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EUR/USD. March 18. "Chinese virus" by Donald Trump. US president demands $1 trillion to support the economy

4-hour timeframe

analytics5e72b42faeaf5.jpg

Amplitude of the last 5 days (high-low): 110p - 279p - 166p - 152p - 234p.

Average volatility over the past 5 days: 189p (high).

The biggest trading day of the week for the EUR/USD pair was held in a surprisingly calm manner. However, we would advise market participants not to relax. We are still a long way from getting out of the state of panic. Perhaps today, traders took only a temporary and, most likely, not a long pause, and tomorrow the movement will resume with new strength. After all, just look at the average volatility indicators and it becomes clear that the markets remain in complete panic. Uncontrolled panic. And there can only be one reason for this – the continuing spread of the coronavirus on the planet. As we have said many times before, no specific fundamental or macroeconomic factors currently affect the movement of any currency pair. The US stock market continues to collapse, but the US dollar continues to rise in price. Despite the crisis and a very likely recession, gold is not used by investors as a safe asset, as it also becomes cheaper. Oil continues to fall amid reduced demand for all types of energy carriers. Thus, there is no correlation between all these factors and events now. The euro stopped falling on March 18, and the pound, for example, continues to depreciate. Although the situation in the UK is not worse than in the European Union.

Despite the fact that the coronavirus began to spread relatively recently in Europe and the United States, no more than a month ago, and central banks have already lowered rates to absolute lows and resumed/expanded quantitative stimulus programs, we can already say that the adjustment of monetary policies does not give the necessary results. Stock markets continue to collapse, and panic is observed in all world markets, as well as among the population of almost every infected country. Moreover, for example, airlines are already experiencing serious financial problems that threaten them with bankruptcy amid a reduction of more than 50% of air travel worldwide. Thus, if the EU and US governments do not provide assistance, we are likely to face a series of bankruptcies. And this applies not only to airlines. After all, in fact, the entire tourist business is now also in quarantine. Most of any trips are canceled, borders are closed, and it is obvious that tour operators, hotels, and resort cities that live on the expense of visiting tourists are experiencing great financial problems. The epidemic is not yet widespread, but most of the world's countries have already closed their borders. And, given the rate of infection, it is unlikely that they will be opened in the near future. As we have already said, in the modern world, all companies, countries, governments and economies are closely linked to each other. Therefore, problems in one of the spheres can lead to a whole heap of problems for other spheres as well.

To counter the crisis, the US government has developed a $1 trillion stimulus package for businesses and ordinary citizens. According to the latest information, Donald Trump and Finance Minister Stephen Mnuchin are literally ready to give out money to American citizens in order to smooth out the economic shock among the population. Each American is expected to receive a check of up to $1,000. This practice has already taken place in the United States in 2008 at the beginning of the debt crisis. Then, within a few months, the US authorities paid out $600 per person, pouring a total of more than $100 billion into the economy. Experts believe that these were one of the most effective measures to stimulate the economy in the history of the United States. Of this trillion, $58 billion will be earmarked for supporting airlines, $500 billion will be used to reduce taxes, and $250 billion will be available on affordable loans to small businesses. Donald Trump has already called on American citizens not to leave home and "enjoy their living room." The US president also said: "If we all abide by these rules and make some sacrifices, acting as a single nation, we can defeat the virus. And then we will all celebrate it together." Trump's recommendations are simple and do not differ from the recommendations for countering the virus around the world: avoid traveling and trips anywhere, study and work from home whenever possible. The rhetoric regarding the possible timing of the completion of the Trump epidemic has changed. If earlier the US president was certain that the virus would not survive April-May, now, referring to representatives of the healthcare sector, he believes that the epidemic can be defeated somewhere in the middle of summer. But at the same time, "it may last much longer."

And of course, the US leader could not resist starting a new skirmish with China. Earlier Beijing was trying to hint at the fact that the US military is to blame for the spread of the virus. To this accusation, Trump replied: "China is constantly spreading false information that it is our military that is spreading the virus. This is not true. But instead of arguing with them, I say I should name this virus where it came from. It came from China, so I will call it the "Chinese virus"."

Recommendations for short positions:

The strong downward movement is put on pause for the euro/dollar currency pair. Thus, we recommend that you stay in the sales of the euro currency with the goals of 1.0942 and 1.0778, until the MACD indicator turns up or another sign of the beginning of a correction.

Recommendations for long positions:

Purchases of the euro currency with the goal of the resistance level of 1.1383 can be considered no earlier than the pair consolidating above the critical line. However, in any case, it is recommended to be very careful with opening any positions. Panic in the markets continues to be present.

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