Technical Analysis of GBP/USD for May 27, 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 and hit the first target zone located at the level of 1.2315. The local high was made at the level of 1.2361, so the bulls are pushing through this zone and are targeting the next level seen at 1.2381. The market conditions are not overbought yet, 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.

analytics5ece0d3b45abd.jpg

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

Technical Analysis of EUR/USD for May 27, 2020:

Technical Market Outlook:

After the Hammer candlestick pattern was made at the level of 1.0870, the bulls took over the market and pushed the price towards the next technical resistance located at 1.0991. This level is the lower boundary of the supply zone so any violation of this zone would be even more bullish. 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).

analytics5ece0c3059292.jpg

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

XAUUSD reaching 1st support, potential bounce !

analytics5ece0a15c0565.jpg

Trading Recommendation

Entry:1701.45

Reason for Entry: Trendline pullback, 88% fibonacci retracement

Take Profit :11734.55

Reason for Take Profit: Horizontal swing high resistance

Stop Loss: 1683.08

Reason for Stop loss: Horizontal swing low

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

Technical Analysis of BTC/USD for May 27, 2020:

Crypto Industry News:

According to a Russian television station, a bill was passed to the parliament by which crypto trade could be completely outlawed. Thanks to the act, the Russians could also regulate digital assets to the detriment of their owners.

Federal Assembly members propose severe penalties for using cryptocurrencies. These regulations suggest a fine of 500,000 to 2 million rubles for users who make large profits on electronic currency, while those who use crypto for illegal activities could be sent to prison for up to 7 years. Although the bill does not prohibit the complete use of digital assets, analysts believe that approval of this idea by the government will cause that running stock exchanges and trading on the fiat-crypto line through any Russian financial institution will be a violation of the law.

One should remember about the recent change in the position of the Russian authorities towards the crypto industry, where the Russian Central Bank published a bill prohibiting the issue of cryptocurrencies, citing the threat associated with them.

Recently, the Russian Federal Ministry of Economic Development has submitted a draft of another law, this time enabling the legalization of cryptocurrencies and all solutions based on blockchain technology. However, its introduction would be based on special regulations. This would mean that the Russian Central Bank would be the only body regulating this sector, which would significantly reduce the crypto industry in Russia.

Technical Market Outlook:

The BTC/USD pair has been trading under the blue trend line in a narrow zone between the levels of $8,656 - $8,836 after the bounce from the level of $8,567 was made. 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.

analytics5ece09ef0e348.jpg

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

Fractal analysis of the main currency pairs on May 27

Forecast for May 27:

Analytical review of currency pairs on the scale of H1:

analytics5ece078712eaa.jpg

For the euro / dollar pair, the key levels on the H1 scale are: 1.1090, 1.1041, 1.1025, 1.0995, 1.0946, 1.0919, 1.0898 and 1.0869. Here, the price registered local initial conditions of May 25 to continue the upward trend on May 14. The continuation of the upward movement is expected after the breakdown of the level of 1.0995. In this case, the target is 1.1025. Price consolidation is near this level. The price passing the noise range of 1.1025 - 1.1041 should be accompanied by a pronounced upward movement. Here, the potential target is 1.1090.

A short-term upward movement is expected in the range of 1.0946 - 1.0919, hence, there is a high probability of an upward reversal. The range of 1.0919 - 1.0898 is a key support for the upward structure and price passing this level will favor the development of a downward trend. In this case, the target is 1.0869.

The main trend is the local structure for the top of May 25

Trading recommendations:

Buy: 1.0995 Take profit: 1.1025

Buy: 1.1043 Take profit: 1.1090

Sell: 1.0944 Take profit: 1.0920

Sell: 1.0896 Take profit: 1.0870

analytics5ece07a17575f.jpg

For the pound / dollar pair, the key levels on the H1 scale are: 1.2566, 1.2515, 1.2438. 1.2361, 1.2288, 1.2259, 1.2208 and 1.2160. Here, the price registered a local upward structure from May 25 to continue the main trend. The continuation of the upward movement is expected after the breakdown of the level of 1.2361. In this case, the target is 1.2438. Price consolidation is near this level. The breakdown of the level of 1.2440 should be accompanied by a pronounced upward movement. Here, the target is 1.2515. For the potential value for the top, we consider the level of 1.2566. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 1.2288 - 1.2260. The breakdown of the last level will lead to an in-depth correction. Here, the target is 1.2208. This level is a key support for the top.

The main trend is the upward trend of May 15 and the local structure of May 25

Trading recommendations:

Buy: 1.2361 Take profit: 1.2436

Buy: 1.2440 Take profit: 1.2515

Sell: 1.2257 Take profit: 1.2210

Sell: 1.2206 Take profit: 1.2160

analytics5ece07bbdbbd6.jpg

For the dollar / franc pair, the key levels on the H1 scale are: 0.9702, 0.9684, 0.9672, 0.9645, 0.9618, 0.9586 and 0.9564. Here, the price registered the potential of May 25 for the development of a downward trend. The continuation of the upward movement is expected after the breakdown of the level of 0.9645. In this case, the target is 0.9618. Price consolidation is near this level. The breakdown of the level of 0.9618 will lead to a pronounced movement. Here, the target is 0.9586. For the potential value for the bottom, we consider the level of 0.9564. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 0.9672 - 0.9684. The breakdown of the latter value will lead to an in-depth correction. Here, the potential target is 0.9702. This level is a key support for the downward structure.

The main trend is the formation of the downward structure of May 25

Trading recommendations:

Buy : 0.9685 Take profit: 0.9700

Buy : 0.9704 Take profit: 0.9728

Sell: 0.9645 Take profit: 0.9622

Sell: 0.9616 Take profit: 0.9588

analytics5ece07d6154cd.jpg

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 mainly expect the development of the descending structure of 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

analytics5ece07f00c916.jpg

For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3942, 1.3873, 1.3829, 1.3758, 1.3705 and 1.3627. Here, we returned to the consideration of the medium-term downward cycle of May 14. Short-term downward movement is expected in the range of 1.3758 - 1.3705. The breakdown of the last level will allow us to expect movement to a potential target - 1.3627. Upon reaching this level, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 1.3829 - 1.3873. The breakdown of the last level will lead to the development of an in-depth correction. Here, the potential goal is 1.3942. We expect the initial conditions for the upward cycle to be formed to this level.

The main trend is the medium-term downward trend of May 14

Trading recommendations:

Buy: 1.3829 Take profit: 1.3870

Buy : 1.3875 Take profit: 1.3940

Sell: 1.3756 Take profit: 1.3709

Sell: 1.3703 Take profit: 1.3637

analytics5ece0808818c9.jpg

For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6792, 0.6760, 0.6705, 0.6666, 0.6614, 0.6585, 0.6552 and 0.6509. Here, we are following the development of the upward cycle of May 15. The continuation of the upward movement is expected after the breakdown of the level of 0.6666. In this case, the target is 0.6705. Price consolidation is near this level. The breakdown of the level of 0.6705 should be accompanied by a pronounced upward movement. Here, the target is 0.6760. For the potential value for the top, we consider the level of 0.6792. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 0.6614 - 0.6585. The breakdown of the last level will lead to an in-depth correction. Here, the target is 0.6552. This level is a key support for the upward structure and its breakdown will lead to the formation of initial conditions for the downward cycle. In this case, the goal is 0.6509.

The main trend is the upward structure of May 15

Trading recommendations:

Buy: 0.6666 Take profit: 0.6705

Buy: 0.6707 Take profit: 0.6760

Sell : 0.6614 Take profit : 0.6587

Sell: 0.6583 Take profit: 0.6552

analytics5ece08245d9dc.jpg

For the euro / yen pair, the key levels on the H1 scale are: 119.69, 119.34, 118.83, 118.41, 117.59, 117.30 and 116.96. Here, the price registered a local upward structure on May 22. The continuation of the upward movement is expected after the breakdown of the level of 118.41. In this case, the goal is 118.83. Price consolidation is near this level. The breakdown of the level of 118.85 should be accompanied by a pronounced upward movement. Here, the goal is 119.34. For the potential value for the top, we consider the level of 119.69. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 117.59 - 117.30, hence, the high probability of a reversal to the top. The breakdown of the level of 117.30 will have the downward structure. In this case, the target is 116.96.

The main trend is the local ascending structure of May 22

Trading recommendations:

Buy: 118.41 Take profit: 118.80

Buy: 118.85 Take profit: 119.30

Sell: 117.59 Take profit: 117.32

Sell: 117.28 Take profit: 116.96

analytics5ece08456609e.jpg

For the pound / yen pair, the key levels on the H1 scale are : 135.26, 134.28, 133.86, 133.16, 132.13, 131.65 and 130.98. Here, we are following the development of the ascending structure of May 15. The continuation of the upward movement is expected after the breakdown of the level of 133.16. In this case, the target is 133.86. Price consolidation is in the range of 133.86 - 134.28. For the potential value for the top, we consider the level of 135.26. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 132.13 - 131.65. The breakdown of the last level will lead to an in-depth correction. Here, the potential target is 130.98.

The main trend is the upward structure of May 15

Trading recommendations:

Buy: 133.16 Take profit: 133.86

Buy: 134.30 Take profit: 135.25

Sell: 132.13 Take profit: 131.66

Sell: 131.63 Take profit: 131.00

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

Technical Analysis of ETH/USD for May 27, 2020:

Crypto Industry News:

On May 18, the Ministry of Digital Transformation of Ukraine published a new draft law "On Virtual Assets", which aims to determine the legal status of cryptographic assets, rules for their circulation and issue in the country. The current version of the proposal is not final and is open to dialogue with the cryptographic community until June 5, 2020.

According to one of the co-authors of the new bill, the main goal of the initiative is to enable local cryptographic companies, such as stock exchanges, to open bank accounts. Michael Chobanian, president of the Bitcoin Ukraine association, an organization that co-authored the new account along with state authorities, law firms and industry entities, says cryptocurrency exchanges still can't create a bank account in Ukraine. The proposed bill aims to lead the cryptographic industry out of the "gray zone" and bring legal presence to companies in Ukraine. Pursuant to the Act, virtual asset service providers, i.e. cryptographic exchanges, issuers and users.

However, unblocking the cryptographic industry in Ukraine has some costs. Earlier this week, Andriy Khavryuchenko, founder of the DevNull.AI programming company, wrote on Twitter that the Ukrainian project "On Virtual Assets" will make all cryptocurrency wallets in Ukraine illegal unless they register with the Ministry. According to the bill, local companies must register to legally conduct fiat-to-crypto operations in Ukraine.

Ukraine is considering the law governing cryptographic assets for at least four years. The first reports of Ukrainian cryptography regulations appeared at the end of 2015, when the Verkhovna Rada of Ukraine announced plans to define the legal status of Bitcoin by January 2016. As in Russia, none of the existing legislative initiatives on cryptography has yet been adopted in Ukraine.

Technical Market Outlook:

The ETH/USD pair has bounced from the level of $195.94 which is a 38% Fibonacci retracement of the last wave down. The bulls are defending the blue trend line support and the target for them is seen at the level of $205.05 of higher at the level of $209.89. Any violation of the blue trend line will likely result in another wave down towards the levels of $193.78 and $188.86, so please keep an eye on current price developments around this levels .

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.

analytics5ece08b5558c2.jpg

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

Hot forecast and trading recommendation for EUR/USD on May 27, 2020

The rapid growth of the single European currency was more like an outburst of emotions accumulated over two days of inactivity. After all, the market essentially did not work on Friday and Monday. Either European exchanges were closed, then American ones. Not only were all the exchanges opened yesterday,but interesting macroeconomic data were released as well. So, traders who are bored with their activities, began to pour out accumulated energy in advance, going in the direction of not the most joyful forecasts for the US real estate market. But to everyone's surprise, the data turned out to be completely different than expected. However, nothing has changed, and the dollar could not recoup its losses.

analytics5ece0b3065b43.jpg

Instead of being reduced by 21.1%, sales of new homes in the United States grew by 0.6%. Moreover, according to S&P/CaseShiller, housing price growth rates accelerated from 3.5% to 3.9%. But they should have slowed down to 3.0%. Yes, the forecasts were depressing, and the growth of the single European currency was quite justified for itself. But the final data should have led to an instant pullback, with the subsequent strengthening of the dollar. However, nothing of the kind happened. Instead, we saw stagnation and consolidation.

New Home Sales (United States):

analytics5ece0b4568435.jpg

The White House saved the dollar from strengthening. Just at the time when many market participants were already thinking about buying back dollars, reports began to arrive that Donald Trump was holding a meeting on the possibility of imposing sanctions on China. This alone was enough to deter investors from hasty and rash actions. After the meeting, the US president threatened China with a serious retaliation attempt to "occupy" Hong Kong. It is this strange and absurd wording used by American officials in relation to China's National Security Act. It is not yet clear what the United States will take, but it is clear that any step will only worsen relations between the two largest economies in the world. And no one needs this in the conditions of the deepest economic recession of the world economy. One needs to recover from the epidemic of coronavirus. Washington's sharp attacks in the direction of Beijing will only delay the world economy's exit from the economic pit. So the markets were in limbo when it is completely not clear what will happen next. Moreover, Washington is the culprit of all this. And although today there is a slight rebound in the dollar, it is more of a technical nature.

analytics5ece0c8a9567f.jpg

From the point of view of technical analysis, we see the next rapprochement of the price with the upper limit of the flat formation of 1.0775/1.1000, where a stop occurred on a natural basis and as a fact a rebound in the opposite direction. It is worth noting that in this case, the ascending path was built from the average deviation of the channel of 1.0885, where the support point was found earlier in the period.

In terms of a general review of the trading chart, the daily period, it is worth highlighting the sequence of measures within the flat formation, which has already acquired a scale of almost two months.

It can be assumed that a price rebound from the 1.1000 border could theoretically return the quote to the average deviation of 1.0885, if the legitimate basis remains on the market.

Specifying all of the above into trading signals:

- We consider selling positions lower than 1.0950, in the direction of the average deviation of 1.0885.

- Buying positions should be considered higher than 1.1020 in the direction of 1.1080, but only if the upper border of the main flat falls and the clock component of the market changes.

From the point of view of a comprehensive indicator analysis, we see that the indicators of technical instruments signal a prevailing upward interest, by finding the price in the upper part of the flat formation.

analytics5ece0c9d35545.jpg

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

Demand for risk is unstable, dollar resumes growth; Overview of EUR and GBP

The risk appetite continues to increase on Wednesday morning, partly due to the lifting of restrictive measures around the world, partly due to increased expectations about the successful testing of coronavirus vaccines, of which at least a dozen are being tested. Expecting a sharp increase in activity, the head of the Federal Reserve Bank of St. Louis Bullard noted that "the third quarter is likely to be the best quarter of all time in terms of growth." Indeed, it is difficult to disagree, especially after the Atlanta Federal Reserve Bank predicts a 40% drop in GDP in the 2nd quarter and a 32% decline in the New York Federal Reserve.

Meanwhile, the Chicago index of activity from the Federal Reserve Bank fell in April from -4.97p to -16.74p, while the Dallas industrial index in May rose from the failed -74p. to -49.2p., in the same proportions, output is growing.

analytics5ecdfc6095f52.jpg

As can be clearly seen, more than a third of the April decline was won back, and all this within one month. Hopes for a strong pullback will continue to increase demand for risk, even though the situation looks bleak in absolute terms, and the US economy is not moving away from a deep recession, but continues to fall.

The corrective weakening of the dollar is unlikely to be deep, and today, it will most likely begin to recover against commodity currencies, since there is no reason for a steady increase in demand for risk.

EUR/USD

The ECB issued a report on the financial stability of the eurozone, taking into account the assessment of the consequences of the COVID-19 pandemic. As noted, the risks significantly increased in several areas at once. Banks' profitability will decline in 2020. An active decrease in the credit ratings of borrowers, a sharp increase in sovereign debt, and budget deficits in 2020 are expected.

Noting that the ECB's urgent measures to block the negative consequences of the pandemic avoided a collapse, the bank directly says that it will take a long period of support for financial institutions until the economic recovery becomes sustainable.

As a result, risk premiums have risen markedly due to high uncertainty. As long as there is a slight positivity in the markets, high premiums will contribute to the growth of demand for risky assets. However, if the growth of GDP and corporate profits go according to a pessimistic scenario, a sharp decline in asset prices can take place.

analytics5ecdfc8d39779.jpg

The report shows a clear desire of the ECB to contain the growth of assets, since the Euro zone economy is not able to reach a sustainable recovery, and excessive demand for assets increases the risk of another wave of decline.

The ECB's position will restrain the growth of the euro. As long as the EUR/USD is below the upper limit of the range 1.1000/20, it must be kept in mind that the Fed does not need a strong dollar at all, in addition to the June 12 meeting, it is likely that another stimulus package will be prepared, which will push EUR/USD up. In the short-term, the probability of breaking through the range is higher; EUR/USD is likely to grow with the target of 1.1140.

GBP/USD

The British pound rose sharply on Tuesday amid rumors of a likely softening of the EU's position in the Brexit negotiations, but the growth ended as quickly as it began, as no specifics other than a possible concession on fishing issues appeared. This concession is too small to expect a successful conclusion of the negotiations, and therefore the driver for the growth of the GBP has not been formed.

Even the performance of the Bank of England chief economist Andy Haldane, who said that the regulator did not consider the possibility of introducing negative rates, did not help. In the conditions of economic recovery, the probability of this step seemed low.

A break of resistance level of 1.2296 improved the technical picture for the pound, the probability of testing 1.2426 and 1.2467 increased slightly, but no more. There are still few fundamental reasons for growth, and in case of a pullback below 1.2290, the bearish mood will increase again.

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

Elliott wave analysis of EUR/GBP for May 27, 2020

analytics5ecdf9a65e032.jpg

EUR/GBP is finally back to test the neckline support at 0.8866. This former resistance which now acts as support should be able to protect the downside for renewed upside pressure through minor resistance at 0.8930 indicating the next impulsive rally towards 0.9065 on the way higher to and above the peak at 0.9495.

In the short-term, we should see a final dip to test the key-support at 0.8866 before EUR/GBP will be ready to turn higher again.

R3: 0.9000

R2: 0.8955

R1: 0.8930

Pivot: 0.8910

S1: 0.8880

S2: 0.8866

S3: 0.8844

Trading recommendation:

We are long EUR from 0.8760 and our stop is placed at 0.8815.

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

Elliott wave analysis of GBP/JPY for May 27, 2020

analytics5ecdf7ef4a00f.jpg

GBP/JPY tested the key-resistance at 133.19 but failed to break above in the first attempt, but after a minor correction a second and more successful attempt should be seen. A break above key-resistance at 133.19 will shift the currently alternate count to the preferred count and this outcome looks possible.

In the short-term, support is seen at 131.97 and ideally this support will be able to protect the downside for the next attack on key-resistance at 133.19. A break above here will call for a continuation higher to 135.38 on the way back to 145.95.

R3: 133.59

R2: 133.19

R1: 132.40

Pivot: 131.97

S1: 131.56

S2: 131.20

S3: 130.65

Trading recommendation:

We bought GBP at 131.95 and has placed our stop at 130.65

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

GBP/USD Price Movement For May 27, 2020

analytics5ecde18a6c25e.jpg

After breaking through the upper Line (downslope) Pitchfork (dash maroon) on 4-hour chart cable the GBP/USD pair is now making a new slope pitchfork channel (blue) but after a purge, the buy-side liquidity pool at 1.2339, the pair has failed to reach the middle line from upslope pitchfork and sank again. The pair will try to reach the lower line from the up slope pitchfork as the first target and the 1.2253-1.2250 levels as the secondary target. This scneario may come true as long as this pair does not edge higher and close above the 1.2362 level.

(Disclaimer)

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

GBP/USD: plan for the European session on May 27 (analysis of yesterday's trade). Pound byers' optimism depends on 1.2304.

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

Yesterday, the bears made several attempts to regain market control after the pair fell to resistance 1.23036, which has now transformed to the 1.2359 level. This range should be highlighted in the morning, since its breakthrough and consolidation above will continue the bullish momentum that we observed yesterday after the news related to the Brexit trade negotiations. With reference to one of the European diplomats, it became known that the European Union is ready to abandon the tough approach to the problem of fisheries in negotiations with the UK. However, in the first half of the day, an equally important task for the bulls will be to protect support 1.2304, since forming a false breakout at this level will be a new signal to open long positions that can lead to a breakthrough of the high of 1.2350. In the absence of demand in the area of 1.2304, it is best to postpone new long positions to a test of a low of 1.2252, from where you can expect an upward correction of 30-40 points within the day. However, be careful with purchases at these highs, since talking about EU concessions are only talk. The Commitment of Traders (COT) reports for May 19 recorded a sharp increase in both short and long positions, which indicates a gradual return of interest of players in the British pound. However, the advantage remained on the side of sellers. The COT report states that short non-profit positions increased to 54,799 over the week, from 45,213, while long non-profit positions also increased from 31,525 to 35,820. As a result, the non-profit net position has become more negative and turned out to be at the level of -18, 989, against -13,668, which so far indicates a bearish trend in GBP/USD.

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

The sellers' task for the first half of the day is to return 1.2304 support to themselves, since consolidating below this level will be a signal to open short positions, which will quickly block yesterday's growth and return GBP/USD to the low of 1.2252 and 1.2206, where I recommend taking profit. Given that important fundamental statistics are not published today, traders will closely monitor the news related to possible changes in negotiations on a trade agreement between the EU and the UK. If the bulls make an attempt to raise the pair in the morning, then short positions in the pound can be calculated only if a false breakout is formed at 1.2425, but you can sell GBP/USD immediately for a rebound only at new local highs1.2425 and 1.2463 and then with the expectation of a slight correctional decline at the end of the day of 20-30 points.

analytics5ecdfc0be65d2.jpg

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 moving averages, which will act as support when the pair decreases.

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 1.2360 will lead to a larger growth of the pound. A break of the lower border of the indicator in the region of 1.2304 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 short and long positions of non-profit traders.
The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD: plan for the European session on May 27 (analysis of yesterday's trade). The next problem of bulls is in the region

There were no signals to enter the market yesterday afternoon, as the bulls did not manage to reach the resistance of 1.1007, and problems with growth already began in the area of the new level of 1.0994, which will be emphasized today. However, the primary goal is to defend support 1.0952, where forming a false breakout is a signal to open long positions in EUR/USD in order to continue the bullish scenario that was formed yesterday after the news about possible advancement in trade negotiations between the EU and the UK. The lack of important fundamental statistics will also allow the bulls to build up long positions. However, it will be possible to talk about a new wave of an upward trend only after the bulls confidently consolidate above resistance 1.0994, which will open the way to new highs in the area of 1.1048-1.093, where I recommend taking profits. In the absence of demand from large players and the lack of activity at the 1.0952 level, it is best to postpone long positions in EUR/USD to a test of a low of 1.0917, which is slightly above the moving average, counting on a rebound of 20-30 points within the day. Let me remind you that the 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 experienced all the same problems in the area of the 10th figure, as they were yesterday. Traders continue to build up short positions at every convenient growth in the area of large levels, which has recently been the 1.1000 area. 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. versus 78,140, which indicates an increase in interest in selling risky assets at current prices.

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

Sellers tried to return to the market several times, but failed to wait for a good entry signal on a 5-minute chart, as a result a new resistance at 1.0994 was formed. Today, in addition to a speech from the European Central Bank President Christine Lagarde, the release of important fundamental data is not planned, which may retain interest among traders in the European currency. The main task of the bears in the afternoon will be to return the pair to the the support level of 1.0952, consolidating under which will lead to a larger sale of EUR/USD to the area of the low of 1.0917, and then to the test of the area of 1.0872, where I recommend taking profits, since this level is likely. Large buyers will return to the market. If the demand for the euro continues to grow, then short positions in conditions of such a strong upward trend can be expected after forming a false breakout at the week's high in the region of 1.0994, and it is best to sell immediately for a rebound after a test of the 1.1048 level based on a small rebound down of 15-20 points within the day.

analytics5ecdfa1608453.jpg

Signals of indicators:

Moving averages

Trading is slightly above 30 and 50 moving averages, which keep the pair from falling 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 lower border of the indicator in the region of 1.0952 will increase pressure on the euro, which will lead to another wave of decline in the pair. A break of the upper border in the area of 1.0994 will sharply strengthen 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 short and long positions of non-profit traders.
The material has been provided by InstaForex Company - www.instaforex.com

AUDUSD pullback to trendline support in progress!

analytics5ecdddce6fd49.jpg

Trading Recommendation

Entry: 0.66752

Reason for Entry: Recent swing high, -27 Fibonacci retracement

Take Profit : 0.65937

Reason for Take Profit: Ascending trendline support, 50% Fibonacci retracement

Stop Loss: 0.67210

Reason for Stop loss: -27% Fibonacci retracement

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

Forecast for EUR/USD on May 27, 2020

EUR/USD

Excellent data on house sales in the primary market came out on Tuesday - the April indicator showed 623,000 against expectations of 492,000 and 619,000 in March. A little earlier, in the afternoon, the consumer climate index in Germany from GfK in June showed an increase from -23.1 to -18.9 (forecast -19.1), which gave the first impetus to the euro's growth. But the single currency's growth on strong US data is more interesting, while all markets were up; S&P 500 1.23%, the yield on government bonds increased, which means that market players got rid of "tools of fear", and gold also fell in price by 0.75% with a vigorous growth in industrial non-ferrous metals. This is a classic picture of buying risk, growing interest in high-yield instruments. And if the pattern of euro's growth amid positive data from US economic data continues for about two weeks, this trend may develop into a long-term one, as was the case from the summer of 2012 to the spring of 2014. The intensification of the US-Chinese trade war, the "hard" Brexit and the likely second wave of the coronavirus epidemic can prevent this scenario. That is, the history of the summer of 2012/spring of 2014 will repeat itself as a farce. In the practical part, this means that buying the euro even on an established trend will be very risky.

analytics5ecde4a14e67c.jpg

The euro has reached the upper limit of the almost two-month range of 1.0767-1.0995. The price is higher than both indicator lines and the Marlin oscillator is in the zone of a positive trend, and the signal line of the oscillator is developing exactly according to its own support of the trend line. The probability of continued price growth is 75-80%. Overcoming the upper limit of the range will increase the optimism of traders and the price will go to the channel line in the region of 1.1140.

analytics5ecde4b439c55.jpg

The price is also higher than the indicator lines and Marlin in the growth zone on the four-hour chart. Consolidating the price over 1.0995 will be a condition for growth to 1.1140. Recovery of the falling mood will occur after the price drops to the signal level of 1.0885.

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

Forecast for AUD/USD on May 27, 2020

AUD/USD

The Australian dollar grew by 107 points on Tuesday, with the day's peak having worked the first target level of 0.6677. Overcoming the level opens the second target of 0.6820. But according to the Marlin oscillator, a triple divergence has already formed, which is the main technical factor for a reversal from the current level.

analytics5ecde0a5b658b.jpg

The reversal scenario is opposed by the Marlin oscillator itself; the second rebound of the oscillator signal line occurred from the zero line, overcoming the trend-forming line in turquoise color, the divergence will be broken and the Marlin trend will be upward.

analytics5ecde0b8e6a34.jpg

The price is above the indicator lines of balance and MACD on the four-hour chart, according to Marlin, the divergence. Departure of the price under the MACD line (0.6570) will be the first sign of the price's intention to move down to goals 0.6330, 0.6110. The first objective of the decline is to support the embedded price channel line at 0.6478. We are waiting for the development of events.

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

Forecast for USD/JPY on May 27, 2020

USD/JPY

The yen traded in the range of 53 points on Tuesday, ending the day with a loss of 18 points. The price was unable to gain a foothold over the signal level of 107.78, respectively, and develop growth to the target level of 108.30. Currently, the price is testing the support of the 107.38 trend line, leaving below it will allow the price to fall to the MACD line at 107.15. Consolidating along the MACD line opens the way to the embedded price channel line in the area of 106.45.

analytics5ecddec7c261c.jpg

The price consolidated under the indicator lines of balance (red) and MACD (blue) on the four-hour chart, the Marlin oscillator in the zone of negative values. The local trend is decreasing. However, due to the discrepancy with the daily trend, the situation from a practical point of view does not seem to be a trading one. We are waiting for a clarification of the situation.

analytics5ecddeda91ce5.jpg

Foreign markets still help the pair grow - the S&P 500 added 1.23% yesterday. The Nikkei 225 grew by 0.21% this morning.

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

GBP/JPY approaching support, potential bounce!

analytics5ecdd3713358d.jpg

Trading Recommendation

Entry: 131.744

Reason for Entry: horizontal pullback support, 61.8% fibonacci retracement and 78.6% fibonacci extension

Take Profit: 133.189

Reason for Take Profit: Horizontal swing high resistance

Stop Loss: 130.744

Reason for Stop loss: Horizontal swing low support

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

Hot forecast and intraday trading signals for the GBP/USD pair on May 27. COT report. Bears need to return to 1.2260, where

GBP/USD 1H

analytics5ecdcfbf8f4e2.jpg

The pound/dollar pair also made an impressive jump on Tuesday, so the US currency fell against two major European currencies. However, we do not believe that buyers have completely seized the initiative and are now ready to form an upward trend. From our point of view, the overall fundamental background remains negative for the pair, so it will be extremely difficult for the pound to show growth in the medium term. Nevertheless, technical factors are now speaking in favor of continuing the upward movement, possibly after a round of downward correction. Thus, buyers can lower the pair to three important levels of 1.2259, 1.2270 and 1.2280 at once, around which they can start buying the pound with renewed vigor. Consequently, a price rebound of this area will trigger new purchases and growth. We believe that it is more likely to overcome the 1.2259-1.2280 area with a further resumption of the downward trend.

GBP/USD 15M

analytics5ecdcca35b02b.jpg

Both linear regression channels are directed upwards on the 15-minute timeframe, signaling a strong position of buyers in the last trading day. At the same time, the GBP/USD pair has pinned itself below the moving average line on this chart, which is the first signal for a possible correction. After yesterday's strong growth, correction is the most likely scenario.

COT Report

analytics5ecdccdfcc24a.jpg

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. And at the beginning of the current trading week, this became noticeable by the increased volatility of the pair. During the reporting week, professional traders continued to actively sell the British currency (+8303 sales contracts) and they were much less active in acquiring purchase contracts (+4313 in total). Thus, from our point of view, the mood for the GBP / USD pair remains more downward. It is on the basis of this conclusion that we expect the resumption of sales of the British currency.

The fundamental background for the British pound remains negative. In the early days of this week, no important events are planned in either the US or the UK, which buyers used. The fact is that it is very difficult to buy the pound when the macroeconomic background is present. And besides the macroeconomics there is also a general fundamental background, which continues to put pressure on the British currency. Buyers do not want to deal with medium-term and long-term transactions, since it is completely unclear what awaits the UK economy in the third and fourth quarter of this year, not to mention the longer term. Thus, the growth potential of the pound is already limited due to Brexit and the so far failed negotiations with the EU. In the coming months, we recall that the Bank of England may lower its key rate in the negative zone and expand the program of quantitative easing, which will be another reason for traders to sell the pound/dollar.

We have two main options for the development of the event on May 27:

1) The initiative for the pound dollar pair fell into the hands of the bulls, as they crossed the important Kijun-sen and Senkou Span B lines. Thus, purchases of the British pound are relevant now, but a new signal is needed to open deals. Such a signal may be a price rebound from the area of 1.2259-1.2280 after a downward correction. Take profit will be about 110 points in this case.

2) Sellers temporarily lost their positions, but will be ready to join the game below the 1.2259-1.2280 area. If the pair below this area is consolidated, we recommend selling while aiming for the support area of 1.2196-1.2216, as well as the May 18 low at 1.2073. In this case, Take profit will amount to about 40 to 180 points.

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

Hot forecast and trading signals for the EUR/USD pair on May 27. COT report. Bulls need to overcome 1.0990-1.1006, otherwise

EUR/USD 1H

analytics5ecdc97098c82.jpg

EUR/USD unexpectedly showed an upward movement on the hourly timeframe during the second trading day of the week. Recall that a few days ago, buyers once again failed to overcome the upper limit of the side channel 1.0750-1.1000, from which the price successfully rebounded and began to move down. However, the bears did not "turn" below the Senkou Span B line and the support area of 1.0880-1.0893, thus providing a new chance for the bulls, which they successfully used. As a result, yesterday the euro/dollar pair returned to the April 19 high at 1.0990, worked it out and, as of the current moment, rebounded from it. Thus, sellers run the risk of losing the initiative again, which sellers will have to use to start a new downward movement, at least in the area of the Senkou Span B. line. We believe that this option is still the main and most likely one. However, there is a backup option, providing for the pair's growth. However, for this, the bulls still need to overcome the area of 1.0990-1.1006.

EUR/USD 15M

analytics5ecdc98534c21.jpg

We see how buyers completely dominate the market on the 15-minute timeframe in the last trading day. Both channels of linear regression are directed upward, clearly indicating an upward trend. At the time of writing, there are not even signs of any channel turning down. However, everything, as before, depends on the area of the psychological level of 1,1000, from which the pair is likely to rebound again.

COT Report

analytics5ecdc9b7d5771.jpg

The latest COT report of May 19 showed that large traders who trade for the purpose of earning exchange rate profit, and not for hedging and conducting current activities, continued to reduce euro purchases in the reporting week and increased sales. 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. However, the beginning of the new week shows that the US dollar was not able to extract dividends from this, and trading continues to be held according to the "technical scenario".

The fundamental background for the pair at this time remains neutral. Neither the euro nor the dollar are now taking advantage of the foreign exchange market. Of course, this does not mean that the pair will now trade in the 1.0750-1.1000 range until the crisis ends or something extraordinary happens. However, the current foundation does not make it possible to guess where the steam can go further. The adoption of the next package of stimulating the eurozone economy is the key issue in the European Union. But since the EU is not the United States, where everything depends on Congress, that is, on whether the Democrats and Republicans agree among themselves, there are problems with adopting this package. The euro is not yet experiencing market pressure in connection with this. Nevertheless, in the long run, this may lead to higher growth rates in the fall of the European economy. The topics of interest in the United States at this time are much larger and all of them are also long-term. Today we recommend that you pay attention to the speech of the European Central Bank President Christine Lagarde.

Based on the foregoing, we have two trading ideas for May 27:

1) It is possible for the pair to grow further if the range of levels 1.0990 and 1.1006 is overcome. In total, these two levels form a strong area of resistance, which buyers are not yet able to overcome. However, it is not necessary to completely put an end to the possibilities of the bulls. Overcoming this area and buying will become relevant with the goal of 1.1111 - the second level of resistance. Potential to take profit in this case will be about 130 points.

2) The second option - bearish - as usual, is more likely. You are advised to sell the EUR/USD pair again, since a rebound from the 1.0990 level has already been completed. So the pair has already begun to fall to the Kijun-sen line (1.0939) and the Senkou Span B line (1.0887). Potential to take profit is 35 and 80 points. Given the average volatility of the pair, these profit indicators are quite good.

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

Overview of the GBP/USD pair. May 27. Is the second wave of the "coronavirus" epidemic starting in the United States? Americans

4-hour timeframe

analytics5ecdaf30b5b90.jpg

Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - up.

CCI: 205.5926

The British pound rose sharply against the US currency on the second trading day of the week. At the same time, as in the case of the euro currency, it is difficult for us to say what caused this behavior of market participants. Given the fact that both the euro and the pound have risen in price synchronously, you need to look for reasons either in the US or not to look for them at all. We remind you that the foreign exchange market has a fairly large number of major players, international companies, syndicates, conglomerates, banks, central banks, investment banks, and so on. Any participant can buy or sell a large amount of dollars or other currency at any time, which will lead to a sharp skew in supply and demand for a particular currency. Thus, it could well be that today one or more major traders sold an impressive amount of dollars on the foreign exchange market, which led to its fall. We do not see any fundamental or macroeconomic reasons for the collapse of the US currency on Tuesday. And since there were no reasons for the sharp fall of the dollar, its growth may resume tomorrow.

While the British pound sharply and unexpectedly resumed its upward movement against the US dollar, disappointing news about the "coronavirus" epidemic is beginning to arrive from the United States. Recall that according to the latest data, 1.663 million cases of the "Chinese virus" were recorded in America. Almost 100,000 deaths from the pandemic have also been recorded. President Donald Trump attributes such high morbidity and mortality rates to the large number of tests performed, "far more than in any other country in the world". However, we have already written that if we calculate the relative indicator "the number of tests performed per 1000 population", then the United States is not even in the top five. But, on the other hand, such high numbers are also explained by a much larger population in the United States than in many other countries of the world. However, many media outlets still believe that the Trump administration is to blame for the virus spreading so much across the country. And Trump blames WHO and China. However, America began to slowly relax the quarantine measures and all this led to the fact that on May 25, on Memorial Day, thousands of Americans rushed to the seas and lakes, without observing measures of social distance and without wearing masks. The Internet is flooded with photos from beaches that are literally teeming with people. It is reported that in some cities and states, the influx of people to beaches was so great that parking lots could not cope with it. According to Johns Hopkins University, the curve of the rate of growth of the disease in the United States is not slowing down, which means that the virus is spreading at the same rate, unlike, for example, in the European Union, where the "curves" begin to indicate a serious decline in the epidemic. Thus, the removal of quarantine measures or their easing in Europe is indeed justified, but not in the US. However, Donald Trump is eager to restart the country's economy in order to increase his chances of re-election in November. He is even willing to sacrifice Americans to achieve the goal. At the same time, it is not clear that the US leader himself adhered to at least some quarantine measures. No one has ever seen the US President in a mask, and as part of the election campaign, the President intends to hold thousands of rallies in many states of the country. Thus, we believe that America is the first candidate to receive the second wave of the epidemic.

Meanwhile, China is going to use the current deterioration in relations with Washington to its advantage. Chinese President Xi Jinping, during the third session of the 13th convocation of the National Political Advisory Council of China, said that the country will begin to gradually reorient from economic growth through exports to the development of domestic markets. "We believe that it is domestic demand that should guarantee long-term and strong economic growth in China. We are actively developing the internal consumer system, as well as actively working on innovations in science and technology," he said. Some experts believe that China is preparing not only to break ties with the United States, but also with the entire West.

An extremely small amount of fundamental information is still coming from the UK. The topic of Brexit and the Brussels-London negotiations has frankly stalled, although time is running out, on July 1, the countries will have to officially declare a decision on the "transition period" and, most likely, it will not be extended after December 31, 2020. However, negotiations have stalled, and London is frankly not eager to reach a consensus and sign an agreement. Thus, we believe that the government of Boris Johnson is ready for the fact that there will be no deal with the European Union or is openly bluffing, trying to force the Alliance to make concessions. Whether this is true or not, we will find out before the end of this year. We still fear for the British economy, which continues to suffer from the very fact of Brexit, and from the crisis caused by the pandemic, and next year may also start to suffer due to the lack of trade deals with the European Union and the United States. Yes, it is with the US. Just a few months ago, Donald Trump promised the British a "huge and profitable" trade agreement that would "undoubtedly bring the two nations closer together". We, however, even at the time of such speeches by the American President, believed that Trump meant "a favorable agreement for the United States". However, now that the COVID-2019 epidemic is raging in the world, negotiations are also put on pause, and Donald Trump himself may leave his post at the beginning of 2021. Thus, it is highly likely that Boris Johnson's team will negotiate with another US President.

At the same time, the UK is preparing to completely abandon the use of equipment from the Chinese company Huawei in British 5G networks. Earlier, Boris Johnson has already denied the Chinese company access to the most important, key and vulnerable 5G nodes. Members of the Conservative Party of Great Britain consider the issue of Huawei's participation in the establishment of 5G a matter of national security. According to media reports, this decision was made by Johnson not without the influence of his friend Donald Trump, who previously imposed sanctions against Huawei, believing that the company cooperates with the Chinese intelligence services and harms the United States.

analytics5ecdaf45a8fe1.jpg

The average volatility of the GBP/USD pair has increased due to yesterday and is now 85 points. However, this is still a low indicator value. On Wednesday, May 27, we expect movement within the channel limited by the levels of 1.2245 and 1.2415. A reversal of the Heiken Ashi indicator downwards will indicate the beginning of a downward correction and a possible resumption of the downward trend. Fixing the price below the moving average will confirm some randomness of yesterday's growth of the pound.

Nearest support levels:

S1 – 1.2329

S2 – 1.2268

S3 – 1.2207

Nearest resistance levels:

R1 – 1.2390

R2 – 1.2451

R3 – 1.2512

Trading recommendations:

The GBP/USD pair on the 4-hour timeframe was fixed back above the moving average, so the trend changed again to an upward one. Thus, it is now recommended to trade the pound/dollar pair for an increase with the goals of 1.2390 and 1.2415, before the Heiken Ashi indicator turns down. However, from our point of view, there is a high probability of a downward turn in the near future. It is recommended to sell the pound/dollar pair when the bears manage to return to the area below the moving average, with goals of 1.2207 and 1.2146.

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

Overview of the EUR/USD pair. May 27. According to the "Merkel-Macron plan", the poorest countries of the European Union

4-hour timeframe

analytics5ecdaef1b15ee.jpg

Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 104.6616

The EUR/USD currency pair spent the second trading day of the week in a strong upward movement and returned to the upper border of the side channel of 1.0750-1.1000. At the same time, it is quite difficult to find any good and unambiguous reasons for such a strengthening of the euro currency. No macroeconomic statistics were published yesterday, and there were no speeches by top officials of the European Union or the United States. Thus, the pair's quotes just returned to the Murray level of "4/8"-1.0986 and now can rebound again from it or from the level of 1.1000, starting a new round of downward movement to the lower border of the channel of 1.0750. Since the euro/dollar pair remains within this channel, we believe that the most likely development of events will be a new decline. However, do not forget that you cannot be 100% sure of anything in the Forex market. You always need to be safe and have a backup plan. If traders confidently overcome the area of 1.0986-1.1008, this may trigger the formation of a new upward trend. There is little fundamental support for the euro currency at the moment, but the same can be said for the US dollar. Thus, the foundation and macroeconomics are not a hindrance to the growth of the euro currency.

Not so long ago, we wrote that France and Germany, in the faces of Angela Merkel and Emmanuel Macron, seems to propose a plan that will help the Eurozone to overcome the crisis caused by the pandemic. However, almost immediately it became clear that not all EU countries support such a scenario, and it seems that no one asked the smallest countries if they supported the German-French proposal. Anyway, after the idea with the "coronabonds" failed, and the European Council failed to agree on the sources of funding for the 2-trillion program of assistance to the European economy, the sacramental question arose: "What should we do?" If the European economy does not continue to pour money, the decline may continue at the same pace, and the recovery will be delayed for many years. It would seem that the solution to this issue would be the proposal to create a 500-billion recovery fund, which will be financed by the EU countries themselves, after which these funds will be divided among the most affected countries and sectors of the economy in the form of grants. However, it is not difficult to guess that Germany, which initially did not want to help the southern countries, accusing them of excessive spending and not being able to save money, would hardly have proposed such a plan, which implies the loss of serious financial resources. Germany itself coped with the "coronavirus" pandemic with relatively small losses, human and financial. Well, France, which has suffered from the "coronavirus" very much along with Italy and Spain, requires itself a serious cash injection from the European government. Thus, according to the plan of Merkel and Macron, the funds will be collected according to the size of the economies of each member country of the Alliance and divided among the most affected industries. It is easy to guess that the countries with the largest economies have suffered the most (with the exception of the "Northern" countries). Thus, in simple terms, the poorest EU countries will have to pay for the restoration of the most important and significant sectors of the economies of the countries most affected by the epidemic, that is, large and rich countries. This is the conclusion reached by the Center for European Economic Research. France, Spain, Greece, Portugal, and Italy can receive the most money from the fund, and they will not need to be returned. Spain and Italy have already announced that they will receive funds only on a free basis. And Austria, the Netherlands, Finland, and some other countries generally opposed the "Merkel-Macron plan". So, first of all, it is not obvious that anything will come out of this proposal at all, and secondly, discussions of this proposal among representatives of all countries have not even begun yet. Accordingly, the fate of the next ambiguous package of assistance to the European economy will be decided only in June, and a decision on it may not be made until July.

While the European currency unexpectedly jumped up, the fundamental background for the euro/dollar pair remains essentially neutral. Yes, there are a huge number of important topics that can have a huge impact on the world economy, on the American and European economies. However, these are "long-term" topics that can have a negative impact on a particular currency, approximately like Brexit on the pound, that is, for many years. For example, if the EU countries fail to come to a common denominator in terms of saving the economy, the recovery will be much longer, which will negatively affect the euro, unless a similar picture is observed in the United States. And overseas are preparing to "cold war" with China, although many experts believe that Washington now has no resources to impose sanctions and duties against Beijing, will not be able to resist the retaliatory measures of the Celestial Empire, and therefore bluff openly, declaring its readiness to introduce a huge list various restriction. Experts believe that the "coronavirus" has crippled the US economy, which will recover hard and long without a new confrontation with China. Moreover, the question is open with Donald Trump and his further tenure as US President. After all, in January 2021, he can leave his post, and the new president can adhere to a completely different foreign policy. For example, Joe Biden is on friendly terms with China and will certainly try to establish relations with it.

ECB President Christine Lagarde and Vice-President Luis de Guindos are scheduled to speak in the European Union on Wednesday, May 27. We do not believe that their statements can surprise the markets in any way, although everything will depend on what the two economists say. Christine Lagarde can just touch on the topic of stimulating the European economy, the "Merkel-Macron plan", and once again call on the European Commission to help businesses and employees. No important macroeconomic publications are planned for this day, either in the European Union or the United States.

analytics5ecdaee2d1f1d.jpg

The average volatility of the euro/dollar currency pair as of May 27 is 73 points. Thus, the value of the indicator is characterized at this time as "average". Today, we expect the pair to move between the levels of 1.0910 and 1.1056. The reversal of the Heiken Ashi indicator downwards signals a very likely resumption of the downward movement to the lower border of the side channel of 1.0750-1.1000.

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 made another round of upward movement within the side channel and again stopped near its upper border. Formally, buy orders are currently relevant since the price is located above the moving average. However, we do not recommend opening buy positions until the area of 1.0986-1.1008 is successfully overcome. It is recommended to return to selling the pair if the price reverts below the moving average line with the goals of 1.0864 and 1.0803.

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

Three factors that could boost pound volatility in June

analytics5ecdb36b73724.jpg

The pound significantly strengthened against the dollar and the euro on Tuesday. The British currency has gone above $1.23 for the first time in 13 days, which is primarily due to the general decline in the US dollar, which suffered from a risk appetite.

Reuters added positive news to the sterling as it reported that the European Union was ready to change its position on fisheries in negotiations on the UK's future relations with the bloc.

GBP/USD

analytics5ecdb37ea833d.jpg

As for speculation about the possible introduction of negative interest rates in Britain, which Bank of England Governor Andrew Bailey implanted last week, here everything is as clear as it might seem at first glance. On Tuesday, BoE Chief Economist Andy Haldane made it clear that the regulator didn't even come close to deciding to switch to negative rates. While everything is at the level of conversation. The central bank will have to assess what the consequences of negative rates will be for British banks and lenders who will experience pressure on margins. It is also important how such a step will affect confidence in the economy. In addition, a number of recent economic data turned out to be slightly better than the economic development scenario provided for by the regulator.

The pound was relieved, but the euphoria was unlikely to last long. Tomorrow will be a new day, although the sterling has already begun to lose the benefits it earned during the day against the dollar in the evening. Ahead of the sterling is a turbulent June, which may be the most volatile of all time after voting for Brexit.

What does the pound prepare for June?

The pound may finish the fall for the fourth straight month. Sterling lost 1.5% against the dollar in May. Meanwhile, the growing list of risks suggests that a lull typical of June should not be expected. In the first summer month, the pound traders seem to face increased uncertainty in several directions at once. This is the end of the Brexit transition period extension, the possible introduction of negative rates in the country and the expected exit of the economy from quarantine. Uncertainty is known to increase volatility.

Britain and the EU do not have much time to conclude a new trade deal. What the parties have today, namely nothing, will not allow them even to come close to concluding a deal. The only way out is to once again extend the transition period. Here, too, the deadlines are tightened, the decision must be announced before June 30. Negotiations on this issue will resume on June 1.

Unwillingness to extend the transition period will cause the pound to be volatile, however, as well as the prospect of any extension of Britain's exit from the EU. At the same time, we will no longer see the highest observed during the peak of panic around the pandemic in March.

analytics5ecdb3b485a9e.jpg

Pound fluctuations may increase as the BoE meeting approaches on June 18. Financial markets were quick to put in quotes the prospect of introducing negative interest rates by the end of the year. Bailey's recent comments on this have led UK bond yields to a record low, below 0%.

There is an opinion in the market that negative rates will not help the economy; a more powerful set of measures is needed. Therefore, the central bank may increase the purchase of assets in addition to state budget incentives. If Britain nevertheless becomes the next largest country with negative rates, the pound may face pressure from options, where a change in risk suggests that the mood of traders is less bearish compared to the spot market. Risk reversal, a barometer of market positioning, indicates that the overall risks of a decline in the British currency still prevail.

Published macroeconomic reports show the depth of damage caused by COVID-19. Investors will closely monitor the UK exit from quarantine, as well as the impact of easing restrictions on the rate of spread of coronavirus in the country. This topic will also not leave the pound indifferent, but Brexit news will nevertheless come to the fore.

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