Overview of the EUR/USD currency pair as of January 24, 2020

Hello, dear colleagues!

As expected the day before, the speech of ECB President Christine Lagarde did not bring anything good to the single European currency.

The main interest rate, as expected, was kept at zero, and this did not cause any significant fluctuations in the euro exchange rate. But after the start of the press conference of the head of the European Central Bank, the market revived, and the single currency came under selling pressure.

The ECB's Governing Council has decided that rates will remain at their current levels or below until inflation approaches the regulator's forecast target of 2%.

Monthly asset purchases (APP) of 20 billion euros will continue for as long as necessary, and this program will end shortly before rates start to rise.

You understand that this will not happen very soon, and therefore such comments by the ECB became, in my opinion, the main reason for the sale of the single European currency.

In her speech, Christine Lagarde noted that production remains at a low level and slows down the region's economy. Lagarde was more optimistic about employment. The head of the ECB again said that her office will closely monitor inflation and, as necessary, will use all tools to maintain economic stability. At the same time, Lagarde added that the risks are shifted downwards and are not so clearly expressed.

In general, Christine Lagarde's speech can be described as "moderately dovish", however, the market decided not to tempt fate and resume selling the single European currency.

Daily

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As expected, the main scenario in yesterday's trading for the euro-dollar was a downward one. As a result of the decline, the pair exited the Ichimoku indicator cloud and ended the session on January 23 at 1.1053. Moreover, strong support was broken in the area of 1.1070 and the green support line was 1.0879-1.0981. The pair even probed another horizontal support level of 1.1040, but rebounded from this mark and finished yesterday, as already noted, at 1.1053.

What can I say? Based on the daily chart, the downward trend is likely to continue. I believe that today the quote will fall below 1.1040 and even test the strength of the iconic technical and psychological level of 1.1000. Let's see what kind of picture is observed in smaller time intervals.

H4

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I think I won't surprise anyone if I express my personal opinion that the main trading idea for EUR/USD is sales. As seen on the four-hour chart, a good option for opening short positions on the euro will be to go up to the area of 1.1107-1.1117, where 50 MA, 233 EMA, and 89 EMA are located. It is characteristic that the horizontal resistance level of 1.1117 passes above. Both the indicated moves and the resistance level can become a serious obstacle when trying to start a corrective recovery for EUR/USD. But for some reason, we are not sure that we will see such a rise and the market will allow us to open short positions from the selected zone.

If you look at earlier and aggressive sales, you can try them after the pair rises to the level of 1.1075. I will not give any recommendations on purchases today. However, those who want to buy euros can try to do it from the price zone of 1.1040-1.0990.

For those who are going to trade EUR/USD today, it is not superfluous to look at the economic calendar. You can find something interesting there. For example, the performance of the same Christine Lagarde, which is scheduled for 11:30 (London time). I don't think the head of the ECB will say anything new and important, but nonetheless.

For this, I wish you a good day and a successful profitable trade!

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The SELL Side Liquidity Pool will attract the EUR/USD For Jan 24, 2020

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Market participants mainly gave a negative response to the ECB meeting results and the regulator's decision on the interest rate in particular. That is why the EUR/USD pair lost ground. It may try to test the daily sell-side liquidity pool at 1.1040 and the 4 hour chart sell-side liquidity pool at 1.1036. There is a probability that fiber will retrace to test the fair value gap, especially the main threshold at 1.1070. However, unless the pair does not edge higher and close above 1.1118, the sell-side liquidity pool can be tested.

(Disclaimer)

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USD/CAD. A double whammy for the Canadian: "loonie" remains under strong pressure

The Canadian dollar was under significant pressure this week: first, traders were disappointed by data on inflation growth in Canada, and the Central Bank's rhetoric. The combination of such negative fundamental factors pushed the USD/CAD price to four-week highs, especially against the background of the general strengthening of the US currency. Nevertheless, the pair's buyers could not gain a foothold above the upper line of the Bollinger Bands indicator on D1 (that is, above the mark of 1.3150), thus saving before the next resistance level of 1.3200 (the lower limit of the Kumo cloud on the same timeframe). Now, the prospects for the loonie movement depend on the behavior of the US dollar - the "Canadian" is now too weak to be the first number in the pair.

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Let me remind you that last Wednesday, the Canadian dollar came under pressure from both macroeconomic reports and the Bank of Canada. The consumer price index disappointed traders: the overall indicator in monthly terms came out at zero, while in annual terms, it remained at 2.2% with forecast growth of up to 2.3%. Core inflation showed a weaker result: every month, the index went into negative territory, reaching -0.4% (after the previous result -0.2%). In annual terms, the indicator also came out in the "red zone", slowing to 1.7%. Over the previous four months, it was at the same level (1.9%), and, according to experts, it should also have risen to this value in December. However, the actual numbers were lower than expected.

After the publication of these data, the Canadian dollar gradually became cheaper, however, the currency's decline was limited - traders were waiting for the announcement of the results of the January meeting of the Bank of Canada. Unfortunately, (for USD/CAD bears), the regulator took a fairly "dovish" position, despite the significant growth of the labor market and the previous growth of the oil market. Despite these factors, the Governor focused their attention on the negative aspects. However, the pressure on the Canadian increased even before the press conference of the head of the Canadian regulator. The Bank of Canada, as expected, kept the main interest rate at the same level (1.75%), but removed the wording from the text of the accompanying statement that the current rate level is "appropriate to the situation".

It is worth recalling that, according to the latest data, the level of Canada's GDP (every month) fell into negative territory (for the first time in the last eight months), reaching the level of -0.1%. In annual terms, the indicator slowed more than expected to 1.2%. The release structure indicates that 13 out of 20 economic sectors showed negative dynamics. In its accompanying statement, the Bank of Canada indicated that in the near term, the growth rate of the Canadian economy "will be weaker than the Central Bank predicted at previous meetings." The regulator also criticized the growth rate of consumer confidence and spending - according to the Bank of Canada, these indicators "were unexpectedly weak", as well as the volume of business investment.

The "dovish" tone of the final communique undermined the positions of the "loonie" bears - the pair went up. Stephen Poloz's further rhetoric only strengthened the northern movement. The head of the Central Bank made it clear that members of the regulator discussed the need to ease monetary policy, however, the current balance of risks allowed to keep the rate at the same level - "at this stage". He said that first of all, they discussed the weak growth rate of inflation and signs of financial instability. At the same time, Poloz made it quite clear that the balance of risks could shift in any direction - "due to the arrival of new data". He also pessimistically assessed the prospects for growth of inflation indicators due to the increase in the Canadian economy's stock of unused capacity.

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Thus, the Bank of Canada took a wait-and-see position at its January meeting. But the tone of the accompanying statement and the rhetoric of the head of the Central Bank were extremely "dovish". By and large, Stephen Poloz warned that the regulator may reduce the interest rate at any next meeting. This probability will increase if key macroeconomic indicators (primarily inflation) continue to show signs of slowing down.

All this suggests that the USD/CAD pair retains the potential for its further growth. Although at the moment, currency market traders have switched to the topic of the spread of the deadly coronavirus - which means that the vector of the "loonie" price movement will soon be determined by the US currency. The US dollar is used by traders as a protective asset, so the growth of panic sentiment will push the pair up. So far, the situation is disappointing - the number of cases has increased to 830 people, and the number of deaths has reached 25. The growth of anti-risk sentiment in the market will open the way for the USD/CAD pair to the key resistance level of 1.3200.

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Hot forecast for EUR / USD on 01/24/2020 and trading recommendation

The Board of the European Central Bank has not only left all its interest rates unchanged, but also expects them to remain at current low levels, and possibly lower, until inflation forecasts show steady growth to 2.0%. To simply put it, the policy of the European Central Bank has not changed, which means that it remains possible to reduce the refinancing rate to negative values. It is for this reason that the single European currency began to decline. Although this is not just a decline, it is the resumption of the gradual weakening of the single European currency, which has been going on for almost a decade, during which the European Central Bank, softens the parameters of its monetary policy step by step.

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At the same time, Christine Lagarde made an extremely important statement during her press conference, which remained completely without attention. The reason for this is because of the general disappointment of investors due to the preservation of the current policy of the European Central Bank, as well as the incredible hype about the pneumonia epidemic caused by the new coronavirus. However, Christine Lagarde said that the European Central Bank is not just considering the possibility, but is already embarking on a review of the ongoing monetary policy. It is expected that this process will be completed before the end of this year. And in theory, this alone should have been enough for the explosive growth of the single European currency, since reducing interest rates constantly can be revised only in one direction - their gradual increase. However, the European Central Bank does not give any specifics on this issue.

Refinancing Rate (Europe):

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Today, a single European currency may be able to complete the week on a major note. Preliminary data on business activity indexes in Europe are likely to show the growth of all indices. In particular, the index should grow from 46.3 to 46.9 in the manufacturing sector, and in the service sector, from 52.8 to 52.9. As a result, the composite index of business activity can grow from 50.9 to 51.1.

Composite Business Activity Index (Europe):

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However, the composite business activity index in the United States, where similar data is published, should decline from 52.7 to 52.5. This can happen due to a decrease in the index of business activity in the services sector, from 52.8 to 52.7, as well as a decrease from 52.4 to 52.2, in the production index of business activity. Thus, if in Europe all indices should increase, then it should decline in the United States.

Composite Business Activity Index (United States):

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From the point of view of technical analysis, we see a pulsed stroke, which led to a breakdown of the lower boundary of the time range 1.1070 / 1.1100. In fact, the three-day stagnation has accumulated a lot of intrigue and doubt, where, the situation with a narrow amplitude was discharged against the backdrop of the ECB meeting, locally redrawing the downward movement.

In terms of a general review of the trading chart, we see that the value of 1.1036 played a point of variable support relative to the past impulse, where a pullback was formed against the background of local oversold, followed by stagnation. The main point of support is located below in the face of the psychological level of 1.1000.

It is likely to assume that the quote has a chance of a more significant rollback after the recent jump. In this case, the price is considered to return back to the lower border of the previously passed flat 1.1070 / 1.1100. In view of alternative positions, it is worth considering yesterday's minimum of 1.1036, where the path to the control level of 1.1000 will open, in case the price is fixed lower.

Concretizing all of the above into trading signals:

- Long positions are considered in case of price fixing higher than 1.1060.

- Short positions are considered in case of price fixing lower than 1.1036.

From the point of view of a comprehensive indicator analysis, we see that the indicators of technical instruments have turned in a downward direction, holding a sell signal due to the recent impulse move.

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USD Index trying to breakout and close above the Equilibrium level on Jan 24, 2020

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Slowly but surely, the US dollar index touched 97.44 for a few times that is seen at the daily chart bullish orderblock. Since then, the USD Index is already moving towards to the Equilibrium level to test the daily chart BUY liquidity pool at 97.84. As long as the price does not breakout and close below the daily chart, SELL liquidity pool remains at 97.09 the USD Index is still heading towards 97.84.

(Disclaimer)

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Technical analysis of ETH/USD for 24/01/2020:

Crypto Industry News:

The Gemini US cryptocurrency exchange has completed the SOC 2 Type 2 rating, confirming the security of the operation. This means that Gemini is the only cryptocurrency exchange that has demonstrated this level of security compliance:

"Type 2 is the highest level of security compliance that any organization can demonstrate," said Gemini risk chief Yusuf Hussain.

In preparation for the SOC 2 Type 2 assessment, Gemini carried out a SOC 2 Type 1 audit in 2019, carried out by the audit giant Deloitte. Hussain mentioned that the giant also took control of Gemini SOC 2 Type 2. Gemini Stock Exchange attaches great importance to compliance and security, in order to win the trust of customers, he explains.

Indeed, Gemini released an advertising campaign a year ago in which one of several slogans appearing on buses and boards was "Krypto needs rules." Given the importance of protection, Gemini's risk chief said: "Incorrect operation in the security industry will result in a direct loss of client funds."

Hussain also said that the SOC 2 Type 2 exam includes the Gemini trading and investment platform as well as custody services.

Technical Market Overview:

The ETH/USD has hit the level of $157.37 which is just a tad above the 50% Fibonacci retracement located at the level of $156.19 (low was made at the level of $156.55 at the time of writing the analysis). The bears are clearly in control of the market and the downward momentum is increasing. There is a visible Bearish Flag price pattern at the H4 chart (thick orange line), so if the bearish pressure intensifies again, then the next target for bears is seen at the level of 151.37.

Weekly Pivot Points:

WR3 - $219.38

WR2 - $198.31

WR1 - $181.78

Weekly Pivot - $161.46

WS1 - $144.93

WS2 - $123.85

WS3 - $107.13

Trading recommendations:

There is a possibility that 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. 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 $196.61 is cleary broken.

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There are no important reasons for the dollar to turn down (we expect EUR/USD and USD/JPY pairs to continue to decline)

The topic of the "Chinese" coronavirus is increasingly taking hold of the minds of investors who find themselves in a quite difficult situation. On the one hand, it is true that the risk of a pandemic has increased, which has a total of 17 people as the death toll. Therefore, the Chinese authorities have already taken a number of measures to prevent the spread of this deadly dangerous virus, but the financial markets are still in a fever.

On the other hand, the emerging market situation contributes to an increase in demand for risky assets. First of all, this is connected with the pacification of Washington and Beijing on trade, secondly - with the attenuation of the risk of a military conflict between the States and Iran, and thirdly - the policy of world central banks contributes to its unprecedented soft monetary policy that capital flows into company shares and other risky assets.

Moreover, the established balance is holding back the growth in demand for stocks of companies and assets, including currencies of countries with developing economies (EM). Thus, we believe that as soon as the situation with the "Chinese" SARS becomes clear, everything will begin to normalize - this will be a signal for a new rally in risky asset markets.

But back to the actions of central banks. The promulgation of the decisions of the Central Bank of Canada and the ECB clearly demonstrate, the widespread concerns of regulators that objective risks are growing for the economies of Canada and the eurozone, which is contrary to expectations. The Canadian Central Bank reported this directly, which caused a landslide depreciation of the local currency, and the European regulator, confirming the status quo of the current monetary rate, announced that it was preparing a strategic change, but did not indicate in which direction it would be carried out. On this wave, the single currency declined on Thursday. In general, everything that happens indicates that the bank has no real solutions so far and this is a decisive limiting factor for raising the euro.

Assessing the general situation in the markets, we note that all sorts of risks - this is "Chinese" pneumonia, threats of US trade sanctions against the automotive industry of the eurozone, risks of recovery of the conflict in the Middle East and the like, will at least prevent the dollar from falling against major currencies, and as a maximum, even get local support in the near future.

Forecast of the day:

EUR/USD is trading below 1.1050. There is a high probability that it will continue to decline to the level of 1.0975, if it holds below it.

USD/JPY is trading below 109.65. The price may catch up to this level. But if it holds below it, then there is a chance of a price reversal and the resumption of its decline to the level of 109.20 or even lower to 109.00.

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Technical analysis of BTC/USD for 24/01/2020:

Crypto Industry News:

The Reserve Bank of India (RBI) said that regulated entities cannot offer cryptographic assets in this country, but this does not amount to a general ban on digital assets.

A published press article quoted a document that the RBI submitted to the Supreme Court in September, which wrote:

"First, RBI did not prohibit VCs (virtual currencies) in that country. RBI ordered its regulated entities not to provide services to persons or entities dealing with or settling VCs."

As part of the regulation, the Central Bank of India issued a statement in April 2018 restricting the use of services to all persons involved in the use of cryptographic assets.

"Due to the associated risk, it was decided that with immediate effect, entities regulated by the RBI will not deal with or provide services to individuals or business entities dealing with or settling VCs," reads the statement.

Following a statement from the RBI, the Internet and Mobile Association of India (IAMAI), a non-profit group dealing with digital development, has proposed repealing the cryptocurrency regulation.

Technical Market Overview:

The BTC/USD pair has broken through the technical support at the level of $8,405 and hit the 38% Fibonacci retracement level located at the level of $8,236. The bears have control of the market now and the downward momentum increases. As there are no signs of a trend reversal, the next target for bears is seen at the level of $7,961 (50% Fibonacci retracement) or just a tad lower, at the $7,934 - $7, 897 zones.

Weekly Pivot Points:

WR3 - $10,362

WR2 - $9,728

WR1 - $9,214

Weekly Pivot - $8,735

WS1 - $8,034

WS2 - $7,406

WS3 - $6,911

Trading recommendations:

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

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Indicator analysis: Daily review on GBP/USD for January 24, 2020

Trend analysis (Fig. 1).

An upward movement is expected today with the target of 1.3183, the resistance line in a black bold line. In case of testing this line, work down with the target at the lower fractal 1.3097.

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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:

The price may continue to move up today.

A downward scenario is unlikely but quite possible. That is from level 1.3123, the retracement level of 14.6% presented in a blue dashed line, work down with a target of 1.3077, the retracement level of 38.2% presented in a blue dashed line.

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Panic is replaced by uncertainty, USD/CAD loses short-term impulse, and USD/JPY may resume growth

The risk aversion slowed after the World Health Organization refused to declare a global emergency due to the new coronavirus. The markets considered this a good sign, and on Friday morning, the first signs of decline in tension were noted - oil is correcting after a three-day decline, the Japanese Nikkei225 and the Australian S & P / ASX 200 are trying to gain a foothold in the green zone, and the decline in government bond yields has slowed.

In general, the situation is characterized by a high level of uncertainty; there is no data to predict a drop in tension or, on the contrary, a new wave of sales. Under these conditions, the dollar receives additional support.

USD/CAD

The Canadian dollar has received several sensitive shocks that are forcing a review of its long-term prospects.

The Bank of Canada changed the text of the accompanying statement following the meeting on Wednesday, and now, monetary policy is not considered consistent with earlier forecasts. The probability of a rate cut at the next meeting in March increased, the spread between the US and Canada rates decreased, while the USD/CAD rate will move towards growth to equalize yields.

At the same time, core inflation growth slowed in December from 1.9% to 1.7% y / y, which was an unpleasant surprise for the markets.

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The volume of wholesale sales declined again, while zero growth was projected. On the other hand, the volume of sales in the manufacturing industry was worse than forecasted.

All these factors are unpleasant, but have limited pressure on the Canadian currency, as a number of Fed measures led to an increase in the dollar supply and evens out the negative from the results of the BoC meeting. The situation is aggravated by the increase in panic, therefore, an additional factor is the decline in oil and the growth in demand for protective assets, hence the probability of a USD/CAD reversal now looks ghostly.

The Canadian will try to return to resistance 1.3170 / 90, but the chances of further growth to 1.3220 / 30 are still unclear. In terms of a combination of factors, the situation should be considered neutral. The key support is 1.3030 / 35, the movement to it will resume only in the event of a decrease in panic.

USD/JPY

The Bank of Japan left the monetary policy unchanged on Tuesday, but adjusted its GDP forecasts. BoJ believes that the economy will continue to grow in the coming years, and even with acceleration, this forecast is based primarily on positive expectations from government stimulus measures.

At the same time, the forecast for inflation is reduced by 0.1% in each subsequent year. The Bank of Japan has almost no options for further incentives, and the chances of reaching an inflation target of 2% are considered illusive. In December, core inflation rose by only 0.7% YoY, the increase was mainly due to higher prices for goods, which is largely a result of the weakening yen and, as a result, higher prices for imports, price increases in the services sector are barely kept above zero.

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Nevertheless, the financial authorities of Japan do not want to admit that all measures taken since 2013 have not yet produced a sustainable result. Prime Minister Shinzo Abe made a speech in the Sejm on the afternoon of January 20, and he ignored the topic of deflation for the first time since 2013. The struggle against which has been going on with varying success for several decades.

As a result, inflationary pressures in Japan are noticeably weaker than in the United States or Europe, and therefore, it is becoming more and more difficult for the monetary authorities to deal with the strong yen. Thus far, the situation has been restrained by the strange faith of the markets in the upcoming recovery, which is reflected in a decrease in the demand for protective assets, so USD/JPY made an attempt to go up after a protracted trading in the range, breaking the resistance at 109.70. Meanwhile, pullback to 109.23 occurred against the backdrop of an increase in panic relative to the Coronavirus, but does not reflect long-term trends, that is, as soon as the panic wave subsides, the growth will resume. On the other hand, new year's celebrations began in China, and so, exchanges stop trading but the negativity will not receive domestic support, which gives grounds for a return to range trading within 109.25 - 110.25 with possibilities of movement to the upper border of the range and the subsequent attempt to break up.

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Technical analysis of GBP/USD for 24/01/2020:

Technical Market Overview:

The GBP/USD pair has broken through the upper channel line around the level of 1.3065, made a new local high 1.3151, tested the technical support at the level of 1.3101 and they are ready to continue the move up. The next target for bulls is seen at the level of 1.3168 and 1.3247. Nevertheless, it looks like the downtrend is still might be resumed as new lower lows are still being made, but before that happens, the bulls might have a test of the weekly Fibonacci retracement seen at the level of 1.3247. On the other hand, any violation of the level of 1.2939 will directly lead to the sell-off extension towards the level of 1.2904 and 1.2786. The weak and negative momentum supports the short-term bearish outlook.

Weekly Pivot Points:

WR3 - 1.3247

WR2 - 1.3172

WR1 - 1.3080

Weekly Pivot - 1.3013

WS1 - 1.2913

WS2 - 1.2847

WS3 - 1.2749

Trading recommendations:

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

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Technical analysis of EUR/USD for 24/01/2020:

Technical Market Overview:

As anticipated yesterday, the EUR/USD broke through the technical support located at the level of 1.1076 and made a new local low at the level of 1.1040 after the Pin Bar candlestick pattern occurred. The momentum remains weak and negative, so the last move up was just a bounce or a local counter-trend correction. To reverse the downtrend, the bulls would have to break through the level of 1.1174, otherwise, the next target for bears is seen at the level of 1.1065 and 1.1040.

Weekly Pivot Points:

WR3 - 1.1216

WR2 - 1.1193

WR1 - 1.1130

Weekly Pivot - 1.1046

WS1 - 1.1042

WS2 - 1.1019

WS3 - 1.0955

Trading recommendations:

Not much has changed since the last week in a bigger perspective. Still, the best strategy for current market conditions is to trade with the larger timeframe trend, which is down. All upward moves will be treated as local corrections in the downtrend. The downtrend is valid as long as it is terminated or the level of 1.1445 clearly violated. There is an Ending Diagonal price pattern visible on the larget timeframes that indicate a possible downtrend termination soon. The key short-term levels are technical support at the level of 1.1040 and the technical resistance at the level of 1.1267.

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Trading plan on EUR/USD for January 24, 2020. Euro fell down after ECB's decisions

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On Thursday, January 23, euro's highlights for the week and month took place: the ECB monetary policy meeting.

ECB:

a) Kept the interest rates at 0%, and lowered bank deposit rates to 0.5%.

b) Kept the liquidity injection program in the markets at the level of 20 billion euros / month.

However, the ECB said that it was "beginning to review the monetary policy strategy."

At the same time, the ECB said that it would raise the interest rates once inflation reaches the ECB's goal of "less than 2%".

In my opinion, the ECB's remark about "beginning to revise the strategy" speaks in favor of the euro. However, it was the market's decision on how to behave. So, on Thursday, after the ECB's decisions and the speech of ECB Head K. Laggard, the euro broke through the lower support of 1.1080 - 1.1070, and closed the day at about 1.1050.

The 30-point drop seems small, but the low volatility reveals it.

Technically, this is a signal of a decline to 1.0980, or possibly, to 1.0880.

EUR / USD:

Be ready to sell from 1.1070.

In the case of a rollback, buy from 1.1110.

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Indicator analysis: Daily review on EUR/USD for January 24, 2020

According to the news, the pair moved down yesterday and broke through the support line 1.1073, presented in a white bold line, and at the same time tested the pullback level of 76.4% equivalent to 1.1043, presented in a red dashed line. Strong calendar news for the euro is expected today at 08:30 and 09:30 UTC. Overcoming the lower fractal of 1.1037 is quite problematic.

Trend analysis (Fig. 1).

A descending side channel is expected today with the first target and the lower fractal of 1.1037. Upon reaching this level, it is possible to work upward with the goal of 1.1067, the retracement level of 14.6% presented in a blue dashed line.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - down;

- Bollinger lines - down;

- Weekly schedule - down.

General conclusion:

A descending side channel is expected today with the first target and the lower fractal of 1.1037. An unlikely but possible scenario is from the lower fractal 1.1037, the price will go down to the lower border of the Bollinger line indicator 1.1011, presented in a blue dashed line.

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Elliott wave analysis of EUR/JPY for January 24, 2020

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EUR/JPY dipped to a low of 120.61 which was deeper than expected for wave ii. The correction in wave ii could be complete, but to confirm this is the case, we need a break above minor resistance at 121.76 that will call for more upside pressure towards 122.88 on the way higher to minimum 124.90.

That said, it is possible that a second dip to or just below 120.61 is seen to complete the correction in wave ii. However, key support at 120.15 must protect the downside under this scenario.

R3: 122.01

R2: 121.76

R1: 121.31

Pivot: 121.15

S1: 120.89

S2: 120.61

S3: 120.49

Trading recommendation:

We bought EUR at 121.25 and has placed our stop at 120.10.

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

Forecast for EUR/USD on January 24, 2020

EUR/USD

The ECB held a meeting on Thursday and the head of the regulator, Christine Lagarde, confirmed the previously adopted plan to continue the stimulating policy for another "long time" and hinted at the likelihood of working with "green bonds". The euro fell by 37 points.

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On the daily chart, the price touched the support of the embedded line of the price channel with a lower shadow; now, with yesterday's low, the target will be the Fibonacci level of 138.2% at the price of 1.0986. Today, the market may not have time to complete the task of consolidating under Thursday's low; its immediate goal is to repeat support testing, now at the level of 1.1033.

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On the four-hour chart, the price reversal occurred exactly from the MACD line, price indicators and the Marlin oscillator consistently show a further decrease in the trend.

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Forecast for GBP/USD on January 24, 2020

GBP/USD

The pound fell by 16 points on Thursday. This was not enough for technical indicators to show a decrease in the risk of continued growth. On the daily scale, the price continues to develop above the balance line, since the Marlin oscillator has only slightly decreased in the growth trend zone. The development of the magnetic point at 1.3207, formed by the intersection of the Fibonacci level of 200.0% and the MACD line, can still take place.

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On the four-hour chart, a small consolidation and decline occurred in the area of the correction level of 38.2% of the extremes on December 13 and 23. The price is also higher than the indicator lines of balance and MACD, Marlin remains in the growth zone.

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The price will retain increasing potential until it goes below the signal level 1.3080 - this is the growth potential of the MACD line for the next day and technical resistance on January 16, 21 and earlier record extremes. Consolidation at 1.3080 will allow a decrease to develop towards the first target of 1.2968 - to the Fibonacci level of 161.8% on a daily scale.

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

Forecast for USD/JPY on January 24, 2020

USD/JPY

The Shanghai Composite Chinese stock index fell 2.75% on Thursday, US indices closed mixed, which caused the USD/JPY pair to fall by 55 points at the moment. The movement was still not very persistent, the price did not begin to overcome the support of the balance line on the daily chart. The Marlin oscillator approached the boundary with the territory of the bears, and can turn up from it. Unless, of course, stock market fears of a pandemic of the Chinese coronavirus subside.

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In general, the price is in the uncertain range formed by the support of the indicator line of balance and the resistance of the MACD line (109.82). In this state, staying between these two lines, the price may drop to an intermediate level of 109.00 (a July 10 high and a May 13, 2019 low). Consolidation below it opens the target of 108.50 - the Fibonacci level of 76.4%.

The positive scenario assumes that the Marlin signal line is turning up, the price is moving above the MACD line (109.82) and there is a slight continuation of growth towards the intersection of the lines of rising and falling price channels - 110.14.

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The situation is decreasing in all indicators on the four-hour chart, but Marlin is aggressively turning up. The overall picture for the yen is not defined, the market is waiting for external incentives.

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

Fractal analysis of the main currency pairs for January 24

Forecast for January 24:

Analytical review of currency pairs on the scale of H1:

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For the euro / dollar pair, the key levels on the H1 scale are: 1.1102, 1.1079, 1.1064, 1.1031, 1.1018, 1.0995 and 1.0964. Here, we are following the descending structure of January 16. Short-term downward movement is expected in the range of 1.1031 - 1.1018. The breakdown of the latter value will lead to a pronounced movement. Here, the target is 1.0995. Price consolidation is near this level. For the potential value for the bottom, we consider the level of 1.0964. Upon reaching which, we expect a rollback to the top.

Short-term upward movement is possibly in the range of 1.1064 - 1.1079. The breakdown of the latter value will lead to an in-depth correction. Here, the goal is 1.1102. This level is a key support for the downward structure.

The main trend is the descending structure of January 16

Trading recommendations:

Buy: 1.1065 Take profit: 1.1077

Buy: 1.1082 Take profit: 1.1100

Sell: 1.1031 Take profit: 1.1018

Sell: 1.1016 Take profit: 1.0996

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For the pound / dollar pair, the key levels on the H1 scale are: 1.3251, 1.3207, 1.3174, 1.3128, 1.3108, 1.3080 and 1.3035. Here, we continue to follow the upward cycle of January 20. Short-term upward movement is expected in the range 1.3174 - 1.3207. The breakdown of the latter value will lead to movement to a potential target - 1.3251. We expect a pullback to the bottom from this level.

Short-term downward movement is possibly in the range of 1.3128 - 1.3108. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.3080. This level is a key support for the top.

The main trend is the upward structure of January 20

Trading recommendations:

Buy: 1.3148 Take profit: 1.3172

Buy: 1.3176 Take profit: 1.3207

Sell: 1.3105 Take profit: 1.3083

Sell: 1.3078 Take profit: 1.3050

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9809, 0.9778, 0.9758, 0.9727, 0.9686, 0.9667 and 0.9643. Here, we are following the development of the ascending structure of January 16. The continuation of the movement to the top is expected after the breakdown of the level of 0.9727. In this case, the target is 0.9758. Short-term upward movement, as well as consolidation is in range of 0.9758 - 0.9778. We consider the level of 0.9809 to be a potential value for the upward movement; upon reaching this level, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 0.9686 - 0.9667. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.9643. This level is a key support for the top.

The main trend is the upward cycle of January 16

Trading recommendations:

Buy : 0.9727 Take profit: 0.9756

Buy : 0.9758 Take profit: 0.9776

Sell: 0.9665 Take profit: 0.9645

Sell: 0.9640 Take profit: 0.9616

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For the dollar / yen pair, the key levels on the scale are : 109.96, 109.78, 109.61, 109.33, 109.20, 109.01 and 108.89. Here, we are following the downward cycle of January 17 (initial conditions have been clarified). Short-term downward movement is possible in the range 109.33 - 109.20. The breakdown of the last value will lead to a pronounced movement. Here, the target is 109.01. For the potential value for the bottom, we consider the level of 108.89, upon reaching which, we expect consolidation, as well as a rollback to the top.

Short-term upward movement is possibly in the range of 109.61 - 109.78. The breakdown of the latter value will lead to an in-depth correction. Here, the goal is 109.96. This level is a key support for the downward structure.

Main trend: potential downward structure of January 20

Trading recommendations:

Buy: 109.61 Take profit: 109.76

Buy : 109.80 Take profit: 109.96

Sell: 109.33 Take profit: 109.20

Sell: 109.18 Take profit: 109.01

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3234, 1.3193, 1.3178, 1.3159, 1.3126, 1.3109 and 1.3083. Here, the price registered the local upward structure of January 22. The continuation of the movement to the top is expected after the breakdown of the level of 1.3160. In this case, the target is 1.3178. Price consolidation is near this level. Passing at the price of the noise range 1.3178 - 1.3193 will lead to a movement to a potential target - 1.3234. We expect a pullback to the bottom from this level.

Short-term downward movement is possibly in the range of 1.3126 - 1.3109. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3083.

The main trend is the local ascending structure of January 22.

Trading recommendations:

Buy: 1.3160 Take profit: 1.3178

Buy : 1.3194 Take profit: 1.3234

Sell: 1.3126 Take profit: 1.3110

Sell: 1.3107 Take profit: 1.3085

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6885, 0.6867, 0.6853, 0.6820, 0.6867 and 0.6885. Here, we are following the development of the descending structure of January 16. Short-term downward movement is expected in the range 0.6820 - 0.6803. The breakdown of the last value should be accompanied by a pronounced downward movement. Here, the target is 0.6781. For the potential value for the bottom, we consider the level of 0.6763. Upon reaching which, we expect consolidation, as well as a rollback to the top.

Short-term upward movement is expected in the range of 0.6867 - 0.6885. The breakdown of the latter value will lead to the formation of initial conditions for the top. In this case, the potential target is 0.6910.

The main trend is the descending structure of January 16, the correction stage

Trading recommendations:

Buy: Take profit:

Buy: 0.6868 Take profit: 0.6883

Sell : 0.6820 Take profit : 0.6804

Sell: 0.6802 Take profit: 0.6784

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For the euro / yen pair, the key levels on the H1 scale are: 121.84, 121.50, 121.22, 120.59, 120.26 and 120.00. Here, we are following the descending structure of January 16. The continuation of movement to the bottom is expected after the breakdown of the level of 120.59. In this case, the goal is 120.26. Price consolidation is near this level. For the potential value for the bottom, we consider the level of 120.00. Upon reaching which, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 121.22 - 121.50. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 121.84. This level is a key support for the downward structure.

The main trend is the descending structure of January 16

Trading recommendations:

Buy: 121.22 Take profit: 121.50

Buy: 121.52 Take profit: 121.84

Sell: 120.57 Take profit: 120.28

Sell: 120.24 Take profit: 120.00

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For the pound / yen pair, the key levels on the H1 scale are : 146.41, 145.92, 144.99, 144.53, 144.06, 143.09 and 142.71. Here, we are following the formation of the ascending structure of January 21. The resumption of movement to the top is expected after the breakdown of the level of 144.06. In this case, the goal is 144.53. Short-term upward movement is expected in the range 144.53 - 144.99. The breakdown of the last value should be accompanied by a pronounced upward movement. Here, the target is 145.92. For the potential value for the top, we consider the level of 146.41. Upon reaching this level, we expect consolidation, as well as a pullback to the bottom.

The level 143.09 is a key support for the top. Its passage at a price will lead to the cancellation of this structure. In this case, the potential target is 142.71.

The main trend is the local ascending structure of January 21

Trading recommendations:

Buy: 144.06 Take profit: 144.50

Buy: 144.55 Take profit: 144.97

Sell: 143.09 Take profit: 142.71

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

Analysis of EUR/USD and GBP/USD for January 23. Christine Lagarde speech pulled down the euro

EUR/USD

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The EUR/USD pair gained about ten base points on January 22, which did not particularly affect the current wave marking, which still implied a continued decline in the instrument. Today, January 23, when Christine Lagarde began her speech, the euro began to decline, which has already lost about 50 base points, and the day can end with even greater losses. Thus, the instrument continues to build a downward trend section and its expected wave Y. Failure to break the 76.4% Fibonacci level may lead to quotes moving away from the lows reached, a break - to continue going down in the direction of the 100.0% Fibonacci level.

Fundamental component:

The news background for the instrument was very strong on Wednesday. By and large, only one event was expected by the markets today. Summing up the ECB meeting, the first in 2020. Expectations about changes in interest rates by the markets were negative, and it is unlikely that anyone would count on statements about changes in the volume of the quantitative stimulus program. Therefore, all attention was paid to the speech of Christine Lagarde, and she did not disappoint. Indeed, she disappointed investors of the euro. At first, Lagarde's speech did not portend disaster. The ECB president announced moderate growth in the EU economy, as well as certain signs of improving the economic situation and accelerating inflation. However, after a few minutes, the markets heard the words that in general the risks for the EU economy remain downward, and industrial production and trade continue to slow down the eurozone economy. Thus, only that which was clear to the markets was confirmed. The decline in industrial production in recent months, weak business activity, geopolitical conflicts, the recession of the global economy - all this has had and continues to have a negative impact on the economy of the eurozone. And since these problems have not yet been resolved, it is too early to expect improvement in the situation in Europe.

General conclusions and recommendations:

The euro-dollar pair, presumably, continues to build a downward set of waves. Thus, I would recommend continuing to sell the instrument with targets located near the levels of 1.1034 and 1.0982, which corresponds to 76.4% and 100.0% Fibonacci.

GBP/USD

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The GBP/USD pair gained about 95 base points on January 22, but at the same time it continues to remain within the framework of the construction of the proposed wave 3 or c, which takes a very complex and extended form. Now we can still assume that the decline could resume in the near future, although the internal wave structure of wave 3 or c already leaves some questions unanswered. A successful attempt to break through the 38.2% Fibonacci level will confirm the readiness of the markets for further sales of the pound sterling.

Fundamental component:

There was no news background for the GBP/USD instrument on Wednesday. The markets are now only watching the settlement of the last controversial issues between the House of Commons and Lords in the Parliament of Great Britain, but there is nothing special to note here. The Queen of Great Britain will sign the Brexit bill in the near future, and ratification of the deal in the European Union is due on January 29. Although in fact all these issues have long been resolved. A small wave of optimism was present in the Forex currency market, the pound slightly rose, but due to what should it continue to rise? The country will enter the so-called transitional period in a week, which will last 11 months. By and large, nothing will change in relations between the EU and Britain on February 1. Only negotiations will begin on agreements defining relations between the EU and Britain after December 31, 2020. There were no economic reports in the US and Britain today, so I'm waiting for a return to the 38.2% Fibonacci level.

General conclusions and recommendations:

The pound/dollar tool continues to build a new downward trend. I recommend selling the instrument again with targets near 1.2941 and 1.2764, which corresponds to 38.2% and 50.0% Fibonacci, on the new MACD "down" signal. A successful attempt to break through the 23.6% level will require adjustments to the current wave marking.

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

Summersaults of the Australian doll

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At the end of this week, the Australian currency made an unexpected leap, sharply soparing to its highest values. At first glance, nothing foreshadowed such somersaults, and experts, on the contrary, predicted the aussie's fall.

On Wednesday, January 22, the AUD/USD pair showed a downward trend with 20 points. Later, the pair reached 0.6830, while the potential for further decline was still maintained. By Wednesday evening, the aussie slightly grew, haggling close to 0.6847, but being ready to fall down at any moment.

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However, further events developed in a different way. On Thursday morning, January 23, the AUD/USD pair surprised the market with a sharp increase to 0.6870. As it turned out, this is not the limit.

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Now the pair continues to move in the wake of this optimism. At the moment, the AUD/USD pair rose to 0.6872, but then handed back a little.

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Experts recorded a mass sell-off of the Australian currency this week. According to experts, the main reason for the sales is the consequences of large-scale fires in Australia, which covered over 64% of the country's area. Despite the emergency situation in Australia, data on losses and impact on the agricultural sector were not recorded. However, the lion's share of investors leaves the asset, selling the aussie. Many of them expect a fall in key macroeconomic indicators in Australia.

Many market participants are confident in a significant deterioration in the macroeconomic environment of Australia. A difficult situation was recorded in the country before the fires, and now it has worsened. Analysts fear that the current state of affairs will force the Reserve Bank of Australia not only to cut interest rates, but also to launch a quantitative easing program (QE).

Information on the Australian labor market is currently expected. Experts believe that the unemployment rate in the country will remain the same - within 5.2%, and the employment growth rate may drop. In December 2019, the Australian economy created only 15 thousand new jobs, which is much lower than the previous indicator - 39.9 thousand new jobs. In this regard, the prospects for the Australian currency, prone to unexpected jerks, do not look very bright.

Experts are unanimous in the opinion that the Australian currency should be sold at the moment. They are certain that in the near future, the strengthening of the US currency will put pressure on the aussie. It will be difficult for the aussie to compete with the greenback, and AUD may lose in this fight, experts conclude.

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Trading recommendations for GBP/USD on January 23

From the point of view of complex analysis, we see a sharp surge in activity, which led to a jump in prices towards 1.3150. In fact, the psychological level of 1.3000 was left behind, and the structure of the Zigzag-shaped model has undergone a significant change. The long-running Zigzag model led to a significant compression of the amplitude, where the psychological level, relative to which the compression phases occurred, became the point of interaction. Yesterday's surge in activity, larger than 110 points, managed to break through the maximum of the third phase of the model [01/17/19 (High) -20.01.20], which led to discussion of the fracture of the Zigzag-shaped model and a sharp surge of long positions. Predictions coincided, traders earned, but in the depths of consciousness lies the thought that this is not the end, but we should expect something more.

What is the doubt? That is, we have two assumptions since the impulse that occurred earlier is insufficient in comparison with the mass of the model. The first suggests that the current impulse is only the beginning of a future move, and the second judgment, on the contrary, casts doubt on the structure of the model and the correctness of the phases. To be more precise, the previous phase [01/17/19/20/01/20] is only a tact, the current phase and the reverse is still possible.

In terms of volatility, we see the highest indicator since the beginning of the trading week, where for the first time we exceeded the average daily indicator by 24%. A characteristic acceleration was observed in the market since Tuesday, where the daily indicator grew to the level of 88 points in comparison with Monday.

Analyzing the past minute by minute, we see that the structure of the move resembles steps, and the impulse move raised us to a new level, where the surge in activity occurred at 10: 00-13:00 [UTC+00 time on the trading terminal]. Subsequent swings were in terms of deceleration, reflecting a range of 1.3115 / 1.3150.

As discussed in the previous review, speculators had long positions even from the value of 1.3201, where the breakdown of the January 17 maximum gave confidence to the actions, which led to the further progress and the achievement of subsequent predicted coordinates.

Considering the trading chart in general terms [the daily period], we see that there are no cardinal changes, the main coordinates are not affected by the price. Thus, the medium-term upward movement is preserved in the structure of the global downward trend.

The news background of the past day contained statistics for the UK, where the volume of borrowing in the public sector fell by 4 billion pounds. At the same time, data were published on the Business Optimism Index [CBI], which rose from -44 to +23, now it remains only for investors to believe in these indicators, since most of them left the United Kingdom since the beginning of the referendum.

The market reaction to the statistics was conditionally in favor of the pound sterling, but probably the sacred meaning was different.

In terms of the general information background, we have the long-awaited approval by the British Parliament of the bill on the country's withdrawal from the EU. The last delay was from the House of Lords, the trough delayed the long-awaited moment of approval for all.

"Parliament has passed a bill to withdraw from the European Union, which means that the United Kingdom will leave the EU on January 31 and will move forward as a whole. At times, it seemed like we would never cross the Brexit finish line, but finally we succeeded, "said the British Prime Minister.

Now all that remains is the signature of Queen Elizabeth II, after which the European side will sign the necessary documents in Brussels, and on January 29 the agreement will have to finalize the European Parliament.

In turn, the Chancellor of the Exchequer of Great Britain, Sajid Javid, was inspired by what was happening and said to the United States government during the World Economic Forum that they should wait in line until Britain finishes negotiations with the European Union and after it comes to them, which the Ministry of Finance did not like USA. Subsequently, the British government corrected the words of Javid, saying that there are no plans for priorities and from February 1 they can freely negotiate with any country.

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Today, in terms of the economic calendar, we only had applications for US unemployment benefits, where no changes are expected. The main event of the day was the meeting of the ECB, followed by a press conference, where, according to expectations, changes in the strategy of the regulator may take place. This event belongs to the European Union, but do not forget that there is a characteristic correlation between the EUR/USD and GBP/USD currency pairs. As a result of which, there may be synchronous moves.

Further development

Analyzing the current trading chart, we see a very remarkable slowdown with perfectly even borders of 1.3115 / 1.3150, where the quote has been fluctuating for more than 20 hours. In fact, we are faced with local ambiguity, which is caused by a small overbought, as well as third-party factors, as we wrote above.

In terms of the emotional mood of the market, we see a high coefficient of speculative positions, which was caused by yesterday's surge in activity.

By detailing the per minute portion of time, we see that the structure of the candles does not have a doji, which indicates the strength of the current accumulation.

In turn, speculators came to the closure of previously opened long positions in connection with a divergence of opinion and a possible new, more profitable entry point.

Having a general picture of actions, it is possible to assume that market activity will continue to grow, and current accumulation is a temporary point of regrouping of trading forces. Due to doubts about the assurance of the Zigzag-shaped model, it is considered to be the best tactic to work with fluctuations, that is, we can safely talk about the completion of the model in case of a price higher than 1.3150 and fixing at 1.3180. An alternative judgment is considered in the form of preserving the Zigzag-shaped model and changing the beat, where the priority impulse awaits us if the price is fixed lower than 1.3105, with a move to the psychological level of 1.3000. After that, the analysis of price fixing points and quotation behavior is performed.

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Based on the above information, we derive trading recommendations:

- Buy positions are considered in case of price fixing higher than 1.3180. Speculative positions may already be from the value of 1.3155.

- Sell positions are considered in case of price fixing lower than 1.3105, towards the psychological level of 1.3000.

Indicator analysis

Analyzing a different sector of timeframes (TF), we see that the indicators of technical instruments turned upward following the impulse move. In turn, the minute intervals took a neutral position due to the ambiguous range.

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Volatility per week / Measurement of volatility: Month; Quarter; Year

Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.

(January 23 was built taking into account the time of publication of the article)

The current time volatility is 32 points, which is an extremely low value. It is likely to assume that volatility will increase locally at the moment of breakdown of the current range.

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Key levels

Resistance zones: 1.3180 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.

Support Areas: 1.3000; 1.2885 *; 1.2770 **; 1.2700 *; 1.2620; 1.2580 *; 1.2500 **; 1.2350 **; 1.2205 (+/- 10p.) *; 1.2150 **; 1.2000 ***; 1.1700; 1.1475 **.

* Periodic level

** Range Level

*** Psychological level

**** The article is built on the principle of conducting a transaction, with daily adjustment

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

EUR/USD: Christine Lagarde pessimism and panic over 2019-nCoV

The euro-dollar pair is plunging down: at the moment, the bears are trying to gain a foothold below the support level of 1.1050 in order to discover the way to the area of the ninth figure. Although in the morning the pair showed corrective growth, in the hope of hawkish notes from the ECB. But to the disappointment of the EUR/USD bulls, Thursday events turned against the European currency. And it's not just because of Christine Lagarde's overly cautious rhetoric. The financial world today has finally succumbed to panic about the spread of the deadly 2019-nCoV virus. Demand for defensive assets has increased again, as well as that for the US currency, which many investors use as a kind of safe-haven in times of heightened uncertainty. In other words, the EUR/USD bulls hope for a resumption of the upward trend burst like a soap bubble - Lagarde could not support the single currency, while the anti-risk sentiment only increased the pressure on the pair.

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The European Central Bank today, quite expectedly, left all the parameters of monetary policy unchanged. In its accompanying statement, the regulator indicated that the ECB rates will remain at the current "or lower level" until inflation approaches the target two percent level "or close enough to this target". This wording was not a surprise to traders. The only innovation in the final communique is the announcement that the ECB will conduct a strategic review of its policy (for the first time in 17 years). However, firstly, this process will take about a year, and secondly, the regulator has not yet shared any details regarding the scope of the policy review. Therefore, the main attention of traders today was riveted to the press conference of Christine Lagarde.

It cannot be said that the head of the ECB took a peremptory-dovish position. Not at all. During her speech, she, in particular, stated that "current rates are worrisome," therefore, in the future, the regulator will take into account the collateral effect of low rates. This statement suggests that there is still a split in the ECB, which appeared back in September last year, when Mario Draghi "pushed" the decision to resume QE. Some of the central bank members then also expressed their concern about the side effect of negative rates.

However, the above remark could not provide the euro with long-term support. Lagarde generally maintained a pessimistic stance on the current situation. First of all, according to the head of the ECB, industrial production is a "brake"on the European economy. On the whole, the existing risks are "tilted downward," although they are less pronounced compared to last year. Despite the signing of the first phase of a trade deal between the US and China, the ECB continues to be concerned about this protracted trade conflict. Lagarde uttered a rather capacious phrase on this subject: "... geopolitics is a threat that leaves the door open for accommodation policy." At the same time, Lagarde rather modestly commented on the growth of European inflation. According to her, the regulator noted "some signs of growth", however, these trends "correspond to earlier expectations". Summing up the January meeting, the head of the ECB said that monetary policy will remain stimulating "for a long period of time", despite some signs of stabilization of the situation in the eurozone.

Buyers of the EUR/USD pair certainly expected more from today's meeting. Previous macroeconomic releases made it possible to count on a more hawkish tone by the central bank chief. Therefore, following the meeting, the pair updated the daily low. But ironically, the press conference of Lagarde coincided with a general increase in anti-risk sentiment in the markets. For example, the yen paired with the greenback fell to the bottom of the 109th figure, and the dollar index jumped to a one-month high (the last time it was at 97.57 points in early December), reflecting investor demand for defensive instruments. Stock indices - on the contrary, collapsed.

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Asian markets have been hit hardest. In particular, the Hong Kong Hang Seng index fell 2.8%, the Shanghai blue chips index fell 1.7%, and the Japanese Nikkei lost 0.9%. The shares of tourism and passenger transportation companies (including airlines) fell most strongly. There is growing concern in financial markets that a virus spreading from China could slow global growth. Cases of infection have already been recorded in Taiwan, Thailand, Japan, South Korea, Saudi Arabia and the United States. The authorities of the PRC quarantined two cities in Hubei province (including the 11 millionth Wuhan), canceling all the large-scale events in Beijing dedicated to the celebration of the New Year on the lunar calendar (January 25).

Such unprecedented measures have reminded traders of the effects of the 2003 pneumonia epidemic. Then the key countries of the Asian region in total lost, according to various estimates, from 30 to 40 billion dollars. (first of all, the tourism sector has suffered). The oil market fell then, due to a significant decrease in air transportation, and, accordingly, the demand for aviation fuel and crude oil.

It is worth noting that at the moment it is impossible to say with certainty that a repetition of the year 2003 awaits us, however, in the context of the prospects of the foreign exchange market (and directly the EUR/USD pair), the very fact that traders succumbed to panic is important. If the situation with the spread of the virus will gain momentum, the pair will continue to decline, despite the other fundamental factors. So far, the EUR/USD bulls are defending - the bears have failed to gain a foothold below the support level of 1.1050. But in the event of an increase in anti-risk sentiment, buyers of the pair will not be able to maintain this level - the price will drop to the ninth figure.

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