Market turbulence and first victories over coronavirus

Coronavirus continues its disruptive activity: yesterday, the markets again fell into a zone of severe turbulence amid another surge of panic. One of the reasons for the panic was a publication in Forbes magazine, where the results of a closed meeting of Goldman Sachs experts were published. According to them, half of the US population and 70% of German citizens are at risk of contracting COVID-19. Although 80% of those infected will have a mild form of the disease, the average death rate will be up to 2%. Currency strategists also predicted that the epidemic is in its infancy, and the peak is expected in about two months. Global growth will slow to 0.9%, which is comparable to the indicators of the post-crisis 2009.

Due to this fundamental background, the dollar became the undisputed and most valuable favorite of the currency market, while other assets fell into the abyss. Perhaps, the past day will become a champion of anti-records. The pound reached a 35-year low against the dollar, marking the first time since the 80s of the last century in the area of the 14th figure. The Australian and New Zealand dollars marked 17-year lows. The Norwegian krona reached a record low, and the Canadian dollar fell to the lows of 2016 (reaching the 41st figure in a pair with the greenback). The Chinese yuan is also getting cheaper, firmly anchored in the area of the 7th figure in the pair with the US currency. Overall, the dollar index exceeded the 100-point mark for the first time since 2017, reflecting huge demand across the market.

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Against the background of such events, the oil market once again collapsed. The price of a barrel of Brent crude fell to a 17-year low (the price fell below $25), while WTI fell below $25 per barrel for the first time since June 2002. The stock market was also scared yesterday. Trading on Wall Street was once again partially suspended after the Dow Jones index fell below 19,500 points. In general, the main US stock indexes boosted the fall to 8-10%. In particular, the NASDAQ index of high-tech companies fell by 8.3% (to 6,725. 16 points), and the S&P 500 – by 9.3% (to 2293.38 points).

The emergency measures taken by the Federal Reserve and the European Central Bank yesterday had little impact on the overall situation: the panic was stronger. Nevertheless, the actions of regulators were able to stop the fall of the euro-dollar pair – buyers of EUR/USD were even able to afford a short-term correction to the middle of the 9th figure. Following an extraordinary meeting, the ECB decided to launch a 750 billion euro securities repurchase program to support financial stability. The package of measures includes temporary purchases of private and public sector securities until the end of this year. According to a communique published by the regulator, the volume of purchases will be carried out "in a flexible mode, without fixed targets." The ECB clarified that the adopted program can be completed ahead of schedule, when the "crisis stage in the spread of coronavirus" remains behind, but in any case – not before the end of 2020.

The Federal Reserve, in turn, has launched a credit line for the Primary Dealer Credit Facility (so– called primary dealers) - under this program, not only bonds, but also shares can act as collateral for loans.

Meanwhile, the number of cases of coronavirus in the world continues to grow. At the moment, this figure exceeds 214 thousand people. In Italy alone, there were 475 deaths from COVID-19 per day yesterday. A total of 2,978 people died in the country during the epidemic.

But, oddly enough, positive news began to appear amid the general pessimism and panic. For example, over the past day, not a single new case of the disease was recorded in the very center of the epidemic - in Wuhan, China. This happened for the first time since the first infection. In total over the past day in a billion and a half China, only 13 cases of infection were recorded. At the same time, 12 infected brought the coronavirus from abroad, only one picked up the virus in their country. Beijing is gradually beginning to abolish quarantine measures, restoring the country's normal operation. The Chinese begin to transfer the accumulated stocks of medical equipment to the countries of Europe and Asia, in which the epidemic has developed.

Despite the forecasts of many European leaders that 70% of the population will be ill with coronavirus, the epidemic did not exceed 90 thousand people in China. Not a single case was detected in most regions of the countries. Tough quarantine measures and a complete ban on leaving the house were applied only in the outbreak - Hubei Province. There, bans were introduced for citizens to leave the house, while the authorities completely provided life support and the delivery of everything necessary directly to the house. Currently, the entire population of China is provided with tests for coronavirus, so the epidemic is taken under full control. In addition, yesterday in the Chinese media announced the high efficiency of a new experimental vaccine against coronavirus, which was developed by Japanese scientists and tested on Chinese patients. Similar tests on volunteers are conducted in Seattle, the United States.

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In addition to relatively good news, you can add news from South Korea – 407 people recovered there in a day, and 152 got sick, that is 2.5 times less. Even in Italy, which is the epicenter of the epidemic in Europe, the number of people who have recovered is gradually increasing – compared to the initial trends.

Of course, it is still too early to talk about any global change in the situation around the world. But the fact that China was able to rein in COVID-19 speaks volumes. Many currency pairs – including EUR/USD - are trying to regain lost positions from the dollar this morning, including due to news from China. The nearest target of the pair's corrective movement is 1.0980 (the lower limit of the Kumo cloud on the daily chart). But the task of the EUR/USD bulls is to return above the average line of the Bollinger Bands indicator (that is, above the 1.1050 mark). Only in this case it will be possible to speak carefully about the turning point of the situation. The support level is this year's price low of 1.0802.

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Technical analysis of EUR/USD for 19/03/2020:

Technical Market Overview:

The EUR/USD pair has broken below the technical support located at the level of 1.0951 and made a new local low at the level of 1.0802. This level is very close to the key short-term support located at the level of 1.0778. The market conditions are oversold on the H4 timeframe with momentum oscillating below the neutral level. In a case of a bounce, the next target for bulls is seen at the level of 1.1050, but this scenario is possible only if the momentum oscillator break higher through 50 levels. Otherwise, the downtrend will continue as the financial markets are not done with the coronavirus pandemic fears.

Weekly Pivot Points:

WR3 - 1.1749

WR2 - 1.1625

WR1 - 1.1316

Weekly Pivot - 1.1171

WS1 - 1.0880

WS2 - 1.0735

WS3 - 1.0438

Trading Recommendations:

The downtrend was valid as long as it was terminated or the level of 1.1445 clearly violated, so now all upward moves will not be treated as local corrections in the downtrend, but as a new uptrend. The Ending Diagonal price pattern visible on the larger timeframes like weekly has been completed and the EUR/USD is developing a new wave up.

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Markets took a break again (a local increase in AUD/USD pair and a decrease in USD/CAD pair is likely)

Investors continue to closely monitor the development of the situation around the spread of coronavirus around the world. Reports in the media already fully resemble military reports, and the market reaction to all this is also extremely nervous and, in our opinion, excessively inadequate.

On Wednesday, the markets experienced the usual collapse of stock indices again. The reason for all this event is also the same - the fears of investors that COVID-19's influence on business and production activity primarily in the US and Europe, and in China, this attack has gone into decline. Again, if you look at everything that happens in the markets, especially in the States, you can clearly see that a collapse in the local stock market is natural and is a collapse of the so-gently and "lovingly" inflated financial bubbles after the mortgage crisis 2008-09, when, to save everything, the Federal Reserve launched unprecedented measures to provide cheap and unsecured dollar liquidity.

If you pay attention to how much the American economy has grown over the past 10 years and how much the S&P 500 index has jumped up, simple and very rough estimates show that the US GDP has added less than 20% over the years, and the index has grown by 100%. The question is, where did these 80% come from? And from there, from quantitative easing programs, the so-called QE, of which there were three. Even then, ten years ago, the author said and wrote in the media that this economic policy would lead to a collapse in the future. And just one serious problem was enough and a catastrophic situation is observed on the American market - the collapse of bubbles.

We believe that, despite all the tragedy – this will only improve the American financial system in the future, and rid the economy of inefficient and" empty " port business. However, despite this cleansing, there is a risk of the US falling into a financial heresy again. The market has not yet responded to large-scale announcements of measures to support the economy and financial stability from the Fed and the Ministry of Finance, but as soon as the situation with the coronavirus stabilizes, inflation will begin again, and the demand ffor risky assets will increase with another collapse expected in the future.

Meanwhile, the market continues to live its own life, not paying attention to any statistics coming out, in conditions of extremely high volatility, when speculators accelerate the value of assets using panic moods. So on Wednesday, the price of oil declined, but today, before the opening of trading in Europe, it is noticeably adding. This helps to restore commodity and commodity currencies. Therefore, AUD/USD, NZD/USD and USD/CAD pairs changed to an opposite direction in the morning to those that were the day before. At the same time, the US dollar is falling after a strong strengthening in the Asian trading session. Gold also cautiously rises in price while the franc and the yen decline.

Observing everything that happens, we note that the nervousness in the markets will noticeably decrease only if the situation with the pandemic in Europe and America stabilizes. Until then, there will be sharp ups in local demand for risky assets, accompanied by a weakening dollar, which will be followed by similar collapse in demand for risk as well as strengthening of the US dollar.

Forecast of the day:

The AUD/USD pair is correcting up by 23% Fibonacci. We believe that fixing the price above the level of 0.5795 will lead to a local price increase to 0.5950.

The USD/CAD pair is correcting down on a wave of growth in crude oil prices. We believe that it can pull back by 23% Fibonacci to 1.4335.

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Indicator analysis. Daily review of EUR/USD on March 19, 2020

Trend analysis (Fig. 1).

Today, from the support line 1.0879 (red bold line) the price will attempt to rollback up with the target at 1.0966, a pullback level of 23.6% (red dashed line). If this level is reached, the continuation of work upward is with the next target 1.1068, a retracement level of 38.2.% (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, from the support line 1.0879 (red bold line) the price will try to roll back up with the target at 1.0966, a pullback level of 23.6% (red dashed line). If this level is reached, the continuation of the upward movement is with the next target 1.1068, a retracement level of 38.2.% (Red dashed line).

An unlikely scenario: from a pullback level of 23.6% - 1.0966 (red dashed line), work down with the target at support line 1.0803 (blue bold line).

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Trading plan for EUR/USD on March 19, 2020

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EUR/USD: Despite Europe's situation with the coronavirus, the euro held a fairly steady position against the dollar. Although it lost its stability on Wednesday and fell from 1.1050 to 1.0800, it bounced back to 1.0930, as the ECB announced its decision to buy bonds for € 750 billion.

The ECB may have reversed the brewing downward trend.

What happens though, if the currency is left to itself during a crisis?:

GBP/USD:

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Another victim of the crisis and the effects of the coronavirus outbreak is oil. It fell to $20 on Wednesday, and rebounded to $23 on the morning of Thursday.

The US market is trying to find a bottom, at about 30%, below the highs of January.

Update on the coronavirus:

As of the morning of March 19, the total number of cases since the beginning of the epidemic is already 220,000.

84,000 have recovered, but it is mainly in China. If you do not take into account the said country's record, the growth of cases is actually more than 10% per day.

The current main center of the epidemic is Western Europe: Italy with 35,700 patients (+10% per day), and Spain with 14,800.

Germany - 12,300 patients

France - 9,100 patients

Britain - 2,600 patients

Other countries:

Iran - 17,300 patients

United States - 9,000 cases (increases more than 10% per day)

Just like before, as long as the number of patients increase at a rate of more than 10% per day or more, no other news will cover the negative impact of the pandemic.

EUR/USD: Keep selling from 1.1055. Stop at breakeven.

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Elliott wave analysis of EUR/GBP for March 19 - 2020

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The uncertainty due to the coronavirus pandemic continues to weigh on the financial markets. All assets are being sold except for cash - cash is king. However, not all currencies are kings. The major safe-haven currencies USD, JPY, CHF, and EUR gets the benefit of the doubt and are racing higher. The Corona pandemic is so rare an event, that it has the power to change otherwise solid counts and change the lager picture, which we have just seen for the EURGBP cross. What looked like a safe bet - to sell EUR - has proved itself to be a wrong with the break above the August 2019 peak at 0.9324, which calls for wave 5/ higher to 0.9742 as the next possible upside.

Support is now seen at 0.9423 and 0.9270.

R3: 0.9742

R2: 0.9596

R1: 0.9523

Pivot: 0.9467

S1: 0.9423

S2: 0.9377

S3: 0.9270

Trading recommendation:

We bought GBP at 0.9190

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Elliott wave analysis of GBP/JPY for March 19 - 2020

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The uncertainty due to the coronavirus pandemic continues to weigh on the financial markets. All assets are being sold except for cash - cash is king. However, all currencies are kings. The major safe-haven currencies USD, JPY, CHF, and EUR gets the benefit of the doubt and are racing higher. The corona pandemic is so rare an event, that it has the power to change otherwise solid counts and change the larger picture, which we have just seen for the GBPJPY cross. What looked like a safe bet - to buy GBP - has proved itself to be a wrong and the break below 126.52 blew-up the former bullish count and now points the arrow towards a drop closer to 123.02 the bottom in October 2016. If this low is broken too, the next downside target is seen near 116.85.

Resistance is now found in the 128.96 - 131.08 zone.

R3: 128.96

R2:127.89

R1: 126.42

Pivot: 126.00

S1: 124.75

S2: 123.95

S3: 123.02

Trading recommendation:

Our stop at 128.00 was hit and we will place ourself on the sideline for now.

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

USD Index trying to break nearest liquidity pool at 103.82

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The Dow Jones plummeted in the New-York session. Gold is in the correctional phase. It is attempting to test the critical support level at 1445.20. Therefore, market participants prefer cash (cash is king). The USD Index is gaining ground. We see that the #USDX Candlestick is moving above the EMA 30 and the CCI (30) already broke 3 important level such as the bottom -100.0. USDX may reach the nearest liquidity pool at 103.82-103.92 levels. As long as the CCI (30) does not drop to the 0 level and the #USDX does not close bellow the 99.15, then the USD index may break 103.82.

The overall bias for the USD index is bullish.

(Disclaimer)

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

Fallout from Covid-19 Pandemic still Creates Bearish Pressure for AUD/USD

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Hollywood actor Tom Hanks and his wife got infected by the coronavirus in Australia. This confirms the large-scale fallout from the Covid-19 Virus in Australia. Before the outbreak happened, Australia's economy had already suffered a negative impact from China as Australia is the major supplier of commodities to China's industry. So, the aussie is vulnerable to any negative developments in China. Now from the technical viewpoint, according to the Daily Chart the CCI (30) has already passed through three important levels: 100, 0, and -100 and the price is moving below the EMA 30. We know exactly the downward pressure is strong enough and now this pair will try to break the nearest Liquidity Pool at 0.5228.

The overall bias of AUD/USD now is bearish.

(Disclaimer)

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

Oil's troubles

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Investors have once again left the assets because according to Goldman Sachs, since governments around the world are urging residents to limit travel and isolate themselves, by the end of March, global oil demand could fall by 8–9 million barrels per day.

Aside from that, the oil market was already shaken, since Saudi Arabia failed to reach an agreement with Russia.

"Everything changed very quickly. One extreme event collided with another," John Saucer, Vice President of Research and Analysis at the Mobius Risk Group in Houston, said.

So far, Saudi Arabia has ignored the request to balance the markets.

At the same time, US oil futures fell, as the weekly US data showed a marked decline in gasoline and diesel inventories. Oil stocks rose by 2 million barrels, while gasoline and distillate stocks declined by 6.2 million and 2.9 million barrels, respectively.

Both commodity indicators reached quarterly declines of about 60%.

Goldman Sachs forecast that Brent prices will drop to $20 in the second quarter.

Analysts say that the sharp drop in US oil prices reflects the increasing bleak outlook for the markets. Traders believe that the increase of activity in Saudi Arabia in the coming weeks will limit the exports, quickly fill storage facilities, and reduce the amount of processing that will be installed in the United States.

"The markets are virtually inactive," Scott Shelton, energy specialist at ICAP, said. "This tells me of a decline until either OPEC returns to negotiations, or US E&P starts announcing production cuts."

Iraq's oil Minister has called for an emergency meeting between OPEC and non-OPEC oil producers to discuss immediate actions to support the market.

The price war between Saudi Arabia and Russia has increased pressure on the market.

The Kremlin said that Russia wants the oil's price to be higher, but the Saudi Ministry of Energy had instructed the national oil company, Saudi Aramco, to continue delivering crude oil at a maximum of 12.3 million barrels per day in the coming months.

"With the Saudis and Russians fighting a tough battle for market share, it is difficult to find any quick solution on this front," ING responded to Iraq's request.

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Meanwhile, Japan's trade bureau said that oil imports fell by 9% in February, as compared to the same period of last year.

In addition to the information above: social restrictions that have not been in place since the World War II have been revived, the world's wealthiest countries are willing to spend trillions of dollars in order to reduce the effects of the coronavirus, and businesses are reducing their operations to keep the majority of employees at home and use only the necessary labor in public places.

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

NZD/USD and AUD/USD Overview: World is rapidly slipping into a recession deeper than in 2008

The rout of global stock exchanges continues, but stabilization is observed for a number of assets. The price of gold began to adjust downward, it is obvious that this is the result of the work of 6 leading Central Banks, which already conducted a similar operation in 2011 and stopped the growth of gold.

The sale of bonds looks strange against the background of falling stock markets, and the reason is probably due to expectations of a significant bond issue, since governments increase incentive measures, as well as increasing forced sales related to losses incurred by some bond funds. The dynamics of Tips bonds indicate a strong drop in inflation expectations, which means a drop in consumer demand in the current conditions and, as a result, a growing probability of a global recession.

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Moreover, measures to save the US securities market continue to multiply. Congress has passed a bill that raises the stimulus package to 1.3 trillion dollars, which is the largest step in history to save the economy. In turn, the Fed will launch a line of credit for primary dealers on Friday, in which not only bonds, but also shares can be collateral. Such a measure is likely to lead to a halt in the decline of stock indices, since the price of the shares will be determined by the Bank of New York Mellon, and not the market, which opens up absolutely fantastic prospects for stock speculators.

Former Fed chairman Bernanke and Yellen wrote an article on the FT that recommended that the Fed request Congressional approval for the direct purchase of corporate bonds, as the Bank of England and the ECB already do. Obviously, if it weren't for the coronavirus, it should have been invented, because under the guise of combating it, it becomes possible to legitimize any, even the most transcendental steps.

NZD/USD

On Monday morning, The RBNZ lowered the rate immediately by 0.75% at an emergency meeting, committing itself to maintaining it at 0.25% for at least a year.

Further incentive steps will somehow rely on money management and facilitating access to it since it is impossible to lower the rate further without going into the negative area, and the RBNZ assumes that the financial system is absolutely not ready for operations with a rate below 0.25%. In this regard, the next step is a large-scale asset purchase, which will be carried out jointly with the Government of New Zealand.

The purpose of the next steps is to reduce bond yields to a level corresponding to the current key rate, as well as to fill in a liquidity shortage. The government took a number of measures on Wednesday, in particular, it intends to buy back assets in the amount of $ 12.1 billion (4% of GDP). Half of this amount will be spent until June.

The NZD/USD rate in the wake of the panic declined significantly below the estimated fair price. In calm times, such a gap would mean a high probability of NZD/USD turning up, but since the depth of the fall in world markets is still unknown to anyone, it is still too early to wait for normalization.

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The current level of the New Zealand currency is fundamentally unjustified, so the decline should be considered only as a result of panic. According to estimates of ANZ Bank, economic activity in China will be normalized by mid-April, and if the forecast is true, then the kiwi will receive reasons for growth.

AUD/USD

This morning, the RBA, following the same scenario with other central banks, lowered the rate to 0.25%. The rate will be kept at a low level until inflation returns to the target range of 2-3% and there is obvious progress towards full employment.

Moreover, the RBA will begin to buy back government bonds in the secondary market starting March 20 and will include an urgent financing mechanism for the banking system with special support for small and medium-sized businesses.

In fact, all actions are completely expected. As well as the market's reaction to them - until the disaster in the stock and commodity markets is finished, the AUD recovery will not begin despite the fact that there is no fundamental justification for such a deep fall for the Kiwi. At the same time, demand from China will decrease, well, so it will decline everywhere. Oil prices will decline, and prices along the entire product chain, down to the high-tech sectors, will also decrease.

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For the time being, only one thing can definitely be said - the Australian currency is deeply oversold, but it will only go up when the decline in stock markets ends.

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

Fractal analysis of the main currency pairs for March 19

Forecast for March 19:

Analytical review of currency pairs on the scale of H1:

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For the euro / dollar pair, the key levels on the H1 scale are: 1.1114, 1.1065, 1.0988, 1.0942, 1.0833, 1.0777 and 1.0707. Here, we continue to monitor the development of the downward cycle of March 9 and, mainly, we expect movement in the correction. Short-term downward movement is possibly in the range of 1.0833 - 1.0777. The breakdown of the latter value will allow us to expect movement to a potential value - 1.0707. We expect a pullback to the top when this level is reached.

Short-term upward movement is expected in the range of 1.0942 - 1.0988. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.1065. The range of 1.1065 - 1.1114 is a key support for the downward structure. We expect the top of the initial conditions to form for the upward cycle.

The main trend is a descending cycle of March 9, we expect the development of correction

Trading recommendations:

Buy: 1.0942 Take profit: 1.0986

Buy: 1.0990 Take profit: 1.1065

Sell: 1.0833 Take profit: 1.0780

Sell: 1.0775 Take profit: 1.0710

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For the pound / dollar pair, the key levels on the H1 scale are: 1.2051, 1.1920 and 1.1687. Here, the price is near the limit values for the descending cycle of March 9, and therefore, we expect a rollback to the adjustment area and registration of the initial conditions for the upward cycle. The movement in the correction is expected after the breakdown of the level of 1.1687. In this case, the first goal is 1.1920. For the potential value, we consider the level of 1.2051, near which, we expect consolidation.

The main trend - we expect a correction

Trading recommendations:

Buy: 1.1687 Take profit: 1.1920

Buy: 1.1923 Take profit: 1.2050

Sell: Take profit:

Sell: Take profit:

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9914, 0.9843, 0.9779, 0.9641, 0.9570 and 0.9518. Here, we are following the development of the upward cycle of March 9. Short-term upward movement is expected in the range of 0.9779 - 0.9843. The breakdown of the latter value will allow us to count on movement to a potential target - 0.9914, when this level is reached, we expect a pullback to the bottom.

Departure for correction is expected after the breakdown of the level of 0.9640. In this case, the target is 0.9570. The range of 0.9570 - 0.9518 is a key support for the ascending structure, in which we expect the top of the initial conditions to form for the downward cycle.

The main trend is the upward cycle of March 9

Trading recommendations:

Buy : 0.9780 Take profit: 0.9840

Buy : 0.9845 Take profit: 0.9914

Sell: 0.9636 Take profit: 0.9570

Sell: 0.9570 Take profit: 0.9518

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For the dollar / yen pair, the key levels on the scale are : 112.85, 111.11, 110.31, 108.80. 108.00 and 106.60. Here, we are following the development of the upward cycle of March 9. Short-term upward movement is expected in the range of 110.31 - 111.11. The breakdown of the last value should be accompanied by a pronounced upward movement. Here, the potential target is 112.85. When this level is reached, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 108.80 - 108.00. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 106.60. This level is a key support for the top.

Main trend: upward cycle of March 9

Trading recommendations:

Buy: 110.31 Take profit: 111.10

Buy : 111.20 Take profit: 112.85

Sell: 108.80 Take profit: 108.00

Sell: 107.98 Take profit: 106.60

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.5012, 1.4814, 1.4707, 1.4561, 1.4484 and 1.4376. Here, we are following the upward cycle of March 13. Short-term upward movement is expected in the range of 1.4707 - 1.4814; hence, there is a high probability of leaving the correction zone. The breakdown of the level of 1.4814 will lead to a movement to a potential value of 1.5012.

Short-term downward movement is possibly in the range of 1.4561 - 1.4484. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.4376. This level is a key support for the top.

The main trend is the local upward structure of March 13.

Trading recommendations:

Buy: 1.4707 Take profit: 1.4812

Buy : 1.4816 Take profit: 1.5010

Sell: 1.4560 Take profit: 1.4484

Sell: 1.4482 Take profit: 1.4376

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For the Australian dollar / US dollar pair, key levels on the H1 scale are : 0.6049, 0.5850 and 0.5706. Here, the price has passed the limit values for the downward cycle of March 9, and therefore, we expect a return to the correction area. Short-term upward movement is expected in the range of 0.5706 - 0.5850. The breakdown of the latter value will allow us to count on movement to a potential target - 0.6049. We expect the initial conditions for an upward cycle to be formed to this level.

The main trend - we expect a correction

Trading recommendations:

Buy: 0.5706 Take profit: 0.5850

Buy: 0.5855 Take profit: 0.6049

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For the euro / yen pair, the key levels on the H1 scale are: 123.12, 122.21, 120.93, 119.85, 117.92, 117.11 and 116.27. Here, we are following the formation of the initial conditions for the upward cycle of March 12. The continuation of the movement to the top is expected after the breakdown of the level of 119.85. In this case, the target is 120.93. Price consolidation is near this level. The breakdown of the level of 120.95 will lead to the development of pronounced movement. In this case, the goal is 122.21. For the potential value for the top, we consider the level of 12312. Upon reaching this value, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 117.92 - 117.11. The latter is a key support for the upward structure. Its passage at the price will lead to the movement to the first potential target - 116.27. We expect the initial conditions for the downward cycle to be formed to this level.

The main trend is the formation of local initial conditions for the upward cycle of March 12

Trading recommendations:

Buy: 119.85 Take profit: 120.90

Buy: 120.95 Take profit: 122.20

Sell: 177.88 Take profit: 117.15

Sell: 117.06 Take profit: 116.28

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For the pound / yen pair, the key levels on the H1 scale are : 130.92, 128.47, 126.89, 124.64, 123.32, 121.28 and 119.94. Here, we are following the local descending structure of March 13. Short-term downward movement is expected in the range of 124.64 - 123.32. The breakdown of the last value should be accompanied by a pronounced movement to the level of 121.28. For the potential value for the bottom, we consider the level of 119.94. Upon reaching which, we expect a departure in the correction.

Short-term upward movement is possibly in the range of 126.89 - 128.47. The breakdown of the latter value will lead to in-depth movement. Here, the target is 130.92. This level is a key support for the downward trend.

The main trend is the descending structure of March 13

Trading recommendations:

Buy: 126.90 Take profit: 128.45

Buy: 128.50 Take profit: 130.90

Sell: 124.64 Take profit: 123.32

Sell: 123.28 Take profit: 121.28

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GBP/USD: plan for the European session on March 19. Pound collapsed by 600 points and this is only the beginning. UK service

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

The British pound collapsed to the lows of the 1985's yesterday and it looks like the bears are not going to stop. Talking about buying in the current volatile market without large support levels is not quite right. Therefore, I recommend that traders refrain from opening long positions and searching for the bottom, since the 2008 crisis shows that the bottom may not be quite soon, and the current decline is only the tip of the iceberg. The task of buyers for the first half of the day will be to form a false breakout at the low of 1.1458, which may lead to an upward correction in the area of 1.1562 and 1.1653. However, it is not entirely true to expect a larger increase.

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

Sellers will struggle to break through and consolidate below the support of 1.1458, which will open the pound a direct path to the area of the lows of 1.1400 and 1.1360. Longer-term goals will be the support 1.1300 and 1.1245, where I recommend taking profits. Given that nothing good can be expected from new economic indicators, especially those related to the services sector, short positions in GBP/USD can also be opened after small upward corrections. The first such level will be the resistance of 1.1562, where the formation of a false breakout will be a signal to sell the pound. Short positions for a rebound can be seen in the resistance area of 1.1653, or even higher, from the high of 1.1746.

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 1.1341. Growth will be limited by the average boundary of the indicator in the 1.1653 area, and you can also sell the pound for a rebound from the upper boundary in the area of 1.1927.

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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 19. ECB is expanding its bond repurchase program to 750 billion euros. Bulls

To open long positions on EURUSD, you need:

The European currency slumped amid a sharp demand for safe-haven assets, which led to a test of the low in the 1.0805 area, which I drew attention to in my yesterday's forecast. The decision of the European Central Bank to expand its bond purchase program to 750 billion euros supported the single currency by the end of the day and now the bulls need more active actions to continue the upward correction. First of all, it is better to look at long positions after moving down to the support area of 1.0860, provided that a false breakout is formed there. Buy the euro immediately on the rebound, with a small stop order under yesterday's low, you can from the level of 1.0822, where the bulls will try to form a new lower boundary of the ascending channel. An equally important goal for buyers will be a breakout and consolidation above the resistance of 1.0909, which will lead to a sharper rise to the high of 1.0975, where another sale was observed yesterday, as well as, quite likely, to the resistance test of 1.1041, where I recommend taking profits.

To open short positions on EURUSD, you need:

Bears don't have much to worry about yet. A small correction after a major two-day collapse of the euro occurred by itself. At the moment, the initial task will be to form a false breakout in the resistance area of 1.0909, which will be a signal to open short positions in the expectation of a repeated decline and update of the lows of 1.0860 and 1.0822, where I recommend taking profits, since euro buyers may be active in this range. If there is no surge in volume in the area of 1.0822, the pair will most likely continue to fall to the levels of 1.0780 and 1.0740. The absence of important fundamental statistics may lead to a continuation of the upward correction. In this case, it is best to return to short positions in EUR/USD on the rebound from the high of 1.0975, or even higher in the area of a major resistance of 1.1041.

Indicator signals:

Moving averages

Trading is conducted below 30 and 50 moving averages, which keeps the probability of a further downward trend in the pair.

Bollinger Bands

In case the euro falls, the lower boundary of the indicator around 1.0820 will provide support, while the growth may be limited by the upper level of the indicator in the area of 1.1000.

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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 EUR/USD pair. March 19. The crisis will continue to worsen until the coronavirus is defeated

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: -181.0696

On March 18, the euro/dollar pair continued to be in a downward movement. On the currency market, there was another collapse of quotes, which lasted all day and affected the euro and the British currency. Unfortunately, not only the European currencies collapsed once again (the Swiss franc also does not lag behind its "counterparts" in misfortune), but also oil of all brands, as well as American stock indices. Thus, we make an almost unambiguous conclusion: full-scale panic in the markets persists. This can be seen from the volatility indicators. Three of the last five trading days ended with a value of more than 200 points per day. It is worth recalling that the normal volatility value for the euro currency is 40-60 points per day. The high is 80 points per day. More than 100-120 points of the pair are held on major holidays. Thus, the continuing spread of "coronavirus", especially the European Union, which came out on top in the world in terms of the number of people infected with the epidemic, overtaking China, continues to have a devastating impact on the economies of all countries and world as a whole. Unfortunately, this state in the markets may continue for a very long time, until the epidemic is localized, until the pace of new infections is suspended, until a remedy for the "Chinese virus" is found. Of course, stock markets will not be able to fall to zero, but the cuts may be so severe that it will take years to reach the levels of 2019. Unfortunately, most likely, it will not do without a series of bankruptcies. Already, experts are sounding the alarm about airlines, various companies and firms associated with the tourism sector, which has already declined by more than 50% around the world. The banking system of each individual country and the entire world may also experience problems with liquidity. In general, the case is that the world will plunge into a new large-scale crisis. As usual, the most "get" ordinary citizens. Separately, we should say about "black gold", which continues to become cheaper, but even theoretically can not fall for a long time below the cost price mark. The "oil wars" that have started now in the world because OPEC and Russia failed to agree on a new agreement to stabilize oil prices – this is exactly what is needed during the global pandemic.

We haven't talked about this in previous articles, however, the European Union even published enough important macroeconomic statistics yesterday. However, it had no effect on the movement of the EUR/USD currency pair. It is impossible to imagine that the euro collapsed by another 200 points only "thanks" to the report on inflation in the European Union for February, and even then, which completely coincided with the forecast values of experts. The consumer price index slowed to 1.2% year-on-year and +0.2% month-on-month. The basic consumer price index (which does not take into account changes in food and energy prices) also amounted to 1.2% y/y and in monthly terms +0.4%.

The United States also published some of the stats that are not the most important and significant. The number of home construction projects started in February was 1.599 million, and the number of new permits received was 1.464 million. The change in the number of new construction permits received was -5.5%.

Meanwhile, the European Central Bank, represented by its Vice-Chairman, Luis de Guindos, tried to calm the markets, saying that it had not completely exhausted the available tools for influencing the economy. Almost all market participants spent the past week discussing the actions of the Fed and the ECB, which brought their rates to "0% or lower", and also announced the resumption/expansion of quantitative stimulus programs. Thus, according to many experts, both central banks have exhausted all available ways to influence the economy. The coronavirus crisis is getting worse and both economies continue to demand even more stimulus measures. Also, an exciting statement was made by the head of the Austrian Central Bank, Robert Holzman, who said that the ECB's monetary policy is at the limit of its capabilities, and the Central Bank itself will not be able to meet market expectations. However, a little later, Holzman refuted his own words, saying that monetary policy has not yet reached its limits. On March 18, the European Central Bank announced that it is ready to further adjust the parameters of monetary policy if it is necessary to maintain the liquidity of the banking system and support the European economy. The probability of a recession has increased significantly, according to Luis de Guindos, but the regulator is ready to "act".

On Thursday, March 19, neither the US nor the European Union is scheduled for any important macroeconomic publication. But as we have said many times, there is no point in statistics now anyway. We need to wait for important reports on the state of the US and European economies in March. It is these data that can either inspire a certain optimism in the hearts of traders and investors or even more plunge them into shock. So far, data for January and February continue to be published, when everything was relatively good and stable both overseas and in Europe. However, tomorrow there will still be one report that can already show how much the "coronavirus" epidemic has affected the US economy. The index of business activity in the manufacturing sector of the Federal Reserve of Philadelphia may fall from 36.7 to 10. At least, these are the official forecasts. In practice, the reduction can be much more extensive. Also, tomorrow, the results of the meeting of the National Bank of Switzerland will be published, which has long brought its key rate to the value of -0.75% and is unlikely to increase its value in March.

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According to the latest data, the number of people infected with coronavirus in the world is more than 207,000. In Italy, the number of cases rose to 32,000, in Spain - 14,000, in Germany - 11,500, and in France - 8,000. This week, animal testing of the coronavirus vaccine will officially begin in Italy. In total, more than 7,000 people died from the pandemic in Italy.

From a technical point of view, the EUR/USD pair continues to fall heavily and there is still no sign of the beginning of an upward correction. The Heiken Ashi indicator is still directed downward, as is the moving average line, as well as the senior channel of linear regression. The pair fell to the Murray level of "1/8"-1.0864 and the volatility level of 1.0819. A rebound from these levels may trigger a round of corrective movement. Theoretically.

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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 215 points. Markets continue to be in an agitated state. There is no logic in the movement now, the markets just collapse and collapse every day. Thus, on Thursday, we again expect a decrease in volatility and movement within the channel, limited by the levels of 1.0675 and 1.1105.

Nearest support levels:

S1 - 1.0864

S2 - 1.0742

S3 - 1.0620

Nearest resistance levels:

R1 - 1.0986

R2 - 1.1108

R3 - 1.1230

Trading recommendations:

The euro/dollar pair resumed its downward movement. Thus, traders are recommended to continue selling the euro currency with the targets of 1.0742 and 1.0675 until the Heiken Ashi indicator turns upward, which will indicate a round of upward correction. You will not be able to buy the pair until the price reverses above the moving average line with the first target of 1.1230. When opening any positions, we recommend increased caution, since the market is now in a state of outright panic.

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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Forecast for EUR/USD on March 19, 2020

EUR/USD

Yesterday, trading in the euro took place in a wide range of about 250 points, this morning the price tested the resistance of the embedded line of the price channel on the daily chart and returned to the red indicator line balance, and opening day occurred under this line, which speaks of the intention of the price to decline further, the market came under the control of the bears. The goal of the decline is the low line of the price channel around 1.0640.

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On the four-hour chart, yesterday's convergence on the Marlin oscillator turned out to be broken, although its effect was reflected in more than 80-point growth in the euro. Currently, Marlin is developing in its own downward channel, the lower boundary of which is very, very low.

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Forecast for GBP/USD on March 19, 2020

GBP/USD

A significant and technically most important event occurred yesterday, on Wednesday - the pound, having fallen by 474 points(!), fell below the low of September 3, 2019 (1.1958), which is the lowest of the new history of the British currency. The quote was lower in the mid-80s (the period of the old history), after the British currency was released into "free float" in 1979. Later, in 1985, the US, Great Britain, Germany, Japan and France adopted the Plaza agreement (hotel in New York) to correct imbalances in world trade, which involves central bank interventions, which has unfolded a number of currencies.

Empirically, in technical analysis, it is believed that the price overcoming key levels before the release of important economic news, can predict the nature of this news. So, we believe that the measures that the Bank of England will take today will not be enough to fix the situation , and in the future, not without the impact of the coronavirus epidemic, the trade agreement between the EU and the UK will not take place, there will be a hard Brexit and the pound will continue to fall for a long time.

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The reason behind the pound's decline yesterday was the closure of schools due to coronavirus. The fall stopped exactly at the Fibonacci reaction level of 261.8%. Respectively, we continue to focus on determining further goals for this instrument. The nearest target is the 271.0% level at the price of 1.1375. Consolidating the price below it opens the second target at the Fibonacci level of 314.0% at the price of 1.1035. The third objective is the support of the embedded line of the price channel in the vicinity of 1.0820.

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There are no reversal and correction signs on the four-hour chart on the Marlin oscillator, we are waiting for the British pound to fall further.

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Forecast for AUD/USD on March 19, 2020

AUD/USD

The Australian dollar fell by 225 points yesterday (at the close of the day), weighed down by global pressure from the US dollar. The aussie currently lost another 276 points at the Asian session, having worked out technical support through the price channel. The currency was supported by the morning data on employment in Australia: 26.7 thousand new jobs were created in February, while the unemployment rate fell from 5.3% to 5.1%.

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But the aussie's decline looks no less dramatic - after overcoming the support of the embedded price channel line at 0.5510, the target opens at 0.5395 - the peak of August 2001. Consolidation below the level opens the second target of 0.5180 - supporting the lower line of the price channel.

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The Marlin oscillator is deeply oversold on the four-hour chart, On the four-hour chart, the Marlin oscillator is deep in oversold, it only signals a possible price c

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Forecast for USD/JPY on March 19, 2020

USD/JPY

Today, in the Asian session, the price of the USD/JPY pair reached the goal along the MACD line on the daily scale chart. Here, the growing correction from the February 21-March 9 movement may come to an end. The stock indexes continued to fall yesterday: S&P 500 -5.18%, Russell 2000 -8.22%, FTSE100 -4.05%, Euro Stoxx 50 -6.16%. This morning: Nikkei 225 -2.66%, China A50 -4.32%, S&P/ASX 200 -1.77%. We still accept the traditional correlation of the strengthening of the Japanese yen following the decline of stock markets, the pair's growth from yesterday is most likely due to the Japanese central bank's intervention, since trading volumes were extremely high. But in the future, the central bank's influence on the yen will weaken, although it will strengthen, but only moderately.

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There are signs of an emerging divergence on the Marlin oscillator on the four-hour chart. Moving the price below the 107.90 level (the nearest linear support on the daily chart ) will strengthen the mood to take the lower level of 107.10, which is also support for the embedded line of the price channel on the daily. Next, the 105.05 target will open – support for the MACD line on the H4. Most likely, the global economy will grow by no more than 0.9% in 2020.

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In an alternative scenario, if the price consolidates above the MACD line of the daily time above 109.10, the price will continue to rise to the upper line of the price channel to 111.95, which will indicate the dollar's global prevalence in all markets.

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Comprehensive analysis of movement options of #USDX vs EUR/USD vs GBP/USD vs USD/JPY (DAILY) on March 19, 2020

Surprises continue. What's next? Here's a comprehensive analysis of movement options of the main currency instruments – #USDX vs EUR/USD vs GBP/USD vs USD/JPY (DAILY) on March 19, 2020.

Minor operational scale (Daily time frame)

____________________

US dollar index

The movement of the dollar index #USDX from March 19, 2020 will be determined by the development and the direction of the breakdown of the range:

  • resistance level of 100.85 at the upper boundary of ISL61.8 equilibrium zone of the Minor operational scale forks;
  • support level of 100.35 on the final line FSL of the Minuette operational scale forks.

In the event of the breakdown of the final line FSL (support level of 100.35) the equilibrium zone of the Minuette operational scale forks, the development of the movement of the dollar index will be directed towards the goals:

- 1/2 Median Line Minor (99.75);

- final Schiff Line Minuette (99.15);

- lower boundary of ISL38.2 (98.65) of the equilibrium zone of the Minor operational scale forks;

with the prospect of reaching the boundaries of the equilibrium zone (98.30 - 97.70 - 97.10) of the Minuette operational scale forks

On the contrary, the breakdown of the upper boundary of the ISL61.8 (resistance level of 100.85) equilibrium zone of the Minor operational scale forks will lead to the option to continue the development of an upward movement #USDX to end Line Schiff Minor (101.70) and the control line UTL (102.15) of the Minuette operational scale forks.

The markup of #USDX movement options on March 19, 2020 is shown on the animated chart.

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Euro vs US dollar

The movement of the single European currency EUR / USD from March 19, 2020 will depend on the development and direction of the breakdown of the range :

  • resistance level of 1.1000 on the reaction line RL23.6 of the Minor operational scale forks;
  • support level of 1.0921 on the control line LTL of the Minuette operational scale forks.

If a breakdown of the RL23.6 Minor reaction line (resistance level of 1.1000) takes place, it will become possible to develop an upward movement of the single European currency to the boundaries of the 1/2 Median Line (1.1170 - 1.1295 - 1.1425) of the Minor operational scale forks.

When the LTL control line (support level of 1.0921) breaks the Minuette operational scale forks, the option to continue the downward movement of EUR / USD to the targets:

- initial SSL Minor line (1.0790);

- control line LTL Minor (1.0750);

with the prospect of reaching the warning line LWL38.2 Minor (1.0415).

The details of the EUR / USD movement options from March 19, 2020 are shown in the animated chart.

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Great Britain pound vs US dollar

From March 19, 2020, Her Majesty's GBP / USD currency will continue to move depending on the range that was developed :

  • resistance level of 1.1950 on the control line LTL of the Minor operational scale forks;
  • support level of 1.1750 on the control line LTL of the Minuette operational scale forks.

In case of breakdown of the control line LTL (resistance level of 1.1950) of the Minor operational scale forks, the development of Her Majesty's currency movement can continue to the SSL Minor start line (1.2290) and the boundaries of the 1/2 Median Line channel (1.2390 - 1.2580 - 1.2780) of the Minuette operational scale forks.

Alternatively, if the control line LTL (support level of 1.1757) of the Minuette operational scale forks is broken, then the downward movement of GBP / USD can be continued to the warning - LWL38.2 (1.1670) and LWL61.8 (1.1300) to lines of the Minor operational scale forks.

The details of the GBP / USD movement on March 19, 2020 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 19, 2020 will be determined by the development and the direction of the breakdown of l-band :

  • resistance level of 108.30 at the lower boundary of the 1/2 Median Line channel of the Minor operational scale forks;
  • support level of 107.65 at the upper boundary of the 1/2 Median Line channel of the Minuette operational scale forks.

With the breakdown of the resistance level of 108.30, the development of the currency of the "country of the rising sun" will continue in the 1/2 Median Line channel (108.30 - 109.40 - 110.60) of the Minor operational scale forks with the prospect of reaching the final Schiff Line Minuette (111.66) and maximum (112.25).

On the other hand, the breakdown of the support level 107.65, the USD / JPY movement will occur in the 1/2 Median Line channel (107.65 - 106.35 - 105.70) of the Minuette operational scale forks with a prospect of reaching the control line Minor LTL (104.40) and the warning line Minor LWL38.2 (102.90)

The details of the USD / JPY movement on March 19, 2020 is presented on the animated chart.

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The review was compiled without taking into account the news background. Thus, the opening 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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S&P and Morgan Stanley bank predict a long recession in the global economy

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Unfortunately, the "Chinese virus", as Donald Trump called it, the COVID-19 virus continues to spread across the planet, shocking all world markets. March 18 ended with another decline in the euro and the pound, as well as oil prices and all key stock indexes in the United States. Despite the fact that the governments of the European Union and the United States said earlier that there will certainly be a recession, it is unlikely that it will reach a full-scale recession, especially considering all the monetary incentives that central banks have already implemented, as well as the fiscal incentives that are only going to be implemented and United States, and the EU. However, in practice, everything turns out completely different. The number of people infected with the pneumonia virus worldwide has exceeded 200,000, and the number of infected people in the European Union is now higher than in China. Thus, first, China, thanks to "draconian" quarantine measures, managed to localize the epidemic relatively quickly and stop its spread. But in Europe, they can't boast of such results. As a result, it was the European Union that came out on top in the world in the number of infected people.

Of course, in a situation where every day the markets are subjected to a new shock, the largest rating agencies can not stay away. At the very beginning of the crisis, which was not even considered a crisis at that time, it was expected that the world economy would lose from 0.5% to 1.5% due to the coronavirus. That is, only a slow down in the growth rate. Now world experts predict a full-scale recession, calling it a "basic" option, and the main question is how long the world will be in a new crisis and whether it will slide into a depression? It is worth explaining at once that almost every economist puts different meanings in the concept of a "recession". For example, if GDP grew by 3% in the third quarter and 2.9% in the fourth, is this a recession? Formally, yes, but experts consider a longer slowdown in growth and a more significant one as a recession. This is exactly what we are talking about now, as well as the rating agency S&P and the investment bank Morgan Stanley. S&P economists note that China's February figures were much weaker than expected. There are more and more restrictions on free movement and contacts between people in Europe and the United States. Travel and business trips are canceled en masse, schools and institutes are closing down, offices, factories and factories are empty, as everyone who can work remotely is transferred to this particular type of work. The problem is that all market participants now want to own only highly liquid assets, so there is a threat of crisis. Thus, S&P expects that eurozone GDP will decline in the second quarter by 0.5% - 1.0%. In the United States, the reduction under the most optimistic scenario will be 1.5%. All oil-oriented countries will suffer serious GDP cuts due to lower oil prices. This also applies to the United States and its oil and gas industry. Shale oil companies will find it particularly difficult, since the extraction of this type of oil is the most expensive. Also, economists of the agency note that the current scenario may well be revised downward.

Morgan Stanley economists make even harsher forecasts. In their opinion, the recession has already begun, and the decline will be much more significant than in 2008-2009. Most likely, the global economy will grow by no more than 0.9% in 2020. The bank's economists expect the eurozone to be hit the most. It is assumed that the economic downturn may reach 5%. Morgan Stanley experts also calculated that the average global refinancing rate is now 0.48%, which is lower than during the financial crisis. Also predictions for the world economy can be even worse if the impact of the virus will persist longer than predicted by experts in the field of health. In this case, it is expected that the epidemic will continue to negatively affect the economy in the third quarter of 2020, and in the fourth.

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GBP/USD. March 18. UK-EU negotiations on deal after Brexit canceled due to coronavirus

4-hour timeframe

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Amplitude of the last 5 days (high-low): 172p - 358p - 351p - 223p - 272p.

Average volatility over the past 5 days: 276p (high).

The GBP/USD currency pair continues a strong downward movement during trade on March 18. The average daily volatility is already almost 300 points. These 300 points are a one-way movement for the pound. Before the outbreak of the coronavirus epidemic in Europe and the United States, we repeatedly gave forecasts for a decline in the British currency during 2020. We simply did not see any reason for the UK, which is experiencing serious problems in the economy and financial sector and without any coronavirus, to suddenly show growth and improvement in macroeconomic indicators. Moreover, 2020 began with Brussels and London almost falling out over trade negotiations, as both sides took radically opposite positions. Of course, both Britain and the EU called the first stage of negotiations "positive", although nothing could be agreed on. However, we believed in any case that the chances of reaching an agreement on Brexit in ten months (negotiations officially began on March 3) are extremely low. However, with the arrival of coronavirus in Europe and Great Britain, the situation has worsened even more. The markets are in a state of panic all the time, and traders are trading based on their own considerations, without paying much attention to the actions of governments, Central banks, and macroeconomic statistics. By all accounts, the US dollar was, is, and will be the number one currency in the world. Thus, in the event of a crisis, you need to buy it, no matter what. But the logic regarding the British pound is completely different. Despite the fact that the UK is not among the leaders in the number of people infected with the COVID-2019 virus, market participants quite reasonably believe that the epidemic can simply finish off the economy of the UK, which is already experiencing huge problems in the last three years thanks to Brexit. Therefore, no one wants to keep their funds in pounds. Therefore, the pound is falling every day. And most likely, it will continue its decline.

However, now the issue of the epidemic is in the first place. The disease needs to be localized, stop its spread, try to make do with the minimum number of victims and find a vaccine as soon as possible. This is the recipe for a global economic recovery. Once the epidemic is defeated, markets will begin to recover and come to their senses. Without this, in our view, any measures taken by governments and central banks will only mitigate the negative impact of the virus on the economy. And even then, not always.

At the same time, British Prime Minister Boris Johnson continues to "pour" his "optimistic" forecasts about the spread of the coronavirus in all directions. Recall that in recent statements, Johnson warned that many families will lose their relatives, as well as that the epidemic will last until 2021, and as a result, about 80% of Britons will be infected. Today, the prime minister called on the British population to prepare for an outbreak of coronavirus, that is, a sharp increase in the number of infected people. "Without radical action, the number of infections can double every 5 or 6 days," the British prime minister believes. At a press conference in London, Johnson asked all citizens who feel symptoms of the disease not to leave their homes with their families, avoid any unnecessary contact, and work from home. He also warned that the infection could spread at a much higher rate in London. The epidemic in Britain has already killed 71 people. As we reported earlier, most of the victims are elderly.

At the same time, official sources in Downing Street said that all upcoming rounds of negotiations on the future relationship between Britain and the EU after 2020 are being canceled. Recall that each round of negotiations was supposed to take place two weeks after the previous one. However, the general epidemic has made adjustments to these plans. "In light of the latest recommendations regarding coronavirus, we will not formally hold talks tomorrow in the same format as we held the previous round," the UK government said. However, both sides will continue to work on options for the agreement, as well as hold regular video and teleconferences to discuss the future deal.

From a technical point of view, the collapse of the pound's quotes continues. All indicators are directed downward, and there is no sign of the beginning of an upward correction. The MACD indicator is at its lowest values and is discharged from time to time. The pound/dollar pair has already almost worked out the lower limit of the volatility channel on March 18.

Recommendations for short positions:

The pound continues its firm downward movement on the 4-hour timeframe. Those traders who remain in sell positions can hold them with targets 1.1799 and 1.1638. Turning the MACD indicator up with a parallel increase in the price may indicate the beginning of a correction. From our point of view, it is currently dangerous to open new short positions.

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 the Senkou Span B line. However, this development is not expected in the near future. When opening any positions, it is recommended to act as carefully as possible and remember 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.

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

EUR/USD. March 18. "Chinese virus" by Donald Trump. US president demands $1 trillion to support the economy

4-hour timeframe

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Amplitude of the last 5 days (high-low): 110p - 279p - 166p - 152p - 234p.

Average volatility over the past 5 days: 189p (high).

The biggest trading day of the week for the EUR/USD pair was held in a surprisingly calm manner. However, we would advise market participants not to relax. We are still a long way from getting out of the state of panic. Perhaps today, traders took only a temporary and, most likely, not a long pause, and tomorrow the movement will resume with new strength. After all, just look at the average volatility indicators and it becomes clear that the markets remain in complete panic. Uncontrolled panic. And there can only be one reason for this – the continuing spread of the coronavirus on the planet. As we have said many times before, no specific fundamental or macroeconomic factors currently affect the movement of any currency pair. The US stock market continues to collapse, but the US dollar continues to rise in price. Despite the crisis and a very likely recession, gold is not used by investors as a safe asset, as it also becomes cheaper. Oil continues to fall amid reduced demand for all types of energy carriers. Thus, there is no correlation between all these factors and events now. The euro stopped falling on March 18, and the pound, for example, continues to depreciate. Although the situation in the UK is not worse than in the European Union.

Despite the fact that the coronavirus began to spread relatively recently in Europe and the United States, no more than a month ago, and central banks have already lowered rates to absolute lows and resumed/expanded quantitative stimulus programs, we can already say that the adjustment of monetary policies does not give the necessary results. Stock markets continue to collapse, and panic is observed in all world markets, as well as among the population of almost every infected country. Moreover, for example, airlines are already experiencing serious financial problems that threaten them with bankruptcy amid a reduction of more than 50% of air travel worldwide. Thus, if the EU and US governments do not provide assistance, we are likely to face a series of bankruptcies. And this applies not only to airlines. After all, in fact, the entire tourist business is now also in quarantine. Most of any trips are canceled, borders are closed, and it is obvious that tour operators, hotels, and resort cities that live on the expense of visiting tourists are experiencing great financial problems. The epidemic is not yet widespread, but most of the world's countries have already closed their borders. And, given the rate of infection, it is unlikely that they will be opened in the near future. As we have already said, in the modern world, all companies, countries, governments and economies are closely linked to each other. Therefore, problems in one of the spheres can lead to a whole heap of problems for other spheres as well.

To counter the crisis, the US government has developed a $1 trillion stimulus package for businesses and ordinary citizens. According to the latest information, Donald Trump and Finance Minister Stephen Mnuchin are literally ready to give out money to American citizens in order to smooth out the economic shock among the population. Each American is expected to receive a check of up to $1,000. This practice has already taken place in the United States in 2008 at the beginning of the debt crisis. Then, within a few months, the US authorities paid out $600 per person, pouring a total of more than $100 billion into the economy. Experts believe that these were one of the most effective measures to stimulate the economy in the history of the United States. Of this trillion, $58 billion will be earmarked for supporting airlines, $500 billion will be used to reduce taxes, and $250 billion will be available on affordable loans to small businesses. Donald Trump has already called on American citizens not to leave home and "enjoy their living room." The US president also said: "If we all abide by these rules and make some sacrifices, acting as a single nation, we can defeat the virus. And then we will all celebrate it together." Trump's recommendations are simple and do not differ from the recommendations for countering the virus around the world: avoid traveling and trips anywhere, study and work from home whenever possible. The rhetoric regarding the possible timing of the completion of the Trump epidemic has changed. If earlier the US president was certain that the virus would not survive April-May, now, referring to representatives of the healthcare sector, he believes that the epidemic can be defeated somewhere in the middle of summer. But at the same time, "it may last much longer."

And of course, the US leader could not resist starting a new skirmish with China. Earlier Beijing was trying to hint at the fact that the US military is to blame for the spread of the virus. To this accusation, Trump replied: "China is constantly spreading false information that it is our military that is spreading the virus. This is not true. But instead of arguing with them, I say I should name this virus where it came from. It came from China, so I will call it the "Chinese virus"."

Recommendations for short positions:

The strong downward movement is put on pause for the euro/dollar currency pair. Thus, we recommend that you stay in the sales of the euro currency with the goals of 1.0942 and 1.0778, until the MACD indicator turns up or another sign of the beginning of a correction.

Recommendations for long positions:

Purchases of the euro currency with the goal of the resistance level of 1.1383 can be considered no earlier than the pair consolidating above the critical line. However, in any case, it is recommended to be very careful with opening any positions. Panic in the markets continues to be present.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicators window.

Support / Resistance Classic Levels:

Red and gray dashed lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movements:

Red and green arrows.

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