NZD/USD Bullish Stance Reinforced!

NZD/USD rallies in the short term after the failure to retest the near-term support levels. It is trading at 0.6137 level and most likely will continue to increase and will make another higher high.

The USDX's drop has demolished the dollar, which has decreased versus most of its rivals. USDX plunged after the failure to reach the 100.00 psychological level, we'll see what will really happen in the upcoming period because the dollar index is trapped within an extended range, so only a valid breakout from this pattern will give us a clear direction of the dollar.

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NZD/USD has managed to come back above the 50% retracement level after it has failed to retest the broken outside sliding line (sl - descending dotted line), and the PP (0.6047) level. The pair is located within a resistance zone, it is still traded below the 0.6174 higher high.

The outlook is bullish as the price has escaped from the descending pitchfork's body and has ignored the outside sliding parallel line (sl). The valid breakout above the sliding line (sl) has confirmed a further increase. Support is seen at 0.6080 previous low and at the Pivot Point (0.6047) level.

  • NZD/USD Trading Tips

The failure to retest the sliding line (sl) has signaled a bullish momentum, the aggressive breakout above the 50% level has suggested buying in the short term, the next target is seen at the R1 (0.6253) level.

We could have another long opportunity if NZD/USD closes and stabilizes above the 0.6157 - 0.6174 area, if it makes another higher high. This scenario could announce an increase also towards the R2 (0.6380) level.

Another short opportunity could appear if NZD/USD decreases and closes below the 0.6080 previous low. A false breakout with a huge separation above the 0.6157 - 0.6174 area will bring a short opportunity as well.

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Fractal analysis of the main currency pairs on May 26

Forecast for May 26:

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: 1.1009, 1.0961, 1.0935, 1.0912, 1.0876, 1.0836, 1.0789 and 1.0756. Here, the price registered the expressed potential for the downward movement of May 21. The continuation of the downward movement is expected after the breakdown of the level of 1.0876. In this case, the target is 1.0836. Price consolidation is near this level. The breakdown of the level of 1.0836 will lead to a pronounced movement. Here, the target is 1.0789. For the potential value for the bottom, we consider the level of 1.0756. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is expected in the range of 1.0912 - 1.0935. The breakdown of the last level will lead to an in-depth correction. Here, the target is 1.0961. This level is a key support for the downward structure.

The main trend is the formation of potential for the bottom of May 21

Trading recommendations:

Buy: 1.0912 Take profit: 1.0933

Buy: 1.0936 Take profit: 1.0960

Sell: 1.0874 Take profit: 1.0840

Sell: 1.0834 Take profit: 1.0790

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For the pound / dollar pair, the key levels on the H1 scale are: 1.2361, 1.2297, 1.2241, 1.2208, 1.2143, 1.2101 and 1.2069. Here, the price entered an equilibrium state: the upward structure from May 15, as well as the downward structure from May 19. The development of the downward movement is expected after the breakdown of the level of 1.2143. In this case, the first goal is 1.2101. For the potential value for the bottom, we consider the level of 1.2069. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 1.2208 - 1.2241. The breakdown of the last level will lead to the formation of an ascending structure. Here, the first potential target is 1.2297. We expect the formation of local initial conditions to this level.

The main trend is the ascending structure of May 15 and the descending structure of May 19

Trading recommendations:

Buy: 1.2208 Take profit: 1.2240

Buy: 1.2244 Take profit: 1.2295

Sell: 1.2140 Take profit: 1.2103

Sell: 1.2100 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, we are following the ascending structure of 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, we are following the ascending structure of May 19. At the moment, the price is in a deep correction. The continuation of the upward movement is expected after the breakdown of the level of 1.3998. Here, the first goal is 1.4029, the breakdown of which, in turn, will allow you to count on moving to 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 1.3942 - 1.3900. There is a high probability of an upward reversal from this range and its breakdown will lead to the cancellation of this upward trend. Here, the first goal is 1.3863.

The main trend is the rising structure of May 19, the stage of deep correction

Trading recommendations:

Buy: 1.3998 Take profit: 1.4027

Buy : 1.4030 Take profit: 1.4070

Sell: 1.3940 Take profit: 1.3905

Sell: 1.3900 Take profit: 1.3865

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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, 0.6514, 0.6488, and 0.6456. 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 upward structure 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, 118.57, 117.93, 117.59, 116.96, 116.39, 115.81 and 115.32. Here, we are following the development of the upward structure from May 14. At the moment, the price is in deep correction and has developed the potential for a downward movement from May 21. The continuation of the downward movement is expected after the breakdown of the level of 116.96. In this case, the target is 116.61. Price consolidation is near this level. The price passing the noise range of 116.61 - 116.39 will lead to a pronounced downward movement. Here, the target is 115.81. For the potential value for the bottom, we consider the level of 115.32, Upon reaching which, we expect an upward pullback.

A short-term upward movement is possible in the range of 117.59 - 117.93. The breakdown of the last level will have a further development of the upward trend. Here, the first goal is 118.57. We expect the formation of a local structure to this level, and it is also a key resistance for the subsequent development of the upward trend.

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

Trading recommendations:

Buy: 117.96 Take profit: 118.55

Buy: 118.60 Take profit: 119.12

Sell: 116.94 Take profit: 116.61

Sell: 116.37 Take profit: 115.81

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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. The 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 short-term downward movement is possible in the range of 130.98 - 130.40. The breakdown of the last level will have the downward trend. Here, the potential target is 129.24.

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

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: 129.30

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Technical Analysis of ETH/USD for May 26, 2020:

Crypto Industry News:

The President of Iran has commissioned central bank officials and ministries of energy, communication and IT to prepare plans for a national strategy for mining cryptocurrencies.

As reported by Iranian media, officials received information during the 137th session of Iran's economic coordination center earlier this week, chaired by President Hassan Rouhani. The situation takes place shortly after the announcement by the Iranian government of a policy of denominating the national currency, or rial, to address the problem of paralyzing chronic inflation. Earlier this week, Iran also introduced cryptocurrencies to its foreign currency exchange regulations and enforcement measures against currency smuggling. This will cause cryptographic exchanges licensed by the Central Bank of Iran to be subject to applicable regulatory regimes for foreign currencies during periods of extreme capital outflows from emerging markets during a global pandemic.

While further details on Iran's national cryptocurrency mining strategy have not yet been clarified, Iran has already issued about 1,000 licenses for cryptocurrency miners in the country and has granted permission to the Turkish cryptocurrency mining company iMiner to set up a facility with 6,000 excavators in of the province of Semnan. The Iranian government allowed the extraction of cryptocurrencies as industrial activity in July 2019. In the ongoing difficult economic situation, the general of the Guard Corps of the Islamic Revolution turned to the crowds earlier this year, calling on the country to use cryptocurrencies to circumvent sanctions.

President Rouhani himself argued for the creation of an alternative currency, potentially digital, to loosen the grip that US sanctions exert as "the main tools for dominating hegemony and intimidation" of certain nations.

Technical Market Outlook:

The ETH/USD pair has been consolidating for the last 24h around the level of $200. Earlier this week, Ethereum bounced from the level of $190.55, but did not manage to make a new high above the level of $217. After the Shooting Star candlestick was made at the level of $209.89 the Ethereum rate begin to move lower. The bulls had all the weekend to push the prices higher, but they failed and now the market is very close to the key short-term trend line support located around the level of $196.30. Any violation of this level will open the road towards the next technical support located at the level of $193.78 and $188.88.

Weekly Pivot Points:

WR3 - $234.40

WR2 - $228.76

WR1 - $216.85

Weekly Pivot - $204.00

WS1 - $192.21

WS2 - $178.64

WS3 - $166.85

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. The next key technical support is seen at the level of $174.82.

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Technical Analysis of BTC/USD for May 26, 2020:

Crypto Industry News:

New strict rules, in which many ways of using digital resources are punishable by a fine or imprisonment, may soon become law in Russia.

New bills specifying how Russia should regulate cryptocurrencies were sent to the parliament of the country, the State Duma, earlier this week. Although the official site for the planned regulations has not yet been updated, both documents were published in the OrderCom telegram channel and were confirmed as authentic by the sources of the Russian news channel RBK.

Legislative proposals were reportedly written by employees of the Digital Economy think tank and the Skolkovo business accelerator. They are looking for a new version of the Digital Resources Act that has been stuck in the Duma for over two years, as well as cryptocurrency-oriented additions to the national criminal code.

The first bill would regulate digital currencies in Russia, or more precisely, prohibit the issuance and operation of digital currencies. It would even be forbidden to disseminate information on such activities.

Individuals and companies will not be able to accept digital currencies as payments, unless they are inherited, transferred to the debtors of a bankrupt company or confiscated as a result of a court decision. People with cryptocurrency should declare it at the tax office, as well as provide information on how to buy.

A second draft would introduce a new article in the Criminal Code imposing sanctions for illegal operations using digital resources.

If the regulations are adopted, the issue of digital assets in Russia without permission to enter in the register, which is yet to be created in the central bank of this country, will result in a fine of up to two million rubles (almost $ 28,000). The same level of penalty is suggested for organizing operations with digital resources and cryptocurrencies without permission, while people would face fines of up to $ 2,800.

Buying a cryptocurrency for cash or a bank transfer from a Russian bank would be subject to a fine of up to one million Russian rubles ($ 14,000) or up to seven years in prison, depending on the scale of the contract. A similar penalty would apply to those who accept crypto for goods and services.

If such a business brings "particularly large" profits or particularly large damage to citizens and the state, the proposal would cause the person (s) involved to be imprisoned for up to seven years, or even forced labor.

Mention of the central bank register suggests that legislators are free to some officially sanctioned entities to issue and use digital assets, while most general operations would be banned.

According to the RBK report, Anatoly Aksakov, head of the Duma of the Financial Markets Commission, confirmed the authenticity of the documents, but stated that they had not been finalized.

Technical Market Outlook:

The BTC/USD pair has bounced from the level of $8,576 after breaking through the key trend line support located around the level of $8,800. The bounce is so far very shallow and the next the nearest resistance is located at the level of $8,919 and $9,013. On the other hand, the next technical support is seen at the level of $8,464 and $8,357.The momentum remains weak and negative, so the odds for another wave down are high.

Weekly Pivot Points:

WR3 - $10,568

WR2 - $10,245

WR1 - $9,478

Weekly Pivot - $9,098

WS1 - $8,333

WS2 - $7,968

WS3 - 7,231

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. The key mid-term technical support is located at the level of $7,897.

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Technical Analysis of EUR/USD for May 26, 2020:

Technical Market Outlook:

The EUR/USD pair has made a temporary low at the level of 1.0870 and after the Hammer candlestick pattern was made, the bulls took over the market and pushed the price towards the next technical resistance located at 1.0951. The market conditions are still in their favor, so does the increasing momentum. On the other hand, the next target for bears is seen at the level of 1.0858, which is 61% of the Fibonacci retracement or at the next technical support at 1.0850.

Weekly Pivot Points:

WR3 - 1.1206

WR2 - 1.1107

WR1 - 1.0997

Weekly Pivot - 1.0901

WS1 - 1.0789

WS2 - 1.0688

WS3 - 1.0567

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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AUD/USD. Trump's "silence" and Morrison's anti-crisis plan

The AUD/USD pair renewed its growth during the Asian session on Tuesday, besieging the boundaries of the 66th figure. And although the price increase is still not very pronounced and rather formal, the dynamics are important here. The aussie has once again demonstrated its "resistance to stress" to negative fundamental factors and even to the general strengthening of the US currency.

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Looking ahead, it is worth noting that the dollar bulls failed to organize a rally amid the surge in anti-risk sentiment. And although relations between the United States and China remain tense, US President Donald Trump did not add fuel to the fire yesterday, leaving the Hong Kong theme without comment. Trump's silence surprised investors, since the Hong Kong issue is now almost the number one topic in the world press after coronavirus. Nevertheless, Trump devoted yesterday's speech to the "sleepy Joe Biden," who, in his words, gave China "everything they wanted " by making extortionate deals with them. In addition, Trump praised his administration and indirectly himself - for the effective, in his opinion, fight against COVID-19. According to him, his team made many governors "look very good", but received nothing in return.

Trump's latest statement must be seen in two ways. Firstly, the fact that he did not mention the Hong Kong issue may indicate behind-the-scenes negotiations with Beijing - in that case, the emotional tweet of the US president (and he doesn't have others) could destroy certain diplomatic constructions. Actually, against the backdrop of such assumptions, the dollar index lost ground and barely reached 99.97 points.

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Secondly, all of Trump's tweets and statements must now be viewed through the prism of the presidential election, which will be held in the United States in just five months. According to a recent poll, Joe Biden is confidently ahead of the White House head at the national level. Moreover, the survey was conducted by the conservative American television channel Fox News, which, so to speak, "favors" the Republicans. So, according to their data, Biden has increased his lead: 48% of respondents are ready to vote for the Democrat, while for Trump - 40%. In addition, in the category of those voters who are "very interested in voting" this fall, Biden has an immediate advantage of 12 percent - 53% against 41%. A previous survey showed that the gap between politicians is only 5%. Then Biden's rating was reduced against the background of the statement of his former employee Tara Reid about sexual harassment, but the Democrat's opponents were not able to "untwist" this scandal so that it became a rating anchor.

In other words, the absence of any of Trump's comments regarding the Hong Kong issue lowered the degree of heat in the market, due to which the dollar index turned around and headed towards the 98th figure. It should be noted that such dynamics may be temporary, since the problem itself has remained on the agenda: the law on national security in Hong Kong has not been withdrawn from consideration, and it seems that this week it will be adopted by Chinese parliamentarians. But, as we see, any relief in US-Chinese relations (even of a tacit nature) reduces the demand for the dollar, which is used as the main defensive asset.

It is also worth noting that the Australian dollar has its own arguments for its growth. The fact is that today, Australian Prime Minister Scott Morrison presented an anti-crisis program called "JobMaker". We are talking about changes in education (in the context of better training) and tax policy. Morrison also stated the need for deregulation in some sectors of the economy, adding that lowering electricity prices will play a key role in stimulating economic growth. Morrisson has so far only outlined the anti-crisis program, so we cannot "put it on the shelves." Nevertheless, the initiative itself was positively received by traders - the Australian dollar has grown throughout the market, even against the greenback.

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Thus, buyers remain cautiously optimistic. The Australian dollar has once again demonstrated its stability, thereby reflecting the stability of the upward trend. Bursts of anti-risk sentiment may put pressure on the aussie, but any more or less large-scale decline in prices can be used to open long positions. From a technical point of view, the pair could drop to 0.6550 within the day (the middle line of the Bollinger Bands indicator, which coincides with the Kijun-sen line on the 30-minute chart). If we look at medium-term prospects, here we can consider growth to the main resistance level of 0.6610 - this is the upper line of the Bollinger Bands on the daily chart.

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Elliott wave analysis of EUR/JPY for May, 2020

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EUR/JPY has responded to the test of the 50% corrective target of a rally from 115.44 to 118.53. It is now heading higher towards short-term key-resistance at 117.98. A break above this resistance will indicate a re-emergence of the underlying uptrend towards 118.53 on the way towards the 119.31 target for wave iii. At 119.31 wave iii will be 161.8% longer than wave i, which is a common taget for third waves.

Support is now seen at 117.50 and again at 116.96.

R3: 118.53

R2: 118.20

R1: 117.98

Pivot: 117.70

S1: 117.50

S2: 117.24

S3: 116.96

Trading recommendation:

We are long EUR from 115.65 with our stop placed at 116.00

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

Elliott wave analysis of GBP/JPY for May 26, 2020

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The break out of the descending chanal from 132.51 indicates that the alternate bullish count could be in play here. We still need more evidence to confirm this is actually the case. If it's the case, then we will see a break above minor resistance at 131.95 and more importantly a break above resistance at 133.19. If a break above 133.19 occurs, we should expect a rally to 135.50 and higher to 147.95.

If the bullish scenario seems more likely, we should in case have a bearish count that is a final dip below 123.99. However, this count has been put on standby by the break to the upside of the descending chanal. So far, we are looking for confirmation - up or down?

R3: 132.51

R2: 132.18

R1: 131.95

Pivot: 131.57

S1: 131.34

S2: 131.03

S3: 130.64

Trading recommendation:

We will buy a break above 131.95 or sell a break below 129.25

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GBP/USD: plan for the European session on May 26. COT reports (analysis of yesterday's trade). Pound buyers gradually returning

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

The British pound was in a narrow side channel yesterday amid the lack of important macroeconomic statistics, as well as a low trading volume due to the holiday in the United States. Bears' attempt to break below support 1.2162 in the morning led to a small increase, which remained today at the Asian session, thereby, causing a new level of support to form. The Commitment of Traders (COT) for May 19 recorded a sharp increase in both short and long positions, which indicates the players' interest in the British pound. However, the advantage remained on the side of sellers, even despite its major decline, which has been observed since the beginning of May 2020. However, medium-term buyers are also attracted by rather interesting lows, to which GBP/USD updates every time upon the release of negative news on the state of the UK economy. The COT report indicated that short non-profit positions increased to 54,799 from 45,213 during the week, while long non-profit positions also increased, from 31,525 to 35,820. As a result, the non-profit net position became even larger negative and turned out to be –18,989 against –13,668, which so far indicates a bearish trend in GBP/USD. As for the intraday strategy, the bulls need to defend the support of 1.2198, which formed yesterday at the US session. A good signal to buy the pound will be for a false breakout to form on it along with a rebound from the moving average, which will lead to a larger upward momentum of the pair in the resistance area of 1.2245, where buyers could face difficulties. Consolidating on this range will lead to a larger upward trend to the area of a high of 1.2293, where I recommend taking profits. In case the pound declines to the 1.2198 level in the morning, and the market is still on the side of the pound sellers, it is best to open long positions from the support of 1.2162 after forming a false breakout, since this will be the fifth test in this account, and it is unlikely for the bulls to protect it, as before. It is best to buy GBP/USD immediately for a rebound from a low of 1.2122 or from a larger support in the region of 1.2074, counting on a correction of 30-40 points within the day.

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

Pound sellers urgently need to return the market to their control, and this can only be done after consolidating under intermediate support of 1.2198, which will increase the pressure on the pair and will definitely lead to the next test of the lower border of 1.2162. It will be possible to talk about resuming the downward trend after a breakout of support 1.2162, which will quickly push GBP/USD to May lows in the areas of 1.2122 and 1.2074, where I recommend taking profit. If the bulls turn out to be stronger in the morning, then maintaining control over the 1.2198 level may lead to a resistance test of 1.2245. It is best to open short positions from there after forming a false breakout, which will clamp the pound in the new side channel of 1.2162-1.2245. I recommend selling immediately for a rebound only after updating a larger high in the region of 1.2293, counting on a correction of 20-30 points by the end of the day.

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Signals of indicators:

Moving averages

Trading is slightly above 30 and 50 moving averages, which indicates a possible slowdown of the bear market in the short term.

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 in the region of 1.2215 will lead to a new wave of pound growth. In case of a fall, a breakthrough of the lower border of the indicator in the region of 1.2170 will increase the pressure on the pair.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit traders are speculators, such as individual traders, hedge funds and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long nonprofit positions represent the total long open position of nonprofit traders.
  • Short nonprofit positions represent the total short open position of nonprofit traders.
  • The total non-profit net position is the difference between the short and long positions of non-profit traders.
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EUR/USD: plan for the European session on May 26. COT reports (analysis of yesterday's trade). Euro buyers are waiting for

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

Trading was in a narrow side channel yesterday since the US market was closed. The bears attempted to continue the downward trend in the morning, however, good data on consumer confidence in Germany returned demand for EUR/USD, which resulted in forming a bullish momentum today in the Asian session. Commitment of Traders (COT) reports for May 19 recorded an increase in short positions, while long positions were partially reduced, indicating a slowdown in the bullish momentum observed since mid-April. Traders continue to build up short positions at the euro's convenient growth in the area of large levels, which recently has been the 10th figure. The report shows an increase in short non-profit positions from 93,840 to 95,194, while long non-profit positions decreased from 171,980 to 167,756. As a result, the positive non-profit net position also decreased and amounted to 72,562 against 78,140, which indicates an increase in interest in sales of risky assets at current prices. As for the intraday strategy, compared to yesterday, I did not revise the levels and decided to leave everything as it was. Bulls still need to defend support 1.0887, and forming false breakout there will be a signal to open long positions. Otherwise, I now recommend buying EUR/USD only for a rebound from a low of 1.0855. An equally important task for the bulls is to return EUR/USD to the resistance of 1.0928, which the pair gradually approached in the Asian session. Given that trading is slightly higher than the moving average, the bulls have a chance to return the market to their control, and it is from this level that the upward trend in the pair continues or not. Consolidating above this range, along with good data on the German economy, may lead to further growth of EUR/USD to the area of a high of 1.0966, and the target in the middle of the week will be the 1.1006 area, where I recommend taking profit.

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

The bears made an attempt to consolidate below support at 1.0887 yesterday, but if you look at the 5-minute chart, confirmation of a breakout and a bottom-up level test on a good volume did not take place, which forced speculative players to retreat after good reports on the German economy. All that the bears need today is another consolidation below the support of 1.0887, which will lead to a further downward correction of EUR/USD in the area of lows 1.0855 and 1.0808, where I recommend taking profit. However, do not forget that regular data on the state of the German economy will be released today, which may contain sufficient positive figures, and cause the euro to strengthen in the morning. In this scenario, I advise you to postpone short positions until an update of resistance of 1.0928 with forming a false breakout there, which will be the first sell signal. In the absence of activity among bears at this level, it is best to wait for a test of a high of 1.0966 and sell the euro from there immediately for a rebound while expecting a correction of 30-40 points within the day.

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Signals of indicators:

Moving averages

Trade is conducted above 30 and 50 moving averages, which indicates an attempt to return buyers to the euro 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 in the region of 1.0920 will lead to a new upward momentum of the pair. A break of the lower border of the indicator in the area of 1.0887 will increase pressure on the euro.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit traders are speculators, such as individual traders, hedge funds and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long nonprofit positions represent the total long open position of nonprofit traders.
  • Short nonprofit positions represent the total short open position of nonprofit traders.
  • The total non-profit net position is the difference between the short and long positions of non-profit traders.
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Technical Analysis of GBP/USD for May 26, 2020:

Technical Market Outlook:

The GBP/USD pair has bounced from the upper channel line and technical support located around the level of 1.2165. The momentum remains neutral-to-negative, but there is still a room for another downside wave. The market conditions are now oversold, so the odds for a bounce extension are high. The last swing low and technical support is seen at the level of 1.2072. On the other hand, the nearest technical resistance is located at the level of 1.2246.

Weekly Pivot Points:

WR3 - 1.2499

WR2 - 1.2389

WR1 - 1.2274

Weekly Pivot - 1.2176

WS1 - 1.2057

WS2 - 1.1949

WS3 - 1.1823

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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GBPUSD reaching 1st support, potential bounce !

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Trading Recommendation

Entry: 1.2167

Reason for Entry: Horizontal swing low, 61.8% fibonacci retracement

Take Profit :1.2297

Reason for Take Profit: Horizontal swing high resistance

Stop Loss: 1.2073

Reason for Stop loss: Horizontal swing low

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Forecast for EUR/USD on May 26, 2020

EUR/USD

As expected, the euro was trading in a small range on Monday due to holidays in the UK and the US. The single currency ended the day at the opening price. The price consolidated under the trend line of the price channel on the euro's daily chart, but remained above the MACD indicator line. The euro should overcome the MACD line and work out the lower limit of the range 1.0767-1.0995, and overcome it either immediately or with a slight delay. The target of the decline is 1.0575.

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A small convergence has formed on the four-hour chart on the Marlin oscillator, this may be a sign of continued price consolidation. The euro can be helped by today's data on consumer climate in Germany from GfK - the forecast for the June index is -19.1 against -23.4 in May.

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Data on sales of new homes in the US for April will come out in the evening - a forecast of 492,000 against 627,000 in March. US consumer confidence is expected to rise from 86.9 to 87.1 in May. The growth is insignificant and therefore a breakthrough down may not take place today. To form a condition for a decrease, the price should be consolidated at a signal level of 1.0885

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CAD/JPY approaching resistance, potential reversal

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Trading Recommendation

Entry: 77.528

Reason for Entry: horizontal swing high resistance and 78.6% fibonacci retracement

Take Profit: 76.499

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

Stop Loss: 77.814

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

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Forecast for GBP/USD on May 26, 2020

GBP/USD

The British pound failed to gain a foothold under the MACD line on Monday (closing of the day was slightly higher than this line), and it opened above this line today. But the Marlin oscillator remains in the zone of negative values. The price may return below the MACD line, as it is still below the Fibonacci level of 161.8% and below the balance line (indicator red).

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The price is developing between the signal level of 1.2165 and the MACD line on the H4 chart. A reversal of the current candle occurred from this line, the Marlin oscillator in a neutral position - on its own zero line.

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The CBI retail sales balance for the current month will be published this afternoon, with a forecast of -65 versus -55 in April, which may support the pound in deciding to once again attack the support of the signal level to the downside. Consolidation under it opens the way to 1.1935 - Fibonacci level of 200.0%.

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Forecast for AUD/USD on May 26, 2020

AUD/USD

The Australian dollar took advantage of the lull in the market and slightly grew on Monday and this morning. A double divergence on the Marlin oscillator exerts pressure on the price on the daily chart, so the 0.6677 level (the goal of a growing trend) is unlikely to be achieved. The price should work out and gain a foothold at the 0.6478 level, then the prospect of a medium-term decline will open up for the aussie.

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The price intensified growth after a reversal from supporting the MACD line on the four-hour chart, which was also helped by today's data on the New Zealand trade balance, which showed growth from $722 million to $1267 million in April while expectation was at $1250 million. Marlin in the growth zone. The price will take at least a day to return to starting positions before the assault on the MACD line support (0.6540).

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Forecast for USD/JPY on May 26, 2020

USD/JPY

The dollar only grew by seven points against the yen on Monday, the balance indicator line kept the growth for several days, but this morning a breakthrough of this resistance took place and the price boldly moved to the first target level of 108.30 (February 3 low). Overcoming the level will open the second target of 109.50 - a November 2, 2019 high. The Marlin oscillator moved up, already in the zone of positive values.

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The price crossed the signal level of 107.78, a May 11 high, on the four-hour chart, while the Marlin oscillator turned up from the border with the decline territory. The situation is completely up.

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CADJPY holding above ascending trendline support! Further push up expected!

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Trading Recommendation

Entry: 76.946

Reason for Entry: Ascending trendline support, 50% Fibonacci retracement.

Take Profit : 77.822

Reason for Take Profit: Horizontal swing high

Stop Loss: 76.529

Reason for Stop loss: Graphical swing low, 61.8% Fibonacci retracement

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Hot forecast and trading signals for the GBP/USD pair on May 26. COT report. Sellers have moderate advantage. Pound can lose

GBP/USD 1H

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An absolute flat was observed on the hourly chart for the pound/dollar pair on Monday. The activity of market participants was minimal, even lower than for the EUR/USD pair, which is traditionally considered less volatile. Quotes that have already overcome the support area of 1.2196-1.2216 returned to it and, at the time of writing, were trading slightly below it. Given the trend of recent days, a new downward channel has formed, which eloquently shows the current trend for the pair. It's down. Therefore, the pair can now rebound off the area 1.2196-1.2216 from below, as well as from the upper border of the descending channel and resume downward movement. Last week, the bulls did not manage to cross the Senkou Span B line, therefore, in aggregate, technical factors speak in favor of continuing the movement down to the May 18 low.

GBP/USD 15M

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The lowest linear regression channel turned up on the 15-minute timeframe, however, we would not rush to conclude that the downward trend was coming to an end in the shortest term, since the bulls and bears were in almost complete balance on Monday. There is no upward movement as such now. The pair was trading between levels 1.2164 and 1.2204 on Friday and Monday, that is, in a very narrow side channel.

COT Report

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The latest COT report for May 19 shows that the total number of buy and sell transactions among large traders per week increased by 29,000, and in equal proportions. Thus, large traders began to more actively trade the pound, which, however, is not particularly noticeable on the pair's movement chart, the volatility remains the same, not too high for the pound. Nevertheless, professional traders in the reporting week continued to actively sell British currency (+8303 sales contracts) and they were much less active in acquiring purchase contracts (total +4313). Thus, from our point of view, the mood for the GBP/USD pair remains more downward.

The fundamental background for the British pound remains negative. No important macroeconomic publications are planned in the first days of the new trading week in the United Kingdom and the United States, and fno important information from Great Britain is being received at all. In recent weeks, traders have been interested in promoting negotiations on an agreement between Brussels and London, but the next round ended in nothing, the parties admitted that they were at an impasse and without further concessions it makes no sense to continue the discussion. Too many cornerstone questions exist between Britain and the EU. Thus, it is now very difficult for the British pound to fuel demand among market participants, but at the same time, it cannot fall constantly and continuously, especially during the crisis, which also covered the US tightly. Thus, we believe that the pair will continue to fall to 1.2073, but it may take some time. Nonetheless, the advantage of sellers is not so strong at the moment.

We have two main options for the development of the event on May 26:

1) The initiative for the pair remains in the hands of bears. Thus, we recommend buying the British pound not before consolidating the price above the Senkou Span B line at 1.2270 and above the resistance level of 1.2280 with the first target resistance level of 1.2399. Take profit will be about 110 points in this case. The pairs are fraught with high risks below these levels of purchase, since the bulls don't have much strength now.

2) Sellers are currently more likely to implement their plans. Bears have already returned to the area below 1.2196-1.2216, which is enough to resume sales while aiming for the May 18 low at 1.2073. In this case, take profit will be about 100-110 points.

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Overview of the GBP/USD pair. May 26. Mike Pompeo demands compensation from China for the "coronavirus". China accuses Washington

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: -57.1704

The British pound spent the first trading day of the new week in calm and quiet trading. After the bulls made an unsuccessful attempt to start a new upward trend, the pair's quotes returned to the area below the moving average line, so the trend has now changed back to a downward trend. On Monday, May 25, the pair began to adjust against the new trend, but this correction is very difficult to call a strong or weak correction or even a correction at all. The volatility of the day is less than 50 points, which is a kind of anti-record for the pound/dollar pair. Thus, we still assume that the formation of a downward trend will continue, since almost all technical indicators speak in favor of this. Both linear regression channels are directed downward, the pair is below the moving average, and the Ichimoku indicator has formed a "dead cross". The overall fundamental background for the British currency remains completely negative, and last Friday it was supported by the macroeconomic background. The UK retail sales report for April showed a 23% year-on-year decline. And yes, the situation in the United States is no better, just remember the unemployment reports overseas. However, it is the UK that is now facing a "double" crisis, as in addition to the crisis caused by the pandemic, its economy has been suffering from a "divorce" from the European Union for more than three years.

There were no important publications in the UK or the United States on Monday. Exactly the same number of them will be today, on Tuesday, May 26. In such conditions, the volatility of the GBP/USD pair may remain low, but at the same time, we remind you that traders are now paying much more attention to technical factors and the overall fundamental background, rather than regular reports. Little news and important information have been received from the UK recently. We remember the time when every day the Parliament received news on Brexit, on the vote on the "deal" with the European Union, on the opposition of the Democrats and Conservatives, on the activities of Theresa May, and then Boris Johnson. Now - news calm. But from across the ocean, the news flows "like a bucket". Most of it has already been covered, most of it has a certain cyclical nature since Donald Trump has clearly formed a list of the most exciting topics in recent months and comments on them almost every day as if reading a mantra. However, yesterday, Trump also made a statement that has never been heard from his lips in recent months. The US leader said that Vladimir Putin probably does not want him to remain President for a second term. Trump said that "he is the worst thing that has happened to Russia", but he "got along with the Russian President". Thus, according to Trump, who has recently been complaining more and more often, China and Russia do not want his re-election, although, after the 2016 election, Trump was accused of having ties with Russia, which could have influenced the election. No evidence has been found, and just like in the case of the Chinese pandemic, we will never know the truth.

By the way, not only Donald Trump in the White House believes that China is to blame for the "coronavirus" epidemic. To be fair, other politicians have the same opinion. However, among these politicians, it is difficult to find at least one member of the Democratic Party, which probably chose the path of cooperation with China and not the other way around. US Presidential National Security Advisor Robert O'Brien compared China's actions or inaction on the coronavirus issue with the actions of the Soviet government in the 1986 accident at the Chernobyl nuclear power plant. According to O'Brien, Beijing knew from the very beginning what was happening with the virus that appeared in Wuhan, but lied to WHO and did not allow experts from other countries to access the information. "They released a virus that destroyed trillions of dollars of American economic welfare that we have to spend to keep our economy going, to keep the American population afloat during this epidemic," O'Brien said.

The head of the US State Department, Mike Pompeo, echoes him. "First we need to deal with the epidemic. The second stage is that we need to inform the whole world that the Chinese Communist Party still does not provide us with information," Pompeo said at a regular briefing. "The world should come together to make China pay its bills until it changes its behavior and behaves like a decent country," Pompeo added. "Then, when the first two stages are completed, the US President will decide how best to get China to admit its mistakes and realize the consequences of its actions and agree to pay compensation for those in the US affected by the virus." According to Pompeo, compensation should be given not only to those Americans who fell ill or lost a loved one but also to those who suffered financial damage.

At the same time, Chinese Foreign Minister Wang Yi said that "some political forces in America are holding Sino-American relations hostage, trying to push them to a new cold war." "This is dangerous and will endanger world peace," Wang Yi said.

The US currency does not react to all this news yet and continues to grow steadily in price in a pair with the British pound. We believe that in the future of several months, the quotes may fall to absolute lows over the past decades around $1.14. And a lot will depend on what happens just in the Foggy Albion. But the questions remain the same. Will Boris Johnson be able to negotiate with Brussels (unlikely) and, if not, how is he going to pull the British economy "from the other world", where it may end up at the end of the "coronavirus" crisis and after a complete break in ties with the European Union? The future of the British pound and the UK economy depends on the answers to these questions. According to some experts, London deliberately does not make contact with the group of Michel Barnier and is not going to concede, and therefore is not eager to sign a comprehensive agreement. Thus, the second issue is increasingly on the agenda.

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The average volatility of the GBP/USD pair has been steadily decreasing in recent days and is currently only 66 points. On Tuesday, May 26, thus, we expect movement within the channel, limited by the levels of 1.2125 and 1.2257. 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 – 1.2146

S2 – 1.2085

S3 – 1.2024

Nearest resistance levels:

R1 – 1.2207

R2 – 1.2268

R3 – 1.2329

Trading recommendations:

The GBP/USD pair was fixed below the moving average on the 4-hour timeframe, 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, with goals of 1.2257 and 1.2329.

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Overview of the EUR/USD pair. May 26. Donald Trump again insults the Democrats, Joe Biden, and China. A new batch of accusations

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) - sideways.

CCI: -90.7906

The EUR/USD currency pair spent the first trading day of the week in absolutely calm trading without major price changes. By and large, the market was flat all day. In principle, this behavior of traders is not surprising for Monday. It often happens that the first days of the week are spent in a frank flat. No important macroeconomic statistics were planned for this day, either in the United States or in the European Union. Moreover, most of the macroeconomic background continues to be simply ignored by market participants. We would call the fundamental background for the EUR/USD pair very strong, but it is important for the future, not at this time. The most important topics that can affect both the US economy and the economy of the whole world are now plentiful. They are developing, but do not yet have a proper effect on the movement of the pair. Hardly anyone can argue that the topic of the re-election of Donald Trump for a second term is not important. This will determine the entire future policy of the United States for the next 4 years. Will trade wars and conflicts continue around the world, or will there be a relatively quiet time when the global economy can recover from the coronavirus epidemic? It is safe to say that there will be little peace in the world under Donald Trump. With a calmer Joe Biden, the chances of establishing relations with China and Russia are much greater. Thus, it would seem that the presidential election is still about six months away, but many experts already consider the probability of a candidate's victory, regularly updating their political ratings and conducting various simulations, according to which Trump is unlikely to win. If this topic were not so important, it would not be given so much time. Also of great importance is the confrontation between China and the United States, which is again gaining momentum. We have already repeatedly discussed why the conflict between the two superpowers has re-emerged. In short, China's spread of the COVID-2019 virus has dealt a major blow to the US economy and personally to the positions of Donald Trump. We can't say whether Beijing did it on purpose, and no one can. This kind of information will never become public. Therefore, Washington can only continue to blame China, and China - to renounce accusations. However, both countries can award each other new sanctions, duties and other "amenities" in 2020, and not only the American and Chinese economies will suffer, which would be fair, but also the economies of other countries of the world, since everyone on the planet Earth is tied to each other.

As we have already said, the entire fundamental background for the EUR/USD pair continues to revolve around US policy, the China-US confrontation, and future US elections. The head of the White House, Donald Trump, continues to criticize and insult everyone who comes under his hand. Of course, most of the attention goes to China, the Democrats, personally Joe Biden and Barack Obama. For example, just the other day, Donald Trump, who dubbed his main opponent "Sleepy Joe" said that he is not fit to serve as President of the United States. Asked about Biden's strong qualities, Trump said: "I could say that he has the experience, but in reality, this is not the case, because he does not even remember what he did yesterday. He has been in politics for a long time, and he has never been known as a smart person." When asked by the same journalist about Biden's weaknesses, Trump replied: "He has a lot of them. I can talk about them all day. First, he doesn't have a sharp enough mind to be President. Biden doesn't know if he's alive. I'm against anyone who can't answer simple questions. I've never seen anything like it." These two statements are all about Donald Trump, as well as a reflection of his policies inside and outside the country. The most important thing is the US President's lack of respect for really strong opponents. Biden was elected by the Democratic Party, which means he is one of the most powerful US politicians at this time. China is one of the strongest countries in the world and has one of the largest economies. However, Trump continues to treat these opponents from a position of strength, threats, and insults, believing that he is invincible. Moreover, Trump continues to make a huge number of unsubstantiated statements that are not supported by anything. For example, he called the entire Democratic Party "corrupt": "I am against a powerful and very corrupt party. The Democrats are very corrupt, and we caught them on it." Who and what caught the Democrats is unclear. However, Trump allows himself to continue making such statements, which further incites voters against him. Also, the odious leader of the United States said that the media, which he personally regularly insults, do not write enough about his services to the country and are generally unfair to him. "The media is also completely corrupt in this country. Whenever I do good things, they write something bad about me. I do something good again and again get a bad story or nothing at all. I solved the problem with the ventilator – nothing in response. Raised the economy – in response, nothing. Have you ever seen anything good written about me? I raised the market, but if Biden takes my place, it will collapse." Is there anything to comment on here? We are not biased against the US President, we only analyze his statements and come to the conclusion that this is a very strange leader who seems to have leadership qualities and can raise the country, however, his exceptional conflict levels all his advantages as a President.

Well, technical factors remain the most important and significant for the euro/dollar pair. We have already said that after the price rebounds from the level of 1.1000 and we expect a move down to the lower border of the side channel of 1.0750. Thus, the pair remains inside the side channel and overcame the moving average line. The volatility of the first trading day of the week was low, no more than 50 points. Thus, there were no significant changes in the technical picture.

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The average volatility of the euro/dollar currency pair as of May 26 is 68 points and has been steadily declining in recent days. Thus, the value of the indicator is characterized at this time as "average". Today, we expect quotes to move between the levels of 1.0828 and 1.0964. The reversal of the Heiken Ashi indicator downwards signals a possible resumption of the downward movement to the lower border of the side channel 1.0750-1.1000.

Nearest support levels:

S1 – 1.0864

S2 – 1.0803

S3 – 1.0742

Nearest resistance levels:

R1 – 1.0925

R2 – 1.0986

R3 – 1.1047

Trading recommendations:

The EUR/USD pair has started a round of upward correction. Since traders have fixed below the moving average line and rebounded from the level of 1.1000, it is now recommended to sell the pair with the goals of 1.0864 and 1.0803, but after the reversal of the Heiken Ashi indicator down. It is recommended to buy the euro currency in the case of a reverse price fixing above the moving average line with the goal of a volatility level of 1.0964.

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Hot forecast and trading signals for the EUR/USD pair on May 26. COT report. Sellers urgently need to overcome 1.0871

EUR/USD 1H

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The EUR/USD pair showed multidirectional movements in a narrow price range not exceeding 50 points on the hourly timeframe during the first trading day of the week. The bears did not manage to overcome the support area of 1.0881-1.0892 on Monday, as well as the Senkou Span B line of the Ichimoku indicator for the 4-hour timeframe. Thus, the downward movement has stalled so far, and no signals have been received to open new sales. Nevertheless, the euro's fate remains in the hands of sellers, as they can resume the pair's sales today. We believe that the pair should fall to an ascending trend line in the short term, which now lies near the 1.0810 level, and possibly to the lower border of the side channel of 1.0750-1.1000. The bulls' potential is limited so far to the 1.0990-1.1008 range. We can conclude that the bulls will try to form a new upward trend above this area.

EUR/USD 15M

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We see that the downward trend is still preserved on the 15-minute timeframe, however, the lower linear regression channel turned sideways. Monday was an absolute flat, so such a channel reversal is not surprising. Everything will now depend on the Senkou Span B line. The pair can be sold when you overcome this.

COT Report

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The latest COT report of May 19 showed that large traders who engage in professional activities with the aim of earning exchange rate profit continued to reduce purchases of the euro and increase sales in the reporting week. The growth of the latter was small, only 1257 contracts, but in aggregate with -3425 contracts for sale, we have a serious deterioration in the mood of traders regarding the euro. The total number of purchase contracts also decreased by 294 units, and the number of Short-deals increased by 970 units. Thus, we see that the mood of traders remains bearish and only intensifies. Therefore, we can even count on overcoming the ascending trend line on the hourly chart, but for now we are just waiting for quotes to fall to this line.

The fundamental background for the pair remains neutral at this time. Nothing interesting happened in the world (meaning events that could affect the pair here and now) and no macroeconomic report was published on the first trading day of the week. The calendar of macroeconomic events also does not contain anything interesting on Tuesday. Thus, the pair's volatility and the activity of market participants may continue to remain low today. Perhaps the situation will change on Wednesday when ECB President Christine Lagarde and ECB Vice President Luis de Guindos make speeches. However, we believe that when a pair is trading in the side channel, it does not need special motives to continue moving between its borders. In general, we recommend that traders continue to monitor any messages on the subject of the US-Chinese confrontation, as they can be potentially very important.

Based on the foregoing, we have two trading ideas for May 26:

1) It is possible for the pair to grow if the price rebounds from the area of 1.0881-1.0892, however, we would not recommend traders to process this signal, since it can be false. Buyers of the euro are advised to enter when the pair consolidates above the Kijun-sen line (1.0939). In this case, we recommend buying the pair with a target of 1.0990. Potential to take profit in this case will be about 50 points.

2) The second option - bearish - is more likely. You are advised to sell the euro after overcoming the area of 1.0881-1.0892 and the Senkou Span B line (1.0871) with the aim of an ascending trend line (approximately 1.0810), around which the future fate of the euro/dollar pair will be decided. Potential to take profit in executing this scenario will be 55 points. Given the pair's volatility in recent days, taking profit is quite high.

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

EUR/USD. Calm before the storm?

General sentiment in the foreign exchange market has not changed over the weekend: anti-risk sentiment is still prevailing, providing background support for the US currency. High-ranking officials from the United States and China continue to exchange high-profile accusations that only exacerbate the overall situation. The high-profile national security bill in Hong Kong added fuel to the fire: now Washington is threatening Beijing with sanctions, not only in connection with a possible refusal to jointly investigate the causes of COVID-19, but also in connection with the "capture" of Hong Kong. China fights back - they say it's impossible to capture what is rightfully yours. After all, Beijing considers Hong Kong to be its full territory, where the formula "one country - two political systems." Therefore, any comments of American politicians regarding the Hong Kong issue, the Chinese perceive with hostility, claiming interference in the internal affairs of the state.

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Nevertheless, Washington has been putting pressure on this "corn" for quite some time, provoking the anger of high-ranking Chinese politicians. First, the Americans openly supported anti-Chinese protests in Hong Kong. Back in November last year, Trump signed scandalous bills that supported Hong Kong protesters. Under the first law, the US Department of State must confirm to Congress at least once a year that Hong Kong maintains sufficient autonomy to maintain favorable trading conditions with the United States. Otherwise, the document provides for sanctions against the city authorities for violating human rights. The second law banned the supply of funds to the Hong Kong police that could be used to disperse demonstrations: tear and pepper gases, rubber bullets and stun guns.

The coronavirus blocked the protest movements of anti-Chinese activists for several months, but so far the rallies have flared up with renewed vigor, especially since Beijing has provided yet another piece of information to"rock the boat". Initially, protests began against considering amendments to the law on extradition of suspects, which would allow Hong Kong to extradite suspects to jurisdictions with which it does not have an extradition agreement (including Taiwan, Macau and mainland China). According to the protesters, this rule of law posed a threat to those activists who disagree with the policies of official Beijing. Subsequently, the Hong Kong administration refused to consider these amendments, and then completely removed them from the agenda. But, as they say, "appetite came with eating" - protesters have already begun to demand liberalization of local legislation and a decrease in the influence of mainland influence.

Beijing responded in a peculiar way: Chinese parliamentarians introduced a bill on national security in Hong Kong. According to this document, the special administrative region of the PRC should at the legislative level prevent "treason, schism, incitement and subversive activity" against the government in Beijing. Supporters of democracy in Hong Kong consider this step another attempt by the Chinese Communist leadership to level out local freedoms. Nevertheless, the bill is already on the agenda of the session of the National People's Congress, which began on May 22 and will last until May 28. This initiative was opposed not only by the United States, but also by the European Union, Canada, Great Britain, and also Australia. However, according to some analysts, Beijing is very likely to adopt the bill, provoking retaliatory sanctions from Washington.

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Thus, the growth of anti-risk sentiment in the foreign exchange market is justified. Moreover, the United States exerts pressure on the PRC not only on the "Hong Kong line", but also on the issue of COVID-19. In particular, yesterday, Trump's national security adviser Robert O'Brien compared the actions of China after the outbreak of coronavirus with concealing the disaster at the Chernobyl nuclear power plant by the Soviet Union in 1986. Such accusations were made against the backdrop of the Republican legislative initiative - Lindsay Graham's bill allows President Donald Trump to impose sanctions on China for refusing to cooperate in identifying the causes of the pandemic.

Thus, US sanctions against China are only getting stronger. The Cold War between the United States and China will obviously slow down the global economic recovery after the coronavirus crisis, and this fact puts pressure on risky currencies. The dollar, in turn, can again "return to the game," since recently it has been playing the role of the main defensive asset. The foreign exchange market is passive today because the United States is celebrating Memorial Day - US trading floors are closed. Therefore, the main price fluctuations for the will begin on Tuesday.

If Beijing does not refuse to adopt the above bill (which is unlikely), and the representatives of China and the United States do not sit at the negotiating table regarding the investigation of the causes of COVID-19 (which is almost unbelievable), then the pressure on the pair will continue. This will allow the pair bears to test the nearest support level of 1.0860 (the middle line of the Bollinger Bands indicator, which coincides with the Kijun-sen line on the daily chart). If the rhetoric of the parties is tightened, then sellers will be able to push the pair to the bottom of the eighth figure. If the PRC shows signs of compromise (at least in the Hong Kong issue), then the bulls will be able to return to the upper line of the Bollinger Bands indicator, that is, to the 1.0990 level. But this scenario is not basic, given the recent statements by senior politicians in both China and the United States.

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