Trading plan on February 25, 2020. The US market fell amid coronavirus worries

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Leading indicators in the US plunged by 3.5%. Dow dropped by 1,000 points. The indices pulled back from the highs of February to the lows of the beginning of the year.

The US financial market plunged as worries over the coronavirus intensified.

The coronavirus update: the virus infected above 77 thousand people in China.The number of recovered people is much higher compared to the number of new cases. So far, the coronavirus has killed around 2,600 people in China.The number of confirmed new cases in the country is decreasing. However, South Korea reported that the infection rate in the country has increased by 10% to above 700 cases. Italy announced more than 150 cases.

Medics say that there is no reason for panic. The new virus is less dangerous compared to influenza. The death toll from the influenza is much higher than from the coronavirus. However, attention of governments and people across the world to the new virus is hurting the global economy. As a result, financial markets are reacting nervously to the spread of the infection.

EUR/USD: the euro is expected to pull back

The price is likely to pull back to the high of 1.0910 and start falling again.

I think it's reasonable to keep sell deals as long as the price holds below 1.0990 and start selling once the price reaches 1.0890.

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February 25, 2020 : EUR/USD Intraday technical analysis and trade recommendations.

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On December 30, a bearish ABC reversal pattern was initiated around 1.1235 (Previous Key-zone) just before another bearish movement could take place towards 1.1100 (In the meanwhile, the EURUSD pair was losing much of its bearish momentum).

One more bullish pullback was executed towards 1.1175 where the depicted key-zone as well as the recently-broken uptrend were located. That's why, quick bearish decline was executed towards 1.1100 then 1.1035 which failed to provide enough bullish SUPPORT for the EURUSD pair.

Further bearish decline took place towards 1.1000 where the pair looked quite oversold around the lower limit of the depicted bearish channel where significant bullish rejection was able to push the pair back towards the nearest SUPPLY levels around 1.1080-1.1100 (confluence of supply levels (including the upper limit of the channel).

Since then, the pair has been down-trending within the depicted bearish channel until last week when bearish decline went further below 1.0950 and 1.0910 (Fibonacci Expansion levels 78.6% and 100%) establishing a new low around 1.0790.

Currently, the EUR/USD pair looks quite oversold after such a long bearish decline and if bullish recovery is expressed above 1.0845-1.0860, further bullish advancement would be expected towards 1.0910 then 1.0950.

Intraday traders were advised to look for signs of bullish recovery around the price levels of (1.0790) as a valid intraday BUY signal aiming towards 1.0910 (the nearest broken demand-level).

By the end of Last week, recent signs of bullish recovery were manifested around 1.0790 leading to the current bullish movement.

Further bullish advancement will probably pursue as high as the price level of 1.0910 provided that a quick bullish breakout above 1.0870 is achieved.

On the other hand, bearish persistence below 1.0790 may enable more bearish decline towards new historical lows around 1.0755 and even 1.0700.

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Double Bottom On AUD/USD?

AUD/USD has found a temporary support near 0.6586 low and now is fighting hard to rebound. The outlook is still bearish as long as the price is located below a downtrend line. We may have an important upside movement if the potential double bottom pattern is confirmed.

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AUD/USD is trading within a downward channel and that's why it is premature to talk about a reversal at this moment. The pair has failed to approach and retest the downside line, signaling that the price is oversold, a comeback to the upside line is favored.

The price is developing a potential double bottom on the H4 chart. This pattern will be valid only after a valid breakout above the 0.6638 high, above the PP (0.6648) and above the downtrend line.

I've drawn a minor ascending pitchfork to catch a potential upside movement, you can see that the price has retested the lower median line (lml) which has been proved as a dynamic support.

  • Trading Recommendation

The outlook is bearish on the H4 chart as long as the price is trading below the descending channel resistance. AUD/USD could drop anytime if it is rejected again or if we'll see a false breakout above the near-term resistance levels. A valid breakdown below the lower median line (lml) will confirm a drop at least till the S1 (0.6563) level, or towards the downside line. In case of a double bottom pattern, we could have a potential increase at least till the median line (ml) of the ascending pitchfork, the second target is seen at R1 (0.6710) level.

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February 25, 2020 : GBP/USD Intraday technical analysis and trade recommendations.

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On the period between December 18th - 23rd, bearish breakout below the depicted previous bullish channel followed by transient bearish movement below 1.3000 were demonstrated on the H4 chart.

However, immediate bullish recovery (around 1.2900) brought the pair back above 1.3000.

Bullish breakout above 1.3000 allowed the mentioned Intraday bullish pullback to pursue towards 1.3250 (the backside of the broken channel) where the current wide-ranged movement channel was established between (1.3200-1.2980).

Recent temporary bearish breakdown below 1.2980 enhanced further bearish decline towards 1.2890 (the lower limit of the movement channe) where evident bullish rejection was manifested on February 10.

Last week, temporary bullish breakout above 1.3000 has been expressed until Wednesday when another bearish decline below 1.3000 brought the GBPUSD pair back towards the lower limit of the channel @ 1.2870 -1.2850 where another episode of bullish recovery is being demonstrated.

As expected, the current bullish pullback managed to pursue towards the price zone of 1.2980-1.3000 which may fail to offer enough bearish rejection.

Although the Intermediate-term technical outlook remains bearish below the price level of 1.3000 (Supply-Zone), any bullish breakout above 1.3000 should be waited as a valid Intraday BUY entry.

If so, further bullish advancement will be demonstrated towards the price levels of 1.3070 and 1.3150.

On the other hand, bearish rejection around 1.2980-1.3000 will probably push the GBP/USD pair back towards 1.2870-1.2850 for another retesting.

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EURUSD: the euro is not afraid of the coronavirus and continues its upward correction. Business sentiment in Germany and

The euro managed to strengthen its position against the US dollar on Monday and even updated the maximum of last week, which is a very good signal for further strengthening of risky assets. The report on the mood in German business circles from the Ifo Institute did not strongly affect the euro exchange rate, although the bulls made an attempt to strengthen the trading instrument in the first half of the day. According to the data, concerns about the spread of the coronavirus did not affect the sentiment index in German business circles. However, the growth in production expectations was offset by the negative construction sector, but the overall level of company sentiment remained fairly high.

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According to the report, the Ifo index of business sentiment in Germany rose to 96.1 points in February 2020 from 96.0 points in January, while economists had forecast a decline to 95.3 points. The current conditions index fell to 98.9 points, while the expectations index rose to 93.4 points. The Ifo expects German GDP growth in the 1st quarter to be 0.2%. By the way, a report on economic growth for the 4th quarter of 2019 will be published today, and economists are not hopeful. At best, the indicator will show zero growth. At worst, it will decrease, which will return pressure on the EURUSD pair in the short term. As for the 1st quarter of this year, German GDP growth may slow down due to reduced exports and supply shortages, and the recent outbreak of coronavirus in Italy will create even more problems.

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Despite the data on the growth of activity in the area of responsibility of the Fed-Chicago and the Fed-Dallas, the US dollar lost a number of positions against the euro and the pound. The reports indicate that the Federal Reserve-Chicago national activity index in January 2020 was -0.25 points against -0.51 points in December. Let me remind you that values above -0.35 signal economic growth. It is particularly worth noting the indicators of production, which in January amounted to -0.23 points against -0.34 points in December.

Manufacturing activity in the area of responsibility of the Federal Reserve Bank of Dallas also increased, as businesses are more optimistic about the economy and their future. Thus, the overall business activity index in February rose to 1.2 points from -0.2 in January, and the manufacturing index in February rose to 16.4 points against 10.5 points. The business outlook index jumped to 3.6 points from 1.9.

Current indicators once again refute some market participants' expectations that the US Federal Reserve will probably have to start a drastic reduction of the key interest rate in the first half of this year. Most likely, the Committee will wait for more negative signals due to the coronavirus before seriously considering the option of further easing monetary policy. In the meantime, the US dollar is strengthening due to its status as a safe-haven currency.

Fed spokeswoman Loreta Mester said during yesterday's speech that it is necessary to closely monitor the situation with the coronavirus outbreak, as it not only worsens China's short-term prospects but also may affect the overall global economy negatively. As for inflation, Mester expects it to solidify around 2.0% in the near future. Falling short of the target level is a problem for both the economy and the Fed officials. However, Mester does not support increasing monetary stimulus to accelerate inflation, as it is quite risky to lower interest rates in order to achieve a faster return of inflation to the target level.

As for the technical picture of the EURUSD pair, yesterday's large growth in the second half of the day returned the market to the location of buyers of risky assets, even despite the outbreak of the coronavirus in Italy, which continues to spread. For today, buyers need to focus on the support of 1.0840, from which the growth can continue, which will lead to a test of highs in the area of 1.0890 and 1.0930. It is possible that the major players will take their time and move to the level of 1.0820, where the lower border of the new ascending channel passes, which can lead to a larger increase in risky assets in the short term.

CAD

The Canadian dollar yesterday also managed to regain a number of positions against the US dollar after the publication of a report that sales in wholesale trade in Canada increased in December. According to the Bureau of Statistics of Canada, sales in wholesale trade in December increased by 0.9% compared to the previous month - to 63.89 billion Canadian dollars. Let me remind you that in November, sales fell by 1.1% at once. A good indicator at the end of the year should have a positive impact on GDP growth for the 4th quarter, data for which will be released this Friday.

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From a technical point of view, the pressure on the Canadian dollar has returned again due to the fall in oil prices and the spread of the coronavirus. The nearest target in the USDCAD pair is resistance, a breakout of which will lead to an update of the highs of 1.3330 and 1.3390. To level the situation, the bears need to return the trading instrument to the support of 1.3265, which will increase the pressure on the pair and lead to a test of the lows of 1.3210 and 1.3160.

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Technical analysis of ETH/USD for 25/02/2020:

Crypto Industry News:

Sarah John, the chief treasurer of the Bank of England (BoE), expressed opinions on digital currencies issued by the state, according to an article published by financial media. She called on other central banks to consider developing a central bank cryptocurrency in response to recent movements of private companies in the digital payments sector.

John said it was "really important" to consider central banks to think of "central bank digital currencies" as "options" in response to the efforts of large technology companies to develop stablecoins.

A BoE official warned that inaction could cause regulators to be forced to catch up with private companies in the digital payments arena, claiming that "it is crucial that central banks" consider whether the public or private sector would be the best to provide digital currencies in the future ".

John's statements appear a few days after Randal Quarles, chairman of the Financial Stability Board (FSB), urged G20 members to accelerate efforts to develop a regulatory apparatus for virtual currencies and Stablecoins.

In a letter sent to governors of central banks and finance ministers, Quarles emphasized the speed of innovation in digital payments and the emerging stablecoin sector, deciding to "accelerate the pace of developing the necessary regulatory and supervisory solutions for these new instruments."

Technical Market Outlook:

After the Shooting Star candlestick pattern has been made at the level of $277.19, the Ethereum has reversed the direction and has filled the weekend gap located between the levels of $262.88 - $268.97. The local counter-trend corrective cycle might continue any time soon and the first target for bears is seen at the level of $238.68 - $235.62 zone. The weak and negative momentum supports the short-term bearish outlook. The fear of coronavirus is spreading across the financial markets and the cryptocurrency market is involved as well, together with stocks and risky currencies.

Weekly Pivot Points:

WR3 - $334.89

WR2 - $309.29

WR1 - $291.76

Weekly Pivot -$264.76

WS1 - $245.87

WS2 - $220.22

WS3 - $202.34

Trading recommendations:

The wave 2 corrective cycles are completed at the level of $115.05, so the market might be ready for another impulsive wave up of a higher degree and uptrend continuation. This strategy is valid as long as the level of $146.94 is not violated. The current move up might be a wave 3 in developing in the overall long-term Elliott wave scenario and so far the top at the level of $288.01 might be wave 1 of the overall wave 3.

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Technical analysis of BTC/USD for 25/02/2020:

Crypto Industry News:

The Ukrainian Kuna cryptocurrency exchange has released a stablecoin linked to the local fiduciary currency, the Ukrainian hryvnia (UAH).

The new stablecoin, named UAX token, is associated with the hryvnia in a 1: 1 ratio and based on Blockchain Ethereum, according to the official announcement of the Kuna exchange.

According to Kun, UAX is currently being tested by selected stock market users in the open beta, which will last until March 20, 2020. The goal of the first stage of UAX implementation is integration with market participants, technical testing on decentralized financial platforms, as well as the study of "the latest economic theory", said the company.

UAX will be publicly presented by Kun founder Michael Chobanski at a local BlockchainUa 2020 industry conference in March.

In an interview with Cointelegraph, Chobanian confirmed the company's position that Kuna is the first entity to introduce stablecoin based on the hryvnia. The founder of Kuna also mentioned that the central bank of Ukraine piloted the national digital currency, e-hryvnia, in February 2019. According to Chobanski, the e-hryvnia project, however, did not go far beyond research. "There was also a pilot of the National Bank of Ukraine, but only as a study," he said.

When asked about the regulatory conditions of the new token, Chobanian stated that there are currently no relevant regulations in Ukraine, adding that Kuna will now be using its own regulatory supervision infrastructure.

Technical Market Outlook:

The bears took control over the Bitcoin market again and immediately pushed the price right back on towards the level of $9,555, where the short-term technical support is located. Currently, the BTC/USD is trading below this level of support and the local low was made at the level of $9,393. The momentum remains weak and negative, so odds for another wave down are high. The next target for bears is seen at the level of $9,249 and $9,123.

Weekly Pivot Points:

WR3 - $11,253

WR2 - $10,744

WR1 - $10,274

Weekly Pivot - $9,742

WS1 - $9,288

WS2 - $8,756

WS3 - $8,263

Trading recommendations:

The market might have made the first impulsive wave up of a higher degree. This strategy is valid as long as the level of $7,582 is not violated. Nevertheless, the larger timeframe trend is still down and all the shorter timeframe moves are still being treated as a counter-trend correction inside of the uptrend until the level of $10,433 is clearly broken.

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Technical analysis of GBP/USD for 25/02/2020:

Technical Market Outlook:

The GBP/USD pair had made a Bearish Engulfing candlestick pattern around this level and the bears took control over the market for a short while. Nevertheless, the bulls are now back with momentum behind their back and had managed to test the key short-term technical resistance located at the level of 1.2988. A sustained breakout through this level will lead to another wave up towards the level of 1.3047. The larger timeframe trend remains up, but the recent breakout from the consolidation zone is a signal, that the uptrend might be reversed soon.

Weekly Pivot Points:

WR3 - 1.3255

WR2 - 1.3152

WR1 - 1.3043

Weekly Pivot - 1.2942

WS1 - 1.2840

WS2 - 1.2740

WS3 - 1.2640

Trading recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is up, so all downward market moves will be treated as local corrections in the uptrend. In order to reverse the trend from up to down in the longer term, the key level for bulls is seen at 1.2756 and it must be clearly violated. The key long-term technical support is seen at the level of 1.2231 - 1.2224 and the key long-term technical resistance is located at the level of 1.3512.

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Technical analysis of EUR/USD for 25/02/2020:

Technical Market Outlook:

The EUR/USD pair has been extending the bounce from the level of 1.0778 towards the nearest short-term technical resistance zone located between the levels of 1.0879 - 1.0904. The bulls have managed to push the price towards the level of 1.0855 and the high was made at the level of 1.0871. Moreover, the price is out of the short-term channel for good (the black one), so now the bulls can make another wave up way more easier. The next target for bulls is seen at the level of 1.0879 - 1.0904 zones and the immediate support is seen at the level of 1.0772. The larger timeframe trend is still down.

Weekly Pivot Points:

WR3 - 1.0954

WR2 - 1.0908

WR1 - 1.0871

Weekly Pivot - 1.0825

WS1 - 1.0787

WS2 - 1.0735

WS3 - 1.0693

Trading recommendations:

The best strategy for current market conditions is the same as it was for recent months: trade with the larger timeframe trend, which is down. All upward moves will be treated as local corrections in the downtrend. The downtrend is valid as long as it is terminated or the level of 1.1445 clearly violated. There is an Ending Diagonal price pattern visible on the larger timeframes like weekly, which indicates a possible downtrend termination soon. The key short-term levels are technical support at the level of 1.0981 and the technical resistance at the level of 1.1267.

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USD/JPY. The yen is back: Kuroda surprised the market with an optimistic mood

The yen paired with the dollar retreated from local highs – the impulse growth of the price brought it to the middle of the 112th figure, however, the bulls could not hold their positions at this height. During the spring of last year, the Japanese currency was so cheap. However, even then, buyers of USD/JPY did not break above the mark 112.44. At the moment, the pair has consolidated at the border of 110 and 111 figures, after a sharp price pullback. The yen cannot determine the direction of its further movement – on the one hand, panic sentiment in the markets is growing (as is the demand for protective instruments). On the other hand, the Japanese currency is under pressure from its own problems. Extremely weak data on Japanese GDP growth for the fourth quarter forced traders to reconsider their attitude to the yen, despite the continued appetite for "safe haven" instruments. Still, the market cannot finally determine the role of the Japanese currency in this situation. The fact that the USD/JPY pair did not gain a foothold on the price heights it won indicates the indecision of the bulls – therefore, long positions now look risky. But short trading positions are also questionable, as the prospects for growth of the Japanese economy in the first quarter of 2020 look bleak.

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Let me remind you that the volume of Japan's GDP in the last quarter of last year decreased at the highest rate in the last six years, following the increase in the consumption tax in the country. The indicator came out at -6.3% compared to the same period in 2018. The key indicator fell into negative territory for the first time since the third quarter of the year before last. And here, it is worth emphasizing that the Japanese economy showed a negative result in the 4th quarter of 2019, that is, when almost nothing was known about the coronavirus. In other words, this factor has not yet had any impact on economic processes, either on a local or global scale. Among the main reasons for the slowdown in economic growth, experts say the fact of increasing the sales tax, the consequences of the devastating typhoon "Hagibis" and weak global demand. After the sales tax was raised in Japan, consumer spending immediately collapsed by 2.9%. Business investment also declined significantly – this figure fell by 3.7% with a projected decline of 1.6%. Exports similarly showed weak dynamics against the backdrop of the ongoing trade war between the United States and China.

In the first quarter of this year, all the above circumstances will be joined by the factor of coronavirus. Therefore, according to most experts, the Japanese economy will show negative dynamics in the period of January-March, indicating the reality of a technical recession. It is noteworthy that the Japanese authorities are not in a hurry to consider the option of fiscal stimulus – according to Japanese Finance Minister Taro Aso, his office "closely monitors the situation in the currency and other markets", but does not yet consider the introduction of additional measures to support the economy.

The head of the Bank of Japan is also in no hurry to answer the question – will the Japanese regulator respond to the current situation? The yen collapsed across the market precisely because of the prospects for monetary policy easing – in response to the increased risks of a technical recession. But Haruhiko Kuroda did not give a clear answer about the Central Bank's intentions and expressed confidence that the country's economy will begin to recover "in the near future." He said that the Central Bank's forecast that Japan's main economic indicators will recover gradually and steadily is still valid. In response to a clarifying question about the prospects for monetary policy, Kuroda repeated his standard phrase that the regulator is "ready to act if necessary", adding that he does not see any need for such a decision today.

After this performance, the yen paired with the dollar turned 180 degrees and returned to the 110th figure. The market is clearly puzzled by the current situation, so the pair is currently fluctuating in a relatively narrow price range.

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If the probability of retaliation by the Japanese regulator decreases (at least in the context of the March 19 meeting), the yen will again be used by the market as a protective asset. And given the fact that the coronavirus still keeps financial markets at bay, the prospects for the USD/JPY pair looks bearish. This week (Thursday), Bank of Japan representatives Masayoshi Amamiya and Goushi Kataoka are expected to speak. If they confirm the probability of maintaining the status quo at the March meeting, the yen will again "spread its wings". The nearest support level for USD/JPY is 110.00, which is the average line of the Bollinger Bands indicator on the daily chart. The next "stop" is at 108.90 (the lower limit of the Kumo cloud on the same timeframe).

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AUD/CAD approaching support, potential bounce!

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Trading Recommendation

Entry: 0.8772

Reason for Entry: Horizontal overlap support

Take Profit : 0.8842

Reason for Take Profit: 78% fibo extension, 50% fibo retracement

Stop Loss: 0.8728

Reason for Stop loss: Horizontal swing low support

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USD/CAD approaching support, potential bounce!

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Trading Recommendation

Entry:1.3267

Reason for Entry: 38% Fibo retracement

Take Profit : 1.3297

Reason for Take Profit: Horizontal swing high resistance

Stop Loss:1.3254

Reason for Stop loss: Horizontal pullback support, 50% Fibo retracement,78% Fibo extension

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EUR/USD approaching resistance, potential breakout!

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Trading Recommendation

Entry: 1.08789

Reason for Entry: 100 %, 61.8% Fibonacci extension, 23.6% fibonacci retracement, Horizontal swing high resistance

Take Profit : 1.09523

Reason for Take Profit: 38.2% Fibonacci retracement, Horizontal swing high resistance, 100% Fibonacci extension

Stop Loss: 1.08430

Reason for Stop loss: 38.2% Fibonacci retracement

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GBP/USD: plan for the European session on February 25. Buyers of the pound are counting on good news on trade negotiations

To open long positions on GBPUSD, you need:

On Monday morning, the British pound fell. However, the bulls quickly took control of the market, forming the lower border of the ascending channel already in the North American session, which I drew attention to in my review yesterday. While trading is above the intermediate support of 1.2933, which acts as the middle of the wide side channel of 1.2890-1.2980, we can expect the pound to return to the maximum of last week in the area of 1.2978 and its update, which will lead to a test of the area of 1.3020, where I recommend taking the profits. Without such a scenario, talking about the long-term advantage of buyers will not be entirely true, especially since the beginning of trade negotiations between the UK and the EU promises to be very problematic. If the bulls do not cope with this task, most likely, the pressure on the pound will return. So, it is best to open new long positions after forming a false breakdown in the support area of 1.2889 or immediately on a rebound from the minimum of 1.2851.

To open short positions on GBPUSD, you need:

The sellers of the pound will try to return in the first half of day the pair under support level of 1.2933, which will increase the pressure on the pound and will update the large level of 1.2889, where I recommend fixing the profit, as there passes the top border of a new upward channel. If the bears manage to break even below this range, the GBP/USD pair will quickly return to the lows of the year in the area of 1.2851, which will indicate a resumption of the downward trend. In the scenario of further growth of the pound during the European session, you can return to short positions on a false breakdown from the level of 1.2978. However, I recommend selling the pound immediately on a rebound only from the maximum of 1.3019.

Signals of indicators:

Moving averages

Trading is conducted just above the 30 and 50 moving averages, which keeps the probability of continuing the upward correction.

Bollinger Bands

If the pair declines, the pound will be supported by the lower border of the indicator around 1.2900. A break of the upper border of the indicator in the area of 1.2950 will lead to a new wave of pound growth.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
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Overview of the GBP/USD pair. February 25. Traders are hoping for new information about the negotiations on trade deals

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - down.

CCI: -31.420

On February 25, the GBP/USD currency pair starts with a new round of corrective movement against the downward trend. On Friday last week, the pair's quotes had the opportunity to gain a foothold above the moving average line, however, it did not take advantage. The new trading week opened with a gap down, which led to the resumption of the downward trend. However, at the same time, bears do not find new reasons for selling the British currency or buying the US dollar. The macroeconomic background this week will be extremely poor, so traders can only count on speeches by top officials of the UK, the European Union, or the United States on topics related to London's trade negotiations with Washington or Brussels. Only this information can trigger serious exchange rate changes in the pound/dollar pair.

A hearing on the inflation report is scheduled for today in the UK. An event with a "high-profile" name that is unlikely to have any impact on the currency market. Also in the UK today, the CBI report on retail sales – sales volume for February, which is also frankly secondary. In the United States, the housing price index and the index of business activity in the manufacturing sector of the Federal Reserve of Richmond will be published. All data from overseas is also secondary. Thus, on February 25, traders will have nothing to pay attention to. If the euro has a strong technical correction factor, then the British currency does not have such a factor. Thus, it is unlikely that we will see a resumption of the downward trend and strong depreciation of the pound in the coming days.

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The average volatility of the pound/dollar pair over the past 5 days is 90 points and is characterized as "average" in strength with a downward trend. According to the current level of volatility, the working channel on February 25 will be limited to the levels of 1.2824 and 1.3004. A new downward reversal of the Heiken Ashi indicator will indicate a possible resumption of the downward movement, however, it is difficult to count on a trend movement when the macroeconomic background is almost empty.

Nearest support levels:

S1 - 1.2909

S2 - 1.2878

S3 - 1.2848

Nearest resistance levels:

R1 - 1.2939

R2 - 1.2970

R3 - 1.3000

Trading recommendations:

The GBP/USD pair is adjusted again. Thus, it is recommended to resume selling the pound with the targets of 1.2878 and 1.2848 if the pair rebounds from the moving average or the Heiken Ashi indicator turns down again. It is recommended to buy the British currency not earlier than traders have passed the moving average line with the first targets of 1.2970 and 1.3000 since the fundamental factors remain on the side of the US currency.

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 variants of the price movement:

Red and green arrows.

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Overview of the EUR/USD pair. February 25. The EU is going to cut funding for various programs because of Brexit

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - sideways.

CCI: 209.7489

The first trading day of the week ended with an unexpected increase in the European currency. From a fundamental point of view, it is unexpected. No important macroeconomic reports were scheduled for Monday, however, market participants still found reasons to buy the euro at the US trading session. We do not believe that the "coronavirus" can be the reason for the fall of the US currency. Otherwise, the US dollar would have become more expensive much earlier, when the epidemic was spreading only in China and the fears of the Chinese authorities were extremely strong. It can not be said that the US dollar reacts negatively to the spread of the Chinese pneumonia virus when the following occurred: (1) it is known that several tens of thousands recovered from the virus; (2) it became known that the virus is not so terrible; (3) 80-90% of cases are completely curable. The defeat of Angela Merkel's party in the local elections in Hamburg was also unlikely to support the British currency. Or information that a new chairman of the Christian Democratic Union will be elected on April 25. Thus, we believe that the main reason for the strengthening of the euro is technical. That is, the same banal need to form an upward correction against the three-week fall of the pair. Based on this, we believe that the correction may continue this week. However, it is unlikely to be strong and fast, given the average volatility of the euro/dollar.

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From a fundamental point of view, you can only pay attention to the report on German GDP for the fourth quarter today. According to experts, +0.4% in annual terms is expected and 0.0% in quarterly terms. Previous publications of this indicator were exactly the same. Therefore, if the forecast and real values coincide, the reaction of traders to this information will be extremely weak or will be absent at all. Apart from the German GDP, no other important publications are planned for today. It should be noted that Germany's GDP itself does not fall into the category of important news since although it has an impact on the European indicator, it is still only one country out of 27 that are members of the European Union. Thus, in almost any case, the fundamental background will not have much impact on the course of trading. This does not necessarily mean that the pair will stay in one place all day. For example, during the three-week period when the euro was cheaper almost every day, there were also days with zero macroeconomic background. Nevertheless, traders continued to sell off the euro. If the majority of traders decide that it is time to close the "dollar" positions, the euro will be able to continue the corrective growth. Monday is proof. The macroeconomic background was zero, however, the euro showed an increase of 60 points from the lows of the day.

Meanwhile, the EU faces a new problem. A financial problem – namely, the shortfall of 75 billion euros that the UK previously contributed. According to his colleagues, the President of the European Council, Charles Michel, "wants too much." Roughly speaking, there is not enough money for its version of the euro budget, so European colleagues refuse to support this document. The issue of long-term EU budgeting was supposed to be resolved within the framework of the EU summit, however, according to various sources, on the first day of negotiations, the process had to actually stop in order to start searching for sources of funding. In the future, several funding options will be put forward for consideration, however, the adoption of the budget for 2021-2027 will take place later. The problem is simple. After the UK leaves the European Union, some countries that are called the "modest four" (Austria, Netherlands, Denmark, and Sweden) are calling for budget cuts and cuts to a number of European programs to compensate for the deficit. The European Commission has already announced a reduction in funding for research and innovation projects, the space program and the armed forces mobility program.

From a technical point of view, the euro/dollar pair resumed its upward movement. However, both channels of linear regression are directed downward, so the maximum that the euro can expect now is a correction.

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The average volatility of the euro/dollar currency pair is 54 points per day. The volatility indicator has started to grow. However, given the weak macroeconomic background this week, it may soon begin to decrease again to its usual 40 points per day. Thus, on Tuesday, we expect movement between the borders of the volatility corridor of 1.0905-1.0795. A downward reversal of the Heiken Ashi indicator will indicate a correction turn against the correction.

Nearest support levels:

S1 - 1.0803

S2 - 1.0742

S3 - 1.0681

Nearest resistance levels:

R1 - 1.0864

R2 - 1.0925

R3 - 1.0986

Trading recommendations:

The euro/dollar pair started a corrective movement, formally - an upward trend. Thus, purchases of the European currency with the targets of 1.0864 and 1.0905 are relevant now. You can return to sell positions after the price is fixed below the moving average line with the targets of 1.0803 and 1.0742.

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 variants of the price movement:

Red and green arrows.

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

Medium-term outlook for the fall of GBP/NZD

GBP/NZD

A reversal divergence is formed on the weekly chart using the Marlin oscillator. The price of the current candle for a short time went above the level of 2.0425 and returned under it. This level is very strong and has strategic importance. Starting from May 2010, the price reversed from it many times or accelerated after the breakdown.

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Now we are seeing a price reversal from the level down. The first goal of the decline will be to support the MACD line at 1.9900, however, this is only the beginning. If a reversal does occur, the MACD line will be overcome. This will become an additional strengthening bearish factor and the price will fall to the target level of 1.8958 - until the top of May 2017. Overcoming the level opens the way to an even lower goal of 1.8274 - the minimum of July 2019.

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According to the daily chart of the GBP/NZD pair, the divergence has already been formed.

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As seen on the H4, a double divergence is already in effect and the Marlin oscillator - in the fall zone of the trend.

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

Forecast for EUR/USD on February 25, 2020

EUR/USD

The market was calm on Monday. There was no hot political news, which became a favorable ground for the mass closing of short positions and fixing the profits of euro sellers.

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According to the daily chart, the price went above the Fibonacci level of 161.8% and visually headed to the upper level of 138.2% (1.0898). The signal line of the Marlin oscillator came out of its own downward channel up, which increased the local upward trend. At the moment when the price reaches the target level of 138.2%, the Marlin line will reach the border with the territory of growth. Here, the indicator and the price will probably turn down in the direction of the main trend.

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As seen on the four-hour chart, the price was fixed above both indicator lines with Marlin in the growth zone. We are waiting for the price to work out the level of 1.0898.

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

Forecast for GBP/USD on February 25, 2020

GBP/USD

The British pound yesterday passed the largest volume in the last six weeks, which is a sign of regrouping forces in the market. The reallocation of positions may continue for another day or two, during which time the price may rise to the resistance line, built on the highs of prices on December 13 and January 31 (1.3035). On the daily scale chart, this line is marked with azure color. A similar line is also drawn on the Marlin oscillator chart. If it is reached by the oscillator line, a downward trend reversal is also possible.

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According to the four-hour chart, the price overcomes the resistance of the MACD line and the Marlin oscillator is in the growth zone. At this scale, we specify the range of corrective growth: 1.3000-1.3035.

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In the evening, the American Conference Board consumer confidence index for February will be released. The forecast for the indicator is broad: 130.6-132.6 against 131.6 in January. The weakness of the indicator will contribute to the growth of the pound.

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

Forecast for USD/JPY on February 25, 2020

USD/JPY

Yesterday's 3.35% drop in the US stock market (S&P500) shocked the yen and other related markets. Today, Japan's Nikkei225 loses 3.02%, China's Shanghai Composite -1.02%. This may indeed be the beginning of a new global crisis (Argentina has already defaulted), however, there may also be a delay. A direct sign of the crisis will be the bankruptcy of several large companies in the Asian region. Let's wait.

analytics5e5493ec1a877.pngBut as long as the USD/JPY pair is above the balance and MACD indicator lines on the daily scale chart, the Marlin oscillator remains in the growth zone. It is possible to continue the growth to the Fibonacci level of 161.8% at the price of 111.93. Today's data on consumer confidence from the Conference Board for February can help the market in this regard. The forecast for the indicator is 130.6-132.6 against 131.6 in January. The house price index for December (forecast: 0.4%) will also be published. If investors are to suppress the fears, the market growth is possible. Overcoming the level of 161.8% will allow the dollar to grow to 112.93 yen, to the Fibonacci level of 200.0%. But then the situation will become even more unpredictable, and divergence may form on Marlin.

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According to the four-hour chart, the price is fixed above the balance and MACD lines, while Marlin is in a weak state - in the zone of negative values. The main trend is growing.

Fixing prices below the low of yesterday, which would also meet the prices under the three important technical line on the daily scale (the MACD line, the Fibo level of 100.0%, the embedded green price channel line) could derail the USD/JPY to the underlying green line of the price channel around 107.97.

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

EUR/GBP will try to test 0.8415

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At the 4 hour chart, we can see that the EUR/GBP pair broke out and closed above the level of 0.8350. EUR/GBP is forming a market maker buy model now. It is flirting with the level of 0.8415. If the pair overcomes this level, there is a possibility that EUR/GBP will reach 0.8503. Nevertheless, in case this pair retraces to 0.8341, the bullish scenario will be doomed to failure.

(Disclaimer)

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

USD index attempting to hit 99.00

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The USD Index is forming a market maker sell model after a breakout and a close below the level of 99.50. The US dollar is likely to attempt to overcome the level of 99.00. If it happens, the USD index may continue its downward movement. The bias will stay bearish as long as the US dollar does not retrace to 99.65.

(Disclaimer)

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

What Are The Major Institutions Trading? | Weekly COT Report (24/2 to 28/2)

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The COT Report shows the long and short positions of the major institutions - which currencies they are the most bullish on and which currencies they are the most bearish on. This information is very useful for swing traders who hold positions for more than a day.

The currency with the strongest bullish bias would be the USD, with Institutions adding more long contracts and at the same time also reducing the amount of short contracts that they were holding onto.

The currency with the strongest bearish bias would be the NZD, AUD and following behind the JPY. Institutions are currently holding more shorts and also adding alot more short positions.

The best plays this week would be to:

1) Long USD/JPY

2) Short AUD/USD and NZD/USD

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