.1031 levels before pulling back. The euro is seen to be trading around 1.1024 levels at this point in writing. It is likely to push beyond 1.1031 levels today before correcting lower. Please note that prices have bounced from the following convergences: 1. The 61.8% Fibonacci retracement previous rally between 1.0879 and 1.1240 respectively. 2. 0.618 extension of the counter trend drop from 1.1240 levels. 3. Elliott Channel support close to 1.1000 levels. The complex corrective structure has finally hit a bottom. So, bulls are expected to print new highs and lows from here. The upside target potential for EURUSD remains at 1.1500/1.1600, while prices should stay above 1.0879.

Trading plan:

Remain long, stop 1.0879, target is 1.1500

Good luck!

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The Sell Side Liquidity Pool 1.0992 will be the target from EUR/USD For Jan 31, 2020

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Today EUR/USD is likely to test the 4-hour chart sell side liquidity pool at 1.0992. If this level is broken, there is a high probability that Fiber will try to test the weekly chart sell side liquidity pool 1.0981 too. This scenario will not come true if the pair hits the 4 hour chart buy side liquidity pool at 1.1039.

The overall bias for EUR/USD is bearish.

(Disclaimer)

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GBP/USD Projection HOD/LOD For Jan 31, 2020

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Today's high (HOD) and low (LOD) from the Central Bank Dealer Range (CBDR) usually form at STDV 2-STDV 4 in the normal condition market but sometimes can reach to the STDV 5-STDV 6. Here's today level:

STDV 10 - 1.3354.

STDV 9 - 1.3329.

STDV 8 - 1.3304.

STDV 7 - 1.3279.

STDV 6 - 1.3254.

STDV 5 - 1.3229.

STDV 4 - 1.3204.

STDV 3 - 1.3179.

STDV 2 - 1.3129.

STDV 1 - 1.3104.

CBDR - 1.3079.

==================

CBDR - 1.3079.

STDV 1 - 1.3054.

STDV 2 - 1.3029.

STDV 3 - 1.3004.

STDV 4 - 1.2979.

STDV 5 - 1.2954.

STDV 6 - 1.2929.

STDV 7 - 1.2904.

STDV 8 - 1.2879.

STDV 9 - 1.2854.

STDV 10 - 1.2829.

Pay attention to the level between today and the previous range - 1.3179 as it can be a potential tunring point.

(Disclaimer)

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Forecast for EUR/USD on January 31, 2020

EUR/USD

The euro grew by 21 points on Thursday, overcoming the resistance of the embedded line of the price channel on the daily chart. The reason for this was the data on GDP growth for the fourth quarter by the expected 2.1% along with a fall in personal consumption spending; real consumer spending fell from 3.2% to 1.8% for the fourth quarter, although in the structure of GDP, sales increased from 2.1% to 3.2%, indicating an increase in inflation and a weak GDP base. As a result, the market probability of a rate cut at the June meeting increased in one day from 36.5% to 41.2%, while a week earlier this expectation was 19.5%. Yields on 5-year US government bonds rose from 1.388% to 1.414% this morning - American securities began to sell - since the yield is inversely dependent on purchases.

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Today, eurozone GDP data for the fourth quarter will be released - a forecast of 0.2%, and inflation for January - a forecast for the core CPI of 1.2% y/y against 1.3% y/y earlier. The general CPI index can grow from 1.3% y/y to 1.4% y/y. US data on personal spending and consumer income for December and inflation data on personal consumption spending (PCE) will be released in the evening, which is important for comparing with yesterday's data on consumer spending. The forecasts are good: 0.3% for revenue, 0.3% for expenses, no forecast for PCE. The index of business activity in the manufacturing sector of the Chicago region for the current month is expected to remain unchanged at 48.9 points.

An important index of business activity in the US manufacturing sector (ISM Manufacturing PMI) for January will be released on Monday, the forecast for which is 48.0 versus 47.2 earlier; industrial orders for December on Tuesday, with a forecast at 0.7% against -0.7 % in November. On Wednesday, the PMI in the services sector is projected to grow from 52.8 to 53.2. On Friday, Non-Farm Employment Change for January is projected at 156 thousand against 145 thousand in December.

All this indicates to us that investors will not rush to sell the dollar.

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On the four-hour chart, the growth of the euro stopped at the MACD line at the point of coincidence with the line of balance. It is very possible that from current levels the price will return to yesterday's low, which will restore the falling movement of the euro with targets at 1.0986, 1.0925. A rise in price to 1.1080 is possible in the case of today's obviously weak US data. But the price in this case must first be consolidated above the top of yesterday.

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Forecast for GBP/USD on January 31, 2020

GBP/USD

Yesterday's meeting of the Bank of England brought a pleasant surprise for the pound - 7 members of the monetary policy committee spoke out for maintaining the rate against the expectation of 6 or even 5 members. The pound grew by 75 points due to this. On the daily chart, the signal line of the Marlin oscillator entered the growth zone and goes above the upper boundary of its own wedge. Price above the balance line. The growth target of 1.3220 is the area of accumulation of the Fibonacci level of 200.0% with the indicator line of MACD.

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On a four-hour chart, the price is higher than both indicator lines - balance sheet and MACD, Marlin in the trend growth zone. We look forward to continued growth.

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Forecast for AUD/USD on January 31, 2020

AUD/USD

The Australian dollar has been falling for two weeks without a noticeable correction. Yesterday, a convergence on the Marlin oscillator formed on a four-hour chart. Such a correction will probably take place today and on Monday.

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A signal to increase to the target level of 0.6779 - the peak of January 29 and the resistance of the MACD line, will be the price exit above the level of 0.6735 - support on January 28 and 29 and the Fibonacci level of 161.8% on the daily chart. At daily target level 0.6779, the Fibonacci level is 138.2%.

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Consolidating the price below yesterday's low will continue the downward movement to the support of the price channel line at daily (0.6642) or even slightly lower, to the Fibonacci level of 223.6% (0.6624), where we are already waiting for a more likely correction.

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Fractal analysis of the main currency pairs for January 31

Forecast for January 31:

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: 1.1084, 1.1052, 1.1035, 1.0995, 1.0964 and 1.0945. Here, we continue to monitor the downward structure from January 16. At the moment, the price is in the correction zone. The continuation of the movement to the bottom is expected after the breakdown of the level of 1.0995. In this case, the target is 1.0964. For the potential value for the bottom, we consider the level of 1.0945. Upon reaching this level, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 1.1035 - 1.1052. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 1.1084. This level is a key support for the downward structure. We expect the initial conditions for the upward cycle to be formed before it.

The main trend is the descending structure of January 16

Trading recommendations:

Buy: 1.1035 Take profit: 1.1051

Buy: 1.1054 Take profit: 1.1082

Sell: 1.0995 Take profit: 1.0970

Sell: 1.0964 Take profit: 1.0947

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For the pound / dollar pair, the key levels on the H1 scale are: 1.3246, 1.3210, 1.3159, 1.3118, 1.3075, 1.3055 and 1.3026. Here, the price forms a pronounced upside potential for January 30. The continuation of the movement to the top is expected after the breakdown of the level of 1.3118. In this case, the target is 1.3159. Price consolidation is near this level. The breakdown of the level of 1.3160 will lead to a pronounced movement. Here, the target is 1.3210. Price consolidation is also near this level. For the potential value for the top, we consider the level of 1.3246, upon reaching which, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 1.3075 - 1.3055. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.3026. This level is a key support for the top.

The main trend is the formation of potential for the upward cycle of January 30

Trading recommendations:

Buy: 1.3118 Take profit: 1.3157

Buy: 1.3160 Take profit: 1.3210

Sell: 1.3075 Take profit: 1.3055

Sell: 1.3053 Take profit: 1.3026

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9767, 0.9734, 0.9715, 0.9699, 0.9673, 0.9644, 0.9610 and 0.9590. Here, we are following the formation of the descending structure of January 29. The continuation of movement to the bottom is expected after the breakdown of the level of 0.9673. In this case, the target is 0.9644. Price consolidation is near this level. The breakdown of the level of 0.9644 will lead to the development of pronounced movement. Here, the goal is 0.9610. For the potential value for the top, we consider the level of 0.9590. Upon reaching which, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 0.9699 - 0.9715. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.9734. This level is a key support for the downward structure.

The main trend is the formation of the downward structure of January 29

Trading recommendations:

Buy : 0.9700 Take profit: 0.9714

Buy : 0.9716 Take profit: 0.9732

Sell: 0.9672 Take profit: 0.9646

Sell: 0.9642 Take profit: 0.9612

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For the dollar / yen pair, the key levels on the scale are : 109.43, 109.20, 109.01, 108.65, 108.47 and 108.25. Here, we are following the downward cycle of January 17. At the moment, the price is in correction. Short-term downward movement is possible in the range of 108.65 - 108.47. The breakdown of the last value will lead to a movement to a potential target - 108.25, and upon reaching this level, we expect a pullback to the top.

Consolidated movement is possibly in the range of 109.01 - 109.20. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 109.43. This level is a key support for the downward structure.

Main trend: potential downward structure of January 17, correction stage

Trading recommendations:

Buy: 109.01 Take profit: 109.18

Buy : 109.23 Take profit: 109.40

Sell: 108.65 Take profit: 108.48

Sell: 108.45 Take profit: 108.25

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3312, 1.3271, 1.3238, 1.3203, 1.3178, 1.3157 and 1.3126. Here, we are following the development of the upward cycle of January 22. The continuation of the movement to the top is expected after the breakdown of the level of 1.3203. In this case, the target is 1.3238. Price consolidation is near this level. There is a short-term upward movement in the range of 1.3238 - 1.3271, hence, a reversal to a correction is also possible. The potential value for the top is considered to be the level of 1.3312.

Consolidated movement is possibly in the range of 1.3178 - 1.3157. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3126. This level is a key support for the top.

The main trend is the local ascending structure of January 22, the correction stage

Trading recommendations:

Buy: 1.3198 Take profit: 1.3236

Buy : 1.3240 Take profit: 1.3270

Sell: Take profit:

Sell: 1.3155 Take profit: 1.3130

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6776, 0.6750, 0.6734, 0.6694 and 0.6651. Here, the price is near the limit value for the descending cycle of January 16. We expect a rollback to correction from the level of 0.6694. Its passage by the price will be accompanied by an unstable movement to the bottom. Here, the potential target is 0.6651, but it is not recommended to work towards this value.

Short-term upward movement is expected in the range of 0.6734 - 0.6750. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.6776. This level is key support for the bottom. We expect the initial conditions for the upward cycle to be formed before it.

The main trend - we expect a correction

Trading recommendations:

Buy: 0.6734 Take profit: 0.6750

Buy: 0.6752 Take profit: 0.6774

Sell : Take profit :

Sell: 0.6694 Take profit: 0.6680

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For the euro / yen pair, the key levels on the H1 scale are: 120.90, 120.59, 120.37, 119.93 and 119.44. Here, given the situation for the pound / yen, we mainly expect a correction. Short-term upward movement is possibly in the range of 120.37 - 120.59. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 120.90. This level is a key support for the downward structure.

The continuation of movement to the bottom is expected after the breakdown of the level of 119.90. In this case, the potential target is 119.44. Upon reaching this level, we expect a pullback in correction.

The main trend is a downward structure from January 16, we expect a correction

Trading recommendations:

Buy: 120.37 Take profit: 120.57

Buy: 120.61 Take profit: 120.90

Sell: 119.90 Take profit: 119.48

Sell: Take profit:

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For the pound / yen pair, the key levels on the H1 scale are : 144.17, 143.79, 143.19, 142.53, 142.11, 141.74, 141.21 and 140.30. Here, the price forms a pronounced upside potential for January 30. The continuation of the movement to the top is expected after the breakdown of the level of 143.19. In this case, the goal is 143.79. For the potential value for the top, we consider the level of 144.17. Upon reaching which, we expect consolidation, as well as a pullback to the bottom.

Short-term downward movement is expected in the range of 142.53 - 142.11. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 141.74. This level is the key support for the ascending structure. Its breakdown will allow us to count on movement to the level of 141.21, which, in turn, is the key resistance to continue the development of a downward trend.

The main trend is the descending structure of January 22, the correction stage

Trading recommendations:

Buy: 143.20 Take profit: 143.79

Buy: 143.80 Take profit: 144.17

Sell: 142.53 Take profit: 142.13

Sell: 142.10 Take profit: 141.76

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

GBP/USD. January 30. Results of the day. The Bank of England left the rate unchanged, which provoked a wave of purchases

4-hour timeframe

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Amplitude of the last 5 days (high-low): 52p - 89p - 118p - 54p - 118p.

Average volatility over the past 5 days: 87p (average).

The British pound showed a fairly strong upward movement on Thursday, January 30, rising against the US dollar by almost 120 points, if you count from the lows of the day. This upward movement was provoked exclusively by the Bank of England's decision not to lower the key rate. However, even this factor was not the main one. Many experts, analysts and traders expected, if not monetary easing, then at least an increase in the number of members of the monetary committee who support the rate cut. However, a surprise awaited market participants here as well. The number of committee members who voted in favor of cutting the key rate remained the same - two. This is again Michael Saunders and Jonathan Haskel. The central bank also quite predictably did not change the parameters of the government bond repurchase program - 435 billion pounds per month, as well as corporate bonds - ten billion pounds a month. Moreover, the BoE in its communique even allowed the key rate to be raised in the near future, saying that "business begins to recover, according to polls, after the Conservative Party won the election in December, and in the future it may even require a moderate tightening of monetary policy." Of course, this "in the future" will most likely come soon. We do not believe that the UK economy has truly embarked on a recovery path. So far, we are talking only about a few good macroeconomic reports on Great Britain. Therefore, not a rate cut and the lack of hints of the regulator to lower it in the near future can already be considered positive news for the British currency. Moreover, for Mark Carney, the current meeting was his last at the head of the British central bank. On March 16, Carney will be replaced by the current head of the Financial Market Compliance Department, Andrew Bailey. Many believed that Carney would follow the example of her colleague Mario Draghi from the ECB and would also "slam the door" in the end, but this did not happen. The Bank of England also published forecasts for GDP for 2020 - moderate growth at 0.8%, and also for 2021 - growth at 1.5%. Inflation, according to the expectations of the British regulator, will remain at "below 2%" over the next three years at a key rate of 0.75%. If the rate is reduced to 0.5% (it turns out that BA still allows this possibility), then inflation is expected to be "slightly above 2%".

Now tomorrow we are waiting for the most high-profile event of recent years - the UK's official exit from the EU, which cannot yet be called complete, as the country will simply go into a "transition period", which will last 11 months. Moreover, during this period the country will enjoy all the EU membership preferences. That is, nothing will change for the British economy. Changes should be expected only in 2021, when Brexit will be completed and everything will depend on whether Boris Johnson manages to sign a trade deal with Brussels or whether from January 1, 2021 all British exports to the European Union will be taxed. Naturally, such terms of trade with the EU will hit the UK economy even harder. Even without Brexit, the economy has been losing about 70 billion a year since the 2016 referendum. Earlier it was estimated that for several decades in the European Union, London paid about the same amount to the EU treasury as it lost in three years due to Brexit (which has not even been completed and, in fact, has not even begun).

Thus, at the moment, quotes of the British pound soared, but very soon the euphoria may come to naught, as in fact nothing positive has happened. BA just didn't lower rates, that's all. Yes, traders were delighted with this information and the lack of hints of a lower rate in the near future. However, what does this change for the British economy compared to the central bank's previous meeting? Nothing. Therefore, it is possible for the pair to return to their original positions in the coming days, at which they were before the publication of the results of the BA meeting.

Trading recommendations:

GBP/USD is trying to start an upward trend. Thus, formally, the purchase of the British pound with a target resistance level of 1.3176 is now relevant. However, after such a strong movement as it is today, firstly, a downward correction may begin, and secondly, markets should calm down and enter into the usual trading mode. The pair's sales can again be considered if the price returns to the area below the Kijun-sen line with targets at 1.2963 and 1.2944.

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 dashed 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.

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

Dollar keeps Fed rate cut in mind and prepares for the election

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Reaction to the results of the January FOMC meeting were a decrease in the yield of treasury bonds and US stock indices, mixed dynamics of greenbacks and an increased likelihood of a weakening of the Fed's monetary policy in the third quarter of 2020.

Unlike in December, in the January FOMC final statement, US household spending growth was marked as "moderate" rather than "strong". Bloomberg experts predict a slowdown in the growth of personal consumption spending in the US (from 4.6% and from 3.2% in the second and third quarters to 2% in the fourth). Obviously, the US economy is losing momentum. If in October – December net exports and investments in the housing sector contributed to the increase in national GDP, then in January – March, including due to the problems of the Boeing airline giant, the indicator may seriously slow down.

According to Fed Chairman Jerome Powell, the regulator is not satisfied with how inflation works. Amid record long-term economic expansion in the United States and the lowest unemployment rate in the country for half a century, consumer prices should confidently go up. However, over the 12 months, including November, the United States personal spending index rose by only 1.5%. The US central bank sees how in other countries weakening inflation expectations slows inflation, and intends to do everything possible so that nothing like this happens in the United States. In particular, the Fed is willing to tolerate PCE above a 2% target. This means that the barriers to raising the federal funds rate are quite high, while the chances of its reduction remain. This is not good news for the greenback.

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Although Powell argues that it is too early to talk about the consequences of the coronavirus epidemic on the global economy, the fact that the Fed is monitoring events in China means that the central bank is closely monitoring the situation. Against this background, rumors appeared that the new virus would become the main reason for the further reduction in the federal funds rate. If during the outbreak of SARS in 2003, China's share in the world GDP accounted for only 4%, but now it is 17%. The number of people infected with coronavirus is about the same as 17 years ago, and the peak of the epidemic has not yet passed.

Thus, an outbreak of coronavirus increases the chances of easing the monetary rate of the Fed. However, it is not a fact that this will necessarily lead to a weakening of the US dollar, since other central banks will also be forced to react if the global economy really has problems.

In the foreseeable future, the US presidential race may also affect the dynamics of the dollar.

According to Wells Fargo experts, strengthening the position of Donald Trump during the election campaign will have a neutral or positive effect on the USD rate.

"Investors seem to like the fiscal stimulus, low tax, and unobtrusive policies of the 45th US president. If Joe Biden begins to gain points, then it will become a neutral factor for the US currency, as the former vice president is unlikely to change anything radically. Strengthening the position of senators (Elizabeth Warren or Bernie Sanders) is likely to be a moderately negative event for the dollar, as both representatives of the Democratic Party are in favor of raising taxes and increasing government spending. The victory of any of them in the elections will mean a radical change in politics," they said.

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According to experts, any changes in the preferences of the US electorate will have only a temporary effect on the dollar.

"Historically, the dollar has tended to rise in the year of the presidential election, at least against major currencies. From the beginning of the year until the election (if this is the first term of the incumbent president), the dollar rose by an average of 2.3%. Therefore, in the coming months, the US currency may be stronger than we expect," Wells Fargo representatives said.

"Expectations that Democrats will retain a majority in the lower house of Congress and Republicans in the upper house will reduce the amplitude and duration of fluctuations in the dollar if a clear leader is identified in the presidential race," they added.

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

EUR/USD. January 30. We are waiting for the rollback of Euro currency and the formation of new sell signals in the area of

EUR / USD - 4H.

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Good evening, dear traders! The trading idea that I described in recent reviews has worn out all its working capacity. Yesterday,, the quotes of the pair completed a reversal immediately after the formation of two bullish divergences in favor of the European currency and began the growth process. The euro-dollar pair did not reach the target level by just 3-4 points, but in my review yesterday, I said that the pair could pullback to the top, and the goal can be considered completed. In this case, the pair remains inside the downward trend range, which continues to show what mood the traders have at the moment - "bearish".

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A new trading idea is as follows: I recommend waiting for the quotes to roll back to the area of the upper line of the downward range. The levels of correction to the last decline of the pair - 38.2%, 50.0% and 61.8% are near this line. From one of them, provided that they do not leave the trend anger itself, they can rebound with a reversal in favor of the American currency and resume falling below the level of 1.1000. Let me remind you that, traders have the right to count on quotes falling in the direction of the low level of 1.0850, according to a long-term trading idea. Thus, I recommend waiting for the pair to increase in the coming days and looking for entry points for new sales. Otherwise, in case that quotes complete fixing over the range, then this trading idea will be canceled.

EUR / USD - Daily.

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There are no changes on the 24-hour chart. After the pair closes below the trend line, I recommend counting on a continued decline in the direction of the level of 1.0850. This goal is relevant as long as the quotes are located inside the global trend downward range.

Forecast on EUR / USD and recommendations to traders:

The long-term trading idea remains valid. Traders still have a long-term target for declining near the level of 1.0850, confirmed by the pair closing below the trend line. In this regard, the terms of its implementation can be 1-2 weeks.

The short-term trading idea is the pair's new sales with rebound from correction levels of 38.2%, 50.0% or 61.8%. A prerequisite is the absence of quotes outside the downward range.

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

GBP/USD. January 30. Pound is trapped in the "triangle". We are waiting for quotes to come out of it and open new deals!

GBP / USD - 4H.

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Good evening, dear traders! As I said in yesterday's review, the pair completed another rebound from the upward global correction line, and this completed the development of our previous signals. The target level of 76.4% 1.2995 already developed with a margin. Thus, now, it is time to formulate a new trading strategy and outline new trading ideas.

On the 4-hour chart, the GBP / USD pair reversed in favor of the British currency and began the growth process in the direction of a new downward trend. Therefore, the trend line and the correction line formed a kind of a narrowing triangle. In this regard, a new trading idea is to wait for the pair quotes to exit this triangle, then it will become clear what mood the traders will form in the coming days. After that, consolidating the quotes of the pair above the upper trend line will increase the probability of continuing the growth in the direction of 1.32 and 1.33. The rebound of quotes from this line will develop in favor of the US dollar and the resumption of decline to the bottom line of correction. On the other hand, further closing under the correction line will increase the chances of the pair to continue the decline, which I will recommend working out.

Forecast and recommendations of GBP/USD for traders:

The new trading idea is to sell the pound when fixing below the correction line from which the pair rebounded yesterday, as well as to buy the pair if it closes above the upper trend line. In turn, the goals will be indicated after one of the signals is triggered.

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

EUR/USD. January 30. Results of the day. Fed reassured markets, but US macroeconomic data continued to weaken

4-hour timeframe

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Amplitude of the last 5 days (high-low): 73p - 42p - 28p - 28p - 36p.

Average volatility over the past 5 days: 42p (average).

The fourth trading day of the week ends with a continuation of a weak upward correction, which began even a few days earlier. There was a rather large amount of important or relatively important macroeconomic information both in Europe and in the US today. Thus, traders again had every chance to behave more actively, however, the pair again beats all the anti-record volatility. The euro/dollar covered a distance of 28 points. Of course, by the end of the day this figure may grow a little and amount, for example, to points 40, which is just the average value for the pair over the past five days. At the same time, the pair worked out the critical line Kijun-sen as part of the correction and intends to overcome it. If this happens, then the downward trend will cancel for a while, and short positions will lose their relevance. Bulls will be able to form an upward trend, especially since for the first time in a long time the macroeconomic background can help them in this. We would also like to note the fact that the pair, once again approaching their two-year lows, could not overcome this area of support and now can again pull back upwards by 100-200 points.

Now we will consider and analyze all the macroeconomic statistics of the day; there were plenty of them on January 30. The day began with the publication of the unemployment rate in Germany, which remained unchanged at 5%. The change in the number of applications for unemployment benefits amounted to -2,000, which is better than forecasts. Then, about an hour later, similar information was published on the European Union. The unemployment rate in December was 7.4%, which is lower than a month earlier. In addition, several secondary indicators were published immediately reflecting the state of the business climate in the EU, as well as the mood in the economy, business optimism and consumer confidence. In general, indicators signaled versatile changes. Some turned out to be slightly better than forecasts, some were slightly worse. In any case, no reaction of market participants to all these data was followed.

Then, a few hours later, again in Germany were published more important data on the consumer price index in January (preliminary values). The main inflation rate accelerated to 1.7% y/y, and in monthly terms fell by 0.6%, which is fully consistent with the forecast values. The harmonized consumer price index was 1.6% y/y and did not reach the forecast value of 0.1%. However, in any case, acceleration of inflation in the locomotive country of the entire European Union is positive news for the euro. Now we can expect that pan-European inflation will accelerate slightly in January. Although, on the other hand, it is unlikely that it will still reach the ECB target levels of about 2.0% y/y.

The most interesting information came from overseas, since we primarily connect the prospects for the euro/dollar currency pair with US macroeconomic statistics. We have already said that we are concerned about indicators of business activity in the manufacturing sector, a drop in industrial production and a decline in GDP. The Fed in the form of Jerome Powell tried to calm the markets, and he managed to do so. Although the US dollar is becoming cheaper at the moment, its fall is negligible. The fourth quarter annual GDP data (preliminary value) amounted to +2.1%. The same value of the main indicator was in the third quarter. Thus, it can hardly be called strong, and the general trend remains bearish. The GDP price index was also published, which characterizes the change in prices for goods and services in the country for the reporting period and is a harbinger for the main inflation indicator. This indicator was forecasted to increase by 1.8%, but in reality it fell to 1.5% in the fourth quarter. The price index for personal consumption expenditures reflects the average amount of consumer spending on durable goods, consumer goods, and services, but does not take into account energy and food expenses. It is also a good indicator for forecasting inflation and also did not reach the forecast value of 1.6%. The last to be published was the index of expenditures on personal consumption, which reflects the average consumer spending on durable goods, consumer goods and services. This indicator decreased compared to the previous period (2.1%) and did not reach the forecast value (1.7%) - 1.3%. Thus, in general, we can say that macroeconomic statistics from across the ocean turned out to be very weak, and most importantly, we can now expect a slowdown in inflation, which has accelerated in recent months to 2.3% y/y. This is bad news for the US dollar, and the euro can finally form a more or less strong upward trend, fundamentally justified.

Trading recommendations:

The EUR/USD pair began to adjust against the downward trend. Thus, it is recommended to sell the euro again with targets of 1.0990, 1.0968, if traders fail to gain a foothold above the Kijun-sen line, that is, a rebound will occur. It will be possible to consider buying the euro/dollar pair no earlier than traders of the Kijun-sen line with small lots with the goal of a volatility level of 1.1051 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 dashed 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.

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

Technical analysis of BTC/USD for 30/01/2020:

Crypto Industry News:

The municipality of Zermatt in Switzerland is now second place in Switzerland where taxpayers can officially pay taxes in Bitcoin. To enable the new tax payment option, Zermatt authorities have partnered with the largest Swiss crypto company Bitcoin Suisse.

As announced by Bitcoin Suisse, Zermatt began to accept Bitcoin as a means of payment for local taxes and transactions on January 28, 2020.

By working with Bitcoin Suisse, Zermatt authorities are now able to convert taxpayer Bitcoins to Swiss francs through a company that then transfers the amount in fiscal currency to the municipality's bank account.

Local taxpayers will be able to pay taxes in Bitcoins using the sales tool installed in the Zermatt city hall or on the online payment portal. However, to pay taxes using Bitcoin online, taxpayers will have to apply directly to the Zermatt tax office for a cryptographic payment solution.

Romy Biner-Hauser, mayor of Zermatt, emphasized that the new tax payment option aims to meet the increased demand for Bitcoin-based tax payments:

While Switzerland is still developing its industry of crypto-financial services in terms of Bitcoin-based tax payments, some global authorities have recently found this option too risky due to the high volatility of Bitcoin values.

Technical Market Overview:

The BTC/USD pair has made yet another higher high overnight, this time it was located at the level of $9,383 and bulls are now consolidating the recent gains. The level of $9,130 will now act as short-term technical support, together with the level of $8,836. The strong and positive momentum supports the short-term bullish outlook and the next target for bulls is seen at the level of $9,539. There is only a couple of days to complete the month of January and the Bitcoin chart still looks very bullish.

Weekly Pivot Points:

WR3 - $9,339

WR2 - $9,028

WR1 - $8,796

Weekly Pivot - $8,458

WS1 - $8,222

WS2 - $7,890

WS3 - $7,647

Trading Recommendations:

There is a possibility that the wave 2 corrective cycles are completed at the level of $6,345, so the market might be ready for another impulsive wave up of a higher degree and uptrend continuation. This strategy is valid as long as the level of $7,582 is not violated. Nevertheless, the larger timeframe trend is still down and all the shorter timeframe moves are still being treated as a counter-trend correction inside of the uptrend until the level of $10,278 is clearly broken.

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

EUR/USD. Virus not a hindrance to the Federal Reserve: US central bank held a boring meeting

The euro-dollar pair reacted minimally to the results of the January meeting of the Federal Reserve. However, the Fed also did not provide any reasons for volatility. The first meeting this year turned out to be completely "passing", contrary to the expectations of some experts. In general, the January meeting is almost completely similar to the December meeting. The same wording, the same intentions and the same decisions. Therefore, the US currency remained indifferent to yesterday's events, continuing to focus on the external fundamental background.

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The US regulator expectedly left all the parameters of monetary policy unchanged. The probability of this scenario was 100%, so the main attention of traders was focused on the key of the accompanying statement and the rhetoric of Jerome Powell. The text of the final communique nearly did not differ from the December one. However, there are still some differences. First, the regulator increased (from 1.55% to 1.6%) the rate on surplus bank reserves (IOER). The overnight repo rate was also increased (from 1.45% to 1.5%). At the same time, the Fed extended REPO operations until the end of April. All these adjustments were technical in nature, so they did not cause a stir in the market.

Secondly, there have been minimal changes in the wording. If the Fed characterized consumption growth rates as "high" in December, then it lowered its assessment to "moderate growth" in January. It is worth recalling that the main index of expenditures on personal consumption shows a downward trend (year on year), so the regulator only reflected the current state of affairs.

The rest of the Fed's accompanying statement was identical to the December one. The regulator "closed its eyes" to the rather slurred Nonfarm (especially in the context of wage growth), noting that "the labor market continues to strengthen, while the economy as a whole is growing at a moderate pace." The Fed has traditionally been worried about the weak growth in the export sector, as well as the level of consumption. According to the Fed, the weak point is inflation indicators , which are still below the target two percent level. At the same time, the regulator noted that the indicators of inflationary expectations, which are based on surveys, "almost did not change their structure." Summing up the January meeting, the Federal Reserve confirmed the preservation of a wait-and-see attitude, emphasizing the effectiveness of current policy. It is noteworthy that in the accompanying statement, the regulator did not reflect the signing of the first phase of the trade deal, nor the hysteria with the spread of coronavirus. In this context, the central bank limited itself to only one vague phrase that "the Committee continues to monitor the impact of incoming data, including events in the world."

Thus, members of the Fed did not provide any reasons for volatility. On the one hand, they did not succumb to general panic (for example, it might have been worried about a possible slowdown in the global economy due to the Chinese pneumonia epidemic). On the other hand, the Fed actually ignored the very alarming signals that came in January from macroeconomic reports. In particular, according to the latest data, the average hourly wage level fell to 0.1% on a monthly basis - this is the worst result since September last year, when it fell to zero. In annual terms, this indicator rose by only 2.9% - this is also a kind of anti-record (the weakest growth rate since July 2018).

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But the fact remains: the US regulator remained faithful to its December guidelines. At his press conference, Powell repeated the main points of the accompanying statement, supplementing them with his comments, but without saying anything significant. He noted that despite a trade ceasefire, uncertainty factors still persist, and coronavirus joined in with these factors. However, Powell did not assess the risks and make any predictions about the possible consequences. As for the dynamics of macroeconomic statistics, the Fed chief expressed surprise that with such low unemployment, the growth rate of wages remains extremely weak. By the way, Janet Yellen spoke about this at the time when she was the head of the Federal Reserve - in her opinion, such dynamics negatively affects inflationary processes. But Powell remains optimistic in this context - according to him, inflation will reach the target level "in the near future". The rest of his phrases were "on duty" in nature: the theses voiced boiled down to the fact that the central bank will continue to "closely monitor conditions in the money markets" and will respond if necessary.

Thus, the US regulator made it possible for the dollar to continue to focus on the external fundamental background. The Fed did not put pressure on the greenback, but also refrained from hawkish notes in its rhetoric. The focus of the market has returned to the theme of the spread of coronavirus, which continues to pace the planet. The number of infected at the moment has reached almost eight thousand, while the death toll has reached 170 people. According to experts, the peak incidence is still ahead, so the dollar will still prove to be a defensive tool. With an increase in anti-risk sentiment, the EUR/USD pair may return to the 9th figure, reaching in the near future the strongest support level of 1.0940 (the lower line of the Bollinger Bands indicator on the weekly chart).

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

EUR/USD Makes False Breakdown, But Bias Still Bearish. Technical Analysis For 30.01.2020

EUR/USD has declined as low as 1.0992 yesterday, but the sellers weren't able to keep the price below the 1.1000 psychological level. The currency pair is trading at 1.1011 level at this moment as the USDX has come back down to retest the 98.00 level.

As you already know, the Federal Reserve left the Federal Funds Rate steady at 1.75%, as expected, but unfortunately, the USD was punished by the poor US data. The Goods Trade Balance widened from -63.0B to -68.3B, much below the -64.5B estimate, while the Prelim Wholesale Inventories edged down by 0.1%, though analysts had expected a 0.1% uptick.

Pending Home Sales plunged by 4.9% in December, whereas economists had expected to see a 0.5% increase after a 1.2% gain in the previous month. You should keep an eye on the economic calendar today, as the Advance GDP, Advance GDP Price Index and the Unemployment Claims from the US could bring life to EUR/USD. If the figures are better than expected, the USD could drive the pair much lower.

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EUR/USD has failed to stabilize below the 1.1 level, but the bias remains bearish as long as the price stays below the median line (ml) of the descending pitchfork. The price has failed to reach and retest the median line (ml), so EUR/USD remains under high selling pressure.

A further increase of the USDX after the 98.00 level retest will signal a EUR/USD drop below the 1.1000 level again. More sellers will be attracted if EUR/USD will make a valid breakdown (close and stabilize) below the 1.1 psychological level.

  • Trading Recommendation and Forecast

We can go short on EUR/USD after a valid breakdown below the 1.1000 level after a lower low with potential targets at 1.0925 and at the lower median line (lml) of the descending pitchfork. Stop Loss should be placed above 1.1027 level. The outlook is bearish as long as the pair is trading below the median line (ml).

Right now, I can't talk about a potential rebound, but you should know that another false breakdown (rejection) below the 1.1 level and a breakout above the median line (ml) could signal bullish momentum on the short term towards the upper median line (uml). This scenario could happen only if the price fails to close and stabilize below the 1.1 psychological level.

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Fed takes a break and will continue to monitor the situation on the market (we mainly expect consolidation in the ranges

As expected, the Fed's decision on monetary policy, as well as subsequent comments by its leader J. Powell, did not have a significant impact on the market.

The American regulator made the expected decision to maintain the parameters of monetary policy during the first meeting this year. The Central Bank left the target range for federal funds 1.50% -1.75%. At the same time, the interest rate on surplus reserves was also increased, up to 1.6% against 1.55%. The discount interest rate remained at around 2.25%. The decision of the voting members of the Open Market Committee (FOMC) was unanimous.

The regulator's resolution states that he will conduct the purchase of short-term treasury bonds throughout the year, while overnight repo transactions are planned to be maintained until the end of the first quarter. In general, the bank stated that inflation expectations and the hope that it would grow to the target level of 2.0% were maintained. The Bank also made it clear that consumption remains moderate, while exports and imports are weak. The labor market is strong amid moderate growth in the national economy.

On the other hand, Powell's speech did not contain any surprises. He expressed dissatisfaction with the persistently low inflation, which is kept below the 2.0% mark, expressed concern about the situation around the coronavirus and indicated that wages are growing mainly in the low wages segment.

In turn, the markets reacted to the final decision of the Federal Reserve and the speech of its head is restrained and without special emotions. The focus of investors remains the topic of the Chinese coronavirus and Britain's exit from the EU on January 31, as already decided by the local parliament. However, this pathetic event is expected on Friday, and today, the attention of market participants will be focused on the outcome of the meeting of the Bank of England on monetary policy. It is assumed that the regulator will leave all the parameters of monetary policy unchanged. The key interest rate at 0.75%, and the amount of asset repurchase in the amount of 435 billion pounds.

The focus of the market will also be the speech of the head of the Central Bank, M. Carney, from whom forecasts on monetary policy for the near future will be expected.

In our opinion, Carney will try not to rock the economic "boat" of Britain in anticipation of the fact of Brexit. Thus, in general, we do not expect any noticeable and radical changes in the currency exchange market today.

Forecast of the day:

The GBP / USD pair is consolidating in the range 1.2965-1.3165 in anticipation of the final decision of the Bank of England on monetary policy, as well as the fact that Britain will exit the EU, which will take place on January 31. We expect the pair to decline only if the bank unexpectedly decides to lower interest rates or M. Carney makes it clear in his speech. In this case, the droppings fall to 1.2900.

The USD / JPY pair is consolidating in a narrow range of 108.75-109.25 in the wake of reducing the fear that the situation with the coronavirus will turn into a pandemic. It is likely that the pair will consolidate today in this range, unless, of course, another negative with the coronavirus appears again in the news top.

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Technical analysis of GBP/USD for 30/01/2020:

Technical Market Overview:

The GBP/USD pair keeps trading inside of a narrow horizontal zone located between the levels of 1.3168 - 1.2962 and currently it is reaching the lower zone levels. The next target for bears is seen at the levels of 1.2988 and 1.2962. If the last support is clearly violated, then the sell-off will continue towards the level of 1.2939. The weak and negative momentum supports the bearish outlook, but the global market participants await the Brexit anyway and the market reaction to this historical event.

Weekly Pivot Points:

WR3 - 1.3380

WR2 - 1.3270

WR1 - 1.3179

Weekly Pivot - 1.3070

WS1 - 1.2967

WS2 - 1.2843

WS3 - 1.2751

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is up, so all downward market moves will be treated as local corrections in the uptrend. In order to reverse the trend from up to down in the longer term, 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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Technical analysis of EUR/USD for 30/01/2020:

Technical Market Overview:

The EUR/USD pair has made a marginally lower low at the level of 1.0990 before the local slight bounce occurred. The bounce has been capped at the level of 1.1024, so the next trading range is being established as the liquidity dries up in the last days of January. The market conditions are extremely oversold on this timeframe, but due to the weak and negative momentum that is still hovering below its fifty level, the odds for another leg down are still high. The next target for bulls, if the breakout is genuine, is seen at the level of 1.1040, but the real gamechanger is seen at the level of 1.1076. Please notice that the downside is limited by the lower channel line as well, so the support might help the price to move higher.

Weekly Pivot Points:

WR3 - 1.1171

WR2 - 1.1139

WR1 - 1.1072

Weekly Pivot - 1.1044

WS1 - 1.0977

WS2 - 1.0946

WS3 - 1.0872

Trading Recommendations:

Not much has changed since the last week in a bigger perspective. Still, 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 1.0981 and the technical resistance at the level of 1.1267.

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FOMC January Report

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The information received after the meeting of the Federal Committee on Open Markets in December suggests that the labor market remains strong and that economic activity is gradually growing. Jobs have grown steadily on average in recent months, while the unemployment rate has remained low. Although household spending grew, investment in fixed assets and exports remained weak where the total inflation fell below two percent for the current year. The Committee believes that the current position of monetary policy is suitable to support sustained growth in economic activity and keep inflation at a level not exceeding 2%.

Decisions regarding the implementation of monetary policy:

The Board of Governors of the Federal Reserve System voted unanimously to set the interest rate on the mandatory and excess reserve balance at 1.60% starting January 30, 2020.

"Starting January 30, 2020, the Federal Committee for Open Markets instructs the Department to conduct operations on the open market as necessary to maintain the federal funds rate in the target range of 1 1 / 2 to 1 3 / 4 percent. The Committee instructs the Office to continue the procurement of treasury bills at least in the second quarter of 2020 to maintain a sufficient reserve level that prevailed in the early stages. The Committee also instructs the Office to participate in dollar coupon exchange and coupon exchange operations, as necessary, to facilitate settlements on Federal Reserve transactions with mortgage-backed securities. "

In this regard, the Board of Governors of the Federal Reserve System unanimously voted to approve the establishment of the primary loan rate at the existing level of 2.25 percent. This information will be updated as necessary to reflect the decisions of the Federal Open Market Committee or the Board of Governors regarding the details of the Federal Reserve's operational instruments and the approach used to implement monetary policy.

The Monetary policy action was voted by the following: Chair Jerome H. Powell, Vice Chairman John C. Williams, Michelle W. Bowman, Lael Brainard, Richard H. Clarida, Patrick Harker, Robert S. Kaplan, Neel Kashkari, Loretta J. Mester, and Randal C. Quarles.

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What did the US Federal Reserve say on January 29?

The US Federal Reserve kept the rate at 1.625% and said:

The information received after the Fed's meeting on open markets in December indicates that the labor market remains strong, and economic activity is growing at a moderate pace. In recent months, the average employment growth has been significant, while the unemployment rate has remained low. Although household spending is growing at a moderate pace, the business investment in fixed assets and exports remains weak. On a 12-month basis, the overall rate of inflation and inflation for goods other than food and energy is less than 2 percent. Market indicators of inflation remain low; The indicators of long-term inflation expectations based on survey results have not changed much.

In accordance with its statutory mandate, the committee seeks to promote maximum employment and price stability. The committee decided to maintain the target range for the Federal funds rate at 1-1 / 2 to 1-3/4 percent. The committee believes that the current position of the monetary policy is appropriate to support the sustainable expansion of economic activity, strong labor market conditions, and the return of inflation to the committee's target of 2% equilibrium. The committee will continue to monitor the impact of incoming information on the economic outlook, including global changes and restraining inflationary pressures, as it assesses the appropriate path of the target range for the Federal funds rate.

In determining the timing and amount of future adjustments to the target range for the Federal funds rate, the committee will evaluate the realized and expected economic conditions relative to its maximum employment goal and its symmetrical 2% inflation goal. This assessment will take into account a wide range of information, including indicators of labor market conditions, indicators of inflationary pressure and inflation expectations, as well as indications about financial and international events.

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Indicator analysis: Daily review on EUR/USD for January 30, 2020

The pair continued to move down yesterday while testing the support line for the downward channel at 1.0995, presented in a red bold line. After that, the price went up. Today, strong calendar news for the euro is expected at 08:55 UTC and for the dollar at 13:30 UTC. On Thursday, a retraceable upward movement is possible.

Trend analysis (Fig. 1).

An upward movement is possible today with the first target of 1.1029, the retracement level of 14.6% presented in a blue dashed line. Upon reaching this level, continue to work upward with the goal of 1.1052, the retracement level of 23.6% 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 - up;

- Weekly schedule - up.

General conclusion:

An upward movement is expected today with the first target of 1.1029, the retracement level of 14.6% presented in a blue dashed line.

An unlikely but possible scenario is from the level of 1.1013, yesterday's closing candle, the price will go down to the support line 1.0994, presented in a red bold line, and then work up.

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