Simplified wave analysis and forecast for GBP/USD and USD/JPY on May 22

GBP/USD

Analysis:

The direction of the short-term trend of the major British currency in the last two months is set by a downward wave. Its last section counts down from April 30. An interim correction is nearing completion. The structure lacks the final part.

Forecast:

Today, a "sideways" is possible between the nearest oncoming zones. In the European session, the upward mood of the movement is expected. By the end of the day, you can expect the completion of the entire rise, the formation of a reversal, and the price move down.

Potential reversal zones

Resistance:

- 1.2280/1.2310

Support:

- 1.2200/1.2170

Recommendations:

Under flat conditions, only short-term intraday transactions are relevant in the pound market. Before the appearance of reversal signals, the priority is the purchase of the instrument. Then you should expand your trading positions.

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USD/JPY

Analysis:

There has been an upward trend in the Japanese yen chart since the beginning of March. Its last section counts down from May 6. The price has reached a strong resistance level, along which a corrective zigzag is formed. It has entered the final phase.

Forecast:

In the first half of the day today, quotes are expected to decline to the limits of the settlement support. At the end of the day, the probability of forming a reversal and the beginning of the growth of the pair's rate increases.

Potential reversal zones

Resistance:

- 107.70/108.00

Support:

- 107.10/106.80

Recommendations:

When trading against the trend, trading transactions are possible only with intra-session "scalping", with a reduced lot. After the price reaches the support zone, it is recommended to track the instrument purchase signals.

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

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

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

Indicator analysis. Daily review on GBP / USD for May 22, 202

The pair traded upward on Thursday after testing 1.2186 - a 50.0% pullback level (presented in a red dashed line) then closed the daylight candle 37 points higher. Today, the price may either try to break down the pullback level of 50% or will move upwards from the level of 1.2186. Nothing is expected for the economic calendar news.

Trend analysis (Fig. 1).

Today, a downward trend is possible from the level of 1.2230 (closing of yesterday's candle) with the target of 1.2186 - a 50.0% pullback level (presented in a red dashed line). If this level is reached, an upward pullback is possible with the target at the upper fractal 1.2296 (presented in a red dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - up;

- Trend analysis - down;

- Bollinger Lines - down;

- Weekly schedule - up.

General conclusion:

Today, the price may move downwards with the target of 1.2186 - a 50.0% pullback level (presented in a red dashed line). If this level is reached, an upward pullback is possible with the target at the upper fractal 1.2296 (presented in a red dashed line).

Another possible scenario is an upward trend from 1.2160 - a 61.8% retracement level (presented in a red dashed line).

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Indicator analysis. Daily review on EUR / USD for May 22, 2020

Trend analysis (Fig. 1).

Today, the downward trend may continue from the level of 1.0952 (closing of yesterday's candle) with the target of 1.0917 - a 38.2% retracement level (presented in a red dashed line). From this level, the price may begin to move upward with the target at the upper fractal 1.1009 (presented in a red dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - up;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

Today, the price may continue to move downwards with the target of 1.0917 - a 38.2% pullback level (presented in a red dashed line). From this level, upward movement is possible with the target at the upper fractal 1.1009 (presented in a red dashed line).

Another possible scenario is an upward trend from 1.0889 - a 50.0% pullback level (presented in a red dashed line) with the target at the upper fractal 1.1009 (presented in a red dashed line).

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

US-China confrontation overshadows the markets, but it is unlikely to be disastrous (a local decline in EUR/USD pair and

The Fed shows a clear signal that the US economy is expected to recover in the second half of this year. Recent statements by regulator's members clearly show this very important position for the markets.

The representatives of the Federal Reserve made it clear that they did not actually expect any second wave of the coronavirus pandemic, which WHO is constantly talking about. These very positive expectations indicate the content of their speeches. So, Fed Vice-Chairman, R. Clarida said that the unemployment rate in the second half of this year will decline. According to him, it will take "some time to better understand the trajectory of the economy" and that by autumn, "there will be a better state of the economy." He was actually echoed by the President of the Atlanta Federal Reserve Bank R. Bostic, who said that he was seeing a silent economic recovery. However, he clearly stated that he was not a supporter of negative interest rates.

But there are pessimists among the members of the Federal Reserve. So the president of the Federal Reserve Bank of New York D. Williams made it clear that before the unemployment rate drops, its local growth is possible. Whether it will happen or not, time will tell, but overall, the position of the American regulator indicates that he expects a more noticeable recovery in the country's economy in the second half of this year.

The financial markets as a whole did not pay much attention to the statements of the Central Bank of America representatives, concentrating all their attention on the situation of the confrontation between Washington and Beijing. Trump is clearly striving, if not to literally rob China, by claiming to conceal it at the early stages of the outbreak in the country, then use this topic as a mechanism for channeling criticism of his opponents in the election race, claiming that China is to blame, and he, supposedly nothing to do with it.

Assessing the prospects for the markets next week, we believe that the shift in investors' views from the topic of COVID-19 to the US-China confrontation will continue. However, it is unlikely to be a decisive factor. Most likely, the recovery of stock markets will continue, as well as crude oil prices. Regarding the dynamics of the currency market, it can be noted that the general side movement is likely to continue in currency pairs where the US dollar is present.

Forecast of the day:

The EUR/USD pair remains in the side range of 1.0770-1.1000. We expect that in the wake of the growing confrontation between the United States and China, the pair will decline to the lower boundary of this range of 1.0770.

The USD/CAD pair is trading upward amid a worsening relationship between Washington and Beijing. The pair still remains in the range of 1.3855-1.4125. We expect a local price increase to the level of 1.4125.

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Negativity to positivity: do pounds threaten negative interest rates?

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The British currency completes the current week on a controversial note. Previously, the pound had to survive both a temporary increase and a long decline, but now difficulties have arisen due to the issue of negative rates. Experts fear that such measures could harm the pound, bringing down its dynamics.

The idea of negative rates, the introduction of which should help the economy of the United Kingdom, was previously voiced by the British authorities. However, its implementation seemed unlikely, almost impossible. At the beginning of March 2020, Andrew Bailey, the head of the Bank of England, spoke out against "lower zero" rates, believing that they would adversely affect the country's banking sector. However, the opinion of the head of the regulator has changed dramatically after two months.

According to A. Bailey, the Bank of England fully admits the introduction of negative rates and has already begun to consider options for this step. Such a decision almost immediately knocked the pound off track, shaking its position. The latest problem that sent the dynamics of the GBP downward was the depressing macro statistics released in the middle of the week.

According to the information provided, almost all indicators of the UK inflation rate came out in the "red" zone. Last month, the general consumer price index declined to -0.2%. On an annualized basis, this indicator also "went downhill," dropping to 0.8%. According to analysts, this is one of the weakest inflation rates over the past few years. The falling retail price index was not pleasing at all, and the indicator of producer prices declined by almost 10%, breaking the record once again. According to experts, the inflation rate in April 2020 was the slowest since August 2009.

At the same time, current evidence of a prolonged economic downturn in the British economy due to the COVID-19 pandemic could prompt authorities to introduce negative interest rates. This is facilitated by the weakness of British inflation, which may push the Bank of England to transfer the key rate to the negative zone. Experts fear that in this situation the negativity will outweigh the positivity, and the UK economy will not benefit from this step.

Nevertheless, relatively positive PMI IHS Markit data added a little positivity to the pound. According to current data, the UK economy showed slight signs of recovery in May after a sharp decline last April. However, in general, the picture is depressing, indicating a serious economic downturn, experts say. Yet, not too negative macro statistics, which slightly cheered up the market, contributed to the strengthening of the pound and the growth of GBP/USD. However, these measures were not enough to break the negative trend of the pair.

According to experts, the British currency is now in the lower band of its recent trading range, sharply responding to the devastating consequences of COVID-19 for the economy. On Friday morning, May 22, the GBP/USD pair began with low levels of 1.2211 - 1.2212. A day earlier, the pound declined by 0.2% to 1.2214, and now has broken its anti-record. According to experts, the pound's decline in May was about 3%.

According to analysts, despite the negative macro statistics, the British authorities should not rush into the introduction of negative rates so as not to weaken the already fragile positions of the pound. Experts also doubt the usefulness of such measures for the country's economy in the long-term, although they recognize that in a critical situation this scenario is fully justified.

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Low rates will lead to a quick recovery of the US economy

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Fed officials have repeatedly declared a V-shaped economic recovery, but warned that it will take a long time to see so.

"My forecast is a couple of difficult months," said New York Fed President John Williams on Thursday. According to Williams, the US economy will see some recovery in the second half of 2020.

In a separate webcast, Fed Vice Chairman Richard Clarida expressed mixed thoughts on the recovery. According to him, the US economy recovering in the second quarter of 2020 is possible, but activity will return to pre-crisis level only after all enterprises are opened.

Both Williams and Clarida committed themselves to maintaining interest rates at a level close to zero.

Meanwhile, Powell reiterated his concern that low-income households are among the most vulnerable. Fed studies show that 39% of households earning less than $ 40,000 a year lost their jobs in March.

Fed officials hope that low interest rates and asset purchases will lead to a quick recovery in the US economy. But supposedly in the absence of a vaccine, the Fed emphasized that the pace of recovery is extremely uncertain.

The next Fed statement will take place on June 9 and 10, to which the Fed is expected to offer an updated set of economic forecasts.

Powell also quoted John Kenneth Galbraith on Thursday, jokingly saying that "this economic forecasting makes astrology worthy of respect."

For several months after the crisis in the US, Powell remains unafraid, even when reporting an economic downturn that could continue until the end of 2021.

Despite the fact that the main economic indicators have reached the darkest levels, Jerome Powell still hopes that the US economy will not slide into depression, and in the second half of the year, will gradually recover.

Powell already implemented programs such as lending, capital injections and rate cuts to increase liquidity and keep companies afloat. He said that the Fed "has not run out of ammunition to fight the economic recovery."

Powell was also praised for his clear, uncomplicated speeches and appearances in the media, as well as for telling the people everything as it is.

Some of his quotes include: "In the long run, and even in the medium term, we will not want to bet against the US economy, as it would recover, which means that people will be able return to work." Also, "the United States and the dollar are the world's reserve currency. We possess the opportunity to take loans at low rates, and we have the opportunity to pay this debt."

Such news rose the dollar against gold, which fell sharply on Thursday:

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Fractal analysis of the main currency pairs on May 22

Forecast for May 22:

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: 1.1082, 1.1041, 1.1005, 1.0986, 1.0935, 1.0912 and 1.0885. Here, we are following the development of the ascending structure of May 14. The continuation of the upward movement is expected after the price passes the noise range of 1.0986 - 1.1005. In this case, the target is 1.1041. Price consolidation is near this level. For the potential value for the top, we consider the level of 1.1082. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is expected in the range of 1.0935 - 1.0912. The breakdown of the last level will lead to an in-depth correction. Here, the target is 1.0885. This level is a key support for the top.

The main trend is the upward structure of May 14

Trading recommendations:

Buy: 1.1005 Take profit: 1.1040

Buy: 1.1043 Take profit: 1.1080

Sell: 1.0935 Take profit: 1.0914

Sell: 1.0910 Take profit: 1.0890

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For the pound / dollar pair, the key levels on the H1 scale are: 1.2414, 1.2361, 1.2325, 1.2272, 1.2226, 1.2192 and 1.2143. Here, we are following the formation of the initial conditions for the upward cycle of May 15. At the moment, the price is in the correction zone. The continuation of the upward movement is expected after the breakdown of the level of 1.2272. In this case, the target is 1.2325. Short-term upward movement, as well as consolidation are in the range of 1.2325 - 1.2361. For the potential value for the upward movement, we consider the level of 1.2414. Upon reaching this level, we expect a downward pullback.

Consolidated movement is possible in the range of 1.2226 - 1.2192. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.2143. This level is a key support for the top and its breakdown will lead to the formation of initial conditions for the downward cycle. In this case, the target is 1.2069.

The main trend is the upward structure of May 15

Trading recommendations:

Buy: 1.2274 Take profit: 1.2325

Buy: 1.2327 Take profit: 1.2360

Sell: 1.2190 Take profit: 1.2145

Sell: 1.2138 Take profit: 1.2070

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9806, 0.9782, 0.9762, 0.9734, 0.9724, 0.9702, 0.9689 and 0.9672. Here, the price registered a pronounced upward potential from May 20. The continuation of the upward movement is expected after the price passes the noise range 0.9724 - 0.9734. In this case, the target is 0.9762. Short-term upward movement, as well as consolidation is in the range of 0.9762 - 0.9782. For the potential value for the top, we consider the level of 0.9806. Upon reaching this level, we expect a downward pullback.

A short-term downward movement is possible in the range of 0.9702 - 0.9689. The breakdown of the last level will lead to an in-depth correction. Here, the potential target is 0.9672. This level is a key support for the top.

The main trend is the upward structure of May 20

Trading recommendations:

Buy : 0.9734 Take profit: 0.9760

Buy : 0.9764 Take profit: 0.9780

Sell: 0.9702 Take profit: 0.9690

Sell: 0.9687 Take profit: 0.9674

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For the dollar / yen pair, the key levels on the scale are : 108.43, 108.31, 108.09, 107.91, 107.46, 107.24 and 106.77. Here, we are following the development of the upward structure from May 14. At the moment, the price is in the correction zone and has formed a pronounced potential for the downward movement from May 19. Short-term upward movement is expected in the range of 107.91 - 108.09. The breakdown of the last level should be accompanied by a pronounced upward movement. In this case, the target is 108.31. For the potential value for the top, we consider the level of 108.45. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 107.46 - 107.24. The breakdown of the last level will lead to the development of a downward structure from May 19. In this case, the potential target is 106.77.

The main trend: the upward structure of May 14, the correction stage

Trading recommendations:

Buy: 107.91 Take profit: 108.07

Buy : 108.11 Take profit: 108.30

Sell: 107.44 Take profit: 107.25

Sell: 107.20 Take profit: 106.80

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.4170, 1.4134, 1.4073, 1.4029, 1.3979, 1.3942, 1.3900 and 1.3863. Here, the price forms the potential for the upward movement of May 19. The continuation of the upward movement is expected after the breakdown of the level of 1.4029. In this case, the target is 1.4073. Price consolidation is near this level. The breakdown of the level of 1.4073 will lead to the development of a pronounced upward movement. In this case, the target is 1.4134. For the potential value for the top, we consider the level of 1.4170. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 1.3979 - 1.3942. The breakdown of the last level will lead to an in-depth correction. In this case, the target is 1.3900. This level is a key support for the upward structure and its breakdown will lead to the cancellation of this trend. Here, the first goal is 1.3863.

The main trend is the formation of the upward potential of May 19

Trading recommendations:

Buy: 1.4030 Take profit: 1.4070

Buy : 1.4075 Take profit: 1.4134

Sell: 1.3979 Take profit: 1.3944

Sell: 1.3940 Take profit: 1.3900

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6705, 0.6666, 0.6608, 0.6561, 0.6494, 0.6472, 0.6434 and 0.6401. Here, we are following the formation of the initial conditions for the upward cycle of May 15. The continuation of the upward movement is expected after the breakdown of the level of 0.6561. In this case, the target is 0.6608. Price consolidation is near this level. The breakdown of the level of 0.6608 will lead to the development of pronounced movement. Here, the goal is 0.6666. For the potential value for the top, we consider the level of 0.6705. Upon reaching which, we expect a downward pullback.

A short-term downward movement is possible in the range of 0.6514 - 0.6488. The breakdown of the latter level will lead to an in-depth correction. Here, the target is 0.6456. This level is a key support for the upward structure.

The main trend is the formation of initial conditions for the top of May 15

Trading recommendations:

Buy: 0.6561 Take profit: 0.6606

Buy: 0.6610 Take profit: 0.6666

Sell : 0.6514 Take profit : 0.6490

Sell: 0.6488 Take profit: 0.6456

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For the euro / yen pair, the key levels on the H1 scale are: 120.27, 119.86, 119.16, 118.68, 118.20, 117.51, 117.10 and 116.52. Here, we are following the development of the ascending structure of May 14. The continuation of the upward movement is expected after the breakdown of the level of 118.20. In this case, the goal is 118.68. The breakdown of which, in turn, will allow you to count on the movement to 119.16. Price consolidation is near this level. A pronounced upward movement is expected after the breakdown of 119.16. Here, the goal is 119.86. For the potential value for the top, we consider the level of 120.27. After which, we expect consolidation in the range of 119.86 - 120.27.

A short-term downward movement is possible in the range of 117.51 - 117.10. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 116.52. This level is a key support for the top.

The main trend is the formation of medium-term initial conditions for the top of May 14

Trading recommendations:

Buy: 118.20 Take profit: 118.66

Buy: 118.70 Take profit: 119.14

Sell: 117.50 Take profit: 117.15

Sell: 117.05 Take profit: 116.62

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For the pound / yen pair, the key levels on the H1 scale are : 134.28, 133.86, 133.16, 132.62, 132.13, 131.49, 130.98 and 130.40. Here, we are following the development of the ascending structure of May 15. At the moment, the price is in the correction zone. The continuation of the upward movement is expected after the breakdown of the level of 132.13. In this case, the first goal is 132.62. The breakdown of which, in turn, will allow us to count on moving to 133.16. Price consolidation is near this level. The breakdown of the level of 133.16 should be accompanied by a pronounced upward movement. Here, the goal is 133.86. For the potential value for the top, we consider the level of 134.28. Upon reaching which, we expect a downward pullback.

A consolidated movement is possible in the range of 131.49 - 130.98. The breakdown of the last value will lead to an in-depth correction. Here, the target is 130.40. This level is a key support for the top and its breakdown will have to be accompanied by a pronounced downward movement to the potential target - 129.24.

The main trend is the upward structure of May 15, the correction stage

Trading recommendations:

Buy: 132.13 Take profit: 132.60

Buy: 132.64 Take profit: 131.12

Sell: 130.96 Take profit: 130.44

Sell: 130.30 Take profit: 129.70

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Hot forecast and trading recommendations for GBP/USD on May 22, 2020

To be honest, the market behaved strictly in accordance with published macroeconomic data yesterday. But to see this, excuse me for sarcasm, you need a microscope. The scale of the movements is so small that it even surprises. Usually, all the data that was published yesterday led to one hundred point movements. In relation to yesterday, we have to talk about the highest movement of points by twenty or thirty. At the same time, to put it mildly, the market completely ignored the data on applications for benefits. So it is not necessary to say that the market is gradually normalizing.

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It all started with a modest strengthening of the pound, which was due to preliminary data on business activity indices. In particular, the index of business activity in the services sector grew from 13.4 to 27.8, and the production index, from 32.6 to 40.6. As a result, the composite business activity index grew from 13.8 to 28.9. It is understandable that the growth of the indices is because of increasing optimism in the business, due to the beginning of the gradual removal of restrictive measures introduced due to the coronavirus epidemic.

Composite Business Activity Index (UK):

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Business activity indices in the United States began to grow exactly for the same reasons. Thus, the index of business activity in the manufacturing sector increased from 36.1 to 39.8, and in the service sector, from 26.7 to 36.9. All this led to the fact that the composite index of business activity grew from 27.0 to 36.4. Business is gradually reviving. The market is tired of an endless stream of bad news. So everyone is optimistic about the lifting of restrictive measures that could lead to increased consumer activity and trigger economic growth. And of course, that the US data led to a change in trend, and the dollar began to strengthen.

Composite Business Activity Index (United States):

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However, the market ignored labor market data, tired of bad news, which hinted that business hopes were not destined to come true. Although the number of initial applications for unemployment benefits continues to decline, and it only reached 2.438 million this time, this is still more than ten times the normal value. Moreover, the number of continuing claims continues to grow, and has already reached 25,073 thousand. That is, the record set last week was broken. So lifting the restrictions imposed due to the coronavirus epidemic will not necessarily lead to an increase in consumer activity. After all, if people were left without work, and could not find a new one, then it is clear that they will greatly reduce their costs. But for now, the market does not want to see this. Investors are hungry for at least some hint of a bright future.

Repeated Unemployment Claims (United States):

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The trend set for the pound to weaken will continue during the US session. And this time, the pound should blame British statistics, which showed an acceleration in the pace of decline in retail sales from -5.8% to -22.6%. This is the deepest decline in the past at least a quarter century. Nothing of the kind was observed even in 2008-2009. This perfectly reflects the state of consumer activity, which is practically nonexistent. Also, this clearly hints that the mood of the business is clearly overly optimistic. So the further weakening of the pound should not surprise anyone.

Retail Sales (UK):

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In terms of technical analysis, we see extremely low activity over the past two days, where the quote slowed down its movement near the area of interaction of the trading forces 1.2240/1.2280. The recovery process, the relatively earlier inertial move has not yet arrived, but it's signs are already being felt on the market.

Considering the past two days in detail, one can see a gradual shift of the flat formations, which indicates a downward slope, which may contribute to the recovery process.

Analyzing the trading chart in general terms, the daily period, it is worth noting that the downward tact from May 1 is still preserved in the market where the recent inertial move did not violate the integrity of the early movement set for the period.

It can be assumed that the recovery process will gradually, but still occur, where, in order to change the market sentiment and move to a new level, the quote needs to be consolidated lower than 1.2180, which will cause the price to fall further.

An alternative scenario considers a more significant slowdown, relative to the past two days, that is, the quote stops updating local lows and goes into an oscillation between the values of 1.2185/1.2285.

Specifying all of the above into trading signals:

- Short positions, we consider lower than 1.2180, with the prospect of a move to 1.2150. The second step comes from consolidating prices lower than 1.2140, with a move to 1.2100-1.2080.

- Long positions, we consider in terms of a wider lateral course, in case of price taking higher than 1.2250, towards 1.2280.

From the point of view of a comprehensive indicator analysis, it can be seen that the indicators of technical instruments regarding hourly and daily periods indicate a sell signal, reflecting the general interest of market participants.

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Technical Analysis of BTC/USD for May 22, 2020:

Crypto Industry News:

The Bitcoin address, which collected 50 BTC from mining, has just shown the first sign of activity since February 2009 - just a month after the creation of Bitcoin.

According to data, the address 17XiVVooLcdCUCMf9s4t4jTExacxwFS5uh transferred the entire award for mining 50 BTC to two different wallets. Of this, 40 BTC remains inactive. The remaining 10 BTC were sent to the multiple address, as evidenced by its starting number.

Since then, the transaction chain has become more difficult to track because Bitcoins have been split into almost tens of parts within a complex chain.

The original wallet contained a transaction generating 50 Bitcoins, which were mined on February 9, 2009. In the community it is known that Satoshi's "fortune" is spread over many different wallets.

Only three people knew about Bitcoin at the time: Satoshi, the dead Hal Finney and Martti Malmi.

Theories about the potential owner of these funds include the wife of Finney and Malmi, but Satoshi is also a likely candidate. The complex transaction chain suggests that the signatory is trying to hide the destination of the funds.

Technical Market Outlook:

The BTC/USD pair has been pushed lower after almost a week of hovering around the level of $10,000, but not breaking it. The bears has pushed the price towards the level of $8,759, which is just a tad above the trend line support. If this trend line is violated, then the losses might extend towards the level of $8,464 or below. Please notice, the momentum is weak and negative which supports the short term bearish outlook.

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 ETH/USD for May 22, 2020:

Crypto Industry News:

The university, which trains officials of the Communist Party of China, has published a new book about cryptocurrencies.

According to a local publication, the Central Party School of the Communist Party of China - also known as the Central Party School - published a book as part of a series of books on breakthrough technologies. Previous entries in this series were "Dialogue with party leaders about AI" and "Dialogue with party leaders about Blockchain".

The goal of the book series is to provide party officials and the public with a source of information on emerging new technology trends. Chinese Central Bank directors, commercial banking directors and regulators were invited to write a prologue to a new published book on cryptography.

The book begins with the history and origin of fiat currency, and then gives an overview of the current credit currency system and its disadvantages. This leads to a section on cryptographic movement and the birth of Bitcoin.

The book further explores the nature and future of the digital currency and explains in detail what cryptographic exchanges and ICOs are. Discusses and analyzes regulatory problems regarding these new solutions.

The entire chapter of the book was distributed to the Digital Currencies of the Central Bank (CBDC). Explains the strategy behind digital Yuan and the impact it would have on the current payment system. A full comparative analysis of CBDC, Libra and stablecoins was included.

It warns against the dangers of super sovereign cryptocurrencies, such as Libra, questioning the monetary sovereignty of countries with imperfect financial market infrastructure. Proposes regulatory measures to address these trends.

Technical Market Outlook:

The ETH/USD pair has extended the losses after the breakout from the Triangle pattern. Moreover, the bears has manage to break through the short-term trend line support as well ( marked in navy on chart) and below another trend line support as well (marked in brown on the chart). The local low was made at the level of $190 which is a technical support for the price. Any violation of this level will lead to the correction extension towards the level of $188.86 and $186.72. Please notice, that the momentum is decreasing as market is coming off from the overbought conditions.

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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Technical Analysis of GBP/USD for May 22, 2020:

Technical Market Outlook:

After the GBP/USD pair has made a new local high at the level of 1.2297, the bearish pressure intensified and the price has tested the upper channel line and bounced from it. The momentum remains negative to neutral, the market conditions are overbought, so the odds for another wave up are now lower. The nearest technical resistance seen at the level of 1.2165 was violated already, so now the target is seen at the level of 1.2246. 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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EUR/USD. States as prosecutor: US accusations against China support the dollar

The bulls of the EUR/USD pair lost the positional struggle for the 10th figure: buyers retreated and headed to the bottom of the ninth price level. This price dynamics is primarily due to the dollar, which unexpectedly grew throughout the market due to a surge in anti-risk sentiment. Traders were alarmed by two factors: firstly, the deterioration in relations between Washington and Beijing, and secondly, talk of a second wave of the epidemic. Such a fundamental background did not make it possible for buyers to continue their upward path, especially since the European currency is also in limbo due to political battles between the south and the north of Europe. Add here the contradictory rhetoric of Jerome Powell and the ambiguous theses of the Federal Reserve's minutes and you get a very confusing fundamental picture that does not contribute to either the growth or (so far) a significant decline in the pair.

But, let's start with Trump. The political conflict between the US and China is the strongest fundamental factor at the moment, which puts pressure on the pair. The phrase "cold war" is increasingly found in the information space, while the latest statements by the head of the White House only increased investor concern around this situation. According to him, China misinformed the world community without providing "reliable data on the transmission and distribution of coronavirus". Moreover, Trump also moved his accusations to the election plane - he is confident that "all Beijing's actions are aimed at ensuring that Joe Biden won the presidential election."

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As a result, the US president threatened China with a complete severance of relations, while Congress is preparing to consider a new package of sanctions against China. Last week, Republican senators submitted a bill that gives Trump the right to impose sanctions on China if Beijing does not provide a "full report" on the COVID-19 pandemic. That is, the presidential administration and the pro-presidential party have openly accused the Chinese authorities of late warning the world about the epidemic and hiding its scale. Earlier, only Secretary of State Mike Pompeo voiced this idea, adding that Beijing deliberately hid the incident with the leak of the virus, which was developed in the biological laboratory of Wuhan.

China, as a rule, does not respond to Trump's angry posts, displaying, so to speak, "eastern wisdom" - the US president often changes anger to mercy in just a few days. But in this case we are talking about very specific, legislative steps. Therefore, Beijing still responded to recent events, and in a rather harsh form. China has threatened retaliation if the US Congress passes sanctions against Beijing for its alleged responsibility for causing an epidemic of a new coronavirus. The corresponding statement was made at the level of the Chinese parliament. The head of the press service of the National People's Congress of China said that "China never creates problems, but it never backs down. "We will protect our interests if the US takes any actions that undermine them."

As you can see, there is no specifics here, but the message looks pretty clear. It was after Beijing's response that the dollar, as a defensive asset, began to be in high demand. The possible escalation of the trade war after the unprecedented coronavirus crisis is not good news for the global economy. Therefore, the concern of market participants seems reasonable.

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Traders also responded to the increased risk of the second wave of the COVID-19 epidemic. According to Andrea Ammon, head of the European Center for Disease Prevention and Control (ECDC), the prospect of a new wave is no longer a "distant theory". The only question is when exactly it will happen and how terrible the repeated flash will turn out. Ammona also noted that an attempt to return to a normal, "pre-quarantine" way of life with non-observance of social distance is fraught with sad consequences. The fact is that only 2% to 14% of the population was ill in different countries of Europe - which means that the rest are still susceptible to coronavirus.

Thus, an unexpected surge in anti-risk sentiment did not allow buyers to enter the 10th figure. Bears seized the initiative and are now pulling the pair to the eighth price level. If relations between the United States and China continue to deteriorate (and this directly depends on the fate of the above-mentioned Republican bill), the dollar will gradually increase its position. But in my opinion, it is not advisable to open any trading orders today - both buying and selling look risky. And even more risky to leave open positions for the weekend. The fundamental picture for the pair can change quite quickly - the history of relations between the superpowers suggests that diplomatic and backstage negotiations are going on after harsh and public statements. The support level for the EUR/USD pair is 1.0880 (the middle line of the Bollinger Bands indicator, which coincides with the Kijun-sen line on the daily chart). The resistance level is still the round mark of 1.1000, which also coincides with the upper line of the Bollinger Bands on the same timeframe.

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Technical Analysis of EUR/USD for May 22, 2020:

Technical Market Outlook:

The EUR/USD pair has rallied towards the level of 1.1008, but market has made Bearish Engulfing candlestick pattern at the top of the move at the level of 1.1008. This level must be clearly violated in order to rally towards the swing high at 1.1017, which is the supply zone high. The nearest technical support at the level of 1.0951 has been violated already, so the next target for bears is seen at the level of 38% Fibonacci retracement at 1.0916. The key short-term technical support is located at the level of 1.0887. The momentum is now strong and positive, but still no clear trend indication except 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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GBP/USD: plan for the European session on May 22 (analysis of yesterday's trade). Pound set in the side channel. They do

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

Yesterday, purchases from the 1.2222 level, to which I paid attention in my review for the afternoon, did not manage to bring the proper result, and after a serious erosion of this level amid the release of data on the US economy, I had to give up long positions, which was the right thing to do, since it did not result in the pound's growth, thereby squeezing the pair in a narrow side channel. At the moment, the bulls need a breakthrough and consolidation above the resistance of 1.2245, which can only happen if there is good data on retail sales and lending in the UK. In this scenario, we can expect the upward trend to continue with a test of highs 1.2293 and 1.2336, where I recommend taking profits. An equally important task will be to protect 1.2185 support, which sellers are now striving for. Forming a false breakout at this level will be a signal to open long positions, while I recommend buying GBP/USD only for a rebound from a low of 1.2122, where an attempt will be made to build the lower border of a new rising channel.

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

Sellers need to keep the pair below the resistance of 1.2245 as low as possible, which is also the upper limit of yesterday's side channel. In case GBP/USD grows, forming a false breakout there in the morning after the release of reports on retail sales in the UK will be a good signal to sell with the goal of breaking through and pinning 1.2185 under the lower border of the current side channel, which will only increase pressure on the pound and will lead to an update of a larger low of 1.2122, where I recommend taking profits. You could aim for the month's low in the area of 1.2074. With the GBP/USD growth scenario above the resistance of 1.2245, it is best not to rush into selling, but to wait for the test of this week's high around 1.2293. You can open short positions from there immediately on the rebound while expecting 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 differs from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger bands

A break of the upper border of the indicator at 1.2245 will result in the pound's sharp growth. A break of the lower border of the indicator in the region of 1.2205 will raise 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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EUR/USD: plan for the European session on May 22 (analysis of yesterday's trade). Good US reports and the expectation of

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

The euro's sharp decline yesterday afternoon occurred after good data on US activity, which indicated a weaker slowdown in May, compared with April. As for transactions in the afternoon, I drew attention to the 1.0941 level and advised only to open long positions from it in case of a breakthrough of support at 1.0979. If you look at the 5-minute chart, you will see how the breakout of 1.0979 will result in a sell-off to the area of 1.0941, from which long positions had to be opened on the rebound, which led to an upward correction. However, the 1.0941 level was broken from the third time at the Asian session, which revised the technical picture. At this moment, the bulls will actively defend 1.0923, but forming a false breakout there will be a signal to open long positions, while it is best to delay buying immediately for a rebound until the test of a larger low of 1.0900, counting on a correction of 20-30 points intraday. An equally important task for the bulls will be to return the resistance of 1.0966 to themselves, after this it will be possible to talk about continuing the upward trend and expect a breakthrough of the 10th figure in the 1.1006 area with the release and update of the high of 1.093.

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

Bears will be waiting for the European Central Bank's monetary policy report, and any hint of an extension to the bond redemption program by the regulator could increase pressure on the euro. The primary objective of the bears will be a breakthrough and consolidation below the support of 1.0923, to which the pair is now aiming for. Surely the first test of this level will rebound, so it is best to sell EUR/USD only after a breakout and consolidation below this level, or on a second test in order to go down further to support 1.0900 and reach a low of 1.0855, where I recommend taking profits. In case the pair grows in the first half of the day, forming a false breakout in the resistance area of 1.0966, where, by the way, the moving averages pass, will also be a good signal to sell. It is possible to sell EUR/USD immediately for a rebound after yesterday's test of the high at 1.1006, based on a downward movement of 25-30 points by the end of the week.

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Signals of indicators:

Moving averages

Trade is conducted below 30 and 50 moving averages, which indicates a change in the market direction to the downward.

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

A break of the lower border of the indicator in the region of 1.0923 will increase pressure on the euro, which will lead to another wave of decline in the pair. Growth will be limited by the upper level of the indicator in the area of 1.0995.

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 22, 2020

EUR/USD

The euro grew during the first half of Thursday due to optimistic rates of European business activity for the current month: Manufacturing PMI of the euro area grew from 33.4 to 39.5, Services PMI showed even greater dynamics - an increase from 12.0 to 28.7. The euro has decisively reversed since the US session opened. US PMIs came out better than expected, but not as much as we expected: Manufacturing PMI grew from 36.1 to 39.8 against 39.3, Services PMI grew from 26.7 to 36.9 with 32.6 expected. Nevertheless, the trading volumes were comparable to those observed on May 18, which indicates a massive closure of purchases and even the opening of sales. A more interesting story awaits us next week, when sales of new housing, orders for durable goods, incomes and expenses of consumers will be published in the US.

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The price was re-marked at the upper border of the price range and with the turn of the oscillator, Marlin headed down on the daily chart. The closest support for the price is the price channel line at 1.0918, below it is the MACD indicator line at 1.0888, overcoming it will confirm the euro's intention to go much deeper down to 1.0767 and 1.0578.

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The signal line of the Marlin oscillator penetrated into the downward trend zone after forming a double divergence on the four-hour chart. The closest target is the 1.0888 level, at which the MACD lines coincide on both scopes. Consolidation under the level opens the way to the lower border of the range 1.0767.

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Forecast for AUD/USD on May 22, 2020

AUD/USD

The Australian dollar lost 30 points as a result of yesterday - a double divergence across Marlin began to take effect, which became more pronounced. The immediate goal for moving down to 0.6492 is to support the embedded line of the price channel. Overcoming the first support opens the way to the second at 0.6338.

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The price overcame support of the signal level 0.6562 (May 11 high) on the four-hour chart, consolidating below which will give rise to a downward movement. The signal line of the Marlin oscillator is already close to the boundary of the bears' territory.

Commodity prices are dropping for the second consecutive day, this important external factor can put strong pressure on the Australian currency.

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Forecast for USD/JPY on May 22, 2020

USD/JPY

The yen's situation has not changed as much over the past day, even the indicator lines have taken a horizontal position, which creates equal chances for the currency pair to rise and fall. Part of the reason lies in the uncertainty of the stock market, which is also in a horizontal local trend for three days. The S&P 500 lost 0.78% yesterday, while the Nikkei 225 is down 0.43% today in the Asian session. The Bank of Japan's meeting from this morning did not have any effect on the yen.

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The price is stuck between the support of the embedded line of the price channel and the resistance of the balance indicator line on the daily chart. The main support is the MACD line at 107.18, since the price overcoming this particular line will be a signal to move to the lower trend line in the area of 106.48. The growth outlook is the 108.30 level, which is the February 3 low.

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The price shows the intention to overcome the support of the MACD line (107.50), since the Marlin oscillator is already in the negative area on the four-hour chart. Departure of the price at 107.50 will be a signal of movement to 107.18, but it will still fit into the sideways movement. We do not expect a strong movement today, there are no conditions for this. It is a public holiday in the United States on Monday, respectively, the yen will continue its indefinite lateral movement for two days.

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Hot forecast and intraday trading signals for the GBP/USD pair for May 22. COT report. Bulls did not manage to go above 1.2270,

GBP/USD 1H

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Lateral movement was observed with a low downward slope on the hourly chart for the pound/dollar pair on May 21. In recent days, traders have not been able to cross the Senkou Span B line, so further upward movement is called into question. However, the bears also failed to cross the Kijun-sen line yesterday, so the resumption of the downward movement is still in question. By and large, now everything depends on which of these two lines traders will overcome. The GBP/USD pair is moving in that direction in the coming days. We believe that a downward movement is more preferable due to the general fundamental background, which is not in favor of the British currency.

GBP/USD 15M

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The higher linear regression channel showed the completion of the upward trend in the short term, turning down on the 15-minute timeframe. But the minor channel of linear regression already signals the completion of the downward movement, at least it turned up. In general, the readings of both channels can be interpreted as uncertainty. Everything will depend on two more significant lines Kijun-sen and Senkou Span B on the hourly timeframe.

COT Report

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The latest COT report for May 12 shows that the total number of buy and sell transactions among large traders per week increased by 4,000, mainly due to purchases. However, the total number of transactions for the purchase is still only 16,000 more than transactions for selling. Such an imbalance persists for a long period of time, and it was not enough for the pair to begin forming an upward trend. In the reporting week, professional traders opened more new deals for selling (4539), which means that most of them are waiting for a new fall in the British currency. A new COT report will be released today, according to which the mood of large traders is unlikely to change to the upward.

The fundamental background for the British pound remains sharply negative. Despite the fact that the macroeconomic background is equally disappointing both in the United States and in Great Britain we believe that the UK economy continues to experience much more serious problems than the American one. Moreover, general uncertainty is again associated with the British economy. No one knows how, by what rules and with whom London will trade after 2020. There are no trade agreements with the EUR and the US yet. But investors and traders really do not like uncertainty and try to invest in the economies and currencies of those countries where everything is more or less clearly, clearly and well predicted. Thus, paired with the dollar and the pound, traders prefer to buy the dollar. A retail sales report is scheduled for Friday in the UK, and it is unlikely to support the British currency, even if traders want to work it out.

We have two main options for the development of the event on May 22:

1) The initiative for the pound/dollar pair remains in the hands of the bears, despite the fact that the quotes have come out of the downward channel. Thus, we recommend buying the British pound not before consolidating the price above the Senkou Span B line - 1.2270 and, and, preferably, even the resistance level of 1.2325 with the first goal being the resistance area of 1.2404–1.2422. The next target, if this area is overcome, will be the resistance level of 1.2550. Take profit will be about 75 points in the first case and 120 points in the second.

2) Sellers are currently more likely to implement their plans. It will be enough to return the price to the area below the Kijun-sen line and the area of 1.2196-1.2215 to resume sales of the pair while aiming for the low of May 18 at 1.2073 and the support level of 1.1987. In this case, take profit will be about 105 and 190 points.

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Hot forecast and intraday trading signals for the EUR/USD pair on May 22. COT report. Bears stayed below the area of 1.0990-1.1008

EUR/USD 1H

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The EUR/USD pair resumed the upward movement and worked out the April 19 high at 1.0990 on the hourly timeframe over the past day, as well as the resistance level of the 4-hour timeframe at 1.1008. The pair rebounded from these two levels, once again showing that the bulls did not have enough strength to form a new upward trend, and began a downward correction, which, according to the logic of things, should go into a downward movement inside the side channel of 1.0750-1.0990 that we have been relentlessly talking about in recent weeks. In any case, before traders overcome 1,1008, the downward movement and selling the pair are more relevant and probable.

EUR/USD 15M

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We see a weakening upward trend on the 15-minute timeframe. The lowest linear regression channel has already turned down, and the higher is unfolding. This suggests that the fuse of the bulls has dried up and they need new reasons for buying the European currency and continuing the upward trend in the short-term plan. So far, everything suggests that the US dollar will continue to rise in price on the last trading day of the week.

COT Report

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The latest COT report dated May 12 showed a new decrease in the number of buy and sell transactions among large traders, by 4,781 and by 3,554. Thus, the general mood of large traders remains bullish (the total number of purchase transactions is higher, 549,000- 521,000), in addition to this, traders managed to stay above the trend line on the 4-hour timeframe. Also, purchase positions increased among entities engaged in professional activities in the foreign exchange market (+4569 purchase transactions). A new COT report will be released today, and its numbers will show how the mood of large traders has changed over the past week. The previous report, we believe, is more than fulfilled.

The fundamental background for the pair at this time remains neutral. This is why there has been a movement in the side channel in recent weeks (unlike, for example, the GBP/USD pair). The top officials of the United States and the European Union regularly appear in public, but their rhetoric, statements and decisions taken do not surprise market participants and, as a result, are not practiced. The coronavirus theme generally receded into the background. Many countries around the world have begun and continue to withdraw quarantine measures while doctors continue to warn of possible new waves of the disease. With a macroeconomic background, it is still easier. Traders have simply ignored it in recent months. In addition, no important macroeconomic publications are planned either in the US or the EU on Friday, May 22. Thus, we believe that nothing should prevent the pair from moving in accordance with the technical picture, that is, down.

Based on the foregoing, we have two trading ideas for May 22:

1) It is possible for the pair's quotes to grow if we overcome the resistance range of 1.0990-1.1008, consisting of two corresponding levels. This will mean that the pair has left the side channel and is ready to form an upward trend with the first target, the March 27 high at 1.1147. Potential to take profit in this case will be about 140 points.

2) The second option - bearish - is more likely. You are advised to sell the euro from the resistance area of 1.0990-1.1008, not forgetting about stop loss in case the bulls still continue to push the pair up. There were already two rebounds from the designated area, so we recommend selling the Kijun-sen line (1.0904), Senkou Span B line (1.0831) and the upward trend line (1.0810) for the pair with targets. Potential to take profit in executing this scenario will be from 40 to 140 points.

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Overview of the GBP/USD pair. May 22. The British pound remains under pressure due to uncertainty about the future of the

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - sideways.

CCI: 51.8021

The British pound spent the fourth trading day of the week in a downward movement and settled back below the moving average line, failing to overcome the Murray level of "5/8"-1.2268. Thus, the downward movement may continue on the last trading day of the week, according to the technical picture and the general fundamental background. We have already mentioned in the article on the euro/dollar that traders continue to ignore almost all macroeconomic publications, rightly believing that the economies of all countries of the world are experiencing approximately the same problems. But the fundamental background for the British pound remains particularly negative. Due to Brexit, the policy of Boris Johnson, the low probability of concluding trade agreements with the European Union and the United States. Remember, in the early years of Brexit, when a referendum was already held, but Parliament needed to agree on a breakup plan with Brussels, the pound was regularly cheaper due to commonplace uncertainty. Investors are afraid of instability and uncertainty, so as soon as there is a situation in which it is difficult to make any forecasts, immediately the currency of this country begins to feel pressure on itself. And now we are seeing approximately the same thing. Michel Barnier and David Frost said after the second round of talks that no progress was made again, exchanged mutual accusations and parted ways until the third, final round of talks, after which the parties will have to officially decide on extending the "transition period" on July 1. It is already clear that this period will not be extended. Thus, the future of the UK and its economy is once again shrouded in fog. On the one hand, the British Ministry of Trade said that 60% of goods will be removed from European tariffs. On the other hand, British goods imported into the EU (namely, the EU is the exporter of more than 50% of all goods from the UK) will be subject to tariffs and duties, according to the rules and regulations of the WTO. Thus, London will not be able to solve the issue of the absence of a trade agreement with the EU unilaterally. Plus, do not forget that the UK budget is already suffering so much from the break with the Alliance, and the "coronavirus" pandemic can cost the country from 30% to 50% of the budget according to various calculations. Thus, this missing money will have to be taken from somewhere. Either borrow or raise taxes, fees, tariffs, and other tools to replenish the state Treasury. Accordingly, it is quite difficult to predict what will happen in the country after 2020. That is why the pound is under pressure from traders in recent weeks, while the euro currency feels more or less stable, although the Eurozone has its own problems.

On Thursday, the UK also published the index of business activity in the areas of services and products. The first rose from 13.4 to 27.8, and the second from 32.6 to 40.6. Thus, both business activity indices exceeded their forecast values. However, there was no reaction from traders to this data. On the last trading day of the week in Britain, a more significant indicator of retail sales for April is planned, which, according to forecasts, will fall by 22.2% in annual terms and by 16% in monthly terms. However, we believe that this report will be ignored, if only because a similar report in the United States and in the European Union showed approximately the same reduction. This is exactly what we were talking about. The dollar can't have an advantage based on a single report if a similar report in the United States is no better. Thus, on Friday, either the pair will resume its downward movement, according to the technical picture, or it will go flat and spend the entire day in a narrow price range.

On Friday, traders can only track unplanned events. And of course, the main newsmaker will remain the US leader Donald Trump. In fact, even many American journalists treat the figure of the US President with irony, since most of his statements most fit the description of the word "fantasy". Most of the accusations coming from the odious leader are not supported by anything. One such recent statement from trump: "China is running a massive disinformation campaign because it really wants' sleepy Joe Biden' to win the presidential race. Then they can continue to pillage the United States, as they did for decades before I came." Thus, in just two sentences, Trump managed to insult Joe Biden, hinting that he would be a lousy president, and once again China. As always, no facts were provided to confirm Trump's words. Thus, all the main theses of the Donald can already be collected in a certain collection called "Trump's Mantra" and no longer read news feeds on the request "Donald Trump", as the American leader repeats the same thing every day. Although there is one more thing that the US leader does not lose sight of. Since the US is currently experiencing an economic shock and crisis, Trump switched from statements about how much the economy has grown under him, to statements about how amazing the next quarter, year, decade will be. "I think we will have a big transition period in the third quarter. I think we will have a very good fourth quarter and an incredible year," Trump said at a regular briefing at the White House. At the same time, the President's economic adviser, Larry Kudlow, said that the economy could grow by 21.5% in the third quarter, which would be the largest growth in the country's history. To be honest, it is even difficult to comment on the next "magnificent" statement of Trump. Naturally, the US President will stop mentioning the failed first and second quarters of 2020, the decline in which will not be able to cover the third and fourth quarters. In the near future, we can also expect new statements in the style of "China wanted to destroy us, but we survived and became even stronger, and it's all thanks to me."

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The average volatility of the GBP/USD pair has been steadily declining in recent days and is currently 102 points. On Friday, May 22, thus, we expect movement within the channel, limited by the levels of 1.2133 and 1.2337. A reversal of the Heiken Ashi indicator downwards will indicate a possible resumption of the downward trend. Fixing the price above the moving average will indicate the weakness of the bears.

Nearest support levels:

S1 – 1.2207

S2 – 1.2146

S3 – 1.2085

Nearest resistance levels:

R1 – 1.2268

R2 – 1.2329

R3 – 1.2390

Trading recommendations:

The GBP/USD pair on the 4-hour timeframe was fixed below the moving average, so the trend changed to a downward one. Thus, it is now recommended to trade the pound/dollar pair for a decrease with the goals of 1.2146 and 1.2085, but after the reversal of the Heiken Ashi indicator down. It is recommended to buy the pound/dollar pair if traders manage to return to the area above the moving average and after overcoming the Murray level of "5/8"-1.2268, with goals of 1.2329 and 1.2390.

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

Overview of the EUR/USD pair. May 22. Donald Trump is predicted to suffer a major defeat in the 2020 election. The chances

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 64.2523

The EUR/USD currency pair finished the penultimate trading day of the week as we expected. Traders did not immediately start a downward movement, and finally worked out the area of the $ 1.10 level once again, which is still the area of the upper line of the side channel. Thus, having worked out the third resistance level on the Ichimoku indicator this week - 1.1008, the pair performed a downward turn and began a sharp and quite strong downward movement. Based on this, we assume that the bulls have exhausted their potential and now the quotes of the euro/dollar pair will rush down. According to the "linear regression channels" trading system, the situation is approximately the same. The pair worked out the Murray level of "4/8"-1.0986, which we also called more than once, and rebounded from it. Now it is expected to move down to the moving average line, overcome it, and move further to the level of 1.0750.

The macroeconomic background of the last day was quite interesting, but at the same time, most of the published statistics had almost no significance in the current situation. We have repeatedly said that traders do not pay attention to most of the reports, but trade each pair based on the general fundamental background (for example, it is negative for the British currency, which is under pressure) and based on technical factors. In the case of the EUR/USD pair, "technique" is in the first place. However, several interesting indicators were published yesterday, so let's look at them briefly. The day started with the publication of business activity indices in the German services and manufacturing sectors. We will not elaborate on the figures, but we will only say that business activity has started to recover compared to the previous month, but it is still minimal. In the European Union, the situation is approximately the same. The service sector showed an increase from 12 to 28.7 and the manufacturing sector – from 33.4 to 39.5. However, much more interest was aroused by the publication of applications for unemployment benefits in the United States. According to this report, the number of primary applications for the week of May 15 was 2.4 million, and the total number of secondary applications for May 8 was 25 million. These 25 million are considered the real number of Americans who have lost their jobs in recent months. A little later, data on business activity in the US were published, and here the picture is approximately the same as in Europe. Both areas showed improvement compared to April. Now let's analyze the movement of the currency pair during today's day. In the European trading session, when weak business activity indices were released, the euro was growing, and in the US, when the next failed unemployment report was released, the dollar was growing. From this we draw the same conclusion as before: market participants ignore macroeconomic statistics.

The fundamental background for the EUR/USD pair is more interesting. For example, yesterday the contents of the minutes of the last meeting of the Federal Reserve became known. According to this document, the Federal Reserve is considering additional opportunities to stimulate the economy and expects that the recovery will be long and unstable. The minutes also said that low rates will continue until the economy begins to show a confident and strong growth rate. It is also reported that members of the monetary committee of the Fed do not consider the possibility of negative rates, despite the fact that this option is supported by Donald Trump. Members of the FOMC are afraid of new waves of the epidemic, which can negatively affect economic activity and further slow down the recovery process. "The Committee may further clarify its intentions regarding its future monetary policy decisions at upcoming meetings," the minutes said. Thus, we see that the US Central Bank is setting itself up for a long recovery and understands that the situation with the "coronavirus" may escalate again at any moment.

Meanwhile, analysts at Oxford Economics provided their report and forecast of the results of future US elections. According to this analysis, which is conducted before every election, and has only shown the wrong result twice since 1948, Donald Trump will be defeated in the election in November. The forecast model uses data such as the country's unemployment rate, income, and inflation. According to this model of analysis, Donald Trump will get about 35% of the vote in November. Interestingly, the same analysis conducted before the crisis gave Trump 55% of the vote. The report also says that Trump's key trumps were leveled by the crisis. Economic growth, unemployment, and the labor market - this is what the current US President can no longer boast to voters. The report also says that seven states, which regularly fluctuate between Democrats and Republicans, are the most affected by unemployment and the economic downturn. We are talking about Iowa, Wisconsin, Missouri, North Carolina, Ohio, Pennsylvania, and Michigan. So these states are expected to vote for Joe Biden. In fact, other analysts have come to similar conclusions, including us.

Donald Trump is well aware that in the current conditions it will be extremely difficult for him to win and continues to pour mud on everyone who comes to hand. The speaker of the House of Representatives, the Democrats, personally Joe Biden, China are all to blame for what is happening in the United States. For example, Trump's latest tweets say that "China is guilty of mass murder around the world". It means that it was China that spread the "coronavirus" around the world, which has already led to more than 329 thousand deaths. In principle, the American President has no choice but to criticize and blame...

On the last trading day of the week, neither the United States nor the European Union has any reports or important news scheduled. This means that nothing should prevent traders from trading in accordance with the technical picture. Thus, we expect a downward movement on Friday, May 22. As a safety net, we recommend considering the option with a new upward movement not earlier than a confident overcoming of the 1.1008 level.

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The average volatility of the euro/dollar currency pair as of May 22 is 83 points. Thus, the value of the indicator remains stable and is characterized as "average". Today, we expect quotes to move between the levels of 1.0877 and 1.1043. The upward turn of the Heiken Ashi indicator may signal a new attempt by traders to break out of the channel of 1.0750-1.0990 through its upper border.

Nearest support levels:

S1 – 1.0925

S2 – 1.0864

S3 – 1.0803

Nearest resistance levels:

R1 – 1.0986

R2 – 1.1047

R3 – 1.1108

Trading recommendations:

The EUR/USD pair started a correction. The level of 1.1000 has already been worked out twice, so there is a high probability of the pair turning down and turning a downward movement within the side channel of 1.0750-1.0990. Thus, it is recommended to consider selling the pair with the goal of 1.0750. Buy orders are recommended to be considered only above the level of 1.1008 with targets of 1.1047 and 1.1108. For more confidence to sell the euros it will be possible after overcoming the resistance.

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

EURUSD and COVID-19: Mass production of the coronavirus vaccine will begin in September this year. Good indices on activity

While the number of detected cases of coronavirus infection in the world has exceeded 5 million, many states are beginning to remove restrictive and quarantine measures, which is gradually reviving the economy, as evidenced by preliminary indices of activity in the service and manufacturing sectors. In some regions, there are also signs of normalization of the situation with coronavirus.

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No one will be surprised that the 2nd quarter of the world GDP will show an unprecedented drop, but the growth of PMI indices also suggests that the decline is beginning to slow down, and the easing of quarantine measures will lead to an even greater recovery of the economy this summer, the prospects for which remain quite gloomy. Yes, we can safely say that the lows have passed, but we still see only a slowdown in the reduction of activity, while its recovery is still very far away, not to mention a return to pre-crisis levels. Let me remind you that the index level below 50 indicates a decrease in activity compared to the previous month.

Now let's run through the leading countries of the Eurozone and see what indicators were released today by the statistics agency Markit. The report on France said that the preliminary purchasing managers' index (PMI) for the manufacturing sector in May this year was at the level of 40.3 points, while in April it was 31.5 points, and economists predicted at the level of 36 points. The service sector also managed to slow its decline slightly. The preliminary index in May was 29.4 points against 10.2 points in April, which is higher than the forecast of economists, who expected a value of 27.5 points.

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The German data also appealed to traders. The preliminary purchasing managers' index (PMI) for the manufacturing sector rose to 36.8 points in May this year from 34.5 points in April, while it was forecast at 28.5 points. But the index of the service sector showed almost double growth to 31.4 points in May against 16.2 points in April, with a forecast of 26 points.

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In any case, the overall recovery in the activity also affected the indicator for the entire Eurozone, where the preliminary purchasing managers' index (PMI) for the manufacturing sector of the Eurozone in May jumped to 39.5 points against 33.4 points in April. The purchasing managers' index for the Eurozone services sector also rose to 28.7 points in May, up from 12 points.

However, there are also those who believe that the observed slight slowdown in the decline in activity compared to the previous month only demonstrates the depth of the fall in April, and does not mean that the situation will also improve in the future, let alone the return of the indices to a value above 50 points.

The overall composite purchasing managers' index (PMI) for the Eurozone in May was at 30.5 points, compared with 13.6 points in April, when it reached a historical low.

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As for the technical picture of the EURUSD pair, more than pleasant data on activity led to a new wave of growth in risky assets, and a break in the resistance of 1.0980 in the first half of the day pushed buyers of risky assets towards the maximum of 1.1020, the breakdown of which will easily throw the euro to the 11th figure.

Today, a similar report was also released for the UK, where the preliminary composite index of supply managers in May rose to 28.9 points from 13.8 points in April. The manufacturing index jumped to 40.6 points, while the services sector recovered from its historic lows of 13.4 points to 27.8 points in May this year.

Returning to the topic of coronavirus, at the beginning of the week, there was news that one of the US biotech companies conducted the first successful phase of trials of a coronavirus vaccine. According to Moderna, clinical trials of the vaccine will end with positive results. The test, which began at the end of April this year on volunteers, shows good results, and after taking the mRNA-1273 vaccine, the number of antibodies of test participants exceeded the corresponding indicator in the blood of people who had COVID-19. But it is more important that the vaccine is safe and tolerated without complications. It is expected that the final stage of testing will be held in July this year.

Today, the British pharmaceutical company AstraZeneca announced that it expects to start its mass production of the COVID-19 vaccine, which is currently being developed jointly with the University of Oxford. It is expected that the final September tests will be successful, so the company has already signed the first contracts for the supply of at least 400 million doses. Such news is another blow to the coronavirus pandemic, which many expect will soon be defeated.

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