Technical analysis of GBP/USD for 05/02/2020:

Technical Market Overview:

The GBP/USD pair has made a massive Pin Bar candle at the level of 1.2939, so the price has returned back to the range zone again. The market is still range bounded and only a sustained breakout through the level of 1.3512 would resume the uptrend on the larger timeframe. On the other hand, the key level for bears is seen at the level of 1.2904 and if violated, then the breakout from the consolidation zone is valid. The current market conditions are neutral.

Weekly Pivot Points:

WR3 - 1.3548

WR2 - 1.3373

WR1 - 1.3306

Weekly Pivot - 1.3131

WS1 - 1.3071

WS2 - 1.2899

WS3 - 1.2839

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 05/02/2020:

Technical Market Overview:

The EUR/USD pair has reversed lower after the Bearish Engulfing candlestick pattern was made at the H4 timeframe chart. The market conditions are coming off the overbought levels and the momentum indicator below its fifty levels, so the bears are regaining the strength step by step. The price has tested the technical support located at the level of 1.2040 already, so more downside is expected in the near-term. The next target is seen at the level of 1.1024 and 1.0998.

Weekly Pivot Points:

WR3 - 1.1243

WR2 - 1.1163

WR1 - 1.1138

Weekly Pivot - 1.1062

WS1 - 1.1035

WS2 - 1.0960

WS3 - 1.0930

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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Trading plan on EUR/USD for February 5, 2020. The epidemic in China and the employment in the United States

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The coronavirus epidemic in China continues to spread at a high rate:

As of Wednesday morning, there are already 24,000 infected (+20% to the previous report) and 490 dead (also +20%).

As long as the rate of the epidemic's spread remains so high, this topic will remain as the main threat to both the world economy and the markets. Given the role of China in the world economy, there is a huge chance that the epidemic in China will cause a global recession. For instance, the oil consumption in China has already fallen by 20%, and oil has fallen below $ 50.

In the foreign exchange market, the crisis in China plays a role in the strengthening of the US dollar as a protective asset.

Thus, the US market rose on Tuesday.

Meanwhile, on Wednesday, the US employment report from ADP will be released at 14:15 London time.

EUR/USD range:

Sell when the price breaks 1.0990 downwards.

Buy when the price breaks 1.1100 upwards.

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Elliott wave analysis of GBP/JPY for February 5 - 2020

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The rally from 140.94 has been stronger than expected. However, the pair remains below the short-term resistance at 143.30. As long as this resistance is able to cap the upside, we should see renewed downside pressure towards 140.94 and closer to 139.24 and 137.86.

Once this zig-zag correction is completed, a new impulsive rally in wave v to 147.95 may occur.

R3: 143.30

R2: 142.88

R1: 142.60

Pivot: 142.29

S1: 142.07

S2: 141.69

S3: 141.24

Trading recommendation:

We are short GBP from 143.95 with our stop placed at 143.35

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Elliott wave analysis of EUR/JPY for February 5 - 2020

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As we suspected, wave iv rose slightly above minor resistance at 120.42. The peak at 120.99 should be enough to complete wave iv and set the stage for the final decline in wave v towards the 118.85 -119.24 target-zone. This should complete the correction in wave 2 and mark the beginning of a new impulsive rally in wave 3.

In the short term, a break below support at 120.42 (former resistance turns into support) will confirm that wave iv has completed and wave v is developing.

R3: 121.43

R2: 121.26

R1: 120.99

Pivot: 120.68

S1: 120.42

S2: 120.05

S3: 119.75

Trading recommendation:

We sold EUR at 120.40 with a 121.26 stop. We take profit and buy EUR at 119.25.

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Kiwi will try to test the 0.6462 level for Today Feb 05, 2020

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At the 4 hour chart, we can see that the pair is likely to test the daily fair value gap main threshold at 0.6462. If this level holds the price movement, there is a potential for Kiwi to retrace and grow again to test 0.6499. However, such a scenario is unlikely to occur if the 0.6462 level cannot halt the down movement of NZD/USD. The bias for this pair is still bearish. It seems this pair will be in a bottom at March 2020 and if the pair breaks through 0.6462, the 0.6446 level will be the next target for Kiwi.

(Disclaimer)

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

AUD/USD will re-test again daily rejection block for Feb 05, 2020

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The AUD/USD pair is attempting to re-test again the daily rejection block zone. If this zone is not broken, the pair may retrace and climb up again to test 0.6763 - 0.6779. The overall bias is still bearish. So, please be careful if you want to open long position.

(Disclaimer)

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

GBP/USD: plan for the European session on February 5. Pound: to rise to the highs of 1.3065 and 1.3100, a UK service sector

To open long positions on GBPUSD, you need:

After yesterday's major movements, today in the first half of the day, it is unlikely that anything will change significantly in the pair before the release of the report on the state of the UK service sector, which is an important component of the country's economy. It is expected that the index in January will remain at the same level of 52.9 points as in December last year. In the short term, the bulls are aimed at the resistance of 1.3025, a consolidation above which will be a powerful impulse to a new wave of growth of GBP/USD in the area of the highs of 1.3064 and 1.3102, where I recommend taking the profits. However, in the scenario of a pair's decline after a weak report on the service sector, new purchases can be considered after forming a false breakdown in the support area of 1.2983, which yesterday transformed from the level of 1.2990 and where a new lower border of the ascending channel can be built today. I recommend opening long positions immediately for a rebound only after testing the minimum of 1.2939.

To open short positions on GBPUSD, you need:

Despite the large fall in the pair, yesterday's rebound indicates that there are buyers in the market who are betting on further growth. Sellers will be forced to continue to defend the resistance at 1.3025 today. Short positions can only be opened from this resistance if a false breakdown is formed and weak data on the decline in activity in the UK services sector is available. Larger sellers are concentrated in the resistance areas of 1.3064 and 1.3102. An equally important task will also be to re-return and consolidate below the support of 1.2983, which also represents the lower border of the wide side channel. A break in this area will open a direct path to the lows of 1.2939 and 1.2896, where I recommend taking the profits.

Signals of indicators:

Moving averages

Trading is conducted in the area of 30 and 50 moving averages, which again indicates confusion with the direction before the release of important reports.

Bollinger Bands

A break of the upper border of the indicator at 1.3045 will lead to an increase in the pound, while a break of the lower border at 1.3005 will again increase the pressure on the pair.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages) 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 5. The bears pushed the euro to the support of 1.1020. Buyers will expect

To open long positions on EURUSD, you need:

Yesterday's data on inflation in the eurozone did not make euro buyers very happy, which was not true of the report on orders in the US manufacturing sector, which supported the dollar in the second half of the day. Now the situation with the levels has changed slightly and buyers may have problems overcoming the resistance of 1.1046. Only the growth of the services sector in the eurozone will return the demand for EUR/USD and help to break above 1.1046, which will strengthen the demand for the euro and lead to an update of the highs of 1.1067 and 1.1095, where I recommend fixing the profits. If the data turns out to be worse than economists' forecasts, then most likely the pair will return to the support area of 1.1019, from where I recommend opening long positions only if a false breakout is formed. You can buy EUR/USD immediately on a rebound from the minimum of 1.1993. A breakdown of the support of 1.1019 will also indicate a reversal of the current upward trend that was formed at the end of January this year.

To open short positions on EURUSD, you need:

Bears still control the market, but it is too early to talk about a reversal of the upward trend. Only a weak report on the services sector will return EUR/USD to the support area of 1.1019, but a more important task for sellers will be to consolidate under this level, which will strengthen the downward trend and lead to an update of the lows in the area of 1.1993, from where the bullish growth began last week. An unsuccessful attempt to return and consolidate above the resistance of 1.1046 in the first half of the day will also be an additional signal to open short positions in the euro, but I recommend selling immediately for a rebound only from the maximum of 1.1067. We must also remember today's speech by the President of the European Central Bank, Christine Lagarde, who may hint at an increase in economic stimulus measures at the beginning of this year, which will also weaken the position of the European currency in the short term.

Signals of indicators:

Moving averages

Trading is conducted just below the 30 and 50 moving averages, which indicates the predominance of sellers in the market.

Bollinger Bands

A break of the lower border of the indicator around 1.1030 will be an additional signal to open short positions in the euro. Growth will be limited to the upper level in the area of 1.1055, a breakout of which will lead to new purchases of the euro.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages) Fast EMA Period 12. Slow EMA Period 26. SMA Period 9
  • Bollinger Bands (Bollinger Bands). Period 20
The material has been provided by InstaForex Company - www.instaforex.com

USD/CAD control zones for February 5, 2020

The test of the weekly control zone 1.3292-1.3276 occurred at the beginning of the week. This made the fixing of the previously opened purchases possible. Meanwhile, the reversal pattern has not yet been formed, so it is quite early to completely exit the long position. The probability of continued growth is still high.

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Sales from the current levels are not profitable, as the probability of testing the November high still remains above 70%. On the other hand, an alternative corrective model will be developed if the "false break" pattern of the weekly high is formed today. This will allow sales to be considered in the nearest support zone tomorrow.

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Daily CZ - daily control zone. The zone formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone that reflects the average volatility over the past year.

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Overview of the EUR/USD pair. February 5. Focus: business activity indices and Christine Lagarde's speech

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower channel of linear regression: direction - downward.

Moving average (20; smoothed) - sideways.

CCI: 6.4103

The second trading day of the week was in a downward movement for the EUR/USD pair. By the end of the day, the quotes were fixed below the moving average line, so the upward trend changed to a downward trend. However, the "paradoxical situation" remains in effect, so when approaching local lows near the Murray level of "0/8" - 1.0986, the pair may turn around again, the bears may lose interest in the US currency, which will eventually provoke a new growth of the euro. Anyway, short positions have become relevant now.

If there were no macroeconomic statistics or other fundamental information available to traders on Tuesday, there will be plenty of it on Wednesday. As they say, there will be somewhere to roam. Unfortunately, most macroeconomic reports can be completely neutral, which will not affect the currency market. However, everything is in order. The day will start with the publication of business activity indices in the service sectors of Germany, the European Union, and some other major EU countries. Forecasts for these indicators are neutral, that is, they do not differ from the values of the previous month – December. Composite PMI indices for January with the same neutral forecasts will also be published. If we take the whole situation as a whole, business activity in the services sector causes much less concern for traders compared to the manufacturing sector. All indices of business activity in the service sector remain stable above the level of 50.0. So tomorrow, the numbers that show the good state of the industry can either be confirmed or not. However, in any case, a small deviation from the forecast values will not cause any reaction from traders. Only a serious discrepancy in the forecasts can provoke a strong movement of the euro/dollar pair.

Next, data on changes in the volume of retail trade in the European Union for December will be published. According to expert opinions, the indicator will grow by 2.3% y/y but will lose 0.5% every month. This is also a fairly minor indicator, which will cause a reaction from traders only if there is a strong discrepancy between the real value and the forecast value. And then there will be a speech by ECB President Christine Lagarde. And this is the key event of the day. Recall that at the January meeting of the regulator, no serious decisions were made. And Christine Lagarde's speech was so boring that the euro/dollar pair did not react at all to such an important event as the Central Bank meeting. Christine Lagarde continues to focus on the need for structural changes in the Central Bank itself and does not make any hints that the parameters of monetary policy may be changed soon. Moreover, there are no new factors that could force Lagarde to make a loud statement. Donald Trump is busy now completing the case for his impeachment and for some time forgot about the European Union and his desire to impose duties on the products of the European engineering sector. Global risks have eased a bit, but they haven't changed. No new and important information on an international scale has been received in recent weeks. Thus, Lagarde may devote his speech not to monetary policy, but, for example, to the risks associated with the new "coronavirus".

Important economic data will be published at the US trading session. First, this is the ADP report on changes in the number of employees in the private sector. Forecast - +150 thousand. Thus, the demand for the dollar after lunch will depend on the excess or absence of it. The business activity index for the services sector and the composite PMI from Markit will also be published. Both indicators are expected to be at the same level as the previous month, meaning no major changes are expected. And the most important and significant index of business activity in the service sector ISM will complete the day's publication of data. Experts expect a small increase to 55.1.

In general, we can say that the reaction of market participants to tomorrow's publications will depend entirely on the actual values of indicators and their compliance with forecasts. Since there is a lot of data, the ones where the discrepancy with the forecast will be the highest will be more important. And of course, Christine Lagarde's very important speech.

From a technical point of view, we expect the downward movement to continue, but a reversal of the Heiken Ashi indicator to the top may indicate at least an upward correction, and, at most, a resumption of the upward movement.

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The average volatility of the euro/dollar currency pair has increased again and is now 48 points per day. Thus, on the third trading day of the week, we expect movement between the borders of the volatility range of 1.0995-1.1090. The pair will probably tend to work out the lower border if the Heiken Ashi indicator does not turn up at the very beginning of the day.

Nearest support levels:

S1 - 1.1017

S2 - 1.0986

S3 – 1,0956

Nearest resistance levels:

R1 - 1.1047

R2 - 1.1078

R3 - 1.1108

Trading recommendations:

The euro/dollar pair resumed its downward movement. Thus, sales of the euro currency with the goals of 1.1017 and 1.0995 are relevant now, before the Heiken Ashi indicator turns up. It is recommended to return to buying the EUR/USD pair not before the price is fixed back above the moving average line, which will change the current trend to an upward one, with the goals of 1.1078 and 1.1090.

In addition to the technical picture, you should also take into account the fundamental data and the time of their release.

Explanation of the illustrations:

The highest linear regression channel is the blue unidirectional lines.

The lowest linear regression channel is the purple unidirectional lines.

CCI - blue line in the indicator window.

Moving average (20; smoothed) - blue line on the price chart.

Murray levels - multi-colored horizontal stripes.

Heiken Ashi is an indicator that colors bars in blue or purple.

Possible price movements:

Red and green arrows.

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Forecast for EUR/USD on February 5, 2020

EUR/USD

Yesterday, factory orders in the United States for December came out with good data - an increase of 1.8% against expectations of 0.7%. And earlier on Monday, the ISM Manufacturing PMI for January showed an increase to 50.9 from 47.2 in December. Thus, the American industry was completely "rehabilitated" for Friday's failed Chicago PMI (falling from 48.9 to 42.9). The euro fell by 15 points yesterday.

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On the daily chart, the price is expected to approach the first target of 1.1020 - the embedded line of the price channel. Fixation under it opens the second target of 1.0925 - the lows of September 3 and 12 last year.

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On the four-hour chart, the price is supported by the balance line. The price is in no hurry to break through to the target level, which allows the MACD line to adapt to the current decline. The line, price, and target level can meet at the same point. The coincidence of technical lines on the daily and four-hour charts will strengthen the level (1.1020), and a correction is likely from it. The transition of the signal line of the Marlin oscillator to the zone of ownership of the "bears" indicates that this goal is likely to be achieved soon.

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Forecast for GBP/USD on February 5, 2020

GBP/USD

Yesterday, the British pound traded in the range of 106 points, eventually closing the day with an increase of 33 points. On the daily scale chart, the lower shadow price punctured the target level - a strong support of 1.2968. This is a sign of another impending attack on this support. Indicator readings confirm this intention of the price: on the daily chart, the price is confidently held under the indicator lines, and the Marlin oscillator is in the negative trend zone.

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On the four-hour chart, the price is held by the red balance indicator line - the trend remains downward. The Marlin oscillator is also in a downward trend.

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So, the nearest and most important task of the price now is to fix it below the level of 1.2968. After that, the road will open to the second target of 1.2820 on the Fibonacci level of 138.2% on the daily scale chart.

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

Forecast for USD / JPY on February 5, 2020

USD / JPY

Due to the general pressure of the dollar and the growth of the stock market, the USD / JPY pair jumped 81 points yesterday. The dollar index, on the other hand, gained 0.12%, and an additional 1.50% on the S&P 500. Today, Nikkei225 is growing at 1.35%, and even the Chinese Shanghai Composite Index is gaining 0.45%.

We believe that optimism on the Asia-Pacific stock markets is temporary. The coronavirus itself is not so terrible as the consequences for the Chinese economy after unreasonably harsh measures to overcome its spread. According to pessimistic estimates, 2/3 of the Chinese economy is paralyzed, and the volume of bad loans is expected to increase to 6.3%. Of course, China can gloss over the following statistics, but this will not change its overall negative picture. So the January Manufacturing PMI has already shown a decrease from 51.5 to 51.1. Services PMI has worsened from 52.5 to 51.8, and on Friday the most important data on the trade balance for January will come out where the forecast for Trade Balance is 36.8 billion dollars against 46.8 billion in December.

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Thus, this makes the situation on the yen look shaky. The price increase up to the peak of January 17 (110.30) is corrective in nature, even if it is part of the trend movement from last August.

It is observed on the daily chart that the correctional price increase was 61.8% (in the figure, due to the overturn of the grid 38.2%). Perhaps this is where the price will unfold. But higher are the stronger resistances with the correctional level of 76.4% which is equivalent to 23.6% in the figure and at 109.90 in the MACD line. Turning the price down will once again direct the price to the area of attraction of the price channel lines and the Fibonacci reaction level of 123.6% at 107.85.

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Price-fixing below the MACD line of 109.20 on the four-hour chart, will be a sign of the development and strengthening of the falling scenario. At the moment, the situation is neutral.

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

Control zones for NZD/USD on 02/05/20

Yesterday's growth was the main model, as the pair was trading outside the average course. The level of 0.6502 remains the main target and is within the daily range. Meanwhile, the defining resistance zone of Weekly Control Zone 1/2 0.6517-0.6511 is located just above the level. Now, reaching this zone will determine the future priority.

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Yesterday's purchase of the instrument should be partially fixed after touching the level of 0.6502, while the rest can be transferred to breakeven.

The continuation of the fall model will be developed if the Weekly Control Zone 1/2 test leads to the formation of the "absorption" or "false breakdown" pattern. This will pave the way for further lowering and updating the monthly minimum. Last month's downward movement remains a medium-term impulse.

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Daily CZ - daily control zone. The zone formed by important data from the futures market that changes several times a year.

Weekly CZ - weekly control zone. The zone formed by the important marks of the futures market, which change several times a year.

Monthly CZ - monthly control zone. The zone that reflects the average volatility over the past year.

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

GBP/USD. February 4. Results of the day. Boris Johnson wants an agreement, "like with Canada or Australia."

4 hour timeframe

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Amplitude of the last 5 days (high-low): 54p - 118p - 132p - 126p - 217p.

Average volatility over the past 5 days: 121p (high).

The British pound began a not too strong correction on Tuesday, February 4, but the downward trend has already been formed, so the upward movement is now the correction, and not an attempt to resume the upward trend. However, we are forced to make a much more important conclusion that the GBP / USD pair failed to overcome a strong support area again near the level of 1.3000. According to the results of today, the British currency tried to gain a foothold below, but it can be observed that the rebound from this area is expressed by a huge pin at the candle. The nearest goals for correction now are the lines of the indicator Ichimoku Senkou Span A and Kijun-sen. If the pound / dollar rebounded these levels, then the downward movement will resume with the prospect of declining to $ 1.29.

There was little macroeconomic data from the UK today, or rather, there was not at all. Thus, traders had nothing to turn their attention to during the day. All this provoked an upward correction, as market participants did not find a reason for new sales of the British pound; however, there are grounds. After all, the threat of the failure of trade negotiations between London and Brussels has not gone away. Moreover, if there was simply no information on this, then the markets would not react to this. However, Boris Johnson personally stimulates issues by making such statements, after which even the most optimists begin to have doubts about the reality of signing a deal between the EU and Britain. Meanwhile, more and more experts are starting to focus not only on the economic problems that Britain has already encountered, but also on the geopolitical problems that the UK may face. This is primarily about Scotland. Thus, the British pound now has two huge areas of potential problems. The first area is economic problems that already exist (capital outflows, business problems, financial losses, a slowdown in the economy, a decline in production and GDP growth rates, as well as a slowdown in inflation), and problems that Britain may face during the year (lack of a trade deal) with the EU, which will further worsen all of the above economic problems). The second area is geopolitics and this is a potential referendum on independence in Scotland, but quite possibly without the approval of London. In this case, riots are possible as well as armed conflict. Scotland does not want to leave the EU, does not want to follow Boris Johnson, and its ruler Nicola Sturgeon is very radical. There are also problems with Gibraltar, the sphere of influence of which is now owned by Britain, but Spain has huge claims on this territory. In addition, problems on the island of Ireland are also possible, and of a completely different nature. Starting from the discontent of various nationalist forces and organizations with the next division of the island, ending with possible problems with smuggling, illegal border crossings and others. In fact, it is Northern Ireland that will now be the "window to Europe" and vice versa. Thus, as soon as one of these problems worsens, as yesterday, for example, a problem with a trade deal the pound will immediately react with a decline to this.

Once again, Boris Johnson said today that the UK government has "made its choice" and wants to get a free trade agreement similar to that with Canada or even Australia. "If we do not succeed, although this is unlikely, then our trade will be based on the current agreement to exit the EU," said the British Prime Minister.

Tomorrow will be much more interesting in terms of macroeconomic statistics, because the index of business activity in the manufacturing sector of the United Kingdom and the United States will be published. These data can cause high interest on the part of trailers and, accordingly, have a quite strong influence on the movement of the pound / dollar pair on Wednesday, February 5. Also tomorrow, the President of the United States is scheduled to appeal to the nation as part of the completion of the Senate consideration of the case of impeachment. At the same time, the ECB President Christine Lagarde will also make a speech.

Trading recommendations:

GBP / USD has started a new downward trend. Thus, sales of the British pound are currently relevant with a target support level of 1.2894, however, we recommend waiting for the completion of the current correction (MACD indicator turning down or other signals about it). The pair's purchases can be considered again if the price returns to the area above the Kijun-sen line with the first target of 1.3283. All targets are quite distant, and the price makes sharp turns. Thus, extra caution is recommended when opening any positions.

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. February 4. Results of the day. Final stage of Trump's impeachment case hearing; coronavirus remains to spread

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Amplitude of the last 5 days (high-low): 28p - 36p - 32p - 79p - 58p.

Average volatility over the past 5 days: 47p (average).

The second trading day of the week was much more boring than the first one. The currency pair calmly continued the downward movement while maintaining low volatility and threatens to overcome the Kijun-sen critical line at the current bar. It can be recalled that breaking through this line will mean a change in the trend to a downward trend and, in fact, the resumption of a downward trend. In principle, this will be even logical based on the readings of the Ichimoku indicator, as the pair quotes failed to overcome the Senkou Span B strong line and, accordingly, failed to overcome the Ichimoku cloud as well. This moment shows the weakness of the bulls once again, and also proves the existence of the same "paradoxical situation", which we spoke about repeatedly. As a result, we have a declining European currency again. Nevertheless, there are still chances to resume the upward movement, even if it's not strong. However, in general, they will not change the general picture of the state of things since fundamental and macroeconomic factors remain on the side of the US dollar.

Tuesday, February 4, was almost empty in terms of macroeconomic events. An insignificant producer price index for December was published in the European Union, which decreased by 0.7% y / y in full accordance with the forecast values. The United States also published a minor indicator of changes in production orders in December, which significantly exceeded forecast values and amounted to + 1.8% y / y. Thus, American statistics won even in the confrontation between insignificant reports.

We have already said that the final Senate vote on impeachment of the US president will take place tomorrow. Today, the last hearings in the framework of the investigation ended, the prosecution and defense parties made closing speeches. Representatives of the Democrats said that the Senate is simply obliged to remove Trump from his post, as the evidence of guilt is "impressive". One of the initiators of the impeachment, Adam Schiff, said that "Trump violated the oath to defend the US constitution." Well, of course, the defenders of the US president called on the Senate to recognize Trump as innocent. According to the defense, the entire impeachment procedure is nothing more than an attempt by the Democrats to cancel the results of the 2016 elections, as well as to prevent Trump from being re-elected in 2020. It can be recalled that even half of the senators did not vote for calling additional witnesses; however, it was the new witnesses who could bring to the case new evidence and new evidence of Donald Trump's guilt. The Senate did not want this and, most likely, will justify the president tomorrow, February 5.

Meanwhile, the new coronavirus continues to spread across planet Earth. The epidemic is mainly spreading so far in China, but cases have already been reported in European countries, America, and Australia. But scientists at Hong Kong University warn that official data on the number of people infected with the virus can be much lower than real numbers. And unfortunately, this is easy to believe, given the desire of any state and government to hide such facts from the whole world. No one wants to admit what real losses have already been and can be incurred. Thus, China is likely to underestimate the official figures, the spread of the virus is already happening exponentially. Having studied all the data on air travel and railway traffic, scientists came to the conclusion that about 75,000 people should have been infected in Wuhan by January 25. While officially reported about 2,000 infected. In addition, the infection should have spread to neighboring cities and provinces - Chongqing, Beijing, Shanghai, Guangzhou and Shenzhen. Even official data suggests that more and more people become infected every day. It is unlikely that healthy citizens are placed in the hospital, but the likelihood that there is a certain number of patients outside the hospitals is very high. Therefore, the real numbers are in any case higher than the official ones.

From a technical point of view, the downward movement continues. If the bears manage to overcome the critical line, then a downward trend will be formed for the euro / dollar pair again and short positions will become relevant.

Trading recommendations:

EUR / USD continues to adjust against a new upward trend. Thus, it is recommended to buy euro currency in small lots with targets at levels 1.1106 and 1.1128, if the pair rebounds from the Kijun-sen critical line. On the contrary, it will be possible to consider the sales of the euro / dollar pair with the goals of 1.1024, 1.1012 and 1.0956, if traders manage to overcome 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: dollar remains on its wave which is good for it, but bad for others

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Unlike trade wars, the coronavirus returned the classic risk aversion to markets. If it was possible to observe surprisingly synchronous dynamics of profitable and reliable assets in 2018-2019 periodically, then in 2020, they move as described in textbooks. Increased demand for treasury leads to a decrease in their profitability, correction of US stock indexes and the strengthening of the dollar's positions. Experts argue that the new epidemic will have an impact not only on the global, but also on the US economy. This is the current year which differs from the previous ones. In addition, investors believed that the United States would benefit from trade wars, so they bought both the dollar and the S&P 500.

According to Goldman Sachs experts, if the Celestial authorities succeed in defeating the coronavirus in February – March, then global GDP will lose 0.1–0.2% in 2020 and will show a modest growth acceleration - from 3.1% to 3.25% . According to the bank's forecast, US production will decline by 0.4% in the first quarter. Bloomberg analysts believe that the Netherlands will do the most damage among European countries. They also expect that economic growth in China in January – March will slow to 4.9%.

At the same time, Beijing is even going to ask Washington to grant a delay to fulfill its obligations to increase purchases of American agricultural products in 2020 (by $ 76.7 billion compared with 2017). It can be recalled that there is a reference to natural disasters or other unforeseen circumstances in the interim trade agreement previously concluded between the parties that may serve as an obstacle to the fulfillment of the PRC terms of the agreement from mid-February.

Due to trade wars, the Shanghai Composite index has been declining repeatedly in 2018–2019, while the S&P 500 has been growing. In 2020, coronavirus forced both indices to go downwards. Last Monday, the Chinese stock market declined more than 7%, which happened only eight times in its history. Loss of market capitalization amounted to a record $ 720 billion. At the same time, US stock indices fell and the dollar, which serves as a protective asset, strengthened. In this regard, only the release of a positive report on business activity in the US manufacturing sector from ISM for January somewhat changed the situation. The indicator rose above the critical level of 50 for the first time since July last year, noting to be the best monthly increase since mid-2013. Against this background, investors returned to stocks, and the dollar lost part of their achievements.

The reaction of the American currency to macroeconomic statistics convinces how nervous the market is once again due to the uncertainty associated with the coronavirus.

Now, it is possible that there was an effect of deferred sales in early February. Chinese investors have just left their holidays after the New Year holidays on the Lunar calendar, and the large-scale decline in the Shanghai Composite looks quite logical. The Chinese index pulled down the European and American counterparts. Today, the situation has stabilized a bit. Nevertheless, the dollar continues to enjoy support as a safe haven asset.

At the beginning of the week, the EUR / USD pair came under pressure, retreating from Friday's values around 1.11. Last week, it formed a short-term basis at 1.0990. Thus, it is possible that the rebound may continue, but the pair will face strong resistance at 1.1180.

Meanwhile, a breakthrough of strong support 1.1015 may signal that expectations for a rebound were still early.

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

Evening review for EUR/USD on February 4, 2020

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The coronavirus epidemic in China is spreading. The risks of a global recession are increasing every day.

The standard behavior of investors during a crisis is to go to the dollar and the US government bonds.

We can see the dollar strengthening against euro, franc and yen.

EUR/USD:

Sell the euro at a break down of 1.0990.

Buy when it breaks up to 1.1100.

On Wednesday, the US employment report for January will be released. However, news from China about the virus is more important.

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

Analysis of EUR/USD and GBP/USD for February 4. Business activity in production increased both in US and EU, but stronger

EUR / USD

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On February 2, the EUR / USD pair declined by 35 basis points and thus, began the construction of the proposed correctional wave as part of the future upward trend section. If this is indeed the case and the downward trend section is fully integrated, then the quote of the instrument will resume in the near future within the framework of the expected wave C. However, an unsuccessful attempt to break through the 23.6% Fibonacci level may just lead to the completion of the construction of the correctional wave b.

Fundamental component:

Monday's news background was interesting enough again for the euro-dollar instrument. Almost the whole day was focused on the release of data on business activity in the manufacturing sectors of the European Union, individual EU countries, as well as the United States. And I must say that these data did not disappoint the markets since both European and American indices turned out to be better than the markets expected to see. However, due to the fact that the US indices were higher, the US dollar received additional demand, which, by the way, completely coincided with the current wave marking of the instrument. But first things first. The EU business activity index increased to 47.9, adding only 0.1 points. The same index in Germany also increased by 0.1 and amounted to 45.3, in the UK - by 0.2 and amounted to 50.0. Thus, the gains of all key indicators were minimal. Moreover, European and German business activity remained below 50, indicating a continuing slowdown in industries. It is a completely different matter in America, where both business activity indexes have grown. If the Markit index grew by only 0.2 and amounted to 51.9, then the ISM index rose immediately by 3.7 points and amounted to 50.9. Thus, American reports turned out to be corny stronger both in absolute terms and in relative terms. This is precisely what caused the increase in demand for the American currency. During Tuesday, the news background will be weaker. But mainly, there's nothing to pay attention to, only the producer price index in the eurozone, which already came out and amounted to -0.7% in December, which led to a slight decrease in the European currency.

General conclusions and recommendations:

The euro-dollar pair supposedly began to build an upward set of waves. Thus, before a successful attempt to break through the Y- wave minimum, I recommend buying the euro using MACD signals "up" with targets located near the calculated levels of 1.1115 and 1.1144, which equates to 50.0% and 61.8% Fibonacci.

GBP / USD

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On February 2, GBP / USD lost about 205 basis points. Thus, the alleged wave 2 or b has acquired a very complex internal wave structure, but can still be considered completed at this time. If this is true, then the pound / dollar instrument has moved on to building a downward wave 3 or c with targets located much lower than 30th figure. However, an unsuccessful attempt to break through the 38.2% Fibonacci level may lead to a departure of quotes again from the lows reached and even more complicate the entire wave structure.

Fundamental component:

The news background for the GBP / USD instrument on Monday was average in strength. Well, at least such a conclusion was suggested based on the contents of the news calendar. The business activity index in the UK manufacturing sector increased by only 0.2 points, but left the area of slowdown, reaching 50.0. This is positive news for the pound. It would have been if it had not been for Prime Minister Boris Johnson, who has made statements before the start of negotiations on a trade agreement with the EU casting doubt on whether this agreement can be reached at all. Johnson said that "the UK intends to get an agreement that will be beneficial to it," he admitted that London could leave negotiations by summer if the European Union does not make concessions. In general, the Prime Minister took a very tough stance on this issue, and the markets responded to Johnson with the bitter sales of the British. On the other hand, the European Union members namely Michel Barnier and Ursula von der Leyen immediately criticized Johnson, saying that he can not sit at the negotiating table at all with such a position.

General conclusions and recommendations:

The pound / dollar instrument supposedly moved to the construction of a downward wave of 3 or C. Thus, now, I recommend selling the British currency with targets located around the level of 1.2764, which equates to 50.0% Fibonacci, and lower. At the moment, I recommend selling the instrument after a successful attempt to break the level of 1.2939, which corresponds to 38.2% Fibonacci.

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

EUR/USD. February 4. Euro currency is declining again; Sales remain relevant

EUR / USD - 4 H.

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Good evening, dear traders! The EUR/USD currency pair on the 4-hour chart, continues the process of declining towards the correction levels of 23.6% - 1.1035 and 0.0% - 1.0993 which was already expected last Monday. Since a bearish divergence was formed and a rebound from the upper line of the downward trend range, the decline in quotes can continue. At the same time, I admit that another attempt will already be made to close the pair's course over the downward range either today or tomorrow. Thus, while I recommend selling the pair with the stated goals, but when closing above the range, they will recommend buying the euro-dollar pair. On the other hand, upcoming divergence is not observed today in any indicator. The informational background helped bear traders yesterday, as a strong index of business activity ISM in the manufacturing sector crossed out all other business activity indices in the eurozone and the USA and led to a growth in the dollar. Today, there are practically no economic reports, and thus, the pair's movement will be calm.

Forecast on EUR / USD and recommendations to traders:

The latest trading idea is to sell the pair when closing below the Fibo level of 38.2% - 1.1061 with targets at 1.1034 and 1.0992. The first of these goals was already completed yesterday, but now the pair is moving towards it again. The rebound of quotes from the level of 1.1035 will work in favor of the euro and the beginning of growth. However, I recommend buying the euro after the closing quotes over the downward range.

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

GBP/USD. February 4. Trading signal for purchasing the pound has triggered

GBP / USD - 4H.

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Good evening, dear traders! In a review for Monday, I pointed out that the global correction line plays a key role now in determining the mood of traders. Yesterday, the pound-dollar pair declined to it, as I expected, and after the formation of a bullish divergence, the CCI indicator reversed in favor of the "British". Moreover, a strong increase in the quotes of the pair has not yet been achieved, however, the mood among traders will be clearly "bullish" today and tomorrow. Therefore, I expect the pair to increase by 50% or 62% from the last decline, that is, to the levels of 1.3074 or 1.3107. At the same time, fixing quotes under the global correction line will work in favor of the US currency and the resumption of the decline in the direction of the level of 1.2904, which is the minimum goal for a further decline. In turn, an informational background could help the "Briton" yesterday, but news from America was stronger. In addition, the speech of Boris Johnson, which significantly reduces the chances of concluding a trade deal with the European Union after Brexit, negatively affected the pound. Today, the information background is calmer.

Forecast on GBP / USD and recommendations for traders:

A new trading idea is to sell the pound when fixing below the correction line with the target of 1.2904 (the first goal, the drop in quotes can be much stronger). Moreover, if quotes rebound from 1.2995, then purchases with targets of 1.3074 and 1.3107 are recommended, while Stop Loss levels are recommended to be moved outside the correction line.

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

GBP/USD. Pound tripped over Gibraltar

The pound-dollar pair is going through hard times again: Britain is seriously worried about the prospects for further relations between London and Brussels, after a surge of optimism due to the January meeting of the Bank of England.. European and British politicians with their comments only stimulate interest in this topic. It can be said that all the most controversial issues that were resolved during the negotiation process are returning to the agenda again. The transition period began with harsh statements that put significant pressure on the pound: the GBP/USD pair literally collapsed 200 points in a day, returning to the area of the 29th figure.

The British overseas territory - Gibraltar, became an obstacle again. A few centuries ago, the British conquered this strategically important piece of territory from the Spaniards, and since then, disputes over its ownership have not ceased between the countries. British sovereignty was formalized by the Utrecht Treaty of 1713, but Spain never recognized it.

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During the Brexit negotiation process, Madrid reasonably decided that for the first time in many years it had effective leverage in negotiations on this issue. After a long fight, the British agreed to conduct direct consultations on the disputed territory, and not as part of general negotiations with the EU. At the same time, the Spaniards demanded separately to prescribe in the draft transaction a clause that London undertakes to agree with Madrid on the fate of Gibraltar. At that time, Gibraltar was not mentioned at all in the agreement - the text contained only a vague clause that all outstanding issues would be agreed upon by Britain and the EU after the country officially left the Alliance. The issue of ownership was not discussed then - at the end of 2018, the parties focused only on the fate of the Spaniards who live and work in Gibraltar. According to statistics about 15 thousand people daily come to Gibraltar from Spain to work. Now, passport checks should arise at the border, which will inevitably lead to long lines, additional costs and other inconveniences. It is worth noting that, at a historical referendum, the majority of Gibraltar residents voted to remain in the European Union.

At the end of the year, London undertook to agree with Spain on the fate of Gibraltar, and now, as they say, "the time has come". Brussels has already announced that it will support the Spaniards "in the matter of its territorial claims" in Gibraltar. This irreversible position increased pressure on the British currency. And it is worth noting that the problem of Gibraltar is far from the only one of its kind. Another difficult issue is Britain's observance of EU rules and a mechanism for resolving possible conflicts. The European side insists that London comply with EU standards in exchange for access to a single market. Boris Johnson, in turn, rejects this ultimatum, declaring government's readiness to abandon negotiations with Brussels on a trade deal.

In addition, the British leader proposes the so-called "Canadian version" of the trade agreement. According to which, London will conclude a deal with Brussels similar to the Comprehensive Free Trade Area Agreement (SETA) between the European Union and Canada. This will allow the UK to enter into trade agreements with third countries. The main negotiator from the European Union, of course, rejects this idea. Obviously, if the parties do not compromise in the foreseeable future, the likelihood of a trade deal between Brussels and London will decrease day by day, putting pressure on the pound.

Traders are also concerned about the tight deadlines for the transition period: experts unanimously argue that the parties will not have time to agree on a colossal volume of issues in a few months. For example, the EU entered into a trade agreement with Canada only after eight years of the negotiation process. Similar negotiations with Japan lasted almost seven years, and with Singapore - almost 10. Analysts believe that certain issues will be agreed before the end of this year, but the most complex and strategically important problems will remain unresolved. Among them are the access of European agricultural producers to the British market, the regulation of European automotive giants, the access of the French, Germans, and Spaniards to British waters for fishing and the aforementioned issue of Gibraltar.

Thus, the British currency is now under significant pressure amid fierce trade negotiations between London and Brussels.

In turn, the US dollar regained its position yesterday due to the ISM manufacturing index, which exceeded the key 50-point mark - for the first time since July last year. It is worth recalling that the December figure unexpectedly collapsed to 10-year lows, reaching 47.2 points. Therefore, the January result brought the dollar back to life after an unstable sharp decline on Friday (the factor of the completion of the week and month played here - many traders took profits). Moreover, the inflation component of the indicator - the Indicator of the dynamics of growth in commodity prices also showed a positive trend, rising to 53.3 points.

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The prevailing fundamental picture allows the bears of GBP/USD to test the nearest support level of 1.2950 in the foreseeable future - this is the lower line of the Bollinger Bands indicator on the daily chart.

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