Control zones for EURUSD 03/18/2020

The pair fell by 2% yesterday, which indicates the continuation of the downward momentum. The next goal is the 1.0919 level. The probability of testing this mark is 90%, which indicates the need to retain part of the sales. New sales must be made at more favorable prices. An important resistance is the weekly control zone of 1.1126-1.1111.

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Work towards weakening the European currency may become the main one for the second half of this month. It is important to understand that the growth up to the weekly CZ will be corrective.

An alternative model will be developed if the closing of today's trading occurs above the weekly control zone. This will indicate the emergence of interest in purchases and the transition to the accumulation phase. The probability of forming a reversal model is 25%, which makes it unprofitable to purchase from current marks.

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Daily CZ - daily control zone. The area 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, which is a reflection of the average volatility over the past year.

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AUD/JPY testing key support, bounce expected!

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Trading Recommendation

Entry: 64.060

Reason for Entry: Graphical swing low

Take Profit : 65.947

Reason for Take Profit: Descending Trendline resistance, 50% and 38.2% Fibonacci retracement and 61.8% Fibonacci extension

Stop Loss: 63.059

Reason for Stop loss: -27.2% Fibonacci retracement

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Simplified wave analysis of EUR/USD, AUD/USD, and GBP/JPY on March 18

EUR/USD

Analysis:

The price decline from March 9 on the chart of the European currency in its wave level reached the level of the H4 scale. The price has reached the upper limit of the potential reversal zone. Since yesterday, a price pullback has been forming up.

Forecast:

The formation of an upward correction is expected in the next day. In the event of a breakthrough in the nearest resistance zone, the euro quotes can reach the far upper zone today.

Potential reversal zones

Resistance:

- 1.1180/1.1210

- 1.1070/1.1100

Support:

- 1.0990/1.0960

Recommendations:

The market is forming a correction in the main direction of the euro, so purchases can be quite risky. It is better to lower the lot. The best tactic is to refrain from trading during the rise, with tracking the best selling points of the pair.

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AUD/USD

Analysis:

The global trend of the Australian currency in the last 2 years looks to the "south" of the chart. Its last section started at the beginning of this year. The price has now reached the upper limit of the intermediate support zone. On the small scale of the chart, conditions were formed for the start of the rollback.

Forecast:

In the coming day, a flat mood of movement in the form of a "sideways" is expected. An ascending vector is not excluded. The price can rise no further than the calculated resistance. You can expect a return to the downward rate at the end of the day or tomorrow.

Potential reversal zones

Resistance:

- 0.6070/0.6100

Support:

- 0.5980/0.5950

- 0.5860/0.5830

Recommendations:

Purchases of "Aussie" are not relevant today. It is recommended to stay out of the pair's market during the price pullback up. When the exchange rate changes, sales of the instrument will be promising.

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GBP/JPY

Analysis:

The movement of the pair since the middle of December last year is set by a descending wave. The wave structure is formally complete. Preliminary reduction goals have been achieved. Quotes are located within a strong reversal zone. Sideways movements of the last 3 days create conditions for the beginning of a price pullback up.

Forecast:

Today, the pair's market is expected to see a general upward trend in the price movement. The upper resistance zone shows the maximum expected level of price growth in the coming days.

Potential reversal zones

Resistance:

- 131.30/131.60

- 130.30/130.60

Support:

- 129.30/129.00

Recommendations:

The potential for sales in the pair's market is exhausted. Trading is only possible within the intraday trading style. In the upcoming sessions, purchases are a priority.

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Explanation: In the simplified wave analysis (UVA), waves consist of 3 parts (A-B-C). The last incomplete wave is analyzed. The solid background of arrows shows the formed structure and the expected movements - dotted.

Note: The wave algorithm does not take into account the duration of the tool movements in time!

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Indicator analysis. Daily review of GBP/USD on March 18, 2020

On Tuesday, the pair continued to move down (in the side channel), having tested the historical support level of 1.2030 (white bold line). Today, a rollback up is possible from this level. Strong calendar news for the dollar is expected at 12:30 and 14:30 UTC.

Trend analysis (Fig. 1).

Today, from the level of 1.2065 (closing of yesterday's candle) a continuation of downward movement is possible testing the retracement level of 14.6% - 1.2177 (red dashed line). Upon reaching this line, the continuation of upward movement is with the target of 1.2285, a retracement level of 23.6% (red dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

Today, a rollback up is possible testing the retracement level of 14.6% - 1.2177 (red dashed line).

Unlikely scenario: from the support line 1.2030 (white bold line), work down with the target at the historical support level of 1.1297 (blue dashed line).

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EUR/USD: weak correction attempt and the strength of the downward trend

Bears of the euro-dollar pair could not gain a foothold in the area of the ninth figure, although yesterday the price was in this area throughout the US session. But during the Asian session on Wednesday, the bulls took the initiative and tried to go above the strategically important 1.1050 mark (the average line of the Bollinger Bands indicator, which coincides with the upper border of the Kumo cloud on the daily chart). According to a number of currency strategists, if buyers manage to settle above the target today, the pair will form a short-term price low. At least now it is obvious that the price area below the 10th figure is quite difficult for sellers of EUR/USD, despite the overall hegemony of the dollar. This price rebound, which has all the signs of a correction, is due to several factors-both fundamental and technical. But in any case, it should be remembered that the pair is still within the downward trend and will remain as long as the dollar is the beneficiary of panic in the market.

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But first of all, let's understand why the euro-dollar pair unexpectedly turned around, despite the dominance of anti-risk sentiment in the financial markets. Strangely enough, the macroeconomic releases still managed to attract the attention of traders. Although, as a rule, during periods of such shocks, economic reports go to the second or third plan, awaiting their hour. But yesterday we witnessed an exception to the rule: both the European and US currencies were under pressure from their respective reports. Initially, the euro came under pressure from disappointing figures: the ZEW indices of Germany and the eurozone came out not only in the red zone, but also updated multi-year lows. The German index fell to -49 points with the forecast of a decline to -29 points. The pan-European indicator showed similar dynamics, falling to almost -50 points, while the forecast for a decline to -23 points. The indicators fell to their lowest values since 2010, reflecting the pessimism of the European business environment.

A little later, US data were published – no better: the overall retail sales index fell into negative territory for the first time since September last year, reaching -0.5% m/m. Excluding car sales, the indicator showed a similar dynamics, falling to -0.4% (the worst result since December 2018). Sales excluding auto and fuel sales also sharply fell (this indicator fell to the lowest in February 2019).

At first, the US currency ignored this data – the dollar index was rapidly increasing amid a decline in stock markets and a wave of general panic. But the dollar index slowed its momentum after testing the hundredth figure. The degree of heat in the markets slightly fell after the optimistic statements of Donald Trump, who said that there is "already progress"in the fight against the coronavirus. He also assured Americans that the White House will support small businesses and coordinate additional stimulus measures with the Senate.

As soon as the anti-risk sentiment in the market slightly weakened, the dollar's position was shaken. This is an important point that indicates the potential vulnerability of the US currency. As soon as the hysteria with the coronavirus fades, the greenback will lose a serious trump card for its growth, while the uncorrelation of monetary policies of the Fed and ECB may provide additional support to the EUR/USD bulls. By the way, according to the representative of the European Central Bank, Robert Holzmann (head of the central bank of Austria), the monetary policy of the regulator "has already reached its limits", while the crisis can have a "cleansing effect on the economy of the eurozone."

However, despite the small price rebound of EUR/USD, it should be remembered that the pair is under strong pressure of panic moods. The dollar did not retreat, but only temporarily slowed down. The number of infected and dead continues to increase around the world, with Europe becoming the epicenter of the epidemic. But in the Chinese province of Hubei, which was previously the focus of the pandemic, only one case was detected over the past day. On the one hand, this suggests that the coronavirus can be brought under control, on the other hand, everyone understands that Europe is not China, and it will be more difficult to curb the epidemic in European countries. In addition, in association with COVID-19: many airlines are on the verge of bankruptcy, and the tourist industry is actually dying out. Next – the domino effect, which will affect the rest of the economy of the eurozone. Chinese data published on Monday illustrated the possible consequences of the pandemic quite clearly.

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Thus, there are no prerequisites for a reversal of the EUR/USD trend at the moment. Moreover, if buyers are not able to gain a foothold above 1.1050 in the near future, the pair will not only return to the ninth figure in the medium term, but also test the eighth price level. And although the bears feel quite uncomfortable below the 10th figure (so far), the ongoing panic will allow them to open new price horizons for themselves.

From a technical point of view, the situation also indicates the priority of the bearish movement. On the weekly chart, the price is located on the middle line of the Bollinger Bands indicator, which indicates the current uncertainty. At the same time, the pair is under the cloud of the Kumo indicator Ichimoku – and this combination indicates the prospect of price reduction. The goal of the downward movement is the above-mentioned mark 1.0850 – this is the lower line of the Bollinger Bands indicator on W1. The resistance level is the price of 1.1105, which corresponds to the lower boundary of the Kumo cloud on the same timeframe.

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Trading plan for EUR/USD on March 18, 2020. Update on the coronavirus. The markets are getting used to the situation.

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The pound fell to the lowest level in 2019, eliminating all the growth it has gained after Brexit. According to the market, one of the reasons why the currency declined is that Britain chose a "too soft" quarantine option.

At the same time, oil fell even lower to $26.35.

Although the US market showed a good rebound to the top after its strong two-day fall, the US market has fallen from highs by about 30%.

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The US is setting a strong example in the fight against the virus. Trump announced a $1 trillion program to support the economy, where some of it will be sent directly to Americans to maintain demand.

Update on the virus: there are now 200 thousand cases in the world, since the beginning of the pandemic (80 thousand of those have already recovered, mainly in China).

At the moment, the main focus is in Europe, where the increase of patients is still by at least 10% per day. As long as this rate continues, the pandemic will remain as the main factor for the markets.

The situation as of the morning of March 18:

Italy - 31, 500 patients (increases more than 10% per day)

Germany - 9, 400 patients

France - 7,700 patients

Spain - 11,800 patients

Iran - 16,600 patients

US - 6,300 patients

Britain - 2,000 patients

Holland - 1,700 patients

All borders in Europe are now closed.

Finland has also closed its border. Transport links between Russia and Finland have been blocked. The border with Belarus is closed as well.

EUR/USD: the euro is preparing for a new wave of decline.

Keep selling from 1.1053.

Buying is possible in case the pair reverses to 1.1240.

The euro is more likely to fall though.

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US announces unprecedented measures to support the economy and the population (we expect AUD/USD and NZD/USD pairs to continue

The market is discussing the Fed's announcement of unprecedented measures and the US Treasury Department to support the US economy, as well as consumer demand amid an impending recession.

It can be recalled that earlier, following the results of an extraordinary meeting of the Fed this Sunday, it was decided to cut the key interest rate to zero, as well as to expand incentive measures in the form of quantitative easing in the amount of $ 700 billion. And on Tuesday, US Treasury Secretary S. Mnuchin proposed a new fiscal stimulus package for more than $ 1 trillion, and D. Trump – support for working Americans with financial problems in the amount of $ 1,000. Of course, all these proposals will first have to pass approval in Congress, where the Democratic Party has the majority. But if they are implemented, this will be not only a big advantage in the election campaign of Trump for the second presidential term, but also a strong factor that keeps the American economy on the border of the recession abyss.

Now, let's move back to the financial market. While stock markets are experiencing severe turbulence, and volatility is at the crisis levels of 2008-09, the US dollar is still confidently holding its positions in the currency exchange market. The ICE dollar index is at the local maximum a month ago, trying to overcome the level of 100 points. Such dynamics, as we previously argued, is shaped precisely by the attractiveness of the US dollar as a safe haven in catastrophic situations of both economic and political nature.

The persistence of such a situation on the market, and it is still supported by the factor of the spread of coronavirus on the planet, will support the demand for dollars. On the other hand, investors will get rid of any assets, just to go into cash. In this situation, we believe that the dollar in the short-term will remain strong against major currencies - to the euro, pound, Canadian, New Zealand and Australian dollars. However, its growth will be restrained by traditional protective currencies - the yen and the Swiss franc.

Meanwhile, currencies of countries with developing economies will definitely remain under pressure against the dollar. A separate line is commodity currencies. The already mentioned Canadian, New Zealand and Australian dollars will decline in the wake of a decline in demand for commodity and commodity assets, as well as expectations of a softening of the Central Bank's monetary policies that mimic them.

If the situation worsens, the regulator may go on raising interest rates, but for now, he holds a pause in the hope that the pressure of the effects of coronavirus on the world economy will weaken in the next month or two, especially since the Chinese economy begins after the peak of this scourge in the country and the level drops sick people gradually restore business and economic activity.

Forecast of the day:

AUD/USD is trading above the level of 0.5960. We consider it possible to resume sales of the pair after crossing this level with a local target of 0.5785.

NZD/USD pair is above the level of 0.5915. A price decline below may serve as a basis for a decline to the level of 0.5785.

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Indicator analysis. Daily review of EUR/USD on March 18, 2020

The pair continued to move down on Tuesday, testing the historical support level of 1.1001 (blue thin line). Today, a continuation of the downward movement is possible. Strong calendar news for the euro is expected at 10:00 UTC, and for the dollar at 12:30 and 14:30 UTC.

Trend analysis (Fig. 1).

Today, the market will continue to move down with the target of 1.0948, a retracement level of 76.4% (blue dashed line). If this level is reached, the downward movement will continue with the next target of 1.0884, a retracement level of 85.4% (blue dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - up;

- Trend analysis - down;

- Bollinger lines - down;

- Weekly schedule - down.

General conclusion:

Today, from a retracement level of 61.8% - 1.1053 (blue dashed line) the price may continue to move down with the first target of 1.0948, a retracement level of 76.4% (blue dashed line). If this level is reached, the continuation of work down is with the next target of 1.0884, a retracement level of 85.4% (blue dashed line).

An unlikely scenario: from the historical support level of 1.1001 (blue dotted line), work up with the target 1.1084, a retracement level of 23.6% (red dotted line).

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Trump and the chronicles of the apocalypse

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The Trump administration discussed last Tuesday the further measures that could help those who are affected the most by the effects of the coronavirus outbreak. Treasury Secretary Steven Mnuchin said during the White House briefing that "the President wants to give the money now" to the public, and will discuss it within the next two weeks. In addition, Mnuchin also said that the administration "believes that the markets will be open", but is considering the reduction of the market's opening hours.

Just a day earlier, during a press conference, Donald Trump described a grim picture of the coronavirus outbreak. He admitted that the US "may" be heading towards a recession, where after which, he predicted that growth would increase sharply. He also forecasted that the coronavirus outbreak, as well as the measures provided to combat this disease, may last until August.

Nevertheless, in order to mitigate the impact of the outbreak on the economy as much as possible, the US government stressed its readiness to provide at least some assistance to individuals and corporations most affected by the outbreak. Trump promised that he will "support airlines 100%", as travel demand declined, and air carriers have been incredibly affected by it. The airline industry has requested more than $ 58 billion in state aid, just so it could in the current circumstances.

Back in Congress, on Monday, the House of Representatives unanimously passed a revised multibillion-dollar coronavirus emergency law and sent it to the Senate for a vote. At least $750 billion is to be allocated to fight the effects of the outbreak, including for hospitals, expanded unemployment insurance, small businesses, and food aid.

The situation abroad also continues to develop: on Monday, the President of France, Emmanuel Macron, said that the country will guarantee companies bank loans worth up to € 300 billion and allow them to defer paying taxes and social insurance contributions during a period of instability. He also ordered citizens to stay at home and leave only for basic duties, reflecting efforts in other countries and municipalities most affected by the coronavirus outbreak.

Other updates: on Monday, Germany closed all its borders except for commercial travel, temporarily banning non-essential travel to the European Union as a whole. In North America, Canada has closed its borders to most non-residents, offering some benefits, including for US citizens.

As travel links between countries end, economists are increasingly preparing for a major blow to global GDP growth in 2020.

"In a realistic scenario where travel and tourism have fallen by 50% in four or five months, annual global GDP growth will be reduced by about 0.7%," Jennifer McKeown, head of Global Economics Service at Capital Economics, wrote on Tuesday. "Indirect consequences or disruption to domestic travel could make it hit even harder. Moreover, the burden on insurers and airlines increases the risk of a financial crisis."

Amid all this, the Federal Reserve is restoring its crisis-era commercial paper fund in order to help businesses generate short-term revenue, easing the disruption caused by the coronavirus outbreak.

"The commercial paper market has been under significant strain in recent days, as businesses and households face greater uncertainty due to the coronavirus outbreak," the Fed said in a statement.

"Initial data from China show that its economy has suffered much more than forecast, despite the fact that stabilization has already begun," S&P Global Chief Economist Paul Grunwald said on Tuesday. "Europe and the US are following a similar scenario, as growing restrictions will sharply reduce activity in the second quarter, before recovery begins."

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Equal High 107.86 to be next target of USD/JPY

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As we see, the USD/JPY pair on the 4-hour chart is already making a bullish pattern. The price has already climbed above the 30-period Exponential Moving Average. Besides, the Commodity Channel Index has already passed through the important levels like 100,0, and 100 (see the blue circle). Under this condition, USD/JPY has developed a strong upward move now. It will try to hit the 107.86-108.51 area. As long as the price has not retraced downwards lower than 105.16, the pair will continue its bullish move.

The overall bias of USD/JPY now is bullish.

(Disclaimer)

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

Elliott wave analysis of EUR/GBP for March 18 - 2020

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EUR/GBP has barely moved since our last update. EUR/GBP has moved inside a narrow range between 0.9064 - 0.9150. It is expected to break below minor support at 0.9064 and more importantly below support at 0.9025 to confirm that wave B has peaked and wave C is in motion.

Once support at 0.9025 gives away, we will be looking for a quick decline to 0.8650 - 0.8743. Wave C is likely to lower to the symmetrical triangles support-line near 0.7500.

R3: 0.9221

R2: 0.9190

R1: 0.9150

Pivot: 0.9064

S1: 0.9025

S2: 0.8976

S3: 0.8931

Trading recommendation:

We sell EUR from 0.9085 with our stop at 0.9185. If this scenario does not come true, we will sell EUR again at 0.9190 or upon a break below 0.9064

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Elliott wave analysis of GBP/JPY for March 18 - 2020

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GBP/JPY made a new low at 128.57. It continues to decline in wave 2. The loss of downside momentum is now massive. It should be just a matter of time before minor resistance at 131.28 is broken indicating that wave 2 has completed and wave 3 is in motion.

To confirm that wave 3 is unfolding we need a break above resistance at 134.32. When this resistance is broken, we expect a quick rally to 137.01 or to 140.96. The pair could grow to 147.96.

R3: 132.28

R2: 131.28

R1: 130.27

Pivot: 129.36

S1: 128.57

S2: 128.10

S3: 127.69

Trading recommendation:

We bought GBP at 129.00 and we placed our stop at 128.00

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Control zones for GBPUSD on 03/18/2020

Work in the downward direction is the main one, so growth should be considered as an opportunity to sell the instrument at a more favorable price. Purchases are high-risk since it will take a long time to form a reversal model against a strong fall.

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The strengthening of the US dollar is taking place on all instruments, so the current bearish impulses should be perceived as a long-term structure.

An alternative model will be developed if the closing of today's trading occurs above the WCZ 1/2 1.2212-1.2195. This will indicate the appearance of a large buyer. The next growth target will be the weekly CZ 1.2423-1.2385. It is important to understand that the probability of forming a reversal model is less than 25%, which makes working in the upward direction not profitable.

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

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

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

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

The USD/CAD price movement for March 18, 2020

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USD/CAD is gaining ground, trying to reach 1.4689. As long as the Canadian dollar does not retrace to 1.3960-1.3950 then this pair may rise to 1.4689.

The overall bias for USD/CAD is bullish.

(Disclaimer)

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

GBP/USD: plan for the European session on March 18. Pound reached last year's lows and is ready to update them. Bank of England

To open long positions on GBP/USD, you need:

The British pound reached the next major support levels that I noticed in yesterday's review, and rebounded from them, but the overall trend remains bearish. Yesterday's decision by the Bank of England to allocate an additional 20 billion pounds to support companies is a good sign for the economy, but not for the pound itself. At the moment, buyers are fighting for the level of 1.2112 and only consolidating it will keep the upward corrective momentum in the area of highs 1.2212 and 1.296, where I recommend taking profits. The pound also needs to cope with the average moving averages, which are slightly higher. However, a more acceptable scenario for purchases, as well as for those who believe that the bearish trend is slowing down, will be the formation of a false breakout in the support area of 1.1975, or slightly lower, in the 1.1935 area, which coincide with the low of last year. But it is best to postpone long positions until these lows are updated, since there are no serious prerequisites for a reversal of the bearish trend yet.

To open short positions on GBP/USD, you need:

Sellers are again actively fighting for the resistance of 1.2112, from which the sell-off of the British pound continued yesterday. If the bulls fail to get above this range in the first half of the day, the pressure on the pair will most likely return again, which will lead to an update of the lows of 1.2019 and 1.1975, where I recommend taking profits, since it will not be so easy to break through below these levels. A more optimal scenario for opening short positions will be the formation of a false breakout in the resistance area of 1.2212. But I recommend selling the pound immediately on a rebound only from the high of 1.2296, where it will be possible to build a new upper limit of the current downward channel. This upward correction is necessary for the pound to break through the lows of last year.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 moving average, which indicates a continuation of the bearish trend.

Bollinger bands

In the event of a decline, support will be provided by the lower boundary of the indicator in the region of 1.2019. A break of the upper boundary of the indicator in the 1.2145 area may lead to an upward correction of the pound.

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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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EUR/USD: plan for the European session on March 18. US prepared a $1 trillion package of measures to combat COVID-19. euro

To open long positions on EURUSD, you need:

In my review for the US session, I recommended buying from the support in the area of 1.0957, from which the pair rebounded upwards. Yesterday's weak reports on the US economy, especially in the area of retail sales, which declined sharply in February this year, although led to a slight rebound of the EUR/USD pair from its intraday lows, but in general the situation remains under the control of sellers. Buyers of the euro need to protect the support of 1.0992 today, since only the formation of a false breakout there will be a signal to open long positions, and this requires good data on inflation in the eurozone, which is not worth counting on. If the pressure on the euro returns, and the pair falls under the support of 1.0992 in the first half of the day, in this scenario, it is best to open long positions only after updating the low of 1.0909, or buy EUR/USD immediately on the rebound from the area of 1.0882 in the calculation of a correction of no more than 30-40 points within the day.

To open short positions on EUR USD you need:

The US is preparing to adopt a package of measures worth $1 trillion, which will be aimed at supporting the economy during the spread of the coronavirus, which is good news for investors. Meanwhile, the bears continue to control the market and today we are waiting for a fairly important report on inflation in the eurozone. If we see its slowdown, we can expect a second wave of sell-offs of the European currency. Sellers only need to return and consolidate below the support of 1.0992, which will quickly pull down EUR/USD to the lows of 1.0909 and 1.0882. I would already count on the 1.0957 area as support. A more interesting scenario for opening short positions will be an upward correction to the highest area of 1.1063 and the formation of a false breakout there after the test of moving averages. I recommend selling the euro immediately for a rebound only after meeting a major resistance of 1.1158.

Signals of indicators:

Moving averages

Trading is carried out below 30 and 50 moving average, which saves the likelihood of a further downward trend in the pair.

Bollinger bands

In case the euro falls, the lower boundary of the indicator in the 1.09573 area will support it, while growth may be limited by the upper level of the indicator in the area of 1.1063, a break which will lead to a larger upward correction.

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

Overview of the EUR/USD pair. March 18. Another collapse of the euro. Traders continue to believe only in the dollar. The

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction -upward.

Moving average (20; smoothed) - downward.

CCI: -163.1966

Another disastrous day for the European currency. If yesterday the EUR/USD currency pair managed to somehow adjust to the moving average line, yesterday the quotes of the euro currency fell down with a new terrible force. As before, there were no specific reasons for the collapse. "Coronavirus" continued to spread across the planet, confirming its status as a pandemic. The US stock indices fell by impressive values, and oil continued to fall in price. That's the full news summary for March 17. What can I say about the result? Chaos and panic continue to reign in all markets. The Fed cut the emergency rate from 1.75% to 0.25% and the US dollar is still in demand (with high demand). This only means that traders continue to buy the US currency. And the reasons why they invest in the dollar are completely unimportant. Recall that at the beginning of the current crisis, it was the euro currency that became more expensive, and it became very expensive. So, many traders have already begun to seriously count on the formation of a new long-term upward trend, and put an end to the "dollar" trend. However, as practice shows, despite the fact that the epidemic has reached the States, despite all the stock market crashes, despite the "extra-dovish" actions of the Fed, traders continue to believe in the dollar.

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The EU is closing its borders. This was announced yesterday by French President Emmanuel Macron. The measures are taken as part of the fight against the "coronavirus" epidemic and will be in effect for at least thirty days. In his speech, the French President described the current situation as "military". And these measures do not seem excessive. In Italy alone, 349 people died from the epidemic during March 16. This is the highest daily number of deaths, and the total number of victims is already more than 2,500. Also, over the past day, another 2,500 people were infected in Italy, and in total, almost 32,000 people were infected. Around the world, the epidemic has already reached 196,100 people, approximately 10,000 are infected per day. And this is only official data. And how many infected people are not registered anywhere? How many people infected with the virus do not even know about it yet, because they have not passed the appropriate tests, or simply do not feel any discomfort? Thus, we believe that the real numbers are much higher. And what can we expect from the participants of the currency market in such conditions? Clearly not calm and measured trading.

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As we have said many times, macroeconomic statistics do not play any role at the moment. Many countries are in quarantine and borders are closed. Thus, it does not matter how much industrial production in the United States increased in February. The same applies to today's publication of inflation in the European Union. A month ago, it was the inflation figures that worried traders almost the most. Now we can say with confidence that there will be no reaction to this report. However, the consumer price index is expected to be 1.2% y/y in February. Most of all, both traders and analysts are interested in the question of how strong the cuts in all key indicators of the US and EU economies will be at the end of March. Yesterday's ZEW index, which reflected the mood of investors, has already shown a strong collapse, which is not surprising. A day earlier, data on industrial production and retail sales in China showed what to expect from similar indicators in the US and the EU. Thus, we are waiting for the official statistics for March and, most likely, there will be a lot of unpleasant surprises in it. But it is absolutely impossible to predict how this statistics will affect the movement of the EUR/USD currency pair. Therefore, we still recommend that traders follow the trend and do not try to "catch" the price turning up.

From a technical point of view, the downward movement continues. The Heiken Ashi indicator is directed downward, as is the senior linear regression channel. Most likely, the lower channel will also turn down in the near future.

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The average volatility of the euro/dollar currency pair remains at record values and continues to grow. At the moment, the average value for the last 5 days is 189 points. Markets remain in an agitated state and can move in any direction with renewed vigor at almost any moment. Thus, on Wednesday, we again expect a decrease in volatility and movement within the channel, limited by the levels of 1.0819 and 1.1197.

Nearest support levels:

S1 - 1.0986

S2 - 1.0864

S3 - 1.0742

Nearest resistance levels:

R1 - 1.1108

R2 - 1.1230

R3 - 1.1353

Trading recommendations:

The euro/dollar pair resumed its downward movement. Thus, traders are recommended to sell the euro currency again with the targets of 1.0864 and 1.0819 before the Heiken Ashi indicator turns up, which will indicate a new round of upward correction. It will be possible to buy a pair no earlier than the price fixing above the moving average line with the first target of 1.1349. When opening any positions, increased caution is recommended, since a frank panic reigns in the market now.

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

Forecast for EUR/USD on March 18, 2020

EUR/USD

Investors' expectations that the euro would fall on the differences in the US and eurozone macroeconomic indicators were justified. The ZEW index of business sentiment in the eurozone fell to -49.5 in March from 10.4 with an expectation of -23.1 points. In the US, retail sales decreased by 0.5% in February against the forecast of growth of 0.2%, but the fall of this index in the context of the growing epidemic was accepted by investors with understanding, but industrial production increased by 0.6% in February against the forecast of 0.4% and capacity utilization increased from 76.6% to 77.0%. This good news helped even stock indexes to increase by 5.2-9.13%. The strongest support for the markets was provided by the measures announced by the White House to provide financial assistance to the economy for $850 billion, also with tax benefits, and targeted support for individuals.

The euro lost 170 points yesterday, reaching the support of the embedded price channel line. The price has gone deep under the MACD line, the Marlin oscillator has entered the zone of negative values – the downward trend zone. In this position of precarious balance, the euro will face the Federal Reserve's FOMC monetary policy decisions at a scheduled meeting this evening. It is expected that the Fed will officially announce the easing – describe in more detail the plan to buy back government and corporate bonds on its balance sheet. Financial easing measures may increase investors' interest in risk, and we expect the stock indexes and the single currency to continue their corrective growth. But the Fed can limit itself to the measures already announced, then the markets will be presented to themselves.

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The first growth target is the MACD line at 1.1075 on the daily chart. This will be enough to wind the signal line of the Marlin oscillator to the zero line. In other words, a formal correction is still expected in the form of consolidation in the 1.0978-1.1075 range.

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A convergence is already formed on the four-hour chart for Marlin . We are waiting for the correction to be completed and the market to determine its intentions after evaluating the economic support measures introduced by the authorities.

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Forecast for AUD/USD on March 18,2020

AUD/USD

The Australian dollar lost 94 points on Tuesday, gaining ground at a strong 0.6068 level formed by the 161.8% Fibonacci level and the downward price channel line on the daily scale chart. Now the 0.5850 target is open before the price, which is also formed by the convergence point of the lower line of the price channel and the Fibonacci reaction level of 200.0%.

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A convergence was formed on the four-hour scale chart using the Marlin oscillator. This is a sign that before the price moves to the next bearish goal, the Australian dollar may correct up to the lines that have become resistances – to the Fibonacci level of 161.8% and the price channel line at the price of 0.6068.

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Forecast for USD/JPY on March 18, 2020

USD/JPY

The US dollar rose by 180 points against the Japanese yen yesterday due to the growth of stock indexes by 5-9%. This evening, the Federal Reserve's FOMC will officially announce easing measures at its scheduled meeting – describing in more detail the plan to buy back government and corporate bonds on its balance sheet. Financial easing measures can increase investors' interest in risk, respectively, and the growth of the USD/JPY pair. But while the crisis has not been overcome and investors have not yet evaluated the effectiveness of the proposed measures, we consider the growth of the markets as corrective. For the USD/JPY pair, the nearest correction target is the MACD line on the daily scale chart of 109.00.

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However, the signal line of the Marlin oscillator found strong resistance from the zero line – the boundary separating the growth zone from the downward trend zone. This technical circumstance creates the risk of a downward trend reversal, that is, the completion of the correction at the current levels. In this case, the target will be the price channel line at 102.78. The growth condition will be the exit of the price above the upper line of the price channel (and above yesterday's high) 107.87.

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In case of a downward scenario, the intermediate support will be the MACD line on the four-hour chart in the 104.70 area.

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Comprehensive analysis of movement options of #USDX vs EUR/USD vs GBP/USD vs USD/JPY (H4) for March 18, 2020

Minuette operational scale (H4)

Well, how long will the decline last now? Here's the development options for the movement of the main currency instruments #USDX vs EUR / USD vs GBP / USD vs USD / JPY on March 18, 2020 in comprehensive form

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US dollar index

The movement of the dollar index #USDX from March 18, 2020 will be determined by the development and the direction of the breakdown of the range:

  • resistance level of 99.91 - maximum of February 20, 2020;
  • support level of 99.25 ultimate Shiff Line of the Minuette operational scale forks

The breakdown of the final Schiff Line Minuette (support level of 99.25) will lead to continuation of the movement of the dollar index to the boundaries of the equilibrium zone (98.20 - 97.60 - 96.95) and 1/2 Median Line channel (97.40 - 96.80 - 96.25) of the Minuette operational scale forks.

Meanwhile, in the case of the maximum update of February 20, 2020 (resistance level of 99.91), the upward movement of #USDX can be continued to the final FSL (100.30) and the warning LWL38.2 (101.40) lines of the Minuette operational scale forks.

The details of the movement marking of the dollar index from March 18, 2020 are presented on the animated chart.

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Euro vs US dollar

The movement of the single European currency EUR / USD from March 18, 2020 will also be determined by the direction of the breakdown of the range :

  • resistance level of 1.1020 at the lower boundary of ISL61.8 equilibrium zone of the Minuette operational scale forks;
  • support level of 1.1000 warning line LWL38.2 of the Minuette operational scale.

The breakdown of ISL61.8 Minuette (resistance level of 1.1020) will lead to the continuation of the movement of the single European currency in the equilibrium zone (1.1020 - 1.1105 - 1.1100) of the Minuette operational scale forks with the prospect of reaching the boundaries of 1/2 Median Line channel (1.1300 - 1.1360 - 1.1430) of the Minuette operational scale forks.

On the contrary, in case of breakdown of the warning line LWL38.2 of the Minuette operational scale forks (support level of 1.1000), there will be an option to continue the development of the downward movement of EUR / USD to the targets:

- warning line LWL61.8 Minuette (1.0940);

- final Shiff Line (1.0880) of the Minuette operational scale forks;

- warning line LWL100.0 Minuette (1.0840).

The details of the EUR / USD movement options is shown on the animated chart.

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Great Britain Pound vs US Dollar

Her Majesty's GBP / USD currency from March 18, 2020 will also continue to develop its movement depending on the development and direction of the breakdown range :

  • resistance level of 1.2075 - final line FSL of the Minuette operational scale forks;
  • support level of 1.1985 - warning line LWL238.2 of the Minuette operational scale.

The return of the instrument price above the final line FSL Minuette (resistance level of 1.2075) will lead to an option for the development of the upward movement of GBP / USD to the targets:

- warning line LWL161.8 (1.2185) of the Minuette operational scale forks;

- warning line LWL100.0 Minuette (1.2340);

- equilibrium zone (1.2450 - 1.2575 - 1.2700) of the Minuette operational scale forks.

Alternatively, the breakdown of the support level of 1.1985 on the warning line LWL238.2 forks of the Minuette operational scale forks will make it possible to continue the development of the downward movement of the currency of Her Majesty to the goals:

- warning line LWL261.8 Minuette (1.1920);

- warning line LWL38.2 (1.1870) of the Minuette operational scale forks;

- warning line LWL61.8 Minuette (1.1745).

The details of the GBP / USD movement can be seen on the animated chart.

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US dollar vs Japanese yen

The development of the currency movement of the country of the "rising sun" USD / JPY from March 18, 2020 will be due to the development and direction of the breakdown of the range :

  • resistance level of 106.90 - upper boundary of ISL61.8 equilibrium zone of the Minuette operational scale forks;
  • support level of 106.40 - 1/2 Median Line Minuette.

In case of breakdown of the 1/2 Median Line Minuette (support level of 106.40), the development of the currency of the "country of the rising sun" can be continued to the goals:

- 1/2 Median Line Minuette (105.70);

- lower boundary of ISL38.2 (105.15) equilibrium zone of the Minuette operational scale forks;

- lower boundary of ISL38.2 (104.50) equilibrium zone of the Minuette operational scale forks;

- 1/2 Median Line channel Minuette (104.00 - 103.00 - 102.00).

In contrast, the breakdown of the upper limit of the ISL61.8 equilibrium zone of the forks of the operational scale Minuette -resistance level 106.90 - continued development of the upward movement of USD / JPY to the goals:

- upper boundary of ISL61.8 (107.70) equilibrium zone of the Minuette operational scale forks;

- final Schiff Line Minuette (109.50);

- final line FSL (110.70) of the Minuette operational scale forks.

We look at the details of the USD / JPY movement on the animated chart.

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The review was compiled without taking into account the news background. Thus, the opening of trading sessions of major financial centers does not serve as a guide to action (placing orders "sell" or "buy").

The formula for calculating the dollar index :

USDX = 50.14348112 * USDEUR0.576 * USDJPY0.136 * USDGBP0.119 * USDCAD0.091 * USDSEK0.042 * USDCHF0.036.

where the power coefficients correspond to the weights of the currencies in the basket:

Euro - 57.6% ;

Yen - 13.6% ;

Pound Sterling - 11.9% ;

Canadian dollar - 9.1%;

Swedish krona - 4.2%;

Swiss franc - 3.6%.

The first coefficient in the formula leads the index to 100 at the starting date - March 1973, when the main currencies began to be freely quoted relative to each other.

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EUR/USD. Dollar encore: US currency soared again

The US currency, after some fluctuations, soared again today: the dollar index jumped to almost 100 points, reflecting the demand for greenback across the entire spectrum of the market. The Fed's dovish decisions did not frighten investors – on the contrary, the actions of the regulator and the White House increased the attractiveness of the US national currency. The US economy is believed to be more resilient to large-scale economic shocks, at least compared to the eurozone economy. Therefore, after a one-day pause, the dollar has again become the favorite – it is used as a defensive asset amid ongoing panic around the pandemic. At the same time, dollar bulls completely ignore US macroeconomic reports, while weak European statistics raise the pressure on the euro. This fundamental background made it possible for EUR/USD bears to test the 9th figure – now the bears are trying to gain a foothold in this price area. If they succeed (and the probability of this scenario is very high), the nearest support level will be 1.0850-this is the lower line of the Bollinger Bands indicator on the weekly chart.

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The catalyst for panic is now the stock market. US indexes almost every day set anti-records, thus fueling the excitement. Yesterday, the S&P 500 index fell by 12% (to 2386.13) – out of 500 companies included in the calculation of this index, 491 shares fell in price. The Nasdaq Composite also showed similar dynamics, which fell to 6,904. 59, the sharpest drop in the technology index for one day. During yesterday's trading, shares slightly regained their positions, after one of the US president's advisers promised Americans tax benefits worth $800 billion. But then there was a statement from Trump himself, who did not rule out a recession – according to him, the pandemic will last at least until July-August – "and maybe longer." After these comments, the stock market plunged again.

Today, the situation is no better: the Dow Jones Industrial Average has fallen below 20,000. Exchanges reacted to the statement of the head of the Federal Reserve Bank of Cleveland, Loretta Meester, who said that she supports the idea of restoring the financing program using commercial securities. This program was applied 12 years ago during the 2008 crisis. Later, the Federal Reserve issued a corresponding statement, providing some details. According to Fed members, this program will provide liquidity to issuers of securities (it involves lending for three months at the rate of OIS +20 bps). The program will be supported by ten billion dollars from the US Treasury Department. At the same time, the Fed admitted that the securities market came under "tremendous pressure". As a result, the stock market is again showing volatility, and the dollar, in turn, is growing on a wave of panic, "cream skimming" from the current situation.

But the European currency today was under additional pressure due to depressingly weak macroeconomic reports. The block of macroeconomic statistics published today confirmed the deplorable forecasts regarding the prospects of the European economy. In particular, the ZEW indices of Germany and the eurozone was not only in the red zone, but also updated multi-year lows. The German index fell to -49 points with the forecast of a decline to -29 points. The pan-European indicator showed similar dynamics, falling to almost -50 points, while the forecast for a decline to -23 points. The indicators fell to their lowest values since 2010, reflecting the pessimism of the European business environment.

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As I said above, US data does not shine with success. February retail sales data came out worse than expected. The overall indicator fell into negative territory for the first time since September last year, reaching -0.5% m/m.Excluding car sales, the indicator showed similar dynamics, falling to -0.4% (the worst result since December 2018). Sales also declined excluding auto and fuel sales (the weakest figures since February 2019).

The dollar completely ignored the published data. This suggests that the US currency is growing solely due to panic, which, in turn, is fueled by the fall in stock markets and the COVID-19 epidemic. In general, the dollar is rising due to strong demand for liquidity amid ongoing panic.

According to a number of currency strategists, if buyers manage to "pull" EUR/USD above 1.1050 in the near future (within one or two days), the pair will form a price low - in this case, short positions will look risky. But if the bears still gain a foothold in the ninth figure (in my opinion, this is the base scenario), they will open their way to new price horizons, namely to the support level of 1.0850, which corresponds to the lower line of the Bollinger Bands on the weekly chart.

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GBP/USD. March 17. Donald Trump admitted that the US economy is moving towards a recession. Most likely, this judgment applies

4-hour timeframe

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Amplitude of the last 5 days (high-low): 165p - 233p - 172p - 358p - 351p - 223p.

Average volatility over the past 5 days: 268p (high).

The GBP/USD currency pair calmly continued its downward movement during trade on March 17. If the European currency paired with the US dollar slightly corrected, the pound sterling just continued to fall. It is impossible to say that today the next drop in the British pound was triggered by some fundamental or macroeconomic data. Yes, several reports were published today in the US and UK, but they were not so significant as to provoke such a strong movement of the pair. Thus, the reason why we continue to see the strongest depreciation of the British currency every day is because of panic. We would like to remind you that at the very beginning of the month, when the panic was just beginning, many experts believed that the US dollar was falling (at that time, it was the decline of the greenback) because the US stock market began to collapse. What about now? US stock markets continue to crash almost daily. Key stock indexes have already lost about 30% of their February highs. But at the same time, the US dollar is becoming more expensive against both the pound and the euro. This is especially true for the British currency. Thus, in both cases, the reasons for the dollar's growth does not depend on the US stock market, the collapse of the price and demand for oil, or other obvious reasons. Also, it is not that market participants abruptly believed in the dollar and began to consider it the safest currency again.

At the same time, US President Donald Trump dramatically changed his rhetoric about the coronavirus. If earlier the US leader said that the virus will not survive in April-May (the warm season of the year), and that "the US is completely in control of the epidemic," then yesterday he said that "no country in the world controls the disease." Moreover, when asked specifically whether the country is heading for a recession, Trump replied: "it's possible. But we are not looking at the situation from the point of view of a recession, but from the point of view of fighting the virus. As soon as we stop it, there will be an incredible unmet demand in both the stock market and the economy. When this is over, I think you will see an incredible growth." President Trump remains true to his style. According to many experts, the coronavirus outbreak can greatly weaken Trump's political ratings. After all, the main reason why it is necessary to choose Trump in the upcoming elections was called the strong growth rates of the economy and the stock market since he came to power. Simple economic calculations show that if the pandemic continues to spread, the US economy could fall back to 2016 levels. On the one hand, the president can always explain the decline of the economy by the Chinese pandemic, over which he has no control. However, over the past three years, there have been too many events (trade wars, impeachment, constant quarrels and insults to the Democrats) of a scandalous nature associated with the name of Trump. The electorate can recall all of "his merits" at once. After such comments by Trump, the S&P 500 and Dow Jones stock indexes collapsed by 11 and 13%, respectively.

At the same time, more and more experts are coming to the conclusion that the Fed no longer has anything to influence monetary policy. Rates have been reduced to almost zero, a $700 billion QE program has been announced, and these actions have not yet had any favorable impact on the stock market. The situation is no better in the UK, where all the same problems. In the current conditions, we still believe that technical factors are the most informative and useful for predicting the movement of any pair or instrument.

Today, data on unemployment, wages and applications for unemployment benefits were published in the UK. We cannot say that these reports turned out to be a failure, but rather generally neutral, because the unemployment rate increased to 3.9%, wages increased by 3.1% (with a forecast of +3.0%), and the number of applications for unemployment benefits was lower than expected by experts. However, as you can easily guess, this statistic did not have any effect on traders. The pound sterling still continued to fall. The last report of the day-industrial production in the United States – exceeded the forecast values, but this excess does not make any sense, because by the end of March, there may be a very impressive drop in all indicators, including industrial production.

A strong downward trend continues from a technical point of view. Therefore, the general recommendations remain the same - trading "according to the trend." Why try to guess a reversal up, if not one indicator is signaling it now.

Recommendations for short positions:

On the 4-hour timeframe, the pound/dollar continues its strong downward movement. Those traders who remain in sell positions can hold them with targets 1,1996 and 1,1956. Turning the MACD indicator up with a parallel increase in the price may indicate the beginning of a correction. To open new short positions, from our point of view, is now dangerous.

Recommendations for long positions:

Buying the GBP/USD pair is recommended only if quotes return to the area above the critical line with the goal of a first resistance level of 1.2895. However, in the near future such a development is not expected. When opening any positions, it is recommended to act as carefully as possible and remember about the increased risks.

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.

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