24-hour timeframe
Another trading week on the Forex market has ended, and we are summarizing its results. The EUR/USD currency pair spent the entire trading week in a side channel, which we have repeatedly discussed in regular reviews. On a 24-hour timeframe, this channel with a width of 250 points is particularly clearly visible. Last time, the pair's quotes bounced off several supports at once, for example, the level of 1.0774. Thus, in accordance with the consolidation scenario, we believe that the upward movement can continue with the goal of the upper line of the side channel, which runs around the levels of 1.0990 and 1.1000. Until the pair leaves the specified range, we do not recommend counting on the formation of a new trend. After a super-volatile and panic-stricken month have ended, the pair does nothing but adjust. Market participants clearly do not have enough reasons to form a new trend, especially given the fact that the entire macroeconomic and fundamental background continues to be ignored.
Despite the fact that recently the "coronavirus" has received less attention than before, it has become a disease that everyone is already used to. It is the topic of the world epidemic that remains the most important. Despite the fact that a number of European countries and the United States are easing the quarantine, official statistics show that the total number of confirmed cases of diseases in the world has reached 4 million. And we again emphasize that this is only a figure that reflects the number of officially registered cases of diseases. The United States continues to lead the world in both the number of cases (1.3 million) and the number of "deaths" (77,000). The country's chief epidemiologist, Anthony Fauci, who has recently been linked to a huge amount of news, said that "the virus will not disappear by itself." "I do not think that this virus will just disappear, it will be close by, and as soon as the opportunity arises, it will attack again. We have several months to prepare and ensure that our healthcare system is equipped with sufficient ventilators, intensive care beds, and personal protective equipment." Dr. Anthony Fauci believes that the second wave of the epidemic is almost inevitable and will occur in the cold season of the year, that is, in the fall and winter of 2020. In addition, Fauci notes that the COVID-2019 virus is much more dangerous and contagious than "normal" diseases, such as influenza or SARS. "It spreads much more effectively than the flu. I am informed of numerous cases when infection occurred through objects that were previously touched by the sick people," the epidemiologist concluded.
We return to what is happening against the background of the epidemic in American political circles. As we said just yesterday, the statements made by Robert Lighthizer, Steven Mnuchin, and Liu He is certainly interesting, but much more interesting are the sentiments of Donald Trump, who is the country's president and openly accuses China of spreading the virus along with Secretary of State Mike Pompeo. We believe that Donald Trump took the virus lightly from the very beginning and simply did nothing in February and March. By the way, the same opinion is held by the Chinese, who quite reasonably ask the American President why he was inactive at a time when the virus was already known around the world, and it began to spread across the United States? Trump seems to already understand his mistake. Now that the United States is leading in the number of diseases and deaths, it will be complicated to prove in the upcoming elections that the American government is not to blame for what is happening. The US economy may lose up to 5% of GDP in 2020, the unemployment rate has already risen to 15% and continues to grow, the labor market is in full decline. What will Trump say as part of the campaign? What is "it's all China's fault"? Such rhetoric is unlikely to help him win the election. And at the same time, China is now almost the only chance for Trump to get away with it. The fact that the virus escaped from the Middle Kingdom does not require proof. Ordinary people are not interested in whether it was created specifically, how long China misinformed the WHO and the whole world, and other details. The virus came from China, so China is to blame. It's simple. Trump will need to win just one person in the November election, namely Joe Biden. Thus, according to many experts, the US leader will not try to "whitewash" from his own mistakes and blunders, however, he will try to "blacken" his main competitor. Actually, this is what he tried to do a year ago, in the notorious story about the request of Ukrainian President Vladimir Zelensky to investigate the activities of Joe Biden and his son Hunter Biden on the territory of Ukraine. Then it cost Trump the impeachment procedure, only the third in the history of the United States. The Senate acquitted Trump only because of the greater number of Republicans in its composition. Now the President can safely go all-in. Because he has nothing to lose. Donald Trump can now try to denigrate Biden with the help of China, saying that the Democrat has always supported China, promoted the idea of cooperation with the Middle Kingdom, and generally wanted to be friends with him. There are a huge number of videos of Biden with the leaders of China, Biden held lectures in China and has always been benevolent to this country. In normal times, this would not be unusual. But now, when all Americans and the whole world know that China is to blame for the pandemic, such friendliness towards China can play a bad joke with Biden. After all, the situation may be the same as in the case of the parliamentary elections in the UK in December last year, when people went to vote for the party of Boris Johnson just to finish Brexit quickly, and not because the number of fans of the Conservative Party has grown sharply in a few months. It can also be in the United States, they can vote for Trump simply because he does not take a friendly position with respect to China. Thus, many political analysts believe that now the US President only needs to tie the name of Joe Biden to China as much as possible, and also continue to "find" evidence of China's guilt in the "coronavirus" pandemic. Of course, we will need to launch a large-scale propaganda campaign to inform the American population about the number of deaths from the "Chinese virus". And this whole plan might work.
Trading recommendations:
On the 24-hour timeframe, the euro/dollar pair continues to consolidate in the side channel. Since there was a rebound from the lower border of the channel, now traders can trade for an increase with goals around the level of 1.0990. Overcoming the lower border of the channel will notify that the consolidation process is completed and the EUR/USD pair can start forming a new downward trend.
Explanation of the illustrations:
Ichimoku Indicator:
Tenkan-sen - red line.
Kijun-sen - blue line.
Senkou span A - light brown dotted line.
Senkou span B - light purple dotted line.
Chinkou span - green line.
Bollinger bands indicator - 3 yellow lines.
The MACD indicator is a red line and a histogram with white bars in the indicator window.
Support/resistance levels - classic red and gray dotted lines with price symbols.
Pivot level - yellow solid line.
Volatility levels - solid red lines.
Possible variants of the price movement:
Red and green arrows.
The material has been provided by InstaForex Company - www.instaforex.com