The EUR/GBP Price Movement For May 18, 2020.

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If we look at the weekly chart on EUR/GBP, we see this pair is now trying to reach 0.8985 before the price is back to the downside again. However, this scenario will be automatically canceled if this pair retraces downwards and closes below the 0.8813 level before the price reaches 0.8985.

(Disclaimer)

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

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EUR/GBP has finally broken through key resistance at 0.8866. The pair is likely to move higher to 0.9066 as its first obstacle. However, in the longer-term, we should see EUR/GBP to go above the 0.9499 peak.

Support is now seen at the former resistance at 0.8866. This should ideally protect the downside for a continuation higher to 0.9066 and ultimately to 0.9499.

R3: 0.9183

R2: 0.9066

R1: 0.8987

Pivot: 0.8934

S1: 0.8914

S2: 0.8866

S3: 0.8850

Trading recommendation:

We buy EUR from 0.8760 and we will move our stop higher to 0.8815

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Indicator analysis. Daily review on EUR / USD for May 18, 2020

The pair traded upward on Friday after breaking through the support line 1.0790 (presented in a blue bold line). It then tested the 21 average EMA 1.0854 (presented in a black thin line) and then traded downwards. Today, the price may continue to move up. Nothing is expected from the economic calendar news.

Trend analysis (Fig. 1).

Today, an upward trend is possible from the level of 1.0822 (closing of the Friday afternoon candle) with the target of 1.0864 - a 38.2% retracement level (presented in a blue dashed line). It is very likely that from this level, the price may continue to move upward with the target of 1.0894 - a 50.0% pullback level (presented in a blue dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - neutral;

- Trend analysis - up;

- Bollinger Lines - down;

- Weekly schedule - up.

General conclusion:

Today, the price may continue to move upward with the target of 1.0864 - a 38.2% pullback level (presented in a blue dashed line).

Another possible scenario is a downward trend from the level of 1.0822 (closing of the Friday afternoon candle) with the target at the support line 1.0794 (presented in a blue bold line).

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Fractal analysis of the main currency pairs for May 18

Forecast for May 18:

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: 1.0922, 1.0895, 1.0853, 1.0831, 1.0800, 1.0778, 1.0746, 1.0723 and 1.0694. Here, we monitor the formation of the initial conditions for the downward movement of May 13. At the moment, the price is in the zone of initial conditions. A short-term downward movement is expected in the range of 1.0800 - 1.0778. The breakdown of the last level should be accompanied by a pronounced downward movement. Here, the target is 1.0746. Price consolidation is in the range of 1.0746 - 1.0723. For the potential value for the bottom, we consider the level of 1.0694. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is expected in the range of 1.0831 - 1.0853. The breakdown of the last level will favor the development of an upward trend. In this case, the first target is 1.0895. For the potential level for the top, we consider 1.0922. We expect consolidation near this level.

The main trend is the formation of potential for the bottom of May 13

Trading recommendations:

Buy: 1.0831 Take profit: 1.0850

Buy: 1.0856 Take profit: 1.0895

Sell: 1.0800 Take profit: 1.0780

Sell: 1.0776 Take profit: 1.0746

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For the pound / dollar pair, the key levels on the H1 scale are: 1.2241, 1.2183, 1.2143, 1.2026, 1.1986 and 1.1908. Here, we monitor the development of the downward structure of May 8 and currently expect to reach the level of 1.2026. Short-term downward movement, as well as consolidation is in the range of 1.2026 - 1.1986. For the potential value for the bottom, we consider the level of 1.1908. The expressed movement to which, is expected after the breakdown of the level of 1.1984.

A short-term upward movement is possible in the range of 1.2143 - 1.2183. The breakdown of the last level will lead to an in-depth correction. Here, the potential target is 1.2241. This level is a key support for the downward structure.

The main trend is the downward cycle of May 8

Trading recommendations:

Buy: 1.2143 Take profit: 1.2181

Buy: 1.2185 Take profit: 1.2240

Sell: 1.2026 Take profit: 1.1986

Sell: 1.1984 Take profit: 1.1910

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9810, 0.9788, 0.9772, 0.9750, 0.9720, 0.9701 and 0.9664. Here, we are following the formation of initial conditions for the upward movement of May 13. The continuation of the upward movement is expected after the breakdown of the level of 0.9750. In this case, the target is 0.9772. Short-term upward movement, as well as consolidation is in the range of 0.9772 - 0.9788. For the potential value for the top, we consider the level of 0.9810. Upon reaching this level, we expect a downward pullback.

A short-term downward movement is possible in the range of 0.9720 - 0.9701. Hence, there is a high probability of an upward reversal. The breakdown of the level of 0.9701 will lead to the development of a downward trend. In this case, the potential target is 0.9664.

The main trend is the upward structure of May 13

Trading recommendations:

Buy : 0.9750 Take profit: 0.9786

Buy : 0.9790 Take profit: 0.9810

Sell: 0.9720 Take profit: 0.9702

Sell: 0.9698 Take profit: 0.9665

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For the dollar / yen pair, the key levels on the scale are : 108.09, 107.91, 107.67, 107.46, 107.15, 107.02, 106.73, 106.45, 106.08 and 105.84. Here, we are following the formation of the descending structure of May 11. At the moment, the price is in correction and has formed a small potential for the top. We expect a short-term downward movement in the range of 107.15 - 107.02. The breakdown of the last level will lead to a resumption of a downward trend. In this case, the first target is 106.73. The breakdown of which will allow us to expect movement to the level of 106.45. Price consolidation is near this level. The breakdown of the level of 106.45 should be accompanied by a pronounced downward movement. Here, the goal is 106.08. We consider the level of 105.84 to be a potential value for the bottom. Upon reaching which, we expect consolidation, as well as an upward pullback.

We expect the development of the rising structure from May 14 after the breakdown of 107.46. Here, the first goal is 107.67. Price consolidation is near this level. The breakdown of the level of 107.67 should be accompanied by a pronounced upward movement. Here, the goal is 107.91. We consider the level of 108.09 to be a potential value for the top. Upon reaching which, we expect a downward pullback.

The main trend: the descending structure of May 11, the stage of deep correction

Trading recommendations:

Buy: 107.47 Take profit: 107.65

Buy : 107.69 Take profit: 107.90

Sell: 107.00 Take profit: 106.75

Sell: 106.71 Take profit: 106.47

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.4292, 1.4234, 1.4189, 1.4124, 1.4071, 1.4040, 1.4006 and 1.3952. Here, we are following the development of the upward cycle of May 11. The continuation of the further upward movement is expected after the breakdown of the level of 1.4124. In this case, the target is 1.4189. The breakdown of which, in turn, will allow us to count on movement to 1.4234. Price consolidation is near this level. For the potential value for the top, we consider the level of 1.4292. Upon reaching which, we expect a downward pullback.

A short-term downward movement is possible in the range of 1.4040 - 1.4006. The breakdown of the last level will lead to an in-depth correction. In this case, the target is 1.3952. This level is a key support for the top. We expect the initial conditions for the upward cycle to be formed before it.

The main trend is the upward cycle of May 11, the correction stage

Trading recommendations:

Buy: 1.4125 Take profit: 1.4187

Buy : 1.4191 Take profit: 1.4230

Sell: 1.4038 Take profit: 1.4006

Sell: 1.4003 Take profit: 1.3955

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6561, 0.6521, 0.6485, 0.6456, 0.6420, 0.6386, 0.6362, 0.6326 and 0.6303. Here, we are following the development of the descending structure of May 11. The continuation of the downward movement is expected after the breakdown of the level of 0.6420. In this case, the target is 0.6386. Price consolidation is in the range of 0.6386 - 0.6362. The breakdown of the level of 0.6362 will lead to a pronounced movement. Here, the target is 0.6326. For the potential value for the bottom, we consider the level of 0.6303. Upon reaching which, we expect consolidation, as well as an upward pullback.

Short-term upward movement is possible in the range of 0.6456 - 0.6485. The breakdown of the last level will lead to an in-depth correction. Here, the target is 0.6521. This level is a key support for the downward structure and the price passing this will lead to the formation of initial conditions for the upward cycle. In this case, the potential goal is 0.6561.

The main trend is the descending structure of May 11

Trading recommendations:

Buy: 0.6456 Take profit: 0.6483

Buy: 0.6486 Take profit: 0.6520

Sell : 0.6420 Take profit : 0.6386

Sell: 0.6360 Take profit: 0.6326

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For the euro / yen pair, the key levels on the H1 scale are: 117.81, 117.49, 117.00, 116.79, 116.20, 115.85, 115.42, 115.18 and 114.43. Here, the price is close to the cancellation of the ascending structure from May 6, which requires passage of the noise range 115.42 - 115.18. In this case, the potential target is 114.43.

A short-term upward movement is possible in the range of 115.85 - 116.20. The breakdown of the last level will have the subsequent development of an upward trend. Here, the goal is 116.79. The price passing the noise range of 116.79 - 117.00 will lead to movement to the level of 117.49. For the potential value for the top, we consider the level of 117.81. Upon reaching which, we expect consolidation, as well as a downward pullback.

The main trend is the upward structure of May 6, the stage of deep correction

Trading recommendations:

Buy: 115.85 Take profit: 116.20

Buy: 117.00 Take profit: 117.47

Sell: 115.15 Take profit: 114.50

Sell: Take profit:

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For the pound / yen pair, the key levels on the H1 scale are : 131.44, 131.07, 130.44, 129.92, 129.10, 128.38, 127.93 and 127.10. Here, we are following the development of the descending structure of May 11. The continuation of the downward movement is expected after the breakdown of the level of 129.10. In this case, the target is 128.38. Short-term downward movement, as well as consolidation is in the range 128.38 - 127.93. For the potential value for the bottom, we consider the level of 127.10. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 129.92 - 130.44. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 131.07. The range of 131.07 - 131.44 is the key support for the bottom, before it we expect the initial conditions for the upward cycle to be formed.

The main trend is the descending structure of May 11

Trading recommendations:

Buy: 129.92 Take profit: 130.40

Buy: 130.50 Take profit: 131.07

Sell: 129.10 Take profit: 128.40

Sell: 127.90 Take profit: 127.15

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

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GBP/JPY has declined as we expected. It should now stay below minor resistance at 131.42 as the downside pressure is likely to extend towards 127.69 and ultimately below 123.99 to complete the long-term decline from 147.95.

Ideally, resistance in the 130.22 - 130.58 area will cap the upside for a continued downside pressure towards 127.69 and 123.99. Only an unexpected break above resistance at 131.42 will question the bearish outlook and indicate a possible turn-around for a bullish outlook.

R3: 131.42

R2: 130.58

R1: 130.22

Pivot: 129.85

S1: 129.24

S2: 128.80

S3: 128.35

Trading recommendation:

We sold GBP at 131.88 and we will lower our stop to 131.50

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Technical Analysis of ETH/USD for May 18, 2020:

Crypto Industry News:

Visa has applied for the creation of a digital currency on Blockchain at the United States Patent and Trademark Office.

According to the published application, inventors Simon Hurry and Alexander Pierre of the Visa International Service Association in San Francisco applied for a patent for the digital currency registered on Blockchain and controlled by the computer of the central unit. The application cites Ethereum as a possible network, and the cryptocurrency itself would be a stablecoin. The application lists two points, one of which would indicate that "a digital currency was created for the amount associated with the denomination for the public key associated with the digital wallet." The second entry is about "removing physical currency from circulation in the currency system."

While the US dollar is specifically mentioned as one of the fiat functional currencies to be used, the application said that the patent could apply to other central bank digital currencies such as pounds, yen and euros: "The physical currency of the central bank anywhere in the world can be digitized. "

Technical Market Outlook:

The ETH/USD pair has broken through the short-term trend line resistance around the level of $205 and made a new local high during the rally at the level of $216 (at the time of writing the article). The momentum behind the move up is strong, but the market conditions are extremely overbought on the daily time frame chart, so the rally might be short-lived. Nevertheless, the next target for bulls is seen at the level of $217.65 and $225.84.

Weekly Pivot Points:

WR3 - $259.01

WR2 - $231.70

WR1 - $222.59

Weekly Pivot - $197.56

WS1 - $188.48

WS2 - $163.94

WS3 - $154.56

Trading Recommendations:

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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EUR/USD and GBP/USD: Failure of trade negotiations between the UK and the EU harms the pound. Fed Chairman Jerome Powell

Markets continue to ignore weak fundamental data and forecasts published by central bankers. Gold, amid all that is happening, is nearing October 1, 2012's high, at the level of 1800.

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Traders ignored the Fed statements over the weekend, but it's clear that the demand for risky assets is unlikely to increase in the near future, especially considering the weak reports that were published on Friday regarding the state of the US economy. Meanwhile, the British pound is to continue its decrease against the US dollar, after another failed negotiations on trade relations between the UK and the EU.

Yesterday, Fed Chairman Jerome Powell made a number of forecasts saying that in the second quarter of 2020, the US economy will shrink by 20%, and total unemployment will reach above 25%. According to him, at present, the authorities need to coordinate their actions and continue to support both the business and the households that are most exposed to the coronavirus, so financial support should be provided over the next 3-6 months, until the effects of the economic downturn cease to have such a strong impact on the economy and population of the country. Powell did not rule out the possibility that the US economy may face a crisis comparable in scale to the Great Depression.

With regards to the COVID-19, the United States is still pushing to conduct an investigation on the virus, threatening sanctions against China if it refuses to cooperate. This weekend, US Secretary of State Mike Pompeo revealed that there are no movements in the investigation, as China continues to refuse providing the necessary information for an objective assessment. Pompeo also said that all proposals to help China determine where the virus came from were rejected.

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The data published on Friday regarding US retail sales disappointed traders, because of the record drop observed in the April index. According to the report, the data turned out to be much worse than economists' forecasts, as many households were forced to abandon shopping because of the proliferation of COVID-19, as well as the decrease on goods available for purchase. Thus, US retail sales in April dropped immediately by 16.4%, much lower than economists' forecast of no more than 11%. In March, sales were already down by 8.3%.

Industrial production in the US also showed a similar record drop in April of this year, due to the suspension of plant operations and interruptions in the supply chain. According to the US Federal Reserve, the index fell immediately by 11.2% in April, slightly lower than economists forecast of 11.1%. The manufacturing industry suffered the most, with a 13.7% decline recorded in production.

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The only good news on Friday was the report on consumer sentiment in the US, which slightly improved in early May, due to the expectations of government assistance. The report published by the University of Michigan revealed that the preliminary consumer sentiment index rose to 73.7 points in mid-May, up from economists forecast of 65.0 points. However, experts continue to note that many consumers do not expect a quick economic recovery, and are increasingly worried about problems related to employment and income.

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Meanwhile, production activity in the area of New York Fed declined in May this year. According to the report, the manufacturing index turned out to be -48.5 points in May, much lower than economists forecast of -60.0 points. A slight increase in production activity in the first half of the month had a positive effect on the indicator, but more than 63% of respondents reported deteriorating business conditions.

As for the technical picture of the EUR/USD pair, the situation has not changed much. Trading continues to be conducted in the side channel, and buyers of risky assets need to make maximum efforts to break through the upper border at 1.0850, which will lead to an increase of the euro to the area of the 1.0900 and 1.0980 highs. Meanwhile, in case of a breakdown of the lower boundary of the side channel in the area of 1.0775, demand on the euro will decrease, which will bring the pair to the lows of 1.0700 and 1.0630.

GBP/USD

The pound resumed its decline against the dollar, after the lower border of the correction channel was broken through, the main reason of which is the failed trade negotiations between the UK and the European Union last Friday. Given the current state of the UK economy, the additional problems associated with trade relations after Brexit only exacerbated the situation. Recall that the transition period after Brexit ends at the end of this year, and as stated in the EU, should be extended to continue consultations. However, at the end of last year, British Prime Minister Boris Johnson announced that he does not plan to make such a request to his European partners, and so far had not changed his opinion regarding it.

The most problematic issues related to the settlement of trade relations between the UK and the EU are the conditions for duty-free trade. The EU has put forward a number of requirements for compliance with common standards in the areas of environmental protection, regulation of labor relations and social support, but the UK does not want to comply with these requirements. The next EU summit will be held in June this year, and the trade negotiations will resume on June 1.

As for the technical picture of the GBP/USD pair, there is a clear bearish mood in the pound, so opening buy positions will not be profitable. Thus, it is best to wait for the major lows to be updated in the areas of 1.2000 and 1.1930, and look for attempts to form the bottom in these ranges. Sellers attempt to break down the support level of 1.2075, the success of which will lead to further sell-offs of the pound. Meanwhile, in case of an upward correction, the increase will be limited by the resistance levels 1.2180 and 1.2250.

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The USD Index Price Movement For May 18, 2020.

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The US Dollar Index on the weekly chart is trying to go to the 100.93 - 100.98 levels as its nearest liquidity pool this week. This scenario will canceled if before reaching the 100.93, the US Dollar Index tumbles and close bellow the 99.46.

(Disclaimer)

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Technical Analysis of BTC/USD for May 18, 2020:

Crypto Industry News:

Counterfeit products "Made in Italy" are sold in markets around the world. The Italian government began the fight against these counterfeits by investing 15 million euros in developing a solution to this problem based on Blockchain.

According to a new counterfeit report, the 'Made in Italy' label resulted in losses of EUR 12.4 billion in 2016 alone. Such losses directly affect the income as well as the future survival of many Italian artisans. The Italian fashion industry and the association of this country with handicrafts contribute to the prestigious reputation of the "Made in Italy" brand. If the name were registered as a brand, it would be the third most valuable property in the world (after Coca Cola and Visa).

The high status of this brand has led to an increasing problem with counterfeit goods. These counterfeits facilitate the theft of intellectual property and destroy the reputation of the label, brands and craftsmen represented by the label. They also cost billions of dollars to the entire industry. The Italian government has recognized this threat and identified Blockchain technology as a potential solution. Recently, the government has allocated EUR 15 million to support the rapid implementation of digital technologies, including the financing of a joint project of IBM Italy and the artisan community.

Aspects of the industry that are being considered for improvement include: authentication of goods and raw materials through the supply chain, secure book of intellectual property rights, demonstrable sustainability and ethical practices, and closer relationships between brands and their clients.

Technical Market Outlook:

The BTC/USD pair has been going up all the weekend and now is hovering around the level of $10,000, which is the key short-term technical resistance for the bulls. Any violation of this level will lead to the local up trend extension towards the level of $10,227 - $10,430. The nearest technical support is seen at the level of $9,382. Please notice, the market conditions on daily time frame chart are extremely overbought.

Weekly Pivot Points:

WR3 - $12,194

WR2 - $10,994

WR1 - $10,553

Weekly Pivot - $9,337

WS1 - $8,765

WS2 - $7,555

WS3 - 7,013

Trading Recommendations:

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 EUR/USD for May 18, 2020:

Technical Market Outlook:

The EUR/USD pair has been trading inside of a narrow range between the levels of 1.0780 - 1.0846, but the bears are pushing the price towards the level of 1.0767 again. The bulls hasn't made a new local high yet, so the next target for them is still seen at the level of 61% Fibonacci retracement at 1.0921. This level must be clearly violated in order to rally towards the swing high at 1.1017. The momentum remains neutral, but might turn negative any time now. No clear trend indication, but the larger time frame trend remains down.

Weekly Pivot Points:

WR3 - 1.0995

WR2 - 1.0945

WR1 - 1.0876

Weekly Pivot - 1.0824

WS1 - 1.0753

WS2 - 1.0693

WS3 - 1.0627

Trading Recommendations:

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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Technical Analysis of GBP/USD for May 18, 2020:

Technical Market Outlook:

The GBP/USD pair has made a new local low at the level of 1.2072. Despite the oversold market conditions the momentum remains negative well and the odds for another wave down are still high. The nearest technical resistance is seen at the level of 1.2165. If the level of 1.2072 is clearly violated, then the next target for bears is seen at the level of 1.2012, which is the key short-term technical support for bulls. No signs of down trend reversal yet.

Weekly Pivot Points:

WR3 - 1.2598

WR2 - 1.2514

WR1 - 1.2258

Weekly Pivot - 1.2179

WS1 - 1.1913

WS2 - 1.1832

WS3 - 1.1572

Trading Recommendations:

On the GBP/USD pair the main trend is down, but the reversal will be possible when the coronavirus pandemic is 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 these 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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Trade negotiations between UK and EU failed. Euro to continue falling

Signals for the EUR/USD pair:

If the pair breaks through at 1.0849, the euro is likely to increase to 1.0895 and 1.0923

A breakthrough at 1.0808 may lead to a sell-off of the euro in the area of 1.0772 and 1.0727.

Signals for the GBP/USD pair:

If the pair breaks through at 1.2119, the British pound may rise to 1.2170 and 1.2225

A breakthrough at 1.2077 may lead to a sell-off of the British pound in the area of 1.2030 and 1.1927

The following fundamental data is set for release during the day:

  • Bundesbank monthly report
  • UK Leading Indicator Index
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DXY testing 1st resistance , potential drop!

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Trading Recommendation

Entry: 100.87

Reason for Entry: 50% fibonacci retracement ,100% fibonacci extension

Take Profit :99.66

Reason for Take Profit: 100% fibonacci extension

Stop Loss: 101.07

Reason for Stop loss: Horizontal pullback resistance

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GBP/USD: plan for the European session on May 18 (analysis of yesterday's trades). Pressure on the pound returned after UK-EU

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

Friday's talks between the UK and the EU on the settlement of issues related to trade after Brexit, suffered another setback, negatively affecting the pound, which after breaking through major support levels, fell again. At the moment, the task of buyers is to maintain the low of 1.2077 and forming a false breakout on it will be a signal to open long positions. However, bulls must first break through and consolidate above the resistance of 1.2119, which will push EUR/USD to the highs of 1.2170, where the moving averages pass, and then to the resistance test of 1.2225, where I recommend taking profits. If there are no active actions on the part of buyers at the low of 1.2077, it is best not to try to catch the bottom, and postpone purchases until support is updated at 1.2030, or try long positions from the local low of 1.1927 in the expectation of a correction of 30-40 points within the day.

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

Sellers have completely taken the market under their control and are now preparing to storm the next low of 1.2077, the test of which will only increase the pressure on the pound after the recent news, which will cause the pair to decline to the area of lows 1.2030 and 1.1927, where I recommend taking profits. However, when selling at current lows, do not forget about stop orders, since an upward correction can be formed at any time, and you will find yourself with short positions at the very bottom of the market. Therefore, it is better to wait for a false breakout to form in the resistance area of 1.2119, or sell GBP/USD on the rebound from the larger high of 1.2170 in the expectation of a correction from this level of about 25-30 points. A larger area for opening short positions is the resistance of 1.2225.

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Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 moving averages, which indicates a bearish nature of the market.

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

In case of further decline, support will be provided by the lower border of the indicator in the region of 1.2050. Growth will be limited by the upper level at 1.2180.

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 May 18 (analysis of yesterday's trades). European currency buyers lack good news.

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

Friday's data on the collapse of retail sales in the US did not result in a major strengthening of the European currency, and did not return the demand for the US dollar, only boosting the faith of investors in the need to buy gold. The current task of the bulls is to keep the 1.08 level, which was formed at the end of last week and also, forming a false breakout will be a signal for opening long positions based on a return and breakthrough of resistance 1.0849. This scenario will result in a larger upward wave in the area of highs 1.0895 and 1.0923, where I recommend taking profits. If there are no active actions in the support area of 1.08, it is best to postpone long positions in the euro until the test of a low of 1.0772, or buy immediately on the rebound from the larger support of 1.0728, since due to the lack of good news, the pressure on the market can return at any time.

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

Sellers need to regain control of the 1.0808 level, consolidating below which will be a good signal to open short positions while expecting another decline in the area of the lower border of the 1.0772 side channel, which formed on May 7. A breakdown of this area will quickly pull down the euro to the lows of 1.0728 and 1.0636, where I recommend taking profits. If the bulls try to return to the market in the first half of the day, then an unsuccessful attempt to update last Friday's high in the area of 1.0849 will be a signal to open short positions. It is best to sell EUR/USD immediately for a rebound after testing the highs of 1.0895 1.0923, counting on a correction of 30-35 points within the day.

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Signals of indicators:

Moving averages

Trade is conducted in the region of 30 and 50 moving average, which indicates the lateral nature of the market.

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

Bollinger bands

Volatility has decreased. A break of the lower border of the indicator in the region of 1.0805 will increase pressure on the euro, which will result in another wave of decline in the pair. Bulls should not have problems with growth above the upper boundary of the indicator in the area of 1.0830.

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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Forecast for EUR/USD on May 18, 2020

EUR/USD

The euro slightly grew last Friday, blocking Thursday's fall of 14 points. The quote is nearly unchanged today in the Asian session, and the euro will probably stand idle all day waiting for tomorrow's EU summit (ECOFIN), which will consider a trillion-dollar package of economic assistance in the form of loans and grants. The final size of the fund and its proportional distribution will obviously affect investor sentiment. At the moment, expectations are optimistic, which can be seen even from a technical point of view; The euro is below the indicator lines, but is growing, the signal line of the Marlin oscillator is moving along the border dividing the growth zone from the decline zone in potential (leading) market trends. Growth potential is the upper boundary of the horizontal band that has been running since April, at 1.0995.

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The price went above the balance (red) and MACD (blue) indicator lines on the four-hour chart, the Marlin oscillator pinned in the positive trend zone. The immediate goal for growth is the peak of May 13 at the price of 1.0897. Trading in any direction in a local situation today carries a risk of uncertainty.

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Forecast for GBP/USD on May 18, 2020

GBP/USD

The pound went ahead of the market and lost around 130 points last Friday. The price is below both indicator lines, the Marlin Oscillator is in the decreasing trend zone. Now the goals are open for the pound: 1.1750 - 223.6% according to the Fibonacci level, 1.1530 - support for the embedded line of the price channel of the monthly scope.

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Friday's price reversal is clearly visible down from the Fibonacci level of 161.8% from the four-hour chart, this indicates the continued relevance of this instrument, built on the first branch of the movement on December 13, 2019 - February 28, 2020.

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A price gap is open today, you need to wait for it to close, and then you can finally look for points to sell. A correction is possible to a strong level of 1.2165 - this is the low of May 14 and April 7.

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Forecast for AUD/USD on May 18, 2020

AUD/USD

The Australian dollar lost 47 points on Friday and that was enough for the Marlin oscillator to move into the negative trend zone and this was a signal to the market's readiness to decline further.

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The aussie's first target is the embedded line of the price channel at around 0.6348, which, most likely, will be overcome without difficulty. Behind it is the second target 0.6255 - support for the MACD indicator line. The third target 0.6127 is the underlying price channel line.

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The price is trying to go above the MACD line on the four-hour chart, the Marlin oscillator is still in the territory of the bears' possessions. A deeper price exit above the MACD line will enable the price to fulfill the first growth target at 0.6495 - the resistance of the price channel line on the daily chart. Exit above the level opens the second target of 0.6562 - the May 11 high.

We are waiting for the corrective growth to be completed and prices to fall by today or tomorrow. Unless, of course, an alternative scenario with medium-term growth is fully disclosed, which will happen when the price is consolidated above the 0.6562 level.

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Forecast for USD/JPY on May 18, 2020

USD/JPY

The yen turned down from the MACD indicator line last Friday, and ended the day with a black candle at 19 points. The signal line of the Marlin oscillator slightly went into the bulls' territory. The initial target, and it is the signal level for a medium-term decline of 106.56, is still open.

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The price is kept below the MACD line on the four-hour chart, the Marlin oscillator is falling in the negative zone. We expect the yen to strengthen further against the dollar with previously defined goals: 105.10, 103.95, 102.30.

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AUDUSD further rise towards descending trendline resistance expected!

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Trading Recommendation

Entry: 0.64248

Reason for Entry: 50% Fibonacci retracement.

Take Profit : 0.64734

Reason for Take Profit: descending trendline resistance, 100% Fibonacci extension

Stop Loss: 0.64023

Reason for Stop loss: Graphical swing low

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EURUSD bounced off support, potential for further upside!

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Trading Recommendation

Entry: 1.07758

Reason for Entry: Horizontal swing low support, 78.6% fibonacci retracement and 61.8% fibonacci extension

Take Profit :1.08923

Reason for Take Profit: horizontal overlap resistance, 50% fibonacci retracement

Stop Loss: 1.07374

Reason for Stop loss: Horizontal swing low support

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GBP/USD. Preview of the week. British economy may contract more than the US. Pound has every chance of continuing to fall

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The British pound sterling traded quite differently from the euro last week, against the dollar. The GBP/USD pair resumed its downward movement and maintained it all week. There were hopes that, resting on the lower border of a wide side channel, there would be a rebound and an upward movement, but on Friday, the pair's quotes overcame this line, without even noticing its presence. At the same time, it is impossible to say that traders based their decisions on macroeconomic data. Since a lot of important data came from the United States last week, and all of them showed one thing – a serious contraction of the American economy. The next report on applications for unemployment benefits, industrial production and retail sales completely failed. However, market participants still continued to sell the pound and buy the dollar. Thus, we can assume that traders have once again started to pay attention to the fundamental background, which, despite all the hardships in the United States, still remains in favor of the US currency, because the situation in the UK is much worse. In short, the UK leads Europe in the number of deaths from coronavirus, in the number of diseases, a split is brewing within the United Kingdom, as Wales, Northern Ireland and Scotland do not want to leave the EU, do not want to submit to London and are skeptical of Boris Johnson. In addition, the British economy experienced serious problems in the last three years, when he was in the process of Brexit, and therefore, it has weakened until the beginning of the epidemic, London refuses to extend the transition period and trade deals with America and EU there is unlikely they will be concluded by the end of the year. This means that from January 1, 2021, trade with Europe will be conducted under the rules of the WTO, with tariffs and duties. These factors negatively affect the pound. If the euro is still afloat, although there are no less problems in the eurozone, then the pound will move down.

A new trading week can only worsen the situation of the British currency if market participants continue to pay attention only to the general fundamental background. However, it is possible that statistics will also cause a certain reaction, so let's consider it. In Britain, on Tuesday, the unemployment rate for March will be released with a forecast of just 4.4% (the previous value of 4.0%), as well as applications for unemployment benefits for March (the forecast is 100,000 at the previous value of 12.1 thousand). A report on wages will also be published on this day, but it has almost no significance in the current conditions. In the United States, Federal Reserve Chief Jerome Powell is scheduled to speak in Congress on this day. The UK consumer price index for April will be published on Wednesday, with a forecast of 0.9% y/y (the previous value of 1.5% y/y), although this indicator is also far from being the most important at the moment. The minutes of the Fed meeting is set to be released on May 20 in the United States, an event with a loud sign and with very little potential. It rarely causes at least some reaction from traders. On Thursday, the UK is scheduled for the next publication of business activity indices for services and manufacturing for May, which will most likely remain at their meager values. Similar figures will be released in the US, plus applications for unemployment benefits with a forecast of another +2.3 million primary and 24.5 million secondary. A report on retail sales in the UK is scheduled on the last trading day of next week, with a forecast of -22.7% in annual terms and -16.9% in monthly terms. Thus, almost all data from Britain will have a negative sign. There will be nothing to pay attention to in the United States, except the next report on applications for benefits and Powell's speech, which is still unknown what will inform Congress. Everyone is already used to his usual rhetoric about "economic shock, a strong fall in the US economy", and it will not surprise anyone. It turns out that the statistics next week could put pressure on the position of the British pound.

At the same time, an increasing number of world publishers, media, and just experts and analysts are paying attention to the topic of a possible new confrontation between China and the United States. According to many, Washington is trying to put China in the most uncomfortable position with the Lindsey Graham bill. In fact, the White House wants to get access for its scientists and experts to Chinese Wuhan to find out what really happened there and whether the Chinese authorities are to blame for it. Obviously, if American scientists get to Wuhan, they will find any evidence of Beijing's guilt. But if they do not get access to the laboratory where the coronavirus allegedly began spreading, then Washington will have an official opportunity to declare to the whole world that the Chinese authorities are clearly hiding something and the matter is dirty and, accordingly, will have formal grounds for imposing any sanctions against the PRC. And even now, there is little doubt that China will not allow Americans to enter Wuhan, and Washington will impose a full list of sanctions against Beijing, except for those that can cause China's counter-measures and further harm the US economy. Recall that the US GDP is expected to lose about 5% in 2020, and China's GDP could even grow by 1.2%. Trump does not need another blow to the US economy. At the same time, he needs everyone to recognize China as the culprit of the epidemic and, preferably, to be punished, preferably financially. Only such a development will leave Trump with a chance of winning the November 2020 presidential election.

How will all this affect the exchange rate of the US currency? It is easy to guess if a new trade and economic war will begin between the United States and China, then the consequences for the US economy can be very serious, respectively, and the demand for the dollar in world markets will fall. However, this may not happen together with the British pound, since the UK has enough problems of its own, and its currency is not in demand, in principle, in recent years. Therefore, the US dollar may feel uncomfortable against the euro, and could continue to rise in price versus the pound.

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In technical terms, the pair continues a downward movement, as evidenced by all indicators of both trading systems, Ichimoku and Linear Regression Channels. Therefore, the best that the pound can now count on is correctional growth. The potential for its fall is almost unlimited. The most likely target is the March 20 low at 1.1411.

Recommendations for the pair GBP/USD:

Since the pound/dollar pair has started a new downward trend, we recommend that we continue to sell it, using mainly the 4-hour timeframe. Volatility remains the same, about 120-130 points per day, there are no signs of panic. Goals for short positions are the support levels of 1.1985 and 1.1806.

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EUR/USD. Preview of the week. US-China confontronation is just beginning

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The past week ended indistinctly for the EUR/USD pair. Market participants ignored around 90% of the macroeconomic information that came to the market during the week. Not only did the pair remain in the consolidation channel, limited by the 1.0750–1.1000 levels, but also started trading in another sideways and narrower channel, limited by the 1.0780–1.0880 levels. Thus, the pair is simply flat. And we believe that, in principle, this development is quite logical.

First, as we all know, there is no eternal and constant trend in any market. Periods of trend movement are replaced by periods of correction and lateral movement. Since February 1, the markets have witnessed at least three trends in the pair, each of which was very strong. Thus, when traders sated their appetites, trading volumes began to decrease, and the opening of new positions became small. There is no advantage for bulls or bears right now. Markets have recovered from the shock of the coronavirus epidemic and the coronavirus crisis. Traders realized that these two events will affect everyone - Europe, the United States, and the whole world. Thus, it is not possible to conclude that all is well in any particular country, so you should invest in its economy and buy its national currency.

Secondly, in order for a particular currency to become more expensive in the medium or long term, global fundamentals are needed. In recent years, for example, such a reason was the difference in interest rates between the ECB and the Fed, thanks to it, the US dollar has slowly, but surely, become more expensive. Now the difference is not as big as it was a few months ago, and both the central bank, in cooperation with governments, are pumping their economies with dollars and euros, giving out cheap loans and buying out securities. Thus, now there are simply no fundamental reasons for buying the dollar or the euro.

Third, the prospect. No one knows how the crisis will end and how much more time the pandemic will torment mankind. Representatives of the medical field in different countries all say as one that it will take at least a year to create a vaccine. Yes, some countries have already begun to produce vaccines, but they have not passed all clinical trials and cannot be considered effective and safe for humans. Thus, traders are simply afraid to make long-term investments. In Europe, GDP is expected to fall by 7.5% in 2020, and in the United States by only 5%. Need to invest in the dollar? But what about the nearly 30 million unemployed Americans? Thus, if you make a choice now, then do so in favor of the Chinese yuan. The Chinese government managed to quickly defeat the pandemic, and their economy has already begun to recover, and by the end of 2020 it may even grow by 1.2%. Yes, this growth is minimal, but compared to US and EU GDP, it is "heaven and earth."

The upcoming week will answer the question whether market participants are ready to form a new trend or continue to trade the pair in a narrow price range. Of the important events (unplanned), we again highlight all the speeches of Donald Trump, who has long been the number one newsmaker in the world, as well as any news related to the China-US confrontation. We believe that Washington will not forgive China for the coronavirus, especially if the US economy contracts by at least 5%, while the Chinese economy will also manage to grow by 1-2% over the same period. In this way, the White House will seek to deal a blow to the Chinese economy, but in a way that does not further destroy its own. It is difficult for us, ordinary citizens, to guess now how everything can end. A new trade and economic war between the two will hit the entire world economy, which has not yet recovered from the first trade war with the same participants and is now under severe pressure due to the COVID-2019 pandemic. But there is simply no other option for Washington and Trump. Many analysts and experts have already stated that thanks to the new crisis, China can significantly strengthen its position in the international arena and become the country with the largest economy in the world. It is obvious that the United States can not allow this and will continue to put pressure on Beijing, especially since it is from China that the infection has come, which has struck almost all countries of the world. And in the question of retaliatory measures and actions against China, the support of Washington by European countries will be of great importance. First of all, we are talking about the UK, whose Prime Minister Boris Johnson is a friend of Trump. However, other European countries that also want compensation from China may join them. If this happens, the trade and economic confrontation may become global, and then China's prospects will no longer be so bright.

The Trump-China confrontation deserves to be written not only as articles, but also in books. It was China, against which Trump has so cheerfully fought in recent years, and wanted to force them to play by their own rules that benefit America, that dealt him such a blow, from which the entire country will recover for a very long time. And Trump's hopes for re-election in November are fading. Back in the days of the China-US trade war, we have repeatedly said that the Chinese will benefit if Trump is not the new president. Beijing has even been accused of deliberately delaying trade talks in order to wait for the election and the victory of another candidate. However, Trump saw through this plan and began to put new pressure on China. As a result, the "first phase" was signed and just a month and a half later the epidemic began. Therefore, if we assume that the virus really did not accidentally break free, it turns out that China responded grandly to Washington's trade war. The whole world was affected, of course, but nevertheless. All of Trump's advantages, which he intended to use during the election campaign, are offset. Thus, in the final months of his rule, the US leader will do everything to whitewash himself and denigrate China. And this story will develop almost unambiguously.

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Trading recommendations for the EUR/USD pair:

The technical picture of the EUR/USD pair shows that the upward movement can continue with the target level of 1.0990, which is the upper limit of the side channel of consolidation, as last week traders were not able to overcome its lower border. Nevertheless, overcoming the critical line is required for such an option. The pair can turn down around the 1.0880 level. It can rebound from the Senkou Span B line. Thus, although the pair is located inside the side channel, there are plenty of obstacles for moving up. The Ichimoku indicator in the conditions of a flat forms false signals. Traders will be able to count on forming a new downward trend after overcoming the lower line of the channel - 1.0740–1.0750.

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