Dollar is losing its status as a safe haven amid the risks of a recession in the US; growth of the EUR and the decline of

Panic sales do not subside. The main stock indices of the Asia-Pacific countries lose by 2-4% during the Asian session, the Chinese Shanghai Composite drops by 2.9% as of 5.45 Universal time, while the Japanese Nikkei225 is even at minus 4.6%, which is even more alarming, since the Japanese the economy is extremely dependent on imports of raw materials, and in calmer times, the fall in oil prices leads to an increase in stock indexes, rather than a decrease in them. Apparently, the reason for this is not that we are witnessing an increase in panic, but because a wave of flight has begun not just in defensive assets, but also in the cache, hence the sharp increase in demand for yen and the euro.

Both of these currencies were under pressure amid growing demand for the dollar, as the American economy looked clearly preferable, and capital left Japan and Europe outside the cycle of fluctuations in demand for raw materials and risky assets. Now, this outcome has sharply slowed down after the decline of US stock indices by more than 10%, which has led to an increase in demand for the currency.

Despite the fact that the latest macroeconomic data from the United States still looks convincing, the market does not pay attention to them. Meanwhile, orders for durable goods in January rose more than forecasts, indicating a growing congestion in American industry. The levels of industrial activity are also generally higher than forecasts according to the Fed's regional reports. But at the moment, a completely different criterion is coming to the fore - an increase in the probability of a FOMC rate cut.

The dynamics of the spread between short-term and long-term bonds, which seemed to have rolled back from dangerous levels in recent months, turned in favor of an imminent recession once again.

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As a result, the main driving force for the dollar against the euro and the yen is suddenly changing direction. According to CME, the probability of a one-time reduction in the FOMC rate in the current year increased to more than 80%, and moreover, the probability of a double reduction in the rate exceeded 50% for the first time.

At the same time, both the ECB and the Bank of Japan are not expected to increase the stimulus package. The ECB has taken more risks into account in its decisions than the Fed, and the Bank of Japan has very limited opportunities. All this leads to the fact that the dollar against the backdrop of collapse of stock indices loses investment attractiveness.

The virus in the current conditions looks like a cause of panic sales, but this is hardly true. The real reason is that the leading central banks do not have the tools to achieve demand growth using monetary methods, since most of the methods were exhausted even in the previous wave of the 2008/09 crisis. COVID19 is an ideal cover for a global recession, but it is clearly not the cause of it.

EUR/USD

The possible loss by the dollar of the status of a safe haven currency makes the euro a favorite of the currency exchange market, but in the long term, a reversal has not yet been formalized. A significant reduction in carry trade operations, in which the euro was used as the funding currency, is another source of its recovery.

EUR/USD is currently trying to gain a foothold above the downward trend border of 1.0965 / 85, if successful, there is a high chance of seeing the euro at 1.11 in the very near future.

GBP/USD

GfK's long-term consumer confidence index has been rising for the third month in a row.

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The increase in the index is due to an increasingly positive outlook on the state of the general economy of Great Britain both in the past and in the next 12 months. Consumer demand supports the pound and its decline in the last 3 days is due to the same reasons as the growth of the euro - the withdrawal of players from commodity assets.

A trade dispute with the EU and panic in the markets led to an increase in the probability of a BoE rate drop to 80%, which is another reason for the weakening pound. It can be expected that the slowdown in panic sales will give the pound an impulse for growth. The support zone is 1.2847 / 67, its decline is only possible in case of increased panic. And most likely, the formation of the base and an attempt to return to the growth trajectory.

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Trading plan for EUR/USD on February 28, 2020. The coronavirus has brought down the US market and oil. The markets on the

analytics5e58af29e2044.jpgAbove is the S&P 500 daily chart. It showed the third biggest drop this week, with the overall drop from highs at about 13%. Although this is not a real crisis yet, it is already a serious bid. Due to the global panic due to the coronavirus, analysts from Goldman Sachs and JP Morgan have announced a massive revision of expectations for companies.

Virus: The number of cases outside China exceeded the number of new cases recorded in the country. The worst situation is in South Korea, with 700 new cases per day, amounting to more than 2000 in total. The second focus is Italy with 650 patients, and Iran with 245 cases.

At the same time, oil fell to $ 45.

As long as there is no slowdown in the spread of the virus, it will remain as the main topic of the markets.

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EUR/USD: the euro reversed the downward trend.

Against the background of the coronavirus as well as the fall of the US market, the euro showed a sharp upward turn.

Our sales followed the footsteps at 1.0990.

Buy at the break of 1.1100 upwards.

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Hot forecast for EUR/USD on 02/28/2020 and trading recommendation

The quote confidently follows the emotions in the structure of a corrective move, where more than 200 points have already been passed from the support point of 1.0775. The noise set amid rumors of a possible Fed interest rate cut puts pressure on dollar traders who have left their positions, and the growing activity of the coronavirus is increasingly discussed by the heads of state, which also creates an additional background for rash jumps.

In terms of statistics, we had a second preliminary estimate of US GDP for the fourth quarter, where we were waiting for a revision upward to 2.3%, but the level remained unchanged at 2.1%. At the same time, applications for unemployment benefits in the United States were published, which remained virtually unchanged: re-9 thousand; primary +8 thousand. It is worth considering that the previous data on applications have been reviewed for the worse.

Today, the focus of attention will be the publication of preliminary data on inflation in Europe, which can show its slowdown from 1.4% to 1.2%. From that moment, all previous data will be instantly forgotten, and the dollar will again grow rapidly, as well as in relation to all currencies. And it's understandable that amid the market's disappointment over inflation in Europe, as well as the fact that with such inflationary dynamics, one does not have to wait for a tightening of the monetary policy of the ECB.

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From the point of view of technical analysis, we see that the corrective move turned into an inertial-impulsive one, which led to the convergence of prices with the psychological level of 1.1000. In fact, this is already a significant scale, if we take into account the entire scope of the correction, thereby overheating long positions already exist, which can play into the hands of sellers.

In terms of a general review of the trading chart, we see that the current movement has generated 50% of the entire downward movement since the beginning of February and now the level of 1.1000 plays a kind of stumbling block where the fate of the downward development is decided.

It is likely to assume that an oversold signal was still received, and in combination with a psychological level of 1.1000, we can get the most attractive short positions. There is no need to hurry, first we will fix the slowdown, the structure of which already has the outlines of 1.0980/1.1010. The next step will depend on the price taking points, we are interested in breaking the boundary of 1.0980 with a pass lower than 1.0965. The sell signal is confirmed in this case. An alternative scenario considers a change in the clock component, where the correction move is maintained towards the level of 1.1080.

Concretizing all of the above into trading signals:

- Long positions, we consider in case of price taking higher than 1.1030, with the prospect of a move to 1.1065-1.1080.

- Short positions, we consider in the case of price taking lower than 1.0980 and passing the mark of 1.0965.

From the point of view of a comprehensive indicator analysis, we see that technical instruments unanimously signal a purchase due to such a significant inertial move. Minute indicators can be unstable due to turbulence within the psychological level.

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Markets are in chaos. What's next? (we expect USD/JPY and NZD/USD pairs to continue to decline)

Yesterday's collapse in global financial markets can be called "Black Thursday". It was the fears of the coronavirus pandemic across the planet that caused world stock indices to decline

It is difficult to say how it will all end, but it can be argued that the consequences of these events will continue to affect the dynamics of exchange-traded assets for a long time to come. The broad sales are based on expectations from investors that the global economy will slow down in its growth. The fears generated by the coronavirus will go to Europe, which turned out to be not at all ready to fight this plague. Therefore, open borders between countries will lead to the rapid spread of this infection if drastic measures are not taken.

In general, we believe that the chaos in the markets will increase or decrease depending on the dynamics of news on the topic of the coronavirus.

The currency exchange market reacts to the panic surrounding the coronavirus by continuing to decline in commodity and commodity currencies. And this is understandable, since the expected decline in global economic growth amid falling business activity and consumer demand causes a landslide drop in the quotes of oil and industrial goods - metals and the like. We believe that for this reason, the Australian, New Zealand, and Canadian dollars will remain under pressure.

On the other hand, significant support will be given to protective assets - government bonds of economically strong countries, safe haven currencies and gold. As for the dynamics of safe haven currencies, everything is not so clear here. The yen and the Swiss franc will traditionally increase. At the same time, the US dollar, as mentioned above, will develop in relation to commodity and commodity currencies.

Thus, an interesting situation will be observed in the euro / dollar pair. The strengthening of the single currency against the US is associated, first of all, with the growth of expectations of lower interest rates by the Federal Reserve at the March meeting. The second reason is the lack of clear signals from the ECB regarding the future monetary policy of the regulator. And another local positive for the single currency is the recent publication of generally positive economic statistics. The presence of these causes against the background of panic around the coronavirus can locally support the course of the Eurocurrency.

Forecast of the day:

The USD/JPY pair continues to decline on the wave of investors withdrawing from risky assets. The price is testing the level of 108.85, the breakdown of which will serve as the basis for the further decline of the pair to the level of 107.85.

The NZD/USD pair is trading below the level of 0.6250 amid falling demand for commodity assets. We believe that fixing the price below this level will become a reason for a further decline in prices to 0.6150.

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Indicator analysis. Daily review of GBP/USD on February 28, 2020

Trend analysis (Fig. 1).

Today, from the support level of 1.2903 (white bold line) a downward movement is possible with the first target of 1.2849 at the lower fractal (red dashed line). If this level is reached, there is a continuation of work down with the target of 1.2797, the lower border of the Bollinger line indicator (blue dashed line curve).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - up;

- Candlestick analysis - neutral;

- Trend analysis - down;

- Bollinger lines - down;

- Weekly schedule - down.

General conclusion:

Today, the price may continue to move down.

An unlikely scenario is from the support level of 1.2903 (white bold line), an upward movement is possible with the target of 1.2939, the pullback level of 50% (blue dashed line).

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Indicator analysis. Daily review of EUR/USD on February 28, 2020

The pair rallied on Thursday, breaking through the resistance line of the downward channel 1.0986 (red bold line). Today, strong calendar news for the euro is expected at 08:55 UTC. The price may continue to move up. A side-channel is possible due to the consolidation of the bull's profit.

Trend analysis (Fig. 1).

The market may continue to move up today with the target of 1.1064, the retracement level of 61.8% (red dashed line). Upon reaching the level of 1.0956, work up to the resistance line of 1.1132 (white bold line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

A continued upward movement is expected today with the target of 1.1064, the retracement level of 61.8% (red dashed line).

An unlikely scenario is from the level of 1.1003 (closing yesterday's candle) work down with the target at 1.0974, the pullback level of 14.6% (blue dashed line). Upon reaching this level, the next lower target is 1.0953, the retracement level of 23.6% (blue dashed line).

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Technical analysis of ETH/USD for 28/02/2020:

Crypto Industry News:

Ethereum co-founder Vitalik Buterin does not believe that the popular model is useful for predicting the price of Bitcoin.

In a recent Twitter debate, Buterin became the second known figure to criticize the stock-to-flow model, according to which Bitcoin will reach an average of $ 100,000 in 2021-2024.

The model has been accurate so far in predicting Bitcoin price increases. However, according to Buterin, the stock-to-flow model is a prognostic model like any other. Discussing press articles that attribute specific events to Bitcoin price increases, he stated that the vast majority were "rationalized nonsense."

"Every day I remind you that 95% + articles in the form" event X will cause the crypto to go (up | down) "is post-hoc rationalized nonsense," wrote Buterin.

The remaining 5% of the articles that Buterin apparently supports are not disclosed."You don't have to be beaten - using the" stock-to-flow "model to predict prices is absolute nonsense," concluded Buterin.

Technical Market Outlook:

The ETH/USD pair has bounced towards the level of $235.42 which is the key short-term technical resistance for the market, but the bulls did not manage to break through this level. Ethereum still trades below the short-term trendline resistance.The weak and negative momentum supports the bearish outlook. The fear of coronavirus is spreading across the financial markets and the cryptocurrency market is involved as well, together with stocks and risky currencies.

Weekly Pivot Points:

WR3 - $334.89

WR2 - $309.29

WR1 - $291.76

Weekly Pivot -$264.76

WS1 - $245.87

WS2 - $220.22

WS3 - $202.34

Trading recommendations:

The wave 2 corrective cycles are completed at the level of $115.05, 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 $146.94 is not violated. The current move up might be a wave 3 in developing in the overall long-term Elliott wave scenario and so far the top at the level of $288.01 might be wave 1 of the overall wave 3.

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Technical analysis of BTC/USD for 28/02/2020:

Crypto Industry News:

According to Skew's analytical data provider, Bitcoins worth more than $ 150 million have been liquidated on the BitMEX exchange, which is the highest value since the beginning of this year. Millions of dollars in long and short positions caused the value of the cryptocurrency to drop to $ 8,580, which is a decrease of over 6%.

Although the price of Bitcoins slightly increased to $ 8,328, it can be difficult to return to above 10,000 again. On February 16, the market value dropped by almost $ 300 per hour, which gives Bitcoin a value well below that threshold.

Some are already preparing for the possibility that the value of cryptocurrency may fall below $ 8,000. However, some observers are more optimistic. Tom Lee, the co-founder of Fundstrat Global Advisors, predicted that by this summer, Bitcoin's price would rise to over $ 27,000 based on a 200-day moving average.

Many cryptocurrency exchanges and companies associated with Blockchain technology have felt the impact of a potential global COVID-19 epidemic, also known as coronavirus. Employees of Chinese mining companies have been forced to stay at home or imprisoned out of cities due to quarantine enforcement.

Regardless of the reason for the recent Bitcoin decline, this incident reminds us that the cryptocurrency market can be just as fragile as traditional investments.

Technical Market Outlook:

The BTC/USD bounce towards the level of $9,000 was very short-lived and the price has only managed to hit the level of $8,915. Currently, the BTC/USD is trading above the support located at the level of $8,693 and the momentum remains weak and negative, so odds for another wave down are high. The next target for bears is seen at the level of $8,405 and the main technical resistance is located at the level of $9,013. The corrective cycle is getting deeper as the coronavirus fears affect all financial markets.

Weekly Pivot Points:

WR3 - $11,253

WR2 - $10,744

WR1 - $10,274

Weekly Pivot - $9,742

WS1 - $9,288

WS2 - $8,756

WS3 - $8,263

Trading recommendations:

The market might have made the first impulsive wave up of a higher degree. 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 $10,433 is clearly broken.

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Technical analysis of GBP/USD for 28/02/2020:

Technical Market Outlook:

Not much has happened on GBP/USD pair overnight. After a new local high was made at the level of 1.3016, the bears had taken control of the market again and push the price way lower towards the middle of the GBP/USD trading range again. The market backed off from the overbought conditions and the momentum indicator is showing negative - to - neutral momentum at the H4 timeframe chart. The market trades aimlessly for now until one of the key levels is finally clearly violated. The next technical support is seen at the level of 1.2904 and 1.2871.

Weekly Pivot Points:

WR3 - 1.3255

WR2 - 1.3152

WR1 - 1.3043

Weekly Pivot - 1.2942

WS1 - 1.2840

WS2 - 1.2740

WS3 - 1.2640

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 1.3512.

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Technical analysis of EUR/USD for 28/02/2020:

Technical Market Outlook:

The EUR/USD pair has been rallying for the whole week and finally, the main channel upper line has been tested and violated around the level of 1.0991. The local high was made at the level of 1.1006 at the time of writing the article, but even after the impressive rebound, the price is still trading below the last swing located at the level of 1.1091, so the rally might be corrective in nature. The market conditions are now overbought despite the positive and strong momentum, so the downtrend might start to be continued any time soon.

Weekly Pivot Points:

WR3 - 1.0954

WR2 - 1.0908

WR1 - 1.0871

Weekly Pivot - 1.0825

WS1 - 1.0787

WS2 - 1.0735

WS3 - 1.0693

Trading recommendations:

The best strategy for current market conditions is the same as it was for recent months: 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 larger timeframes like weekly, which indicates 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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Monthly Analysis of Gold for Feb 2020

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In the larger timeframe (Monthly Chart), we can see there is a range in this timeframe between 1,770.60 and 1,824.30. This Liquidity Pool will be act as a magnet area for this asset to be reached. The coronavirus epidemic is setting the tone for the global market conditions. The outbreak gives a negative domino effect for almos tall countries. Uncertainty forces traders and investors to protect their asset into the safest and low-risk assets and one of them is Gold. So, the odds are that Gold will extend its bullish bias as long the Gold price does not drop below 1,445.20 which can halt the bullish bias at least temporarily.

(Disclaimer)

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NZD/USD price movement for Feb 28, 2020

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Today Kiwi is attempting to overcome the nearest sell-side liquidity pool at 0.6237 as its prime target and 0.6201 as its secondary target. Pay attention to 0.6461 as this can be a breakout level. If this scenario confirms, NZD/USD will resume its downward movement. The overall bias for the pair is bearish.

(Disclaimer)

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GBP/USD: plan for the European session on February 28. Last chance for Pound buyers to return to 1.2895. Bears control the

To open long positions on GBP/USD you need:

UK government statements on trade talks with the EU from yesterday, which I described in more detail in the forecast for the US session, limit the growth prospects for the pound. Buyers have the chance to resume the correction, which directly depends on the resistance of 1.2895. If the bulls manage to gain a foothold above this range, we can expect an increase to the resistance of 1.2930, and then an update of the high of 1.2970, where I recommend taking profits. The formation of a false breakout at the support level of 1.2862 will also be a signal to open long positions in the pound, but it is best to take your time and wait for the local lows to update around 1.2830 and 1.2799, where larger players will return to the market.

To open short positions on GBP/USD you need:

Pound sellers control the market, so they will wait for more suitable prices. The formation of a false breakout at the level of 1.2895 with a rebound from the moving average will be a signal to open short positions in the pound, which will lead to its decline and update support at 1.2862, which keeps the pair from a sharper fall. In the absence of active sales in the region of 1.2895, it is better to open short positions in GBP/USD only by a rebound from the high of 1.2930, or even higher, in the resistance area of 1.2970. A more important task of the bears is to break through and consolidate below the support of 1.2862, which will quickly push the pair to the year lows at 1.2830, and will lead to their renewal in the area of 1.2799, where I recommend taking profits.

Signals of indicators:

Moving averages

Trading is carried out below 30 and 50 moving average, which saves the likelihood of continued downward correction. The averages also play the role of resistance.

Bollinger bands

A break of the lower boundary of the indicator at 1.2862 will increase pressure on the pound, while a breakout of the upper boundary at 1.2897 will cause the pair to sharply rise.

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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 February 28. Euro has reached the level of the 10th figure. Next target 1.1046

To open long positions on EURUSD you need:

Correction in the US stock market (the S&P 500), which lost more than 13% over the week, has a positive effect on the European currency, but the test of the 10th figure may limit further upside potential, so be careful with purchasing at current highs. Yesterday's weak data on the US economy also acted as a catalyst for the euro's growth. However, it is worth saying that today's breakthrough of resistance at 1.1002 will be accompanied by a bearish divergence on the MACD indicator, which will limit the growth of the pair. It is best to return to long positions after correction and the formation of a false breakout in the support area of 1.0968, or buy immediately for a rebound from a low of 1.0937. Under the scenario of good fundamental statistics for the countries of the eurozone, and today there are quite a lot of them, a break and consolidation above the resistance of 1.1002 will lead EUR/USD to new highs in the areas of 1.1022 and 1.1046, where I recommend taking profits.

To open short positions on EURUSD you need:

The large increase in the euro did not leave a single chance for the sellers yesterday. Today, bears will try their best to prevent the growth of the European currency above the resistance of 1.1002, which may coincide with the bearish divergence on the MACD indicator. A false breakout of 1.1002, after updating yesterday's highs, will be a signal to open short positions in the calculation of a correction to the lows of 1.0968 and 1.0937, where I recommend taking profits. If the data on inflation and the labor market in Germany turn out to be better than forecasts of economists, then it is best to return to short positions after updating the high of 1.1022, and larger sellers will retreat to the resistance of 1.1046.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 moving averages, which indicates the likelihood of further upward correction of the euro. With a decrease in the pair, the moving averages will also act as support.

Bollinger bands

Growth will be limited by the upper indicator level in the region of 1.1020, while the lower boundary in the area of 1.0935 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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Forecast for EUR/USD on February 28, 2020

EUR/USD

The euro showed an abnormal growth of 120 points on Thursday amid moderate (canadian dollar) or even indistinct (Australian dollar) development in other leading currencies.. The reason for this was the widespread risk aversion and the curtailment of European carry trade transactions. The US stock market (S&P 500) fell 4.42%, in one week the decline blocked the previous four-month growth. The market likelihood (in accordance with futures on federal funds) of the Fed's rate cut in March in one day increased from 44.3% to 97.4%, even for April, another cut is 73.1% compared to 27.5% the day before. At a time when the epidemic of the coronavirus began to subside, a storm came to the markets. On the other hand, this is the best time to blow out market bubbles and remove small players from the market. Major players left the market last year. Euro trading volumes were the highest yesterday in the last 5.5 months. The lion's share did not fall on purchases, but on closing stop losses above 1.09. The euro corrected 50% of the entire decline on December 31-March 20. Now you can turn down. The fact is that if investors really consider the collapse to be the beginning of a new global crisis, whether they want it or not, the world will buy dollars even when rates are lowered, but carry trade deals, according to experience, are closed very quickly.

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The euro reached a low of January 2020 and the resistance of the embedded line of the price channel on the daily chart. Growth was stopped by the red indicator line of balance, which from a purely technical point of view indicates that the downward mood will continue. The MACD line is also higher than the price. The Marlin has risen, but shows an intention to turn down.

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The situation is completely upward on the four-hour chart. The Marlin oscillator in the overbought zone. Taking into account yesterday's volumes, we can expect some price delay in the area of the reached high, investors will need several days to make new decisions. A signal for the resumption of sales will be when the price leaves the under the MACD line, approximately, around 1.0890-1.0900, that is, from the place where there were recent stop losses.

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Forecast for GBP/USD on February 28, 2020

GBP/USD

A wide-range trade of 87 points took place for the British pound yesterday, but the price lost 14 points at the end of the day. The pound demonstrated its intention to follow the previous course without strong attention to the European panic (the euro jumped 120 points yesterday). The immediate goal remains the Fibonacci level of 110.0% at the price of 1.2842, then we expect the price at the Fibonacci level of 123.6% at the price of 1.2758.

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On a four-hour scale, the upper limit of yesterday's range was determined by the MACD line. At the moment, the price is held below the line of balance. The Marlin oscillator remains in the downward trend zone. We look forward to a further decline in the pound.

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Forecast for AUSD/USD on February 28, 2020

AUD/USD

The Australian dollar rose 24 points yesterday following the general weakening of the US dollar. The growth resistance was the Fibonacci level of 238.2% on the daily chart (0.6593). This is a good sign of working out the Fibonacci grid, it says that you can continue to navigate it in determining target levels.

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The closest intermediate support is the Fibonacci level of 271.0% at the price of 0.6536. Overcoming the level opens the way to 314.0% at the price of 0.6457. The beginning convergence of the Marlin oscillator under the pressure of the upper forming line (solid green) may not form.

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The price is falling below the lines of balance and MACD on a four-hour chart. The Marlin convergence has been formed, expressibly worked out, and now the signal line of the oscillator is again in the negative trend zone. We are waiting for the price to move to 0.6457.

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Comprehensive analysis of movement options of #USDX vs AUD/USD vs USD/CAD vs NZD/USD (H4) from February 28, 2020

Minuette operational scale (H4)

Before the spring worsens, here's a comprehensive analysis of the development options for the movement of the dollar index and "commodity" currency instruments #USDX vs AUD / USD vs USD / CAD vs NZD / USD.

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US dollar Index

The movement of the #USDX dollar index from February 28, 2020 will be due to the development and direction of the breakdown of the boundaries of 1/2 Median Line channel channel (99.00 - 98.70 - 98.35) of the Minuette operational scale forks. We look at the animated chart for the movement markings inside this zone.

The breakdown of the support level of 98.35 on the lower boundary of the 1/2 Median Line Minuette channel will confirm that further the movement of the dollar index will occur within the equilibrium zone (98.35 - 97.90 - 97.45) of the Minuette operational scale forks.

In case of breakdown of the upper boundary of the 1/2 Median Line Minuette channel - resistance level of 99.00 - the #USDX movement will continue inside the equilibrium zone (99.00 - 99.20 - 99.45) of the Minuette operational scale pitchfork with the prospect of reaching the 1/2 Median Line Minuette channel boundaries (99.85 - 100.00 - 100.15).

The markup of #USDX movement options from February 28, 2020 is shown on the animated chart.

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Australian dollar vs US dollar

Range development and breakdown direction :

  • resistance level of 0.6580 - lower boundary of the 1/2 Median Line Minuette channel;
  • support level of 0.6543 - start line SSL of the Minuette operational scale forks

will begin to determine the development of the movement of the Australian dollar AUD / USD from February 28, 2020 .

The breakdown of the resistance level of 0.6580 is an option for the development of the movement of the Australian dollar within the boundaries of the 1/2 Median Line channel (0.6580 - 0.6595 - 0.6605) and the equilibrium zone (0.6615 - 0.6635 - 0.6655) of the Minuette operational scale forks with the prospect of reaching the lower boundary of the 1/2 Median Line channel Minuette (0.6670).

On the other hand, in case of breakdown of the start line SSL of the Minuette operational scale forks - the support level 0.6543 together with the control line LTL (0.6535) of the Minuette operational scale forks will direct the downward movement of AUD / USD to the warning line LWL38.2 Minuette (0.6444).

We look at the layout of the AUD / USD movement options from February 28, 2020 on the animated chart.

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US dollar vs Canadian dollar

From February 28, 2020, the development of the movement of the Canadian dollar USD / CAD will be determined by developing the boundaries of the equilibrium zones of the Minuette operational scale forks (1.3380 - 1.3350 - 1.3325) and Minuette (1.3370 - 1.3315 - 1.3260). The details of working out the boundary levels of these zones are shown in the animated chart.

The breakdown of the support level of 1.3260 at the lower boundary of the ISL38.2 equilibrium zone of the Minuette operational scale forks will make it possible to continue the downward movement of the Canadian dollar to the targets:

- the initial line SSL Minuette - 1.3245;

- control line LTL Minuette - 1.3233;

- local minimum - 1.3201;

- The final Schiff Line Minute is 1.3185.

Alternatively, the breakdown of the resistance level of 1.3380 at the upper boundary of ISL61.8 of the equilibrium zone of the Minuette operational scale forks will direct the development of the upward movement of USD / CAD to the final Schiff Line Minuette (1.3420) and the final line FSL Minuette (1.3465).

We look at the markup of USD / CAD movement options from February 28, 2020 on the animated chart.

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New Zealand dollar vs US dollar

The development of the movement of the New Zealand dollar NZD / USD from February 28, 2020 will depend on the development and direction of the breakdown of the range :

  • resistance level of 0.6320 (lower boundary of the 1/2 Median Line channel of the Minuette operational scale forks);
  • support level of 0.6305 (upper boundary of the ISL38.2 equilibrium zone of the Minuette operational scale forks).

In the event of a breakdown of the resistance level 0.6320, the NZD / USD movement will continue in the 1/2 Median Line Minuette channel (0.6320 - 0.6335 - 0.6350) with the prospect of reaching the boundaries of the equilibrium zone (0.6365 - 0.6390 - 0.6415) of the Minuette operational scale forks.

On the contrary, with the breakdown of the support level of 0.6305 at ISL38.2 Minuette, the development of the movement of the New Zealand dollar in the equilibrium zone (0.6305 - 0.6205 - 0.6110) of the Minuette operational scale forks, taking into account the development of the initial SSL (0.6281) and control LTL (0.6723) lines of the Minuette operational scale forks, will become relevant.

We look at the markup of the NZD / USD movement options from February 28, 2020 on the animated chart.

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The review was compiled without taking into account the news background. Thus, the opening trading sessions of major financial centers does not serve as a guide to action (placing orders "sell" or "buy").

The formula for calculating the dollar index:

USDX = 50.14348112 * USDEUR0.576 * USDJPY0.136 * USDGBP0.119 * USDCAD0.091 * USDSEK0.042 * USDCHF0.036.

where the power coefficients correspond to the weights of the currencies in the basket:

Euro - 57.6%;

Yen - 13.6%;

Pound Sterling - 11.9%;

Canadian dollar - 9.1%;

Swedish krona - 4.2%;

Swiss franc - 3.6%.

The first coefficient in the formula leads the index to 100 at the starting date - March 1973, when the main currencies began to be freely quoted relative to each other.

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

How to make money on fear - what does the #SPX stock market crash teach us?

Monday, Tuesday and Wednesday can rightfully be called rainy days for global financial markets. In particular, traders and investors who had never encountered anything like it before, as a result, many of them received the so-called margin warning - margin call.

The positions of traders are large, the pledges are small, and the market itself is more likely to range than trend. The victims in such cases are those who do not comply with the risks and open positions in large volumes, but even those who observe the rules of money management and diversify their risks often find themselves in an unpleasant situation, which is caused by increased volatility. Today we'll talk about the application of volatility to analyze financial markets.

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Volatility is the rate at which a price changes over a given period of time. A sharp increase in price fluctuations usually accompanies a fall in stock markets, from which important conclusions can be drawn. By analyzing the behavior of volatility, predicting the direction of its movement, it is possible to determine favorable and unfavorable periods for investments and opening positions in assets such as CFDs on stock indices - #SPX, gold - Gold and other precious metals, Japanese yen - USDJPY, US dollar and oil - #CL.

It is easier said than done, however, from the intermarket technical analysis, we know that when stock markets go down, there are changes in the price of safe havens and a decrease in the oil market. The relationship between the stock market and other assets looks like this: a decline in the stock market is accompanied by increased volatility, an increase in the dollar and gold prices, a decrease in the price of oil and the USDJPY pair.

Quotes of all the above assets are available at InstaFOREX terminals, but where can I get data for volatility analysis? The answer to this question only at first glance seems complicated, the so-called "Fear Index" - VIX, which reflects the volatility of stock prices of the hundred leading US corporations included in the S&P 500 stock index, will help us in analyzing the structure of volatility. Multiple resources on the network offer convenient tools for analyzing this index, and in order not to blur the mind over the monitor, we will analyze the current situation in VIX (Fig. 1).

I want to explain to the readers the following points. The daily time reflects the situation from one month to six months. Period 5 on the daily time is a week, period 20 is a month, period 120 is six months. The standard settings for the RSI indicator in the stock market is period 14, the MACD indicator is set to 12.26.9 by default. Periods 20 and 120, which are closely related to business cycles, are especially important for analysis.

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Fig. 1: VIX index, day, period one year.

So what does the current situation in the VIX index tell us? First of all, we see that the index indicators are 26.26 and exceeded the volatility indicators for the entire previous year. Therefore, we can say that as scary as it is now, the markets have not had since the active phase of the trade war between China and the United States in December 2018.

An interesting feature is that the stock market grows when the VIX index is below the 120-moving average, and other indicators are reduced. Now we see that indicators are growing. Consequently, conclusions from this situation will suggest a lack of opportunities to buy shares in US companies and the availability of opportunities for their sale. Similarly, one can evaluate stock indices - as long as the situation with volatility has not returned to normal, any recovery of stock indices should be considered from the point of view of opening trading positions.

However, this is not all, as follows from inter-market analysis, with increasing volatility, we should look for opportunities to buy precious metals, primarily gold, we can also consider buying the US dollar against a basket of foreign currencies, selling the USDJPY pair and selling oil. In other words, we do not consider signals that contradict our assumptions, and, on the contrary, look for signals that confirm our hypothesis, while not forgetting about the prospects for the movement of assets from one to six months. An analysis of volatility in other periods may give us solutions for short-term deals in lesser times.

Volatility analysis is a non-trivial task in itself, over which many traders and investors are puzzled. However, a trader who has the basics of technical analysis can always use this tool, which, however, does not eliminate the need for him to follow the rules of money management. Be cautious and careful.

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

GBP/USD: plans for US session on February 27. Pound falls amid the UK government's comments on timing of trade negotiations.

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

The British pound is still losing ground against the US dollar. Its unsuccessful attempt to return to the resistance level of 1.2930 I had mentioned in my morning forecast resulted in massive short deals on the pound/dollar pair. In addition, the pound was weighed down by the news that the UK will walk away from post-Brexit trade talks in June if they show little sign of progress. The bulls have missed the area of 1.2889. Now the main challenge of the day will be the return to this range. If the price consolidates in this range, it will make a rebound to the area of the 1.2930 high, where I recommend locking in profits. If the pound continues to fall after the US GDP report for the fourth quarter is released, it will be possible to buy the pound sterling after a false breakout of the monthly low near 1.2851 or right away in order to rebound from 1.2799.

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

The strong sell signal from the level of 1.2930 I had spoken about in detail in the morning review resulted in the pair's decline and the breakout of the 1.2889 support level, below which trading is currently being conducted. In the afternoon, bears will have to hold off buyers' attacks in this area. Another unsuccessful attempt to grow above 1.2889 may lead to another sell-off in the area of the pair's monthly low, 1.2851, where I recommend locking in profits. If traders become reluctant to buy the pair in this range, it will most likely go down towards its low of 1.2799. If the pound continues to gain ground moving above 1.2889 in the afternoon, it will be possible to open short positions only from the pair's daily high in the area of 1.2945.

Signals of indicators:

Moving averages

Trading is being conducted below the 30-day and 50-day moving averages, which have limited today's bulls attempt to return to the market.

Bollinger Bands

In the case of an upward correction, the upper border of the indicator will act as resistance in the area of 1.2945.

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 12-period EMA. Slow 26-period EMA. 9-period SMA
  • Bollinger Bands (Bollinger Bands). Period 20
The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD. Germans and alarmists raised the pair to the 10th figure

The euro-dollar pair still strengthened to the boundaries of the 10th figure. Such dynamics was in question just yesterday - many said that corrective growth has exhausted itself. The EUR/USD bulls could not overcome the resistance level of 1.0920 (the middle line of the Bollinger Bands indicator on the daily chart), and after a three-day growth, the price froze in a flat, in the middle of the eighth figure. But after a one-day swing, traders with invigorated strength began to get rid of the dollar, while investing in euros. It is worth noting that this time the pair is growing not only due to the weakening of the greenback. The single currency received unexpected support from the Germans, who seemed ready to begin fiscal stimulus. This plot twist was really unexpected, especially against the background of general pessimism regarding the pace of spread of the Chinese coronavirus in Europe.

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Thus, information appeared in the German press that Berlin plans to allow municipal governments to temporarily exceed their budget expenditures as part of fiscal support for the country's economy. And although this information is informal, it provided significant support to the euro.

It is worth recalling that Christine Lagarde, during her first speeches as head of the ECB, urged the governments of the EU countries to use the surplus of their budgets to support the eurozone economy. First of all, she addressed the leaders of Germany and the Netherlands. According to Lagarde, these countries "with a chronic budget surplus" should increase investment and government spending.

Around the same time - that is, last fall - rumors appeared on the market that Germany could create the so-called "shadow budget" to increase government spending. The German government allegedly considered the possibility of creating this mechanism, given the slowdown in the growth of the national economy. The main goal is to increase government spending in such a way as to circumvent restrictions on public debt growth, thereby observing the rules of the European "Stability and Growth Pact." Indeed, at the end of the year before last, it was precisely for violating this Pact that Brussels was going to hold Italy accountable - Rome was facing a fine of several billion euros for exceeding the "ceiling" of the budget deficit. Apparently, then Berlin failed to create a "shadow mechanism" that would allow legally increasing government spending for the implementation of infrastructure and other projects. But the idea itself did not die: recent publications in the German press eloquently testify to this.

Officially, Germany has so far denied such intentions. Recently, a spokeswoman for the German ministry of finance said the government still held the position of "fiscal rationality." But talk about this still does not cease, because the financial impulse from Germany is especially important in the context of the subsequent actions of the European regulator. According to some experts, this step on the part of the Germans will allow members of the European regulator not to resort to further measures to soften the parameters of monetary policy - especially against the background of the existing split on this issue in the ECB.

Meanwhile, dollar bulls continue to be under pressure from speculation over the Fed's interest rate cut. After a lull, rumors about the respective intentions of the US regulator appeared on the market again. Moreover, the date of this decision was again "brought closer": if last week we discussed summer dates (June or July), then at the beginning of this week, traders started talking about lowering the rate at the April meeting. Today, some currency strategists have not ruled out the March option.

Coronavirus is to blame. The total number of people infected in the United States has increased to 60 people. 18 cases were related to trips to China or close contacts with travelers, and 42 cases were evacuated from the Diamond Princess liner. Since the new virus hit the United States, the dollar has ceased to be used as a defensive asset. Traders put at least one Fed rate cut in prices, although the likelihood of a double cut increases, as they say, "not by the day, but by the hour." Panic sentiment is now playing against the US currency.

Macroeconomic statistics also failed to support the dollar. The second estimate of US GDP growth in the fourth quarter of last year was published today. Contrary to optimistic forecasts, the indicator was not revised upwards (up to 2.2%) - it remained at the level of initial estimates. But the price index of GDP was unexpectedly revised downward - to 1.3%. Business investments have also substantially declined: this indicator has been revised to the level of -2.3% from the initial level of -1.5%. The reduction in business investment has been recorded for the third straight time, implying negative growth prospects for the US economy in the first quarter of this year.

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Thus, today the fundamental background is conducive to further corrective growth of EUR/USD. The nearest resistance level is located quite high - at around 1.1080 (the upper line of the Bollinger Bands indicator on the daily chart). But to confirm the upward trend, the bulls of the pair need to gain a foothold within the 10th figure: this is a kind of key to the subsequent testing of the above price target.

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

GBP/USD. Results of February 27. US data and Britain's uncompromising stance put pressure on the pound

4-hour timeframe

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Amplitude of the last 5 days (high-low): 80p - 105p - 68p - 104p - 108p.

Average volatility over the past 5 days: 93p (average).

The GBP/USD currency pair, unlike the EUR/USD pair, traded downward for most of the penultimate trading day of the week. Since there has not been a single macroeconomic publication in the UK today, and the decline in the pound/dollar quotes began at the European trading session, it can be assumed that US reports were not involved in the sale of the British currency on Thursday, February 27. However, nevertheless, with the release of US data, one can associate the continued fall of the pair or, for example, suggest that traders were ahead of the curve and played strong reports in advance, although the forecasts were just rather weak. We believe that, as in the case of the euro currency, the main reason for the current fall of the British currency is the technical one. Since the pound and the euro have different technical patterns, the movements today are different. The pound continues to be in the so-called "swing" and just dropped today to the lows of February 20, no more. There is no trend movement as such, although the downward trend still persists. We still believe that the pound has only one direction - down. Therefore, in principle, the drop in quotes should continue sooner or later.

Thursday's macroeconomic background was quite strong. All macroeconomic data should have come from overseas, and all of them turned out to be not weak in the end. Most attention was focused on data on orders for durable goods. The main indicator showed a decrease of 0.2% in January, but forecasts predicted a decrease of as much as 1.5%, so the real value was much better than the expectations of market participants. Moreover, the value of the previous month (2.4%) was revised in favor of an increase and amounted to +2.9%. The second most significant indicator, excluding defense and aviation orders, grew in January by 1.1% instead of + 0.1% predicted by experts. Excluding transport orders, the indicator grew by 0.9% against the forecast of +0.2%, and the previous value was also revised upward from -0.1% to +0.1%. And finally, the last derivative of the indicator of orders for durable goods excluding defense increased by 3.6% with a forecast of +1.3%. Thus, all four indicators out of four turned out to be stronger than forecasts, and two were also reviewed in the direction of improvement. The preliminary value of US GDP for the fourth quarter was also published today, which was very expected to be +2.1%, as a quarter earlier. Thus, this report turned out to be neutral. As we have already said, the euro did not react to these publications, and the pound sterling simply continued the earlier begun decline, which is likely to continue today.

The fundamental background for the British pound was also quite weak today. It became known already in the morning that the government of Boris Johnson was seriously thinking about withdrawing from any negotiations with Brussels on a trade deal by June if progress was not seen. Johnson's Cabinet of Ministers understands progress as the acceptance by the European Union of her, Britain, interests and conditions. If the EU does not meet London, the prime minister is ready to curtail any further negotiations and leave the EU on December 31 without any deal. We have said more than once that the lack of a deal with the EU is a new blow to the British economy. However, Boris Johnson, it seems, is ready to take any risks, if only to finally complete the "divorce" with the EU and completely leave the jurisdiction of Brussels. As we expected earlier, the pound will fall for all of 2020.

From a technical point of view, the "swing" continues. Thus, today or tomorrow we can witness a new round of upward movement. The pound is now facing the first support level of 1.2850, which the price could not overcome last time. Thus, the pound/dollar pair is now not the most attractive tool for trading. And of course, there's a fundamental background ... We still don't see how it can improve if the UK economy continues to slow down, it can slow down even more during 2020 and 2021, and the prospects for a trade deal between the EU and Britain remain vague. Therefore, now the British currency is still balancing on the verge of not collapsing, but it seems that this will happen sooner or later.

Trading recommendations:

GBP/USD is trying to resume a downward trend. Thus, it is now possible to sell the British pound with the target of 1.2850. However, the pair may not leave below this level. In any case, a rebound from the first target or a reversal of the MACD indicator upwards will signal a round of correction. We recommend considering the pair's purchases with a target of 1.3000 small lots if the bulls re-consolidate the pair above the Kijun-sen 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

EUR/USD. Results of February 27. Euro takes advantage of technical factors, Donald Trump boasts of a coronavirus vaccine

4-hour timeframe

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Amplitude of the last 5 days (high-low): 43p - 80p - 67p - 60p - 54p.

Average volatility over the past 5 days: 61p (average).

The EUR/USD currency pair continued its upward movement on the fourth trading day of the week, which is still interpreted as a correction against a three-week fall in the euro. As already mentioned, the upward movement unexpectedly intensified today. It happened in the morning when no important macroeconomic statistics were published either in the European Union or in the United States, there were no important and high-profile speeches. Moreover, for example, the pound has been in a downward movement for most of the day, thus showing no correlation with the euro. From this we can already conclude that the reason for the strong growth of the euro was news and news not from the United States. Thus, Donald Trump's talk about coronavirus (to be discussed below) is definitely not to blame. Perhaps a strong rise in the European currency could be related to the speech of Christine Lagarde? However, as of the current moment, there is not a single news in the media related to the speech of the head of the ECB. Perhaps macroeconomic statistics from the eurozone had such a strong impact on the euro? In total, five indexes and indicators were published at the European trading session, reflecting the mood in the economy, consumer confidence and so on. None of these indices turned out to be lower than forecasted values, 3 out of 5 were better than forecasts, and 2 of the last 3 remained in the negative zone. Thus, we believe that they could not have three absolutely minor indexes, 2 of which remained in the negative zone to provoke the strengthening of the European currency by 100 points. Despite the fact that the normal volatility for the euro/dollar is 40-50 points per day. Moreover, a closer examination of the illustration makes it clear that the euro began to grow even at night, so daytime events and publications are certainly not reasons for strong purchases by euro traders. And one more fact, just to immediately close the topic of the impact of macroeconomic statistics on today's euro growth. Just half an hour ago, data on orders for durable goods in the United States were published, and all four indicators exceeded the forecast values, and the preliminary GDP value coincided with the forecast. Thus, statistics from overseas would simply have to cause the strengthening of the US currency, or at least stop the euro's growth, but this did not happen. Thus, we believe that the only reason for the upward movement of the euro/dollar pair is technical on Thursday, February 27. All the same technical need for correction after a long fall.

Now we'll take a closer look at all the published statistics and try to determine how it can affect the balance of power between currencies in the future. European statistics, as already mentioned, turned out to be very good, but initially it was secondary. The economic sentiment index in February amounted to 103.5 against the forecast of 102.8, the mood indicator in the services sector was 11.2 against the forecast of 11.0, the level of consumer confidence in February remained unchanged at -6.6, the business climate indicator exceeded forecasts of -0.28 and amounted to -0.04, and the index of business optimism in industry added 1.2 and amounted to -6.1. Thus, the figures even more eloquently indicate that European data could not cause such a strong growth of the euro. Since we figured out that non-economic data caused the euro to strengthen, we will look at all US statistics in the article on GBP/USD. Unlike the euro, the pound at least showed a hint of a reaction to the published data.

Meanwhile, U.S. President Donald Trump said that the United States is in full swing developing a vaccine against coronavirus. It is difficult to say how to interpret the words of the American leader, if literally at the same time, the director of the US National Institute of Allergy and Infectious Diseases Anthony Fauci said that the vaccine would be ready for use no earlier than a year later. Nevertheless, Donald Trump, who previously promised a quick death of the virus due to natural warming due to the arrival of spring, believes that the risk of contracting an American is minimal. Earlier, the US presidential administration requested Congress $2.5 billion to accelerate the process of creating a vaccine.

From a technical point of view, all three resistance levels and the upper limit of the volatility channel are overcome thanks to today's movement. Thus, traders now can only wait for the MACD indicator to turn down and begin a downward correction. The signal to buy the Golden Cross is strong.

Trading recommendations:

EUR/USD continues to move up. Thus, it is now possible to consider long positions, but all the goals have been worked out and overcome. Thus, you should turn to the higher timeframe for new goals. A downward correction may begin in the near future. It will be possible to return to selling the euro/dollar pair with the target of 1.0826, when traders will be able to gain a foothold back below the critical 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

EUR/USD Surges Thanks To Weaker Dollar! US Data On Radar

EUR/USD has resumed the upside movement and now is pressuring a strong confluence area formed at the intersection of two resistance levels. We foresee a bullish bias in the short term as the USDX is expected to drop deeper. EUR/USD is trading at 1.0915, above the 1.0908 former high, but we need a confirmation that the pair will resume the bullish movement.

The USDX's drop has enabled the EUR/USD to increase. The index has slipped below 98.91 static support and is expected to drop further if it stabilizes below this level. That's why the odds are in favor of the EUR/USD growth. You should be very careful today because the US data will shake the pair. The US is to release the Prelim GDP, Prelim GDP Price Index, Unemployment Claims, Core Durable Goods Orders, Durable Goods Orders, and the Pending Home Sales. Amid such a loaded economic calendar, EUR/USD should advance further if the data disappoints later today.

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EUR/USD has reached the confluence area formed between the median line (ml) of the descending pitchfork and the R2 (1.0914) level. I've said in my previous analysis that the pair could approach and reach these levels if stabilizes above the Pivot Point (1.0829).

Only a valid breakout above this confluence area will confirm a further increase towards the R3 (1.0966) level, or higher towards the upper median line (uml) of the descending pitchfork. A false breakout and a rejection from this resistance area will send the price down again.

EUR/USD could register a false breakout if the US data comes in better than expected. Some upbeat metrics will boost the USDX, which will signal the USD appreciation versus the major currencies.

  • Trading Recommendation

We may have a great long opportunity if EUR/USD makes a valid breakout through the confluence area formed at the intersection between the median line (ml) and R2 (1.0914) level, the next upside targets are seen at R3 (1.0966), 1.1000 psychological level, and at the upper median line (uml).

A false breakout with a great separation could send the pair back towards the PP (1.0829) level.

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

GBP/USD. One step forward, two steps backward: pound cannot determine the direction of its movement

The British currency can not determine the direction of its movement. Yesterday, the pair collapsed to local lows, reaching the level of 1.2893, following the next attack on the 30th figure. However, GBP/USD shows corrective growth again during the Asian session on Thursday. The position is due to a contradictory fundamental background: on the one hand, the pound is under pressure from the Brexit issue (especially in anticipation of negotiations on a trade agreement), on the other hand, the fall of the pair is constrained by the weakness of the dollar, which remains vulnerable. The market also discusses the prospects of monetary policy, although this fundamental factor has so far played a secondary role, since it is still a month (March 26) until the next meeting of the Bank of England. As a result, the pair is forced to trade as part of a wide-range 200-point flat, the lower border of which is the middle of the 28th figure, and the upper border is the middle of the 30th price level.

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Brexit remains the most sensitive topic for the pound. This week, the EU General Affairs Council approved the mandate of the European Commission in negotiations on future relations with Britain. The 46-page document will become the basis for the upcoming negotiations within the transition period (the first consultations between the parties will begin as early as next Monday). The European delegation will be led by Michel Barnier, who "fought with the British" during the first stage of negotiations.

The 46-page document above put significant pressure on the British currency. It reflects Brussels' quite tough position in the upcoming discussions. The common thread is the idea that EU standards should serve as an "unconditional reference point" in any version of a future trade agreement. According to the European Commission, these standards should be applied in the areas of state aid, competition, state, social and labor standards, environmental standards, climate change, relevant tax issues "and other regulatory measures and practices in these areas".

In other words, Europeans initially rejected the so-called "Canadian version" of the deal (as well as the "Australian scenario"). The first option involves almost duty-free trade, with the exception of a number of goods and the market for services. As an alternative, the British propose to consider the "Australian option" - in this case, the parties can choose which sectors of the economy they can agree on, while all other areas will be regulated by the rules of the World Trade Organization.

Moreover, the European Union initially opposed the above options - and now has outlined its position in the form of an approved document. Brussels is trying to "fasten" Britain to EU standards in regulatory matters and trade rules. In addition, Europeans insist that London accept the jurisdiction of the EU Court in possible trade disputes. Great Britain, in turn, is categorically against such proposals. Given these differences, almost all experts and politicians predict a difficult future for the upcoming talks. As French Foreign Minister Jean-Yves Le Drian put it, the parties will "tear each other apart", seeking to gain an advantage in the negotiations. This week, the currency exchange market received another confirmation of such prospects, so the pound paired with the dollar in one day lost more than 100 points.

In addition, many observers are confident that it will be difficult for Britain to conclude a free trade agreement with the EU by the end of 2020. It is worth recalling that the agreement on trade and economic cooperation between the EU and Canada was concluded in 2016 after seven years of negotiations, but similar negotiations between Brussels and Australia on a free trade agreement started back the year before last and have not yet been completed. The upcoming negotiations with London should be completed in 10 months, in December. Given such a short time and all previous statements by politicians, one can imagine how complex and nervous they will be.

The pound paired with the dollar would not be limited to the 28th figure if it were not for the vulnerability of the American currency. The dollar index resumed a downward movement today amid speculation about the prospects for the monetary policy of the Fed. And although Vice President Richard Clarida reassured markets yesterday (he said he was a proponent of a wait-and-see attitude), the general sentiment of the dollar bulls seems depressed. Judging by the dynamics of the spread of coronavirus throughout the world, this issue will be on the agenda for many months to come - therefore, the probability of lowering the interest rate this spring or summer remains high. Due to such risks, the dollar is not able to rally, despite the growth of key macroeconomic indicators.

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Thus, GBP/USD in the medium term will remain within the framework of a wide-range flat: on the one hand, Brexit, on the other hand, the vulnerability of the dollar. The support level is the level of 1.2820. This is the bottom line of the Bollinger Bands indicator on the daily chart, while the resistance level is the price of 1.3030 - the Kijun-sen line at the same time frame.

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Simplified wave analysis of EUR/USD, AUD/USD, and GBP/JPY on February 27

EUR/USD

Analysis:

In the last six months, a downward wave zigzag has been formed on the chart of the European currency. Its last part (C) started in early January. The price has approached the upper limit of the preliminary completion zone. Before the final pull down, a counter rollback is formed.

Forecast:

Today's upcoming trading sessions are expected to see the end of the upward pullback, the formation of a reversal, and a price decline. The beginning of the downward phase can be expected by the end of the day or tomorrow.

Potential reversal zones

Resistance:

- 1.0920/1.0950

Support:

- 1.0850/1.0820

Recommendations:

Trading transactions against the trend direction may be unprofitable and not recommended. In the area of the calculated resistance zone, it is proposed to track euro sell signals.

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AUD/USD

Analysis:

The downward trend continues on the Australian dollar chart. Its last section counts from the beginning of the current year. Last week, the price pushed down the level of intermediate support.

Forecast:

Before continuing the decline, the pair needs to gain a higher wave level, having worked out a pullback up. In the first half of the day, an upward mood is expected today, not above the resistance zone. You can expect a change of course at the end of the day or tomorrow.

Potential reversal zones

Resistance:

- 0.6590/0.6620

Support:

- 0.6520/0.6490

Recommendations:

Purchases on the "Aussie" market today are only possible within the intraday style with a reduced lot. We recommend that you focus on searching for sell signals in the area of calculated resistance.

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GBP/JPY

Analysis:

The last unfinished wave model on the pair's market started in mid-December last year. The middle part (B) is nearing completion. Analysis of the structure of this section shows that the wave is not complete.

Forecast:

In the coming day, you can expect the completion of the downward pullback of the last days, the formation of a reversal and the beginning of a price rise. The upcoming price growth may take a pronounced impulse character. The resistance zone shows the upper limit of the expected volatility.

Potential reversal zones

Resistance:

- 143.30/143.60

Support:

- 142.40/142.10

Recommendations:

Sales of the pair today can be very risky and not recommended. It is suggested to track the instrument purchase signals.

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Explanations: In the simplified wave analysis (UVA), waves consist of 3 parts (A-B-C). The last incomplete wave is analyzed. The solid background of the arrows shows the formed structure and the dotted background shows the expected movements.

Note: The wave algorithm does not take into account the duration of the tool's movements in time!

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Impact of coronavirus on the currency market will remain high (there is a possibility that the USD will continue to grow

The issue regarding coronavirus remains at the forefront of global financial markets. It continues to dominate, and it seems that investors will not calm down even with its end, since its consequences can be extremely negative for the global economy

The main news of recent days for investors has been an increase in expectations of a slowdown in the US economy. If Fed officials have not yet shown serious concerns about the high probability of a slowdown in the US economy due to the inhibition of the Chinese economy and due to the influence of the coronavirus, then former head of the regulator J. Yellen made it clear on Wednesday that the risks to the American economy remain high and that this misfortune may push the US into recession.

On the other hand, in the wake of the negative that poured into the markets, the US dollar was under noticeable pressure, but not everywhere. After rising in the current last week, it declined against the yen, the Swiss franc and the single European currency. An important role was played here by the growth of expectations that the negative impact of coronavirus on the American economy would force the Federal Reserve to lower interest rates, which, of course, would reduce its attractiveness.

At the same time, the exchange rate of the American currency received support in pairs with the currencies of countries with developing economies from the main ones it rose against the Australian, Canadian and New Zealand dollars. These currencies are commodity and raw materials and strongly correlate with the dynamics of commodity and commodity assets. For example, an "Australian" currency reacts nervously to falling prices for iron ore, the export of which is the most important in the country's economy. Meanwhile, the Canadian dollar is responding to rising or falling oil prices.

The expectation of a slowdown in the global economy amid falling demand for commodity and commodity assets in China is crushing the exchange rates of these currencies. In this case, the American dollar, despite the problems, is growing in relation to them. And such dynamics may continue for some time.

Given recent realities, we believe that, it will continue to remain the main "newsmaker" which will conduct markets until the peak of the influence of coronavirus on investor sentiment passes. Moreover, we believe that by the end of this week, the yen, franc and partly the euro will receive some support in the currency exchange market, which began to increase in the wake of the latest published positive economic statistics on the eurozone. In turn, Canadian, Australian and New Zealand dollars will remain under pressure.

Forecast of the day:

AUD/USD is trading above the level of 0.6500. The persistence of panic in the markets associated with the influence of coronavirus on global economic growth will continue to exert a couple of pressure. This probability is confirmed by the dynamics of the distribution of net positions of futures contracts for the Australian dollar, according to the sentiment of major investors Commitments of Traders (COT). Given these prospects, we believe that the pair can continue to decline to the level of 0.6500 until the end of this week.

USD/CAD is testing a strong resistance level of 1.3345. We believe that negative market sentiment will put pressure on the Canadian currency, which means that if the price breaks the level of 1.3345, it will continue to rise to 1.3415.

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Indicator analysis. Daily review of GBP/USD on February 27, 2020

Trend analysis (Fig. 1).

Today, from the support level of 1.2903 (white bold line), an upward movement is possible with the first target of 1.2944, the retracement level of 38.2% (blue dashed line). If this level is reached, a continuation of work upwards with the target of 1.2958, the pullback level of 50.0% (blue dotted line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - neutral;

- Trend analysis - up;

- Bollinger lines - down;

- Weekly schedule - up.

General conclusion:

Today, the price may start to move up.

An unlikely scenario is from a pullback level of 38.2% equivalent to 1.2944 (blue dotted line), work down with the target at the support level of 1.2903 (white bold line).

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Technical analysis of ETH/USD for 27/02/2020:

Crypto Industry News:

Billionaire Vladimir Potanin received the permission of the Russian central bank to launch his own Blockchain-based platform and token for use by consumers, financial media reports.

Vladimir Potanin, who has recently become the richest man in Russia according to Forbes ranking, wants to expand his Blockchain platform by launching his own cryptographic token. Digital units will allow customers to buy metals, airline tickets and transfer ski passes from his companies.

Ironically, messages appear shortly after we reported that the FSB has opted for the central bank to potentially ban cryptocurrency as a means of payment.

Potanin has expressed his intention to develop cryptographic tokens several times. He wanted to help customers buy metals using tokens. Now he can implement his plans after obtaining the green light from the Bank of Russia.

The platform's goal is to reduce formalities and brokers, as well as to speed up transaction time.

The Blockchain Potanina platform, called Atomyze, will also be present in Switzerland and the United States, but will only be available to institutional clients.

Atomyze is expected to enter into force by the end of 2020 when the Russian law on digital financial assets will pass through the State Duma and enter into force. Potanin says his tokens would have a great impact on metals. Its nickel and palladium mining giant, Norilsk Nickel, will be the first to try tokens supported by palladium, copper and cobalt. Other platform testing companies include Traxys SA, Trafigura Group and Umicore SA. Nickel, who is the world's largest palladium producer, will be the first to issue Potanin tokens.

Headquartered in Zugu, Switzerland, Atomyze has developed a Blockchain platform based on Hyperledger Fabric and is currently in trial mode.

Technical Market Outlook:

The ETH/USD pair has broken through the key short-term technical support located between the levels of $225.12 - $229.81 as anticipated. The new low was made at the level of $209.85, but the bulls are now trying to bounce a little and test the level of $225.12 from below. The weak and negative momentum supports the bearish outlook. The fear of coronavirus is spreading across the financial markets and the cryptocurrency market is involved as well, together with stocks and risky currencies.

Weekly Pivot Points:

WR3 - $334.89

WR2 - $309.29

WR1 - $291.76

Weekly Pivot -$264.76

WS1 - $245.87

WS2 - $220.22

WS3 - $202.34

Trading recommendations:

The wave 2 corrective cycles are completed at the level of $115.05, 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 $146.94 is not violated. The current move up might be a wave 3 in developing in the overall long-term Elliott wave scenario and so far the top at the level of $288.01 might be wave 1 of the overall wave 3.

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Trading plan for EUR/USD on February 27, 2020. The panic around the virus subsided.

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The panic around the coronavirus has subsided. Although the US market closed negatively, the decline was much smaller than that of Monday and Tuesday. Meanwhile, oil fell below $ 50.

News on the virus: the epidemic has obviously passed its peak in China. The total number of cases recorded is 78 thousand. 30 thousand of those has recovered. Meanwhile, for the first time since the beginning of the epidemic, the number of cases outside China exceeded the number of new cases in the country (540 and 440 respectively).

The main and most dangerous foci are South Korea and Italy (374 cases).

Nevertheless, Thursday morning brought no new huge bad news.

Trump reassured that there is no reason for US residents to panic.

Now, let's see if the market can return to normal:

Today at 14:30 London time, GDP on the orders for durable goods in the United States will be released.

EUR/USD: the euro once again slightly updated the highs of the week.

We are still waiting for a new wave of decline.

Sell from 1.0925.

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Indicator analysis. Daily review of EUR/USD on February 27, 2020

During its downward pullback on Wednesday, the pair tested the pullback level of 23.6% equivalent to 1.0865 (blue dashed line) and then continued to move upward, testing the 21 average EMA at 1.0909 (black thin line). Today, strong calendar news for the dollar is expected at 13:30 and 15:00 UTC. The price may continue to move up.

Trend analysis (Fig. 1).

The market may continue to move up today with the target of 1.0956, the pullback level of 38.2% (red dashed line). Upon reaching this level, continuation of work up to the support line of 1.0971 (red bold line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

A continued upward movement is expected today with the target of 1.0956, the pullback level of 38.2% (red dashed line).

An unlikely scenario is from the 21 average EMA of 1.0909 (black thin line), work down with the target 1.0883, the retracement level of 23.6% (blue dashed line). Upon reaching this level, the next lower target is 1.0863, the retracement level of 38.2% (blue dashed line).

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Technical analysis of BTC/USD for 27/02/2020:

Crypto Industry News:

The fourth richest person in the world discussed his experience with Bitcoin after raising money. Justin Sun, CEO of the Throne and longtime cryptocurrency supporter was present.

In May 2019, they both met others at a fundraiser for the Glide Foundation, a charity that helps homeless people in San Francisco. Speaking like a billionaire to billionaire, young Sun suggested to seasoned Warren to consider investing in cryptocurrencies.

However, when asked if Sun gave him Bitcoins after the exchange, Buffett replied:

"I don't have any cryptocurrency. I will never do it ... You can't do it except to sell it to someone else. Cryptocurrencies basically have no value."

He also commented on the fact that cryptocurrency is related to money laundering and terrorism:

: Bitcoin was used to illegally transfer a large amount of money, "he said.

Buffett made the most of his assets on hedge funds and insurance. His assets are estimated at USD 88.9 billion.

Bitcoin has seen large investments from both millionaires and billionaires, but as Warren showed, some who have made a fortune using more traditional means are reluctant to accept cryptocurrencies. Mark Cuban, a billionaire who gained fame in the dot-com bubble, said he would rather have "bananas" rather than Bitcoin.

On the other hand, several success stories have appeared. Tyler and Cameron Winklevoss may not have grabbed the benefits of Facebook, but after the Gemini cryptographic exchange was founded, they both have total assets of over $ 1.4 billion.

Technical Market Outlook:

The BTC/USD pair has made another lower low at the level of $8,495. Currently, the BTC/USD is trading below the support located at the level of $9,123 and the momentum remains weak and negative, so odds for another wave down are high. The next target for bears is seen at the level of $8,405. The corrective cycle is getting deeper as the coronavirus fears affect all financial markets.

Weekly Pivot Points:

WR3 - $11,253

WR2 - $10,744

WR1 - $10,274

Weekly Pivot - $9,742

WS1 - $9,288

WS2 - $8,756

WS3 - $8,263

Trading recommendations:

The market might have made the first impulsive wave up of a higher degree. 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 $10,433 is clearly broken.

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The Bitcoin is on the way to $8,435.37

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At the 4-hour Chart, Bitcoin is trading under selling pressure. Now this cryptocurrency seems to be willing to attack the $8,435.37 level as long the price does not rebound to the level higher than $9,247.15. The $8,435.37 level is still imminent to be reached. The overall bias for bitcoin is bearish.

Disclaimer: Trading Forex on margin carries a high level of risk, and may not be suitable for all traders or investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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Technical analysis of GBP/USD for 27/02/2020:

Technical Market Outlook:

After a new local high was made at the level of 1.3016, the bears had took control of the market again and push the price way lower towards the middle of the GBP/USD trading range again. The market backed off from the overbought conditions and the momentum indicator is showing negative - to - neutral momentum at the H4 timeframe chart. The market trades aimlessly for now until one of the key levels is finally clearly violated. The next technical support is seen at the level of 1.2904 and 1.2871.

Weekly Pivot Points:

WR3 - 1.3255

WR2 - 1.3152

WR1 - 1.3043

Weekly Pivot - 1.2942

WS1 - 1.2840

WS2 - 1.2740

WS3 - 1.2640

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 1.3512.

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Technical analysis of EUR/USD for 27/02/2020:

Technical Market Outlook:

The EUR/USD pair has broken through the nearest short-term technical resistance zone located between the levels of 1.0879 - 1.0904 and made a new local high at the level of 1.0914. The next target for bulls is seen at the level of 1.0940 and 1.0981, but the market conditions are now overbought despite the strong and positive momentum. The larger timeframe trend is still down.

Weekly Pivot Points:

WR3 - 1.0954

WR2 - 1.0908

WR1 - 1.0871

Weekly Pivot - 1.0825

WS1 - 1.0787

WS2 - 1.0735

WS3 - 1.0693

Trading recommendations:

The best strategy for current market conditions is the same as it was for recent months: 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 larger timeframes like weekly, which indicates 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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