AUD/USD Price Movement For May 06, 2020

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AUD/USD is now trying to reach the SELL Stop Liquidity Pool at 0.6374. If this level can be easily broken out, then this pair will have a high probability to continue the downward movement to 0.6338 as the first target and 0.6284 as the second target as long as the price does not rebound higher than the 0.6477 level.

The overall bias of AUD/USD is bearish.

(Disclaimer)

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Trading idea for Gold

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Good afternoon traders! Here is a trading idea for gold.

Through the "Price Action" and "Stop Hunting" methods, a pin bar formed in the trend, which left the traders a double top in the D1 time frame.

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Bullish mood persisted at the US session for the past three days, which put pressure on the trend line:

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We suggest increasing the pair to take profits at the levels 1714 and 1722.

Do so until a breakout below 1694.

Good luck!

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Decline in quarantine measures contributes to the positive growth, while fundamental data show the opposite picture; Overview

Markets continue their cautious recovery, supported by news of the gradual withdrawal of a number of countries from restrictive measures on the spread of coronavirus. At the same time, this factor has a limited impact, because it is based on expectations, and not on real changes.

US service activity indices continue to drop rapidly. The Markit index has already fallen to a level below 2008/09, setting an absolute record for the entire history of observations, and there is no doubt that the fall in the PMI will also entail an unprecedented decline in GDP, which, in turn, will sharply reduce the budget revenue and contribute to a record increase in the deficit.

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The ISM index in the services sector fell to 41.8p, which is slightly better than expected, but only due to the only parameter that is growing – the supply index. In other words, companies continue to fulfill their obligations taken in previous periods, and this circumstance prevents the ISM from collapsing on a large scale. At the same time, other sub-indexes are telling - business activity 26%, new orders 32.9%, and employment 30%.

The last parameter is especially important for Friday non farm - an increase in unemployment claims by 26 million in just 5 weeks indicates the largest crisis in US history, the depth of which cannot be estimated at the current stage.

Most likely, the positivity will continue in the next 2-3 days, which will support raw materials and commodity currencies, but Friday may turn the market sentiment towards the continuation of sales.

NZD/USD

The employment report for the 1st quarter (Q1) published Wednesday morning was outdated, not having time to go out, and therefore did not have any effect on the kiwi rate. ANZ Bank warns that the labor market has deteriorated significantly in April and the depth of the economic decline remains to be seen later. It is expected that a strong decline in demand will force the government to expand the scope of incentives in order to preserve jobs as much as possible, but "this cannot last forever", and a sharp increase in unemployment is inevitable.

In turn, The RBNZ may double QE volumes in the near future, lowering rates below zero is currently considered unlikely. Thus, the dynamics of kiwi will largely be determined by how much stimulus will be involved in relation to similar programs in the USA and Australia.

The total short position on the NZD for the week has not changed much, the bearish advantage is confidently strong, and the local peak 0.6175, reached by the end of April, is highly likely to be a turning point before the approaching decline.

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A decline in the NZD/USD pair seems inevitable; technically, a reversal will be made after consolidation below the level of 0.5908. On Wednesday morning, the kiwi is near the maximum, there is a high possibility that the possible last bull attack will fall near the resistance zone of 0.6130/50. The recommendation is to sell with a nearest goal of 0.5840.

AUD/USD

The RBA meeting, which ended on Tuesday, did not bring news and did not add volatility to the Australian dollar. The RBA supported the liquidity of the markets by providing additional measures for pledging repo transactions to maintain the investment level of corporate bonds, and expressed concern about the fall in the labor market, suggesting unemployment to rise to 10% at the peak.

The PMI in the services sector fell in April to 19.5 p, which is the worst indicator among developed countries at the moment, which does not add confidence to the AUD bulls.

The total short position of AUD grew by the results of the previous week by more than 10% to 2.45 billion, the Australian currency does not receive support either from oil attempts to push off from the local minimum, or from improving the situation with the spread of coronavirus in Australia.

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The correction after the fall to 0.5505 on March 16 is highly likely to be considered completed, the chances of updating the maximum of 0.6572 are low. The recommendation is to sell from the current levels, and if you try to increase to 0.6570 add to sales, stop in the zone of 0.6580/6600, the nearest goal is 0.6360, the next 0.6260, if the price is consolidated below this level, the fall may increase.

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Euro and British pound expected to fall further

Signals for the EUR/USD pair:

If the pair breaks through at 1.0852, the euro is likely to rise to 1.0882 ant 1.0923.

A breakthrough at 1.0811 can lead to a sell-off of the euro at 1.0787 and 1.0755.

Signals for the GBP/USD pair:

If the pair breaks through at 1.2478, the British pound can grow to 1.2517 and 1.2557.

A breakthrough at 1.2424 can lead to a sell-off of the British pound at 1.2391 and 1.2360.

Fundamental data:

The following fundamental data is set for release during the day: France Services Purchasing Managers' Index, the German Services Purchasing Managers' Index, the Eurozone Services PMI, the Eurozone composite PMI, the Euro Area Retail Sales, and the ADP Employment Change in the United States. Apart from that, the European Commission will publish macroeconomic forecasts for the EU.

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Control zones for NZD/USD on 05/06/20

Today's movement of the pair must be considered in the framework of the flat formed by the last two days. If the pair cannot break through the weekly control zone 1/2 0.6087-0.6080, then the decline will continue, and the next goal of the decline will be the weekly minimum.

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Working in the downward direction remains a priority, and goals allow you to enter positions with a favorable risk-to-profit ratio.

An alternative growth pattern will be developed if today's close of trading occurs above the Weekly Control Zone 1/2. This will open the way for the pair's growth in the second half of the week. The goal of the increase will be the April maximum and the level of 0.6196.

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

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

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

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Elliott wave analysis of EURGBP for May 6, 2020

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EUR/GBP dipped slightly lower than expected and didn't find support before a test of 0.8689. This corrective decline from 0.8814 is more than enough to reset, what we expect is the start of a new impulsive uptrend, which should break above the short-term key resistance at 0.8866 to confirm more upside pressure, that ultimately should break above the peak at 0.9499.

Short-term a break above minor resistance at 0.8758 will be a strong indication of a corrective bottom being in place for renewed upside pressure to 0.8866 and above.

R3: 0.8866

R2: 0.8814

R1: 0.8758

Pivot: 0.8720

S1: 0.8688

S2: 0.8670

S3: 0.8621

Trading recommendation:

We are long EUR from 0.8765 with our stop placed at 0.8670

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Elliott wave analysis of GBP/JPY for May 6, 2020

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There was no time for even the slightest correction and the key support at 131.88 is being tested. We don't see a direct break below this key-support, but rather a correction to 133.18 and possibly even closer to 133.64 before renewed downside pressure through the key support at 131.88 for a decline to below 123.99 to complete the long-term decline from 147.95.

Short-term a break above minor resistance at 132.69 will confirm the expected mini rally to 133.18 and possibly 133.64 before lower again.

R3: 133.64

R2: 133.18

R1: 132.69

Pivot: 131.88

S1: 131.10

S2: 130.50

S3: 130.05

Trading recommendation

We will sell GBP at 133.50 or upon a break below 131.88

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Control zones for EUR/USD on 05/06/20

The pair is trading within the weekly control zone 1.0837-1.0819 today. This allows you to consolidate part of the sales, and transfer the remainder to breakeven. To continue the downward movement, it will be necessary to close today's trading below the level of 1.0819. This will allow you to hold some of the sales and look for new entry points in the direction of bearish impulse.

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The main activity in the second half of the week may possibly be working in the downward direction. So far, there are no prerequisites for a reversal of the bearish pattern.

An alternative pattern will begin to develop if the closing of today's trading occurs above yesterday's opening. This will allow you to create an "absorption" pattern of the daily level, which will indicate a change in priority.

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

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

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

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GBP/USD: plan for the European session on May 6. Sellers urgently need to return to the market, otherwise buyers will take

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

After several unsuccessful attempts to break below the support of 1.2424, the sellers of the pound retreated, forming a large resistance of 1.2478, which they continue to protect now. Buyers of the pound currently need another false breakout to form in the support area of 1.2424, after which you can count on a larger upward correction and a test of the high of 1.2478, where I recommend taking profits. However, it will be possible to talk about continuing the upward trend only after updating yesterday's high. Consolidating above the resistance of 1.2478 will only strengthen the position of the bulls, which will open a direct road to the levels of 1.2517 and 1.2557. Today there is a report on activity in the construction sector in the UK which will not have a serious impact on the pound. Therefore, if the pressure on GBP/USD persists in the first half of the day, and the bulls miss the support of 1.2424, it will be possible to return to long positions only after the test of 1.2391, provided that a false breakout forms there, or buy the pair immediately on the rebound from the low of 1.2360.

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

Pound sellers need to break through and consolidate below 1.2424 support, since this scenario will maintain the bearish momentum in the market, which can push GBP/USD to the lows of 1.2391 and 1.2360, where I recommend taking profit. Weak UK construction data could help. An unsuccessful attempt to push the pound above resistance 1.2478 will be a signal to open short positions. The lack of activity in this range on the part of sellers, as well as the lack of a quick movement of the pair down, can lead to further growth and a larger upward correction to form to the highs of 1.2517 and 1.2557, where I recommend opening short positions immediately for a rebound while expecting a downward movement of 30-40 points within a day. However, be careful, as a break of resistance 1.2478 and updating yesterday's highs will be a verdict for pound sellers, as the short-term downward trend in the pair will be broken.

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Signals of indicators:

Moving averages

Trading is below 30 and 50 moving averages, which indicates the formation of a bearish momentum.

Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger bands

If the pound rises in the first half of the day, the average indicator border at 1.2460 will act as resistance. A break of the lower border of the indicator in the region of 1.2424 will increase the pressure on the pair.

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. May 6. China has done everything possible to prevent the world from learning about the COVID-2019

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - sideways.

Lower linear regression channel: direction - sideways.

Moving average (20; smoothed) - down.

CSI: -103.6868

The EUR/USD currency pair starts below the moving average line on Tuesday, May 5. Thus, the trend for the pair has changed to a downward one, and the downward movement continues according to our assumptions about consolidation in a wide side channel. The first two trading days of the week were quite active, although important statistics were not published on these days. Nevertheless, 180 points were passed, which is not so small for the euro. However, we still have no reason to assume that traders have begun to form a new downward trend.

Although traders do not sit on the fence, and the flat in the literal sense of the word is not observed for the EUR/USD pair, the fundamental background remains extremely weak. For example, in the first two trading days of the week, only the indices of business activity in the production and services sectors of the European Union, as well as in the US services sector, were published. It makes no sense to stop at these indices since they simultaneously fell. Moreover, now it does not matter whether the hypothetical index of business activity in the United States will be reduced to 30 points or 20. It doesn't matter. The service sector is experiencing huge problems due to the quarantine, the production sector is kept afloat, but it is also declining. Thus, before the end of the quarantine, it is premature to talk about any restoration of these indices, and, more importantly, about the restoration of the production and services sectors themselves. Therefore, everything, as we have said before, comes down to the quarantine and the epidemic. EU countries and the United States are beginning to gradually relax the quarantine measures under the friendly calls of doctors to do it slowly and as carefully as possible. Otherwise, all the hastiest countries risk a second wave of the epidemic. We can only observe what is happening and monitor the daily incoming messages from the US White House.

And all the messages from the White House now relate to one topic. The United States is serious about igniting a new conflict with China. And not without reason, since it does not matter whether the virus accidentally broke free or on purpose. It was developed, studied, and escaped from a special laboratory. Accordingly, Beijing should bear responsibility for the consequences. This opinion is held not only by Donald Trump and Washington officials. Emmanuel Macron and Michael Gove also believe so. Thus, from our point of view, China may soon fall out of favor with many developed countries of the world. However, this topic is quite "subtle". For example, the United States has declared "a huge amount of evidence of China's guilt", but none has been presented to the world public for discussion. They may be unpublished. For example, Washington found out what happened in Wuhan through outright espionage, but if it reveals its cards, it will immediately be accused of illegal activities on foreign territory. Therefore, many points may be clear and obvious to Washington, but they cannot bring them to the general court. Therefore, China can not be accused of anything yet, since there is no evidence. Beijing understands this and calls on the United States to release information with evidence if they have it. However, the main complaint against China is not even that the virus broke free, but that the Chinese authorities misinformed WHO and the whole world, and also delayed the publication of information about the fact that the virus broke free and about the degree of its contagion. US Secretary of State Mike Pompeo said that the Chinese authorities did everything possible to prevent the world from learning about the COVID-2019 threat in time. Thus, if Beijing had declared everything from the very beginning, it would have been possible to prepare for the epidemic more seriously. However, the Chinese authorities did the same as the Soviet authorities did in 1986 when the accident at the Chernobyl nuclear power plant occurred. For several days, until the huge radioactive cloud over Europe could no longer be hidden or ignored, the Soviet authorities denied that any accident had occurred on the territory of the country. Residents of Pripyat and nearby cities and towns began to be evacuated only on the third day. Thus, something similar was done by China, which knew from the very beginning that the virus was transmitted from person to person, but hid it. Perhaps the Chinese authorities wanted to localize the epidemic and not "take the trash out of the house". Perhaps when they realized that the virus had broken free, they felt that it wasn't just their economy that should suffer. Perhaps even the virus leak was not accidental. However, we can't say for sure about this. Thus, there will be a lot of claims and accusations against China, most of which will remain without evidence.

On the third trading day of the week in the European Union, the publication of business activity indices in services is planned. All indices will remain below the mark of 20. As we said above, it doesn't matter how much the values of these indicators will fall. Thus, these figures will be ignored by market participants. A little later, a report on retail sales in the European Union for March will be published. It is expected that volumes will decrease by 10.5% in annual terms, and by 8% in monthly terms. However, this will also not be a revelation for traders. Almost everyone is ready for such a decline now. In the afternoon, the ADP report on changes in the number of employees in the private sector will be released in the United States. This report is considered quite important, but in April it may show -20 million workers. Despite such huge losses, traders are ready for this, since these figures have long been no secret to anyone. Weekly reports on applications for unemployment benefits display them for several weeks in a row. So this is not some "new" 20 million. Therefore, the markets are unlikely to react to these data either.

Thus, we still have the same technical factors that will continue to influence the movement of the currency pair. We have already assumed that the euro/dollar pair is now consolidating in the 250-point range. So far, this scenario is being worked out at 100%. Having pushed off from the upper border of the channel, the Murray level of "2/8", the quotes are moving confidently to the lower border of the channel - just above the Murray level of "0/8". Thus, we expect a fall now in the area of 1.0750-1.0800. This is likely to be followed by a rebound and a round of upward movement.

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The volatility of the euro/dollar currency pair as of May 6 is 95 points. Thus, the indicator has started to grow again and at the moment falls under the "strong" characteristic. Today, we expect quotes to move between the levels of 1.0745 and 1.0935. A reversal of the Heiken Ashi indicator upward may signal a round of upward correction.

Nearest support levels:

S1 – 1.0742

S2 – 1.0620

S3 – 1.0498

Nearest resistance levels:

R1 – 1.0864

R2 – 1.0986

R3 – 1.1108

Trading recommendations:

The EUR/USD pair continues to move down. Thus, traders are now recommended to sell the euro currency with the goal of the Murray level of "0/8"-1.0742 before the Heiken Ashi indicator turns up. It is recommended to consider buying the euro/dollar pair, not before the price is re-anchored above the moving average line with the goals of 1.0935 and 1.0986.

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

Technical Analysis of BTC/USD for 06/05/2020:

Crypto Industry News:

Most Chinese miners expect a huge influx of new Bitcoin buyers over the next six months. According to a survey conducted on 4 May by a cryptographic services company, 57% of Chinese miners expect a large number of new Bitcoin buyers to join the market in the near future. Over 71% of respondents also believe that the market has regained confidence in Bitcoin. In addition, 45% of respondents believe that the price of Bitcoin will be between $ 10,000 and $ 12,000 in the next six months, almost 24% believe that it will remain around $ 10,000 with low volatility, while over 14% believe that cryptocurrency will be worth over $ 15,000 .

Most respondents also believe that Bitcoin hashrate will not change significantly after the upcoming halving and expects it to be between 110 and 130 EH / s per day.

This seems to coincide with the expectations of crypto community members. As one of the foreign industry portals recently reported, 37% of the cryptocurrency community expects the hashrate to be higher a month after halving, compared to the current level.

Respondents also expect the US economy to affect Bitcoin in the future. As many as 64% of them expect that federal support will have a "moderately positive" impact on Bitcoin. Only 12% of respondents believe that these measures will have a very positive impact, and another 12% believe that this will not affect cryptocurrency.

Technical Market Outlook:

The volatility of Bitcoin has decreased since the beginning of the new week. The BTC/USD pair has broken through the trend line resistance located around the level of $8,819 and is heading towards the next technical resistance at $9,123. Nevertheless, the key level of support is still seen at $8,357. Any violation of this level will deepen the correction towards the level of $7,934 which is a key short-term technical support for the price. Weak and negative momentum supports the short-term bearish outlook.

Weekly Pivot Points:

WR3 - $11,425

WR2 - $10,480

WR1 - $9,720

Weekly Pivot - $8,578

WS1 - $7,824

WS2 - $6,750

WS3 - $5,970

Trading Recommendations:

The recent rally in Bitcoin was made in anticipation of Bitcoin halving and it is a classic pump and dump scheme. The larger time frame trend remains down and as long as the level of $10,791 is not violated, all rallies will be treated as a counter-trend corrective moves. This is why the short positions are now more preferred until the level of $10,791 is clearly violated.

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Technical Analysis of ETH/USD for 06/05/2020:

Crypto Industry News:

The average daily transaction value on the Ethereum platform equaled the values in the Bitcoin network.

From 12.04, the total value of assets transferred in one day to the Ethereum network began to compete with the results in the Bitcoin network. We are talking about the value of the transaction at the level of about USD 1.5 billion. The value transmitted to the Ethereum network includes both Ether (ETH) as well as the stablecoins supported by this blockchain - in particular Tether (USDT).

Ethereum beats Bitcoin in transactions per second. This is not the first indicator in which Ethereum beat Bitcoin. Transactions of the Bitcoin network per second (TPS) reached the highest level of 4.7 during the bull market at the end of 2017. Currently the indicator is falling. From March 12, the network processes almost three transactions per second.

Technical Market Outlook:

The ETH/USD pair has plunged towards 38% Fibonacci retracement located at the level of $195.94. Moreover, the short-term trend line support has been violated as well and the price is testing the technical support at the level of $193.78. Nevertheless, the price bounced from lows seen at the level of $193.78 and is currently trying to test the trend line from below. The weak and negative momentum supports the short term outlook towards the next support located at $188.86 or even towards 50% retracement at $186.72.

Weekly Pivot Points:

WR3 - $296.61

WR2 - $243.36

WR1 - $224.05

Weekly Pivot - $205.69

WS1 - $188.49

WS2 - $168.64

WS3 - $150.80

Trading Recommendations:

The fear of the coronavirus consequences is very strong among the global investors and it rules on the financial markets. So far the global investors are not so keen to invest in cryptocurrency, because they are being perceived as risky assets. The larger time frame trend on Ethereum remains down and as long as the level of $288 is not violated, all rallies will be treated as a counter-trend corrective moves. This is why the short positions are now more preferred.

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Technical Analysis of EUR/USD for 06/05/2020:

Technical Market Outlook:

The EUR/USD bears have manage to push the prices through the short-term support located at the level of 1.0893 and through the trend line support as well. The momentum is now negative, so the odds for another dynamic wave up are decreasing. If the 61% Fibonacci retracement gets clearly violated, then the next technical support is seen at the level of 1.0779 and if broken, the sell-off might accelerate towards 1.0727.

Weekly Pivot Points:

WR3 - 1.1279

WR2 - 1.1141

WR1 - 1.1073

Weekly Pivot - 1.0940

WS1 - 1.0861

WS2 - 1.0728

WS3 - 1.0662

Trading Recommendations:

The fear of the coronavirus consequences is very strong among the global investors and this fear still rules on the financial markets. On the EUR/USD pair the main long term trend is down, but the reversal is possible when the coronavirus pandemic will be tamed. The key long-term technical support is seen at the level of 1.0336 and the key long-term technical resistance is seen at the level of 1.1540. Only if one of this levels is clearly violated, the main trend might reverse (1.1540) or accelerate (1.0336).

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EUR/USD: plan for the European session on May 6. Pressure on the euro may continue. Bears aim to break support 1.0811

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

Yesterday's attempt to push the pair at the beginning of the US session following reports on activity in the US non-manufacturing sector was unsuccessful, and the bears quickly returned the market under their control, which is clearly visible on the 5-minute chart. Unfortunately, I expected the bears to move a little higher, from the resistance of 1.0895, so I could not use the reversal from the 1.0880 level for selling. The euro will remain under pressure following the German constitutional court's decision, as what is happening in the eurozone does not inspire new investors to buy. At the moment, buyers need to return the resistance of 1.0852, similar to how it was yesterday. Consolidating above this range in the first half of the day will lead to a larger upward correction in the area of 1.0882, and the long-term goal of the bulls will be the high of 1.0923, where I recommend taking profits. A number of reports on activity in the service sector of the eurozone countries and the composite PMI index will be released today, which could negatively affect the euro. Therefore, if the pressure on the pair continues, it is best to return to long positions on the support test of 1.0811, provided that a false breakout forms there, or buy immediately for a rebound from the low of 1.0787 and 1.0755, counting on an upward correction at the end of the day of 25-30 points.

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To open short positions on EUR/USD you need:

Sellers are fully in control of the 1.0852 resistance, which can be seen on the 5-minute chart. While trading will be conducted below this range, we can expect the downward trend to continue, which will lead to the renewal of new lows in the area of 1.0811 and 1.0787, where I recommend taking profits. Poor data on activity in the eurozone service sector can become an additional factor for the euro's fall, which is expected in the morning. Another false breakout at 1.0852 will be a good signal to open short positions in the euro. In case the bulls return to the 1.0852 level in the first half of the day, it is best to return to selling only on a false break from yesterday's high of 1.0881. You can sell the pair immediately for a rebound after the 1.0923 resistance test, counting on a correction of 30-35 points within the day.

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Signals of indicators:

Moving averages

Trading is below 30 and 50 moving averages, which indicates a bearish sentiment.

Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger bands

Growth will be limited by the upper level of the indicator at 1.0865. A break of the lower border of the indicator at 1.0825 will increase pressure on the euro.

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

Hot forecast and trading signals for the EUR/USD pair on May 6

EUR/USD 1H

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The picture is now as follows in the hourly time frame. First, the euro/dollar pair overcame a fairly long-term upward trend line, which indicates a change in the downward trend. Secondly, the pair's quotes are pinned below the support level of 1.0854 and below the support area of 1.0880 – 1.0895 (highlighted with a red rectangle), from which they have repeatedly rebounded. Thus, two strong obstacles remain on the upward track: the Senkou span B line for the 4-hour timeframe and the upward trend line, which began its existence from the March 20 low.

As we have already said in recent fundamental reviews, market participants are ignoring the entire macroeconomic background. We do not claim that traders have not worked out any report for the last two or three months. However, we would like to state that there has not been any development in the usual sense of the word, that is, when an important report is released and the mood of traders changes in accordance with its meaning and trades are conducted in the direction of the report's nature, for a long time. Several indices of business activity in the US and the European Union were published in the first two trading days of the week, but even their fall to record-low values did not surprise traders at all. The coronavirus is still the number one topic for the whole world. At the same time, close calculations of those infected in a particular country have already stopped. Many countries are beginning to relax their quarantine measures. And the number one question for the coming weeks: will there be a new COVID-2019 outbreak in one of the countries that are easing the quarantine? For example, according to opinion polls in the United States, the majority of Americans do not approve of Donald Trump's initiatives to "open" the economy. Despite the previous rallies "for the abolition of quarantine". Americans value their health and are afraid of coronavirus, so they do not want to complete self-isolation in the midst of an epidemic. The number one pressing issue now is the China-US standoff, as Washington may start putting pressure on Beijing in the near future. The demand for the US dollar could increase as the geopolitical situation in the world turns more intense. However, we still believe that technical factors should remain in the first place now.

Based on the foregoing, we have two trading ideas for May 6:

1) In the coming hours, the downward movement may continue with the immediate goal of the Senkou Span B line - 1.0811. Thus, those traders who are already in sales can hold them for this purpose. Further, the US dollar still has the potential to grow. If traders overcome the Senkou Span B line, then the downward movement can continue with the goal of an upward trend line, which lies slightly above the support level of 1.0754. The potential to Take Profit in these cases is 30 and 70 points. A retreat to the resistance area of 1.0880 - 1.0895 is not excluded, with a rebound from which you can short the pair again.

2) the second option - bullish - involves overcoming the resistance area of 1.0880-1.0895. In this case, it will become an upward trend in the short term, and we advise you to buy the euro while aiming for the Kijun-sen line-1.0921 and the April 19 high of 1.0990. Potential Take Profit in this scenario can be 20 and 90 points.

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Technical Analysis of GBP/USD for 06/05/2020:

Technical Market Outlook:

The GBP/USD pair has made a local low at the level of 1.2406, just above the 61% Fibonacci retracement located at 1.2397. Any violation of this level will open the road towards the next target for bears seen at 1.2310. There is a short-term ascending trend line close to this level, so it might get tough for bears to violate it in one go. Please notice, the momentum indicator is neutral, but when it turn south, then the sell-off might accelerate towards 1.2246 level. It looks like bulls are not strong enough to push the price above the level of 1.2485 and the price is consolidating in a narrow zone before the plunge.

Weekly Pivot Points:

WR3 - 1.2909

WR2 - 1.2757

WR1 - 1.2605

Weekly Pivot - 1.2476

WS1 - 1.2324

WS2 - 1.2200

WS3 - 1.2054

Trading Recommendations:

The fear of the coronavirus consequences is very strong among the global investors and it rules on the financial markets. On the GBP/USD pair the main trend is down, but the reversal is possible when the corona virus pandemic will be tamed. The key long-term technical support has been recently violated (1.1983) and the new one is seen at the level of 1.1404. The key long-term technical resistance is seen at the level of 1.3518. Only if one of this levels is clearly violated, the main trend might reverse (1.3518) or accelerate (1.1404). The market might have done a Double Top pattern at the level of 1.2645, so the price might move lower in the longer-term.

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Forecast for EUR/USD on May 6, 2020

EUR/USD

The euro fell by 66 points on Tuesday, showing determination to achieve 1.0595 - support for the embedded line of the price channel of the higher (monthly) timeframe. The price has consolidated under the balance and MACD indicator lines, the Marlin oscillator has penetrated into the negative trend zone.

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The price also consolidated under the balance and MACD lines on the four-hour chart, Marlin is in the decreasing trend zone. We look forward to pulling down the price further to the designated goal. It is possible to open trading positions at current prices with a stop loss above 1.0890.

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The general political background is maintained and enhanced in favor of the dollar. Yesterday, the German Constitutional Court ruled that the Bundesbank would stop buying government bonds, however, until the ECB could prove the need for such purchases. Data on industrial orders in Germany for March will be released today, the forecast is -10.0% against -1.4% in February. The forecast for retail sales in the euro area is -10.5/-11.2%. The eurozone business activity index for the current month is expected to fall from 26.4 to 11.7 points.

The current output of data on jobs in the US private sector from ADP for April is expected to hit a record low (-20.5 million), but a general market rule could work here: buy the dollar when everything is bad everywhere. A positive point for the dollar is Donald Trump's promise to lower taxes again in the fight against the national crisis. In addition, the United States decided to blame the spread of coronavirus on China, which is essentially a direct declaration of a trade war. And as history shows over the past year, the trade war strengthens the dollar.

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Forecast for GBP/USD on May 6, 2020

GBP/USD

The pound was at the Fibonacci level of 138.3% on Monday and Tuesday, under the pressure of a divergence that was not strong on the Marlin oscillator. This is probably a consolidation before a more decisive downward movement. There are two key supports on the daily chart: the MACD line at 1.2345 and the Fibonacci level of 161.8% at 1.2235. Overcoming the latter opens the way to a medium-term decline in the pound with targets below 1.1700.

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The price has to overcome the support of the MACD line in the area of 1.2370 on the H4 chart, consolidating under which opens the target of 1.2235. The Marlin oscillator is in the bears' territory, just waiting for the price to move.

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Forecast for AUD/USD on May 6, 2020

AUD/USD

Yesterday, an attempt to push the Australian dollar ended with the currency gaining three points. Now the bears aim to push the aussie to their targets today. The first goal is the MACD line on the daily scope, at around 0.6265. Behind it is an embedded price channel line in the area of 0.6150.

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Yesterday's growth stopped at the balance indicator line on the four-hour chart, which speculatively implies the market's reluctance to leave when a downward trend is forming. The price was also consolidated under the MACD line this morning. The Marlin is in a downward trend zone.

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A signal for opening short positions is when the price drifts under the Monday low of 0.6374.

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Forecast for USD/JPY on May 6. 2020

USD/JPY

The yen overcame the support of the enclosed price channel line on the daily chart, it lost 15 points on Tuesday. Now the pair has already dropped 25 points today in the Asian session (with the Japanese market closed due to a national holiday). The price is located directly on the 9th time line of the Fibonacci period from the beginning of the cycle on February 20, this is technically a strong factor for accelerated price movement. The objectives of the decline remain unchanged: 105.10, 103.95, 102.35.

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The price is falling below the balance and MACD indicator lines on the four-hour chart, the Marlin oscillator is in the decreasing trend zone. Stock indices in Asia are falling today: Chinese China A50 -1.06%, Australian S&P/ASX 200 -0.87%, which also adversely affects the USD/JPY pair.

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AUDUSD broke below trendline. Further push down expected.

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Trading Recommendation

Entry: 0.64532

Reason for Entry: descending trendline resistance, 61.8% Fibonacci retracement

Take Profit : 0.63729

Reason for Take Profit: Graphical swing low

Stop Loss: 0.64974

Reason for Stop loss: 61.8% Fibonacci retracement

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XAU/USD approaching resistance, potential drop!

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Trading Recommendation

Entry: 1710.14

Reason for Entry: Horizontal swing high resistance, 78.6% fibonacci retracement and descending trend line

Take Profit : 1688.25

Reason for Take Profit: Horizontal pullback support, 61.8% fibonacci retracement

Stop Loss: 1719.91

Reason for Stop loss:t 61.8% fibonacci extension, horizontal swing high resistance

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EUR/USD. Unexpected decision of the German court: Focus on the ECB meeting

The German constitutional court today ruled against the euro. Pessimistic forecasts were justified, however, not in the worst execution. On the one hand, the German court said that the quantitative easing program partially violates the Basic Law of Germany. On the other hand, the judges allowed the European Central Bank to argue its decision within three months and prove that it did not exceed its authority. Otherwise, the court will prohibit the Bundesbank from participating in this program. At the same time, the German constitutional court did not agree with the arguments of the European court, which legalized QE two years ago. In other words, the judges questioned the legality of the program, which the European regulator resumed last fall.

Immediately after the court verdict was announced, the EUR/USD pair collapsed. This reaction is quite understandable – today, in any case, increased volatility was expected for the pair, the question was only in which direction the price would go. The first reaction of the market was sharply negative: the European currency fell in price throughout the market, and fell to the bottom of the eighth figure against the dollar. But you should not believe this price movement – at least for now. The subsequent "debriefing" allowed us to look at the situation from a different angle, after which the bulls not only stopped the price decline, but also sent it back towards the ninth figure.

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But let's start with a little background to the question. Three years ago, in 2017, German judges already considered a similar complaint about the Bundesbank's participation in the ECB's bond-buying program. The former deputy of the German Parliament, together with other eurosceptics, demanded a private ruling that would oblige the German central bank to immediately stop participating in this program. However, the German constitutional court, in fact, shifted the responsibility for making this decision to the European court. In June 2017, they referred the case to the European court of justice for a preliminary decision. At the same time, the Federal Constitutional Court expressed its opinion, stating that the European regulator is using its bond-buying program to "finance the budgets of European countries in an unauthorized way". However, the European Court on December 11, 2018 ruled that the purchase of government bonds and other securities by the ECB did not contradict EU law.

Now the German constitutional court has yet to evaluate the ECB's quantitative easing program, which lasted from 2015 to 2018, and then was resumed at the end of 2019. That is, we are not talking about "coronavirus money", although, according to some experts, German judges may return to the incentive program amid the spread of Covid-19 in the foreseeable future. But to date, the court has indicated in a separate line: "... the published decision does not concern any financial assistance measures taken by the European Union or the ECB in the context of the current coronavirus crisis." This is an important point, as many market participants expressed concerns that the court's decision could cause problems with the program to combat the consequences of the pandemic.

However, the German court stated that the arguments of the European Court, which did not find violations of EU law, look unconvincing. According to the German court, the program violates the articles of the treaty on the functioning of the European Union. The court's statement states that the ECB is not able to ensure that the "economic and fiscal policy effects did not outweigh its policy objectives", so the regulator's decisions exceed the ECB's monetary policy authority. This refers to the rules according to which the ECB purchases bonds in accordance with the economic weight of each participating country and no more than 33% of the debt obligations of any individual Issuer.

As a result of the judicial review, the judges banned the Bundesbank from participating in the ECB's program for buying government bonds, unless the Board of Governors of the European regulator "provides documentation demonstrating that such balancing took place," during the three-month transition period.

Thus, the European currency was rightly under pressure, given the rhetoric of German judges. But when making trading decisions for the EUR/USD pair, several factors must be taken into account. Firstly, the verdict of the German Federal Constitutional Court does not create legal obligations for the ECB. This court decision, of course, can strengthen the opposition of the German hawks (the Bundesbank had previously expressed its disagreement with QE), but it is unlikely to stop the program as a whole.

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Secondly, the European Commission has already made a comment on the decision of the German court. The spokesman for the department said that the laws of the EU take precedence over national laws, that is, the ruling of the European Court is binding on national courts.

Thirdly, the decision of the constitutional court covers only the quantitative easing program that existed before the start of the coronavirus epidemic.

Lastly, the ECB did not say a word. An unscheduled online meeting of members of the ECB will take place today (the meeting is scheduled for 17:00 London time), afterwards, the regulator will announce its position on the court verdict.

Due to these circumstances, it is extremely risky to make any trading decisions at the moment. It is necessary to wait for the results of today's ECB meeting, and based on the market reaction to open long or short positions. The support level is 1.0760 (the lower line of the Bollinger Bands indicator on the daily chart), and the resistance level is 1.0980 (the lower border of the Kumo cloud on the same timeframe, coinciding with the upper line of the Bollinger Bands). If the result of an emergency meeting of ECB members is not in favor of the euro, then the EUR/USD pair could already be consolidated in the seventh figure today, testing the above level of support. If Christine Lagarde can calm the market, the pair will return to the area of the ninth figure.

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