Analysis and forecast for EUR/USD on August 18, 2020

Hello, dear colleagues!

According to the results of the first day of the current trading week, there were no drastic changes in the price dynamics of the main currency pair of the Forex market. Yesterday's data on the index of activity in the manufacturing sector from the Federal Reserve of New York, as well as reports on total and net purchases of US securities by foreign investors were weaker than expected. However, I do not think that these rather minor releases had a decisive impact on the results of trading on April 17, but the fact that they did not support the US currency is a fact.

Speaking of statistics, no reports are scheduled from Europe today, and the United States will provide data on building permits and new housing starts at 13:30 (London time). Much earlier, at 09:00 (London time), there will be a speech by Lela Brainard, a member of the Federal Open Market Committee (FOMC). Although we can assume that today's events will not become a determining factor and will not make significant changes in the trading for the euro/dollar. After all, the main event of the week will be tomorrow's publication of the FOMC minutes, from which market participants will try to get information or at least signals about the next steps of the US Central Bank following its September meeting.

Regarding the COVID-19 pandemic, it should be noted that coronavirus passions do not subside. The United States and India continue to see the largest daily increase in infections, which negatively affects the prospects and timing of economic recovery. Relative to a number of European countries, the situation with a new type of coronavirus infection has also worsened. In particular, fears of the beginning of the second wave of COVID-19 and an increase in daily cases of infection are noted in France, Spain and Italy. Nevertheless, the situation in these European countries is incomparably better than in the United States, and therefore investors fear that the world's leading economy will recover at a slower pace. Such sentiment is also not good for the US dollar, which ended yesterday's trading with losses across a wide range of the market.

Daily

Yesterday's daily candle was the third in a row that closed above the red line of the Tenkan Ichimoku indicator. Based on this, with a high degree of confidence, we can consider the breakdown of this line true, and expect that in the case of a corrective pullback, Tenkan will support the price.

However, there is no question of any corrective rollback yet. After yesterday's trading on EUR/USD closed at 1.1870, today, at the moment of writing, the pair continues to rise and is selected at a significant mark of 1.1900, slightly above which, at 1.1915, the key resistance of sellers passes. Let me remind you once again that in my personal opinion, only a true breakdown of the mark of 1.1915 will open the way for euro bulls to higher goals, among which it is worth highlighting 1.1945, 1.1960, 1.1980 and the most important psychological and technical level of 1.1000. Bears on EUR/USD are still weak, and are not able to turn the course in the south direction. To get a signal about a correction or reversal of the exchange rate, sellers need, first of all, to return the quote under the Tenkan line, which runs at 1.1813. However, to fully control the pair, players on the downside of the exchange rate at all costs need a breakout of strong support in the area of 1.1700. Only with this development of events, the bearish sentiment for the euro/dollar will significantly strengthen and you can count on the subsequent decline of the pair.

H1

After the initial growth during today's Asian session, the pair suspended its upward movement and is trading flat at the end of the article. This may be a consolidation before an attempt to break through a significant resistance zone of 1.1900-1.1915, or the current flat occurs before a corrective pullback, the goals of which may be the levels of 1.1860, 1.1830 and 1.1813.

Taking into account the upward trend, the most likely is the continuation of the rise, during which the resistance level of 1.1915 will once again be tested for strength. If you go to the trading recommendations, then buying under such strong resistance is quite risky. In my opinion, it is better to wait for a pullback to the price zone of 1.1860-1.1850 and (or) 1.1830-1.1815 and from there consider opening long positions on EUR/USD. With this trading plan, in the selected zones, it would be good to enlist the support of the corresponding candle signals and only then open positions to buy. I do not recommend buying at the breakdown of 1.1915. It is better to wait for the actual breakdown of this level and consider opening long positions on the rollback to it. If, under 1.1900 and 1.1915, bearish reversal candlestick analysis patterns appear on the four-hour or hourly charts, you can short sell with targets in the first highlighted area.

Good luck with trading!

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GBP/USD. August 18. COT report. The British economy will not recover from the crisis until the end of 2021, as the Bank of

GBP/USD – 1H.

Hello, traders! On the hourly chart, the quotes of the GBP/USD pair continue to grow. The upward trend line at this time characterizes the mood of traders as "bullish", and the fact that quotes are fixed above the upper border of the side corridor increases the probability of further growth of the pair. Since the information background in the UK and America is currently absent, I would like to draw the attention of traders to the results of a Bloomberg survey, according to which many economists and experts do not expect a full recovery of the British economy until the end of 2021. Let me remind you that the Bank of England previously stated that it expects to reach pre-crisis levels by the end of 2021. The Central Bank believes that industrial production will fully recover by then. However, economists believe that a certain number of businesses will still go bankrupt as a result of the crisis, and unemployment will rise in any case, since the Bank of England will not be able to constantly stimulate the economy by maintaining wages. Now it looks like this: the state supports enterprises financially, so that they do not dismiss employees. This explains the low unemployment rate in Britain. In addition, economists fear a disordered split with the European Union, after which British and European companies will not be able to trade with each other as easily and duty-free as they are now.

GBP/USD – 4H.

On the 4-hour chart, the GBP/USD pair continues to grow in the direction of the corrective level of 161.8% (10.3157. The sideways corridor is also clearly visible on the 4-hour chart, as the pair has been trading neatly between the levels of 127.2% and 161.8% for several weeks. Fixing the pair above the Fibo level of 127.2% will increase the probability of further growth towards the next corrective level of 200.0% (1.3370). The rebound from this level will work in favor of the US dollar and resume the fall of quotes in the direction of the lower border of the side corridor on the hourly chart.

GBP/USD – Daily.

On the daily chart, the pair's quotes performed an increase to the corrective level of 100.0% (1.3199), however, the level of 161.8% on the 4-hour chart does not allow the quotes to continue the growth process. Closing above the 100.0% level will work in favor of further growth in the direction of the Fibo level of 127.2% (1.3684).

GBP/USD – Weekly.

On the weekly chart, the pound/dollar pair performed an increase to the lower downward trend line. A pullback from this line may allow the pair to perform a reversal in favor of the US dollar and resume the process of falling towards the approximately 1.1500 level. This is a long-term perspective.

Overview of fundamentals:

On Monday, in the UK and America, the calendars of economic news were empty, so the background information did not have any effect on the course of trading during the day.

News calendar for the US and UK:

On August 18, the information background will also be absent, since the calendars of economic events in the UK and the US do not contain anything interesting.

COT (Commitments of Traders) report:

The latest COT report on the British pound was absolutely predictable. Large speculators continued to increase long-contracts (+2.5 thousand) in the reporting week and got rid of short-contracts (-8.5 thousand). Thus, the "Non-commercial" group continued to believe in the pound. The total number of buy positions opened by speculators has been growing for three weeks in a row, and the number of short contracts in their hands has been declining for three weeks in a row. At the same time, the total number of open long and short contracts for all groups of traders is already approximately the same - 171 thousand and 175 thousand.

Forecast for GBP/USD and recommendations to traders:

I recommend selling the pound with the goal of 1,3005, if a new rebound is made from the level of 161.8% (1.3157) on the 4-hour chart. I do not recommend buying the British currency today, as there is a high probability of a rebound from the upper border of the side corridor and the level of 161.8% (1.3157).

Terms:

"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.

"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.

"Non-reportable positions" - small traders who do not have a significant impact on the price.

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EUR/USD. August 18. COT report. Warren Buffett's company invests in gold. Bad signal for the US currency

EUR/USD – 1H.

Hello, traders! On August 17, the EUR/USD pair continued the growth process inside the upward trend corridor, which continues to characterize the current mood of traders as "bullish". There was no news from America or the European Union on Monday. However, some very interesting reports have started to appear from American billionaires who have started buying gold. Gold has always been considered a protective asset in times of any crisis, since it is considered that it can not devalue, unlike money or shares of any company that can be severely affected by the economic crisis. For example, one of the most famous investors, billionaire Warren Buffett, has previously criticized gold for being the most unattractive tool for investing. However, with the arrival of the next economic crisis in the United States, the largest in the last 50-80 years, Warren's companies suddenly began to invest in gold mining companies. The world's leading analysts immediately concluded that the most famous investor stopped trusting banks, as the central banks of the world's leading countries may have lost control of what is happening and print billions and trillions, thereby killing fiat money. Of course, such actions of Buffett's investment funds do not mean that the US economy is over. This only means that it can recover from the crisis for a very long time and hard.

EUR/USD – 4H.

On the 4-hour chart, the quotes of the EUR/USD pair, after rebounding from the corrective level of 127.2% (1.1729), continue the growth process in the direction of the upper border of the side corridor. The rebound from the upper border of the corridor will work in favor of the US currency and the beginning of the pair's fall in the direction of the lower border of the corridor and the corrective level of 127.2% (1.1729). Fixing quotes above the corridor will increase the chances of further growth towards the next corrective level of 161.8% (1.2027).

EUR/USD – Daily.

On the daily chart, the EUR/USD pair performed a new consolidation above the corrective level of 261.8% (1.1825), but this level is located inside the side corridor, which is represented as a rectangle on this chart. Thus, this signal is not strong and requires purchases of the pair.

EUR/USD – Weekly.

On the weekly chart, the EUR/USD pair performed a consolidation over the "narrowing triangle", which now allows us to count on further growth of the euro currency, which can be very strong and long-term.

Overview of fundamentals:

On August 17, there were no economic reports in Europe or the United States, no important reports or news. Thus, the information background had absolutely no effect on the mood of traders.

News calendar for the United States and the European Union:

On August 18, the calendars of the European Union and the United States are empty, so the information background will also be absent today.

COT (Commitments of Traders) report:

The latest COT report was very eloquent. Large market players in total (for all groups) closed both long and short contracts during the reporting week. However, we are more interested in the "Non-commercial" group, which actively got rid of sales contracts and increased long. Thus, large speculators continued to favor the euro currency, while not favoring the US dollar. The fact that the euro currency continues to trade near its peaks for many months should not be surprising. The largest traders who enter the market in order to make a profit continue to buy the euro currency. Thus, the COT report allows us to conclude that the mood of large traders has not changed during the reporting week. The US dollar is still weak.

Forecast for EUR/USD and recommendations to traders:

Today, I recommend buying the euro currency with the goal of 1.2027, if it is fixed above the upper line of the 1.1908 corridor. I recommend selling the pair with the target level of 1.1729 after fixing the price below the ascending corridor on the hourly chart or rebounding from the level of 1.1908.

Terms:

"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.

"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.

"Non-reportable positions" - small traders who do not have a significant impact on the price.

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EUR/USD and AUD/USD: Demand for dollar depends on the rate of economic recovery. RBA to adhere to its previous monetary policy

Dollar continues to decline against the euro and the pound, mainly due to the negative news surrounding the United States. The price jump yesterday is a confirmation of this, as such indicates that investors are again uncertain on which asset they would place their trades into.

The current main problem is the suspension of assistance programs that were adopted and operated during the pandemic, and such could seriously slow the pace of economic recovery in the United States. The failure of the government and Congress to find a consensus in supporting the affected companies and unemployed will put even more pressure on the economy in winter, which could lead to a severe economic slowdown or to a slowdown in GDP recovery, thereby revising the forecasts for next year into worse figures.

In addition, the Federal Reserve System will publish the minutes of its latest meeting today, which will indicate their intention to preserve a soft monetary policy. Some economists believe that the suspension of the assistance programs will result in a decline in GDP by 0.4% and a decline in the dollar by 0.9% each month, but the European Union solved some of its problems this summer by laying a solid foundation for economic growth in the second half of the year through a recovery fund for the EU economy, which the US could adopt as well.

The recent economic slowdown this July is also one of the evidence of the problems, but credit must be given to the fact that many businesses in the US have shown surprising resilience to the pandemic. In April this year, about a quarter of small businesses ceased operations, and by July this year, only 6% of them remained closed. In large enterprises, only those who went bankrupt before the pandemic went bankrupt.

As for Treasury bond yields, its recent rise will most likely support the US dollar in fall, as many investors will begin to return to safe assets that period because it would bring, albeit minimal, profit. However, the main support of the dollar will be the economic growth in the 4th quarter, but given the tensions between the United States, China, the EU and a number of other countries, the US dollar could weaken, and gold quotes may confidently consolidate above a price level of $ 2000.

With regards to macroeconomic statistics, the reports released yesterday included data on manufacturing activity in the New York Fed, which indicated a slowdown in August compared to July. The indicator came out 3.7 points against 17.2 points in July, while economists had expected the index to rise to 19.0 points.

Homebuilder sentiment also jumped to record high this August, which indicates a continued recovery. The report of the National Association of Home Builders revealed that the housing market index rose from 72 points in July to 78 points in August, and readings above 50 indicate that more builders are assessing conditions as positive. Economists forecasted the index to be 72 points.

Thus, for the technical picture of the EUR/USD pair, the quote is close to reaching the 19th figure, on the breakdown of which quite a lot depends. The breakout from the resistance level of 1.1915 will push the quote towards the high of 1.1970, and then will lead to a test of the psychological level of 1.2020. But if demand on risk assets decline today, the quote may update the low of 1.1830 is updated, which will be a good entry level for major players. A more serious area of support lies in the level of 1.1785, with which it is possible that the bulls will not bring the pair to such a precarious position and will begin to actively act after the update of the support level of 1.1865.

AUD/USD

The latest minutes published by the RBA once again made it clear that the central bank does not intend to change its monetary policy, but declared that it is ready to show flexibility in the event that the situation in the Australian economy changes. However, as always, such is done in order to protect itself and hold investors on their side.

Nonetheless, the Australian dollar managed to slightly increase last week, and is currently targeting a rise above the resistance level of 0.7240. A breakout from this range will push the quote towards the highs of 0.7315 and 0.7350, but the further target of the bulls is the price level of 0.7400. However, if the situation turns towards the bears again, long positions may be opened under the condition of a downward correction in the level of 0.7130, or when the price reaches the level of 0.7070.

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Indicator analysis. Daily review on GBP / USD for August 18, 2020

Trend analysis (Fig. 1).

The market may continue to move upward from the level of 1.3105 (closing of yesterday's daily candle) with the target at the historical resistance level of 1.3350 (blue dotted line). From this level, a downward pullback is possible.

Figure: 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger lines - up;

- Weekly chart - up.

General conclusion:

Today the price may continue to move upward from the level of 1.3105 (closing of yesterday's daily candle) with the target at the historical resistance level of 1.3350 (blue dotted line).

Another possible scenario is from the level of 1.3105 (closing of yesterday's daily candle), the price may continue to move upwards with the target at the upper fractal 1.3186 (red dotted line). In case of testing this level, the price may move downward with the target of 1.3050 - a 14.6% pullback level (red dotted line).

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

Trend analysis (Fig. 1).

The market may continue to move upward from the level of 1.1872 (closing of yesterday's daily candle) with the target at the upper fractal 1.1917 (red dotted line). From this level, the price may continue to move upward with the next target of 1.2103 - a 76.4% pullback level (blue dashed line).

Figure: 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger lines - up;

- Weekly chart - up.

General conclusion:

Today the price may continue to move upward from the level of 1.1872 (closing of yesterday's daily candle) with the target at the upper fractal 1.1917 (red dotted line). From this level, the price may continue to move upward with the next target at 1.2103 - a 76.4% pullback level (blue dotted line).

Another possible scenario is an upward movement from the level of 1.1740 (closing of yesterday's daily candle) with the target at the upper fractal 1.1917 (red dashed line). From this level, the price may begin to move downward with the target of 1.1807 - a 14.6% pullback level (red dashed line).

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Simplified wave analysis and forecast of GBP/USD and AUD/USD for August 18

GBP/USD

Analysis:

A bullish trend has been developing on the chart of the British pound since March. Quotes are located in the area of the strong resistance zone of the senior TF. Since the end of July, the price has formed a flat correction along its lower border. Its structure is still incomplete.

Forecast:

In the next trading sessions, it is possible to wait for the completion of the price rise. In the second half of the day, a reversal is expected in the area of the calculated resistance and the beginning of the price move down. If the nearest support breaks through, the decline will continue to the borders of the next zone.

Potential reversal zones

Resistance:

- 1.3180/1.3210

Support:

- 1.3100/1.3070

- 1.3010/1.2980

Recommendations:

Today, buying the pound is risky because of the small potential for expected growth. It is recommended to refrain from trading during the upcoming decline. Intraday supporters will have an opportunity to sell the pair after the reversal signals appear.

AUD/USD

Analysis:

On the chart of the Australian dollar, within the framework of the dominant bullish trend in the last month, the price forms a correction. In the form of extremes, this wave has the form of a shifting plane. The price has been moving towards the upper limit of the price channel in recent days.

Forecast:

Today, the general upward vector of the pair's movement is expected, with the flat nature of price fluctuations. In the next session, a short-term decline is not excluded, no further than the support borders. In the area of the resistance zone, there is a high probability of a return to the downward course.

Potential reversal zones

Resistance:

- 0.7260/0.7290

Support:

- 0.7190/0.7160

Recommendations:

Today, trading on the pair's market is only possible within the intraday framework. Before the appearance of reversal signals, purchase of the instrument is in the priority.

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

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

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Trading recommendations for GBP/USD currency pair on August 18

The GBP/USD currency pair is showing low dynamics, following within the boundaries of the sideways channel 1.3000/1.3185, while the sequence of the price rebound from the set frames has a natural basis in the market.

The deceleration in the structure of the flute is variable, which in theory can give acceleration in the event of a breakdown of a particular channel boundary. The primary difference between the existing flat and the typical one is in the daily period, where there is a set of versatile doji candlesticks, which signals a high degree of uncertainty in the market instead of consecutive fluctuations. Perhaps the ambiguity is related to the sell-off of the US dollar, due to which the pound exchange rate managed to strengthen strongly in value. Under current economic circumstances, this is an irrational step, which may later lead to a sharp weakening of the pound.

It turns out that the pound is overbought and trying to adjust in value, and the dollar still can not get off the needle of sales, so there is a versatile flat of candle models like "Doji".

Analyzing the last trading day by the minute, a narrow horizontal price movement of 1.3086/1.3120 can be seen, where the only interesting moment was the burst of activity of short positions in the period of 10:30 (UTC+00 trading terminal time). The surge came amid speculation within the market stagnation.

In terms of daily dynamics, the lowest volatility indicator for 60 trading days is recorded, it amounted to 47 points, which is 56% lower than the daily average. If we proceed from the fact that the activity is below the average level over the last week, and an unusual low value of volatility has formed over the past day, then we can assume that the compression of dynamics in the very near future will lead to a sharp surge in speculative activity, which will provoke an increase in volatility.

As discussed in previous reviews, the main tactic is the method of breaking through the established flat boundaries, which will make it possible to catch a surge in activity, as well as receive a signal about the upcoming price movement.

The news background of the past day did not include the publication of key economic indicators for Britain and the United States, the market followed a technical scenario. Secondary indicators include the IHS Markit household Finance index, which fell to 40.8 in August from 41.5 in July, which is considered the largest drop since 2011.

Today, in terms of the economic calendar, we have data on the construction sector in the United States, where indicators for the number of building permits issued, as well as new construction projects, may grow. In terms of fundamental analysis, the growth in construction indicators plays in favor of the strengthening of the US dollar. It is worth recalling that the recent reaction of fundamental analysis to statistics for the United States has been negatively correlated.

Further development

Analyzing the current trading chart, you can see a sharp surge in activity relative to the stagnation of the past day, where the quote headed towards the upper border of the flat formation 1.3000/1.3185.

It can be assumed that the area of 1.3170/1.3185 will play the role of resistance in the event of a repetition of the regular basis of price fluctuations within the flat, which will lead to a reverse movement of 1.3100-1.3000.

The method of breaking through the boundaries of the 1.3000/1.3185 flat, which will indicate the subsequent path of the quotes' development is the main strategy that most traders adhere.

- Consider buy deals above 1.3185, towards 1.3250.

- Consider sell deals below 1.2985, towards 1.2885-1.2770.

Indicator analysis

Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments on minute and hourly intervals work amid an upward jump from the lower border of the flat to the upper one, signaling a buy. The daily period, on the other hand, always signals a buy based on the main course, excluding the current slowdown.

Weekly volatility / Volatility measurement: Month; Quarter; Year

The volatility measurement reflects the average daily fluctuations, calculated per Month / Quarter / Year.

(18 August was built taking into account the time of publication of the article)

The volatility of the current time is 74 points, which is 57% higher than the previous day's indicator, which signals a local acceleration. It can be assumed that speculative interest will continue in the market for some time. The main surge in activity will occur on the breakout of the established flat.

Key levels

Resistance zones: 1.3200 (1.3250) **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.

Support zones: 1.3000; 1.2885 *; 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1.1000; 1.0800; 1.0500; 1.0000.

* Periodic level

** Range level

*** Psychological level

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Is Buffett cheating on principles? Signal for gold buyers

Berkshire Hathaway, led by the "visionary from Omaha", Warren Buffett acquired more than 20 million shares of gold miner Barrick Gold in the second quarter of this year. The report, which the investor provided to the SEC Commission, says about $ 562 million, which was spent on these purposes.

The event is notable since Buffett has not previously invested in gold. Moreover, he systematically and consistently criticized colleagues who choose banking metals for investment. As an example, two decades ago, Buffett said during a speech at Harvard that people behave strangely, digging up a piece of gold in one part of the world, transporting it to another part of the world, then to bury it again underground (in storage) and put a guard. "Anyone looking at this from Mars would scratch their heads in puzzlement," Buffett said at the time.

Withdrawal from the banking sector or redistribution

The simultaneous sale of US bank securities by Berkshire Hathaway sparked even more discussions in the investment sector. Thus, the share of the conglomerate in JPMorgan decreased by 60% and by 42% in PNC.

The mainstream media and specialized analytical platforms were full of headlines that Buffett stopped believing in the prospects for the US economy. Some observers make very bold predictions that the next equally important change in the investment strategy of the "Omaha Seer" will be investments in cryptocurrencies. However, such statements are rare so far.

More conservative analysts urge colleagues not to engage in information speculation. After all, Buffett does not really leave the banking sector, but only reallocates resources. As an argument, such experts cite the situation with Bank of America. The fact is that Berkshire Hathaway has been increasing its share in this asset over the past two months.

In addition, the attention of the industry community deserves the fact that the investor did not give up his stake in Apple. The latter, as before, accounts for more than 40% of the holding company's portfolio. According to some sources, Buffett's conglomerate is the second largest shareholder in the Apple brand (in terms of investment).

Not Buffett alone

The attractiveness of gold in today's market conditions also affects other large investors. From the same reports sent to the SEC, it became known about the increase in the share of precious metal in the portfolio of Bridgewater Associates founded by Ray Dalio, one of the largest hedge funds on the planet.

The fund has invested about $ 400 million in gold. Thus, more than $ 1.1 billion of Bridgewater Associates is now accumulated in the precious metal.

As previously reported, quotes of gold futures continued to rise during American trading on Monday. Elon Musk's gold, bitcoin and shares remain the most profitable assets in 2020.

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Brief trading recommendations for EUR/USD and GBP/USD on 08/18/20

The EUR/USD currency pair has been following the rising course of the side channel 1.1700 // 1.1810 // 1.1910, (6 + 5 + 4, lines) for the fifth trading day, where there are only a few points left to the area of the upper boundary of 1.1910. A noteworthy point was that trend line No. 3 was taken as the slope angle, which served as the lower boundary of the ascending channel, until the sideways channel appeared.

In this situation, special attention is paid to line No. 4 (area 1.1910), since the subsequent price movement in the market will depend on whether the quote is consolidated higher or lower.

Based on the movement and location of trend lines, a number of market development scenarios can be predicted:

First, a rebound from line No. 4.

In this situation, the logical basis of the price rebound from line No. 4 (area 1.1910) is considered, as it has repeatedly happened in the history of the side channel 1.1700 // 1.1810 // 1.1910. The entry point for sell positions will be indicated under a number of circumstances; it can be a touchdown at the level of 1.1910, followed by a price rebound, or a price slowdown on one coordinate. The prospect of price development will be directed towards line No. 5 (area 1.1810) and line No. 6 (area 1.1700).

Second, the breakdown of line No. 4.

This moment will come sooner or later when the lateral channel 1.1700 // 1.1810 // 1.1910 is broken through. In this scenario, special attention is paid to the channel boundaries, in this case, there will be a risk of breakdown when approaching line No. 4 (area 1.1910). The entry point for a buy position is considered after a clear price consolidation above 1.1925, with the prospect of a move to 1.2000.

For the fourth day in a row, the GBP/USD currency pair has been concentrating within the midline of the side channel 1.2985 // 1.3085 // 1.3185 (# 6;5;4), with a variable deviation. The price never broke the boundaries of 1.3070/1.3145 which were set a day earlier, which indicates low market activity.

The concentration of trading forces within line No. 5 is a temporary phenomenon, the price movement towards line No. 4 or line No. 6 is likely to occur today.

Based on the looped price fluctuation within line 5, the recommendations from August 17 are still valid.

A scenario for market development :

First, price movement in the direction of line No. 4 (area of 1.3185).

In this case, the price movement is considered along the course 1.3145 -> 1.3185, where the second value reflects the upper boundary of the channel.

Second, price movement in the direction of line No. 6 (area of 1.2985).

In this case, the price movement is considered along the course 1.3070 -> 1.3000, where the second value reflects the area of the lower boundary of the channel.

Third, the breakdown of line No. 4 or No. 6.

In this case, we are talking about the completion of the amplitude of the side channel 1.2985 // 1.3085 // 1.3185, where the main strategy is aimed at identifying price fixing points outside a particular boundary, which will make it possible to predict the further course of the market.

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Analysis and trading recommendations for the EUR/USD and GBP/USD pairs on August 18

Trading recommendations for the EUR/USD pair on August 18

Analysis of transactions

The attempts to overcome the price level of 1.1840 failed to trigger a drop in the European currency, so sell transactions in the EUR/USD pair did not give profit as expected. Fortunately, buy transactions from the level of 1.1869 covered all the losses that traders had in the first half of the day.

The absence of important macroeconomic statistics has led to such a narrow trade in the euro, and, the situation may repeat today, so it is best to exit the market after any prerequisites for a price reversal.

  • Buy positions when the quote reaches a price level of 1.1895 (green line on the chart), targeting a rise to the level of 1.1933. The increase may occur, on the grounds of a continued impulse relative to Friday's weak US economic indicators. Take profit at the level of 1.1933.
  • Sell positions after the quote reaches the level of 1.1869 (red line on the chart), targeting a drop towards the level of 1.1831. Take profit at a price level of 1.1869.

Trading recommendations for the GBP/USD pair on August 18

Analysis of transactions

Buy transactions failed to raise the GBP/USD pair in the market yesterday, but the situation has completely changed today during the Asian session.

Since there are no important macroeconomic reports scheduled to be published today, the direction of the pair depends on the activity of the bulls in the market. Demand for the dollar continues to decline at the moment, especially since gold has also risen in the market. Because of this, the GBP/USD pair is certain to further increase today in the trading chart.

  • Buy positions when the quote reaches the price level of 1.3141 (green line on the chart), targeting a rise to the level of 1.3175 (thicker green line on the chart). Take profit at the level of 1.3175.
  • Sell positions after the quote hits the price level of 1.3108 (red line on the chart), and take profit at the level of 1.3063.
The material has been provided by InstaForex Company - www.instaforex.com

Dollar's weakness is deceptive; Overview of USD, NZD, and AUD

The report on the movement of foreign capital in US securities confirmed an unpleasant trend – in June, there was no increase in non-resident investments in US government bonds and corporate bonds. Throughout the pandemic months, US government securities, with the exception of stocks, were not in demand, which means only one thing – investors no longer perceive them as safe assets.

The US net international investment position reached -12.057 trillion as of the end of the 1st quarter, which is a record negative result in the entire history of data collection. The reduction in purchases of government bonds directly indicates a crisis of confidence.

The Fed cannot endlessly increase the supply of the dollar in foreign markets, which is inevitable in times of crisis, and at the same time buy back government debt, since foreign investors are losing interest in US debt securities. In the current environment, the choice will be made in favor of internal stability, which will allow the Fed to remain neutral before the election. The chances of a stronger dollar in the last two months before the election are growing, and the Fed minutes, which are expected to be published on Wednesday, may be surprising.

NZD/USD

There is an increasing fear about a second wave of the coronavirus pandemic. The New Zealand government decided to postpone parliamentary elections for a month due to the outbreak of the disease in Auckland. The RBNZ is expanding the asset repurchase program to $ 100 billion, which exceeded the forecast of $ 90 billion.

The threat of further deterioration in macroeconomic indicators in New Zealand remains. The government has raised the level of threat, which automatically leads to the return of restrictions, primarily in the service sector, and if this level is raised again, and everything goes to that, then it would be too optimistic to expect an increase in consumer demand by the end of the year.

According to the CFTC report, the net short position of the NZD decreased by 84 million for the reporting week, but for its outlook, the effect is zero - the estimated fair price continues to decline.

The postponement of the elections reduces the relevance of the publication of the report on the economy and changes in forecasts, which the government of New Zealand is preparing this week. The publication is expected on August 20, the Treasury will present its view on the development of the economic situation in the future 4 years. At the moment, there is a consensus assessment of the forecast as moderately positive, but the possibility of a surprise is not excluded, given the recent increase in the threat level in Auckland to 3 levels and 2- in some other regions. If this assumption is confirmed, and there are grounds, then the NZD will receive an additional negative impulse and strengthen the downward movement.

NZD/USD slowed down in front of a strong support zone at 0.6500/30, it is possible that it will rise to the resistance 0.6580/90, followed by a final reversal downward. It is more likely that it will go below 0.65 with a target of 0.6370/90.

AUD/USD

The Australian dollar moves in the wake of most commodity currencies, net short has increased by 174 million, which increases the odds in favor of a bearish reversal. The estimated price declined.

At the same time, the Australian currency resumed its growth as of 5.00 Universal time, while the AUD/NZD cross-instrument exceeded 1.10 for the first time in two years.

The AUD looks pretty convincing, despite the growing risks, as the markets evaluated positively the speech of the head of the RBA, Lowe, in the Australian parliament last Friday. Yes, all the duty words were spoken and the main threats were listed, in response to which the RBA could further reduce the interest rate, increase the purchase of bonds and change the urgent financing mechanism. At the same time, Lowe stressed that there are no discussions regarding negative rates, and foreign exchange interventions to establish a fair AUD rate are not even discussed.

Nevertheless, the probability of a reversal is growing even though the mood is optimistic. Today, the recent high of 0.7243 is expected to be tested, which is already quite close, but this test is unlikely to be successful. A decline to the support zone 0.7130/40 and subsequent re-targeting to the level of 0.7060 is more likely.

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

Fractal analysis for major currency pairs on August 18, 2020

Forecast for August 18:

Analytical overview of currency pairs on the H1 scale:

The key levels for the euro / dollar pair on the H1 scale are: 1.1963, 1.1924, 1.1897, 1.1864, 1.1841 and 1.1809. Here, we are following the August 12 upward structure. A short-term upward movement is expected in the range 1.1897 - 1.1924. The breakdown of the last value will lead to a movement to a potential target. In this case, the target is 1.1963. There is consolidation, as well as a downward pullback near this level.

A short-term downward movement is possible in the range of 1.1864 - 1.1841. The breakdown of the last value will lead to a deep correction. Here, the target is 1.1809. This level is a key support for the local upward structure of August 12.

The main trend is the local upward structure of August 12

Trading recommendations:

Buy: 1.1898 Take profit: 1.1922

Buy: 1.1925 Take profit: 1.1961

Sell: 1.1864 Take profit: 1.1842

Sell: 1.1839 Take profit: 1.1810

The key levels for the pound / dollar pair on the H1 scale are: 1.3234, 1.3202, 1.3163, 1.3130, 1.3066, 1.3037, 1.2997, 1.2943 and 1.2873. Here, we are following the August 12 upward structure. A short-term upward movement is possible in the range of 1.3130 - 1.3163. The breakdown of the last value will lead to a pronounced movement. Here, the target is 1.3202. For the potential value for the top, we consider the level of 1.3234. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 1.3066 - 1.3037. The breakdown of the last value will lead to the development of a downward trend. In this case, the first target is 1.2997.

The main trend is the upward structure from August 12

Trading recommendations:

Buy: 1.3130 Take profit: 1.3161

Buy: 1.3164 Take profit: 1.3200

Sell: 1.3066 Take profit: 1.3038

Sell: 1.3035 Take profit: 1.2998

The key levels for the dollar / franc pair on the H1 scale are: 0.9122, 0.9093, 0.9073, 0.9021, 0.8994, 0.8957 and 0.8933. Here, we are following the downward structure from August 12th. At the moment, a movement to the level of 0.9021 is expected. A short-term downward movement, as well as consolidation are in the range of 0.9021 - 0.8994. The breakdown of the level 0.8994 should be accompanied by a pronounced downward movement. In this case, the target is 0.8957. For the potential value for the bottom, we consider the level of 0.8933. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 0.9073 - 0.9093. The breakdown of the last value will lead to a deep correction. Here, the target is 0.9122. This is a key support level for the bottom.

The main trend is the descending structure from August 12

Trading recommendations:

Buy : 0.9073 Take profit: 0.9092

Buy : 0.9095 Take profit: 0.9120

Sell: 0.9020 Take profit: 0.8996

Sell: 0.8992 Take profit: 0.8958

The key levels for the dollar / yen pair on the scale are : 106.26, 106.03, 105.84, 105.60, 105.48, 105.20 and 105.00. Here, we are following the development of the downward trend from August 14. The continuation of the downward movement is expected after the price passes the noise range 105.60 - 105.48. In this case, the target is 105.20. We consider the level of 105.00 as a potential value for the bottom. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 105.84 - 106.03. The breakdown of the last value will lead to a deep correction. Here, the target is 106.26. This is the key support level for the downward structure.

The main trend is the downward cycle of Aug 14

Trading recommendations:

Buy: 105.84 Take profit: 106.00

Buy : 106.05 Take profit: 106.24

Sell: 106.46 Take profit: 105.20

Sell: 105.18 Take profit: 105.03

The key levels for the Canadian dollar / US dollar pair on the H1 scale are: 1.3318, 1.3271, 1.3239, 1.3176, 1.3143, 1.3096, 1.3061 and 1.3006. Here, we are following the development of the downward structure from August 7th. A short-term downward movement is expected in the range of 1.3176 - 1.3143. The breakdown of the last value will lead to a pronounced downward movement. Here, the target is 1.3096. Price consolidation in the range of 1.3096 - 1.3061. We consider the level of 1.3006 as a potential value for the bottom. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 1.3239 - 1.3271. The breakdown of the last value will lead to a deep correction. Here, the target is 1.3318. This is a key support level for the downward structure.

The main trend is the descending structure from August 7

Trading recommendations:

Buy: 1.3240 Take profit: 1.3270

Buy : 1.3273 Take profit: 1.3318

Sell: 1.3174 Take profit: 1.3144

Sell: 1.3142 Take profit: 1.3096

The key levels for the Australian dollar / US dollar pair on the H1 scale are : 0.7318, 0.7286, 0.7271, 0.7247, 0.7229, 0.7204, 0.7184 and 0.7161. Here, we are following the development of the upward cycle from August 12. A short-term upward movement is expected in the range of 0.7229 - 0.7247. The breakdown of the last value will lead to a pronounced upward movement. Here, the target is 0.7271. Price consolidation is in the range of 0.7271 - 0.7286. We consider the level of 0.7318 to be a potential value for the top. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is expected in the range 0.7204 - 0.7184. The breakdown of the last value will lead to a deep correction. Here, the target is 0.7161. This is a key support level for the top.

The main trend is the upward cycle of August 12

Trading recommendations:

Buy: 0.7247 Take profit: 0.7270

Buy: 0.7287 Take profit: 0.7318

Sell : 0.7204 Take profit : 0.7186

Sell: 0.7183 Take profit: 0.7163

The key levels for the euro / yen pair on the H1 scale are: 127.36, 127.09, 126.63, 126.18, 125.80, 125.49 and 125.11. Here, we are following the upward structure from August 10. The price is currently in correction. The resumption of the upward movement is possible after the breakdown of the level of 126.18. Here, the first target is 126.63. The breakdown of which will lead to a pronounced upward movement. Here, the target is 127.09. We consider the level of 127.36 as a potential value for the top. Upon reaching which, we expect consolidation, as well as a downward pullback.

A consolidated movement is expected in the range of 125.80 - 125.49. The breakout of the last value will lead to a deep correction. Here, the target is 125.11. This is the key support level for the top.

The main trend is the upward cycle from August 10, the stage of correction

Trading recommendations:

Buy: 126.18 Take profit: 126.60

Buy: 126.65 Take profit: 127.09

Sell: Take profit:

Sell: 125.47 Take profit: 125.14

The key levels for the pound / yen pair on the H1 scale are: 140.17, 139.64, 139.28, 139.03, 138.45, 138.17, 137.96 and 137.59. Here, we are following the descending structure from August 13th. The continuation of the downward movement is expected after the breakdown of the level of 138.45. In this case, the target is 138.17. Price consolidation is in the range of 138.17 - 137.96. For the potential value for the bottom, we consider the level of 137.59. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 139.03 - 139.28. The breakdown of the last value will lead to a deep correction. Here, the target is 139.64. This is a key support level for the downward structure.

The main trend is the descending structure from August 13

Trading recommendations:

Buy: 139.03 Take profit: 139.26

Buy: 139.30 Take profit: 139.62

Sell: 138.45 Take profit: 138.18

Sell: 137.95 Take profit: 137.61

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

Why will oil prices never rise again? (we sell WTI oil on growth as well as the USD/CAD pair)

Crude oil prices, as well as a number of other assets, fell into a kind of time and price trap that COVID-19 created for them. This makes you think that they will never reach the maximum values of 2011 again, when there was talk in the market that they should be expected to grow to $ 200 per barrel.

Should we expect changes in oil prices in the near future?

The quotes of black gold, after falling early this year in the wake of the expansion of the trade crisis between the United States and China, received another blow in the back, when the coronavirus infection, later named as COVID-19, limited economic activity in the world. Due to this, the WTI crude oil mark even showed a negative value, and the North Sea BRENT declined well below the minimum values of 2009 and 2016. But then, on a general wave of hopes that demand will begin to grow in April or at least in May amid the broadest stimulus measures from the Federal Reserve and the US Treasury, which will be supported by the growth of economic activity after the COVID-19 pandemic, prices rebounded sharply. And now, throughout the summer, they are slowly stretching upward, but they cannot gain a foothold on BRENT above the level of 45, and on WTI above the mark of $ 43 per barrel.

Globally, prices cannot move neither the news about the early start of production of vaccines against coronavirus, nor weakly restorative attempts to grow the American economy, and China alone, yes, even in the conditions of the Cold Trade War unleashed by D. Trump, it is simply impossible to swallow everything real supply of "black gold" in the world market.

The weakness of the American and European economies more than covers the growth of economic activity in China. More and more cases of COVID-19 outbreaks are simply digging deeper and deeper into their economies. The recession caused by the coronavirus can drag on for a significant period of time, and then smoothly move to the stage when the world economy will simply no longer be able to recover naturally. The risks of falling production volumes and, accordingly, the demand for raw materials from pre-crisis levels to the current ones, may for a significant period of time drive oil prices, which revolve around the current values, into a rigid framework of the impossibility of either falling or growing. In fact, it will be possible to say that they will never grow again in some near future to those maximum levels of the late 2000s and mid-10s.

So what to expect?

We believe that the slow dynamics of the recovery process in the global economy will keep prices from both falling and growing significantly. They will not grow even if OPEC + further expands its control measures over oil production. Yes, they will not go for it because it is impossible to endlessly cut production because of the risk of ruining this industry. Therefore, we believe that oil quotes of both brands will remain approximately at the current level until the end of this year.

What are the additional risks?

These include the unpredictability and uncertainty of the outcome of the presidential campaign in the States. On the contrary, this factor may cause high volatility in the commodity market, but in no way a steady rise or fall in prices.

What are the prospects?

We believe that all the above reasons and factors influencing the dynamics of crude oil prices will ultimately lead to their stagnation. It seems that quotes will remain approximately near the current levels, which, in our opinion, opens up wide opportunities for making deals on the options market, provided that prices are actually frozen.

Forecast of the day:

WTI crude oil prices continue to consolidate at the upper end of the price range. We believe that the lack of growth in demand for this product and a weak recovery impulse in the US and European economies will not allow them to overcome the local maximum. Therefore, we consider it possible to sell the growth with the local target of 41.85.

The USD/CAD pair remains in a short-term downward trend. In the wake of a limited recovery in oil prices within the general sideways trend, it continues to decline to 1.3150 with the prospect of falling to the level of 1.3100.

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

GBP/USD: plan for the European session on August 18. COT reports (analyzing yesterday's trades). Pound remains in a sideways

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

Nothing changed during the day from a technical point of view, except a signal to buy formed yesterday afternoon. If you look at the 5 minute chart, you will see how a good long entry point was formed after an update of the 1.3074 support, which I paid attention to in my review. After that, a return to the resistance area of 1.3139 took place, and the movement was around 60 points. The report from the futures market also shows that the demand for the pound is growing and the tipping point is about to come when the net position becomes positive.

The Commitment of Traders (COT) reports for August 11 recorded an increase in long positions, as well as a reduction in short ones. This suggests that, even despite the differences that exist with the EU on the trade deal, recent macroeconomic indicators make us believe in a more active recovery of the UK economy after the pandemic crisis, as well as the pound's growth in the medium term. The COT report indicates that short non-commercial positions decreased from the level of 60,704 to the level of 59,874 during the week. On the contrary, long non-commercial positions increased from the level of 45,977 to the level of 48,053. As a result, the non-commercial net position again decreased its negative value to -2,821, against -14,727. This suggests that the market trend is about to change in the near future and control will go to the side of buyers of the pound in the medium term.

As for the current picture, it has not changed much compared to yesterday's forecast. The bulls need to break above the resistance of 1.3139, since it currently depends on it – whether the upward trend on the pound continues, or the pair hovers in the side channel, which it has been in since the end of last week. Settling above 1.3139 forms a good entry point into long positions in anticipation of updating the high of 1.3181. The resistance of 1.3228 is the long-term goal, where I recommend taking profits. In case the pound falls in the first half of the day, it will be possible to return to long positions on a false breakout from the support at 1.3074, and in the absence of activity, I recommend postponing new long positions until the lower border of the wider side channel near 1.3007 is updated, counting on a correction in 30-40 points within the day.

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

In order to somehow change the current situation on the market, sellers need to break below the support of 1.3074, since settling under this level will be a good signal for further opening of short positions in the hope of pulling down the pair to a low of 1.3007. A break in the support of 1.3074 will also lead to a break in the lower border of the current ascending channel, which buyers of the pound have been trying to form since the middle of Friday last week. The low at 1.2916 is still the long-term goal of the bears, which is where I recommend taking profits. An equally important problem for the bears is protecting the 1.3139 resistance, which is now the main trading area. Everything can happen according to yesterday's scenario: an attempt to break 1.3139, update the high from August 14 and return the pair to this level. All this forms a good signal to open short positions in anticipation of a decline to the middle of the 1.3074 side channel. If there is no activity at this level, I recommend selling the pair immediately for a rebound only after updating the resistance of 1.3181 in anticipation of a correction of 30-40 points.

Indicator signals:

Moving averages

Trading is carried out slightly above 30 and 50 moving averages, which indicates that traders are still willing to buy the British pound.

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

Bollinger Bands

A breakout of the upper border of the indicator around 1.3139 will lead to a new wave of growth in the pound. In case of decline, support will be provided by the lower border at 1.3080.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial 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 non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • The total non-commercial net position is the difference between short and long positions of non-commercial traders.
The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD: plan for the European session on August 18. COT reports (analyzing yesterday's trades). Bulls break above 1.1865

To open long positions on EURUSD, you need:

Even at a second attempt, buyers of the European currency achieved their goal and managed to break through above the large resistance level of 1.1865 yesterday, from which you could observe active sales in the first half of the day. If you look at the hourly chart, you will see how a strong bullish momentum caused the pair to settle and stay above the 1.1865 level, forming a good entry point into long positions, which was implemented today in the Asian session.

Reports from the futures market also tell us that buyers continue to dominate. The Commitment of Traders (COT) reports for August 11 continued to report the growth of long positions and the reduction of short ones, which tells us about the continued interest of investors in risky assets, even at such high prices, as many bet on a further weakening of the US dollar before the US elections and a more difficult situation with the spread of the coronavirus epidemic. Problems are also being added due to disagreements in the US Congress on the further approval of financial assistance to the unemployed, as well as the aggravation of US trade relations with China and the EU. The report shows an increase in long non-commercial positions from the level of 262,109 to the level of 266,078, while short non-commercial positions decreased from 81,461 to 66,327. As a result, the positive non-commercial net position sharply jumped to 199,751, up from 180,648 a week earlier, indicating an increase in interest in buying risky assets.

As for the further movement of the pair, much will depend on how buyers will show themselves in the resistance area of 1.1912, which is a gradual movement. A breakout and consolidation above this level, and unfortunately there is nothing to do it on, since important fundamental data will not be released today, will result in EUR/USD growing further towards a high of 1.1987. A more distant goal will be the 1.2020 level, where I recommend taking profits. If the pressure on the euro returns in the European session, then by analogy with yesterday, you can watch purchases immediately on the rebound from the major support of 1.1865, where the moving averages are. You can also open long positions from the low of 1.1830 in anticipation of a correction of 30-40 points within the day.

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

As long as trade is developing in this way, sellers of the euro are unlikely to act rashly. Most likely, we can only observe the bears' first activity of the day after updating the 1.1912 level. But a false breakout forming there will be a signal to open short positions in the hope of pulling down the pair to a larger support of 1.1865, where the moving averages that play on the side of buyers also pass. An equally important task is to consolidate below this range, which will raise the pressure on the euro and lead to an update of the low of 1.1830, where I recommend taking profits. However, testing this level will not even create a real threat to the bull market, which we can now observe. This requires returning to the support of 1.1784. In case bears are not active in the 1.1912 area, it is best to postpone short positions until the highs of 1.1987 and 1.2020 have been updated, from where you can sell EUR/USD immediately on the rebound in anticipation of a correction of 30-40 points within the day.

Indicator signals:

Moving averages

Trading is conducted above 30 and 50 moving averages, which indicates a continuation of the bullish trend.

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

Bollinger Bands

In case the pair falls, support will be provided by the lower border of the indicator in the 1.1845 area, from where you can buy the euro immediately on a rebound. A breakout of the upper border of the indicator around 1.1890 will lead to a larger rise in the euro.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial 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 non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
The material has been provided by InstaForex Company - www.instaforex.com

GBP/USD Intraday Projection For August 18, 2020

The high of the day and low of the day from the Central Bank Dealer Range (CBDR) are usually formed at the STDV 2-STDV 4 in the normal market condition. Sometimes, they can reach the STDV 5-STDV 6 during the high volatility condition in the market. Here are today's levels:

STDV 10 - 1.3493.

STDV 9 - 1.3457.

STDV 8 - 1.3421.

STDV 7 - 1.3385.

STDV 6 - 1.3349.

STDV 5 - 1.3313.

STDV 4 - 1.3277.

STDV 3 - 1.3241.

STDV 2 - 1.3205.

STDV 1 - 1.3169.

CBDR - 1.3133.

==================

CBDR - 1.3097.

STDV 1 - 1.3061.

STDV 2 - 1.3025.

STDV 3 - 1.2989.

STDV 4 - 1.2953.

STDV 5 - 1.2917.

STDV 6 - 1.2881.

STDV 7 - 1.2845.

STDV 8 - 1.2809.

STDV 9 - 1.2773.

STDV 10 - 1.2737.

Pay attention to the level of confluence between today's & yesterday range of 1.3169, 1.2917 and the previous day high of 1.3121 with the previous day low of 1.3073. All these levels could become a potential turning point.

(Disclaimer)

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

EUR/USD: Intraday High&Low Projection For August 18, 2020

The High Of The Day and Low Of The Day from the Central Bank Dealer Range (CBDR) today are usually formed at the STDV 2-STDV 4 under normal market conditions. However, the pair sometimes can reach the STDV 5-STDV 6 under higher volatility in the market. Here are the levels for the today:

STDV 10 - 1.2043.

STDV 9 - 1.2027.

STDV 8 - 1.2011.

STDV 7 - 1.1995.

STDV 6 - 1.1979.

STDV 5 - 1.1963.

STDV 4 - 1.1947.

STDV 3 - 1.1931.

STDV 2 - 1.1915.

STDV 1 - 1.1899.

CBDR - 1.1883.

==================

CBDR - 1.1867.

STDV 1 - 1.1851.

STDV 2 - 1.1835.

STDV 3 - 1.1819.

STDV 4 - 1.1803.

STDV 5 - 1.1787.

STDV 6 - 1.1771.

STDV 7 - 1.1755.

STDV 8 - 1.1739.

STDV 9 - 1.1723.

STDV 10 - 1.1707.

Pay attention to the level of confluence between today's & yesterday range at 1.1701, 1.1644 as well as the previous Day High of 1.1881 and the Previous Day Low of 1.1829. All these levels can be a potential pivot point.

(Disclaimer)

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

Analytics and trading signals for beginners. How to trade the EUR/USD pair on August 18? Plan for opening and closing trades

Hourly chart of the EUR/USD pair

The EUR/USD pair continued its upward movement at night trading and reached the first target level of 1.1890. The pair also came close to the 1.1903 level, which we have designated as the upper limit of the side channel with a width of 200 points. A downward reversal and movement towards the 1.1696 level is very likely near the upper border of the channel. However, to implement such a scenario, we would recommend waiting for the price to settle below the upward trend line. However, a price rebound from the 1.1903 level can also be regarded as a signal to sell. At the same time, we remind novice traders that if there is a side channel (or any channel), it does not mean that the price will constantly bounce off its borders. Sooner or later, overcoming will happen.

No important publications or news from the European Union and America are scheduled for August 18. Therefore, novice traders can continue to trade calmly in accordance with the technical picture. And the technical picture now raises one question: what will happen around the 1.1903 level? Previously, the price fought back from this level three times. Let's try to look at the overall picture: the US dollar continues to fall in price, as in the past three months. Only this time it's inside the side channel. There are no good reasons for the dollar to fall. The fundamental background is not in favor of the dollar, but there is no new data on the basis of which traders could begin to form new sales of the US currency. There are no economic reports at all at the beginning of the week. Therefore, it is logical for the pair to currently strengthen inside the side channel, but further growth above the 1.1903 level isn't. Thus, we are more inclined to the option of resuming the downward movement in the coming days. It should also be noted that any negative news from America can help traders overcome the 1.1903 level. For example, coronavirus, which has already claimed the lives of 170,000 Americans and infected 5.4 million. However, only 42,000 cases were recorded in America on August 16, which means that the epidemic is on the wane. This is a positive factor for the dollar.

The following scenarios are possible on August 18:

1) Buying the pair on Tuesday is still relevant, since the price continues to be above the trend line. However, all buy orders can be closed on the way to the 1.1903 level, since there is a high probability of a downward reversal around this level and also a drop of points by 200. Thus, we recommend buying the pair again after clearly breaking the 1.1903 level and after a correction down, its completion will be signaled by the MACD indicator. Aim for 1.1912 and 1.1942.

2) But we advise you to start selling the pair if the price rebounds from the 1.1903 level. A rebound is unambiguously required, on one bar (novice traders can look at how the price bounced from this level earlier in order to understand how a rebound is required). Then the pair can be sold with the goal of an upward trend line, and if the price overcomes this, then it is advised to keep selling open with targets at 1.1838 and 1.1808.

What's on the chart:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Red lines are the channels or trend lines that display the current trend and show in which direction it is preferable to trade now.

Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.

The MACD indicator consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).

Important announcements and economic reports (you can always find them in the news calendar) can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal.

Beginners in the Forex market should remember that not every single trade should be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

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

Hot forecast and trading signals for the GBP/USD pair on August 18. COT report. Completely calm on Monday. Traders waiting

GBP/USD 1H

The GBP/USD currency pair continued to trade in a very narrow price range on August 17, by only a few dozen points. So Monday was really very boring. Traders rested all day without even trying to trade the pair. As a result, the quotes moved flat even inside the side channel. In recent days, the pound/dollar pair does not even try to approach the upper or lower line of the side channel. In general, a complete calm. Thus, there is no movement with a certain direction even inside the side channel, which makes it difficult to trade even on the smallest timeframes. Based on this, we believe that the best option at this time is to wait for the flat to end and the resumption of the trend movement.

GBP/USD 15M

Both linear regression channels are directed upwards on the 15-minute timeframe, but the lower channel eloquently shows how volatile trading is now and where the pound/dollar pair is mainly moving. The latest Commitment of Traders (COT) report for the British pound, which was released on Friday, turned out to be almost an exact copy of the report on the euro currency. As for the euro, big traders opened new Buy-contracts (2,569) in the reporting week and closed Sell-contracts (8,405). Thus, the net position for non-commercial traders increased by almost 11,000 during the reporting week, which, in fact, means an increase in bullish sentiment. We could draw the same conclusions based on the nature of the movement of the pair itself. Given the fact that we have not seen even a normal correction of the British pound for several weeks, we can make a clear conclusion that big traders are not selling this currency now. Therefore, even the COT report does not yet suggest the beginning of a new downward trend. At the same time, the new week started with extremely weak movement. Have professional traders decreased their activity?

The fundamental background for the GBP/USD pair was simply absent on Monday. Based on the nature of the pair's movement during the day, one could draw this conclusion without even looking at the calendar of macroeconomic events. Unfortunately, the situation with the fundamental background is unlikely to change today, because the news calendar is still empty. There is almost no news even on broad fundamental topics at the moment. There are rumors that Washington is going to use more serious weapons in the "cold war" with China, but it has not yet reached the point of actions and direct threats to use new "weapons". The whole world could already enjoy the trade war between China and the United States, which plunged the world economy into recession. As for the UK, there is generally a news calm. Several macroeconomic reports were published last week, which, however, also did not help the pair finish flat, and traders decided which way to trade.

There are two main options for the development of events on August 18:

1) Buyers in general continue to hold the pound/dollar initiative in their hands. We recommend opening new purchases of the British currency, but not before the 1.3157-1.3181 area has been overcome with targets at the resistance levels of 1.3213 and 1.3284. Potential Take Profit in this case is from 20 to 90 points. You can also try to buy the pound when the price rebounds from the Kijun-sen, but this signal will be weak.

2) Bears have already failed to overcome the support area 1.3003-1.3023 five or six times. Thus, consolidating the price below the Kijun-sen line (1.3067) will allow us to expect the price to fall in this area. Each trader has to decide for himself whether to reject this signal or not, since the pair as a whole remains in a flat. We do not see the pair below the 1.3003 level yet, but if this level is overcome, we recommend opening sells with targets at 1.2939 and 1.2873.

Hot forecast and trading signals for the EUR/USD pair.

We also recommend that you study the fundamental background in these articles:

Overview of the EUR/USD pair. August 18. The US dollar has no reason to get more expensive, except for technical reasons. Donald Trump is reducing the gap from Joe Biden by several percent.

Overview of the GBP/USD pair. August 18. Scotland and Northern Ireland are increasingly hinting at their exit from the UK. The British economy will continue to experience problems in 2021.

Explanations for illustrations:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

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

Hot forecast and trading signals for the EUR/USD pair on August 18. COT report. Washington is considering new ways to pressure

EUR/USD 1H.

The euro/dollar pair continued its upward movement on the hourly timeframe of August 17, which began after the rebound from the Kijun-sen and Senkou Span B lines since the macroeconomic and fundamental backgrounds were practically absent on this day, the trading was calm, without sharp and strong movements. The pair reached the resistance area of 1.1886-1.1910 by the end of the trading day, near which its future fate will now be decided. If a rebound occurs from it, then the fall will resume within the side channel of $1.17-$1.19 while aiming for its lower border. The upward trend may resume if buyers finally gather their strength and overcome this area.

EUR/USD 15M

Both channels of linear regression are still directed upwards on the 15-minute timeframe, as the mood of traders did not change on Monday. A new Commitment of Traders (COT) report was released last Friday. According to this report, non-commercial traders reopened Buy-contracts and closed Sell-contracts. Thus, the net position for the "non-commercial" category of traders, which is the most important and significant category of traders, has grown again, this time by 15,000 contracts, which is a high value (5,128 Buy-contracts were opened and 9,681 Sell-contracts were closed). This leads to the conclusion that big traders have not changed their mood at all over the past week. In principle, the same conclusion can be drawn by looking at the chart of the euro/dollar currency pair itself. The pair has been in the side channel since July 27, which is three weeks ago. Thus, we can not even say that the euro has started to fall in price, which would allow us to conclude that the mood of the major players has changed. During all this time, traders managed to adjust the pair by a maximum of 200 points down, which is very little to be reflected in the COT report. Thus, the euro continues to rise in price, and the COT reports show a strengthening bullish mood.

There was no fundamental background for the EUR/USD pair on Monday. Traders had only to reason and analyze common fundamental topics, one of which is the US-China confrontation. According to the latest information, Washington may resort to new methods of pressure on Beijing, including a ban on Chinese banks' access to the international money transfer system centered in New York; restricting the access of Chinese companies to the SWIFT system of international transfers, which is formally Belgian, but according to some sources is subject to Washington; prohibiting any US financial entity from interacting with Chinese companies. Thus, the United States is considering new ways to influence China, which has become the source of the spread of the coronavirus around the world, because of which the American economy suffered the greatest losses. Also, the Chinese side is in no hurry to start talks on the second phase of the trade deal and, according to some reports, does not fully comply with all the agreements under the January agreement. Beyond that, Beijing clearly wants Joe Biden to win the November election, further enraging US President Donald Trump. In general, the confrontation between Beijing and Washington continues to heat up.

Based on the above, we have two trading ideas for August 18:

1) Buyers continue to wait and do not force events. To make new purchases of the euro,you are advised to wait until the price settles above the resistance area of 1.1886-1.1910. Then we will recommend buying the pair with the first target at the resistance level of 1.1958. In this case, the potential Take Profit is about 30 points. The next target is 1.2051, but with current levels of volatility and buying activity, it is not known when this level will be reached.

2) Bears continue to experience big problems and cannot go below the 1.1715 level. We recommend opening sales after breaking through the support area of 1.1702-1.1727 with the first target at the 1.1652 level. Potential Take Profit in this case will be about 30 points. If the price rebounds from the resistance area of 1.1886-1.1910, you can also open shorts with the targets of the Senkou Span B line and the 1.1715 level. In this case, Take Profit is from 60 to 100 points.

Hot forecast and trading signals for the GBP/USD pair.

We also recommend that you study the fundamental background in these articles:

Overview of the EUR/USD pair. August 18. The US dollar has no reason to get more expensive, except for technical reasons. Donald Trump is reducing the gap from Joe Biden by several percent.

Overview of the GBP/USD pair. August 18. Scotland and Northern Ireland are increasingly hinting at their exit from the UK. The British economy will continue to experience problems in 2021.

Explanations for illustrations:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

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

Overview of the GBP/USD pair. August 18. Scotland and Northern Ireland are increasingly hinting at their exit from the UK.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - sideways.

CCI: 100.3660

If the European currency is even in a side channel, then at least it is traded between its upper and lower borders, regularly working them out, then the pound sterling is traded in different directions even within the day. All its movements are similar to confusion and chaos, but in no way to calm trading, even in the flat. At the moment, the pound/dollar pair is fixed above the moving average line, but the last three attempts to overcome the Murray level of "6/8" - 1.3123 ended in failures. But the Murray level of "6/8" is not even the upper limit of the side channel, in which the pair has been trading for a month and a half. Thus, it is now completely unclear what market participants think at all, especially the major players who drive all the instruments. And this is especially true for non-profit traders, who are the most important group of large traders. As shown by the latest COT report, this group continues to invest in the British currency, but the size of these investments is not yet enough to continue the upward trend. Moreover, we have repeatedly drawn the attention of traders to the fact that, from a fundamental point of view, the pound sterling does not have such a big advantage over the US dollar (in contrast to the same Euro currency). And given that the pound has already risen in price in a pair with the dollar by 8 cents and there has not been a single significant correction for all this time, the probability of the pair going down, we would say, is now very high. It turns out that market participants have already played back all the negative fundamental background that has been coming from overseas for several months. But it is not possible to constantly sell the dollar for the same reasons. There are no new reasons. As for the British fundamental background, we see a paradoxical situation here. All traders forgot that the economic situation in the Foggy Albion is not much better than in the States. First, of all the European countries, the UK is the country that suffered the most from the first "wave" of the "coronavirus". Second, the British economy has been slowing and shrinking for four years because of Brexit. Third, London has not signed any trade agreements with America, the European Union, or anyone else. Fourth, even negotiations on a trade agreement are not going on with anyone (the EU can no longer be considered, despite the tons of optimism expressed by both sides). Fifth, Boris Johnson is now generally unclear what he is doing, since there is no information about this. The British Prime Minister was due to travel to Brussels in person at the end of July to hold talks with EU leaders. However, it seems that he decided to follow the most famous motto of Donald Trump: "My word, I want - I give it, I want - I take it back."

So what happens? It turns out that the British economy lost 20% in the second quarter, and in 2021 it will be dealt another blow in the form of a complete break of all ties and agreements between British and European companies. The new trade agreement between Britain and the Alliance is already "fantastic". Accordingly, recovery from the "coronavirus crisis" will be long and difficult, complicated by new "kicks". Moreover, Britain may lose Northern Ireland and Scotland in the future. What is happening now in Belarus, what has previously happened in Ukraine and in many other countries before, clearly shows that if people do not like something, they express it from time to time. When the "boiling point" is passed, they will take to the streets and fight for the right to live as they want, and not as they are forced to. This is exactly what can happen in civilised Northern Ireland and Scotland. Edinburgh has long been telling London that it wants to hold a second independence referendum. After this, Prime Minister Nicola Sturgeon is confident of a positive outcome, the country will want to return to the European Union, from which it did not want to leave initially. In Northern Ireland, which has long been in conflict with the British authorities, separatist sentiments and national organizations have always flourished, which, as history shows, can fight for their ideas and beliefs for years. And if the economic situation due to Brexit and the lack of a deal with the EU deteriorates even more in these countries, then a direct confrontation with London may begin. Boris Johnson and Michael Gove just recently visited Scotland and Ireland with financial aid packages for local companies. However, the assistance is provided in the form of loans, not "new year's gifts". But still. Many sources note that London is afraid of losing these two regions. Moreover, the European Union has just recently shown the UK all the advantages of being part of it. "Coronavirus" hurt all European States, but the EU government has accepted an unprecedented package of assistance for 750 billion euros, 2/3 of which will be distributed by grants, that is, free of charge. Moreover, a number of bills aimed at implementing reforms in the fields of energy and finance were adopted, which would hardly be approved by the UK. Thus, it turns out that the EU has become even stronger with the departure of Britain. It should also be recalled once again that it is Britain that is more dependent on the EU, and not vice versa.

Moreover, the Scottish government was much better at dealing with the pandemic itself than the British government, because it made its own decisions and did not follow London's lead. Northern Ireland shows an open desire to rejoin Ireland and does not want to have a border, customs and other bureaucratic issues between them. And the more such disputes and disagreements arise, the more likely it is that the discontent of the inhabitants of these countries will one day "overflow". Then Great Britain will feel for itself what it means when the people are forced to live as they do not want to. The Brexit referendum was devastating from the start. The margin of 3-4% had to be declared insufficient in order to start the procedure of leaving the European Union. 52% were in favor and 48% were against. This means that almost half of the British population is actually forced to leave the EU and live worse than before.

The average volatility of the GBP/USD pair is currently 78 points per day. For the pound/dollar pair, this value is "average". On Tuesday, August 18, thus, we expect movement within the channel, limited by the levels of 1.3032 and 1.3188. A downward turn of the Heiken Ashi indicator will indicate a new round of downward movement inside the side channel of 1.3000-1.3180.

Nearest support levels:

S1 – 1.3092

S2 – 1.3062

S3 – 1.3031

Nearest resistance levels:

R1 – 1.3123

R2 – 1.3153

R3 – 1.3184

Trading recommendations:

The GBP/USD pair on the 4-hour timeframe is located inside the side channel and is currently moving up. Thus, at this time, it is recommended to either trade the pair between the boundaries of the side channel of 1.3000-1.3180 or wait for the end of the flat.

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

Overview of the EUR/USD pair. August 18. The US dollar has no reason to get more expensive, except for technical reasons.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - sideways.

CCI: 125.2834

The EUR/USD currency pair continues to trade in a side channel with a width of approximately 200 points and does not even try to leave the specified range. In recent days, the pair's quotes have been held slightly above the moving average line, however, they have not yet managed to even approach the upper line of the side channel. Thus, trading is now ultra-quiet. None of the currencies has advantages, just as neither bulls nor bears have it. Unfortunately for traders who clearly would like to conduct active trading, and not sit in the flat, the entire macroeconomic background of the previous week, in fact, was ignored. Recently, there were quite a lot of important macroeconomic indicators both in the European Union and in America, but none of them managed to force the pair to leave the range of $ 1.17 - $ 1.19. Also, the situation is now called "some can't, others don't want to". We have already written about this. Buyers now do not want to make new purchases, since there are no new fundamental reasons for this. And sellers still do not want to invest in the dollar, because there is no reason to do so for several months. So it turns out that the euro/dollar pair is just marking time in one place.

Unfortunately, again for the US dollar, even macroeconomic statistics cannot support this currency now. Despite the fact that quite a large number of different reports have been published in America recently, the first place was the GDP report, which showed a drop of 33%, which has never been seen in the history of the United States. After these numbers, all reports like inflation (which has increased) or industrial production, did not matter much to traders. Even the report on NonFarm Payrolls, which exceeded forecasts, did not cause traders much optimism. The situation in the European Union is much better now. First, GDP in Europe fell by only 12%. Secondly, this country has managed to contain the coronavirus pandemic in at least some countries, at least for a few months. Although now there is again a fairly high number of cases in Spain and France (5-10 thousand daily), it is still not 50-60 thousand cases in America every day. In many EU countries, the coronavirus is under control, which has a positive impact on the pace of economic recovery. Plus, the European Union still adopted the budget for 2021-2027, as well as the economic recovery fund for 750 billion euros, and in the States, the Democrats and Republicans have been arguing for about a month on a new package of economic assistance and have not come to anything, because any actions by either side now pass through the prism of elections, which are less than 3 months away. Thus, the US government leadership continues to think more about how to win elections, rather than how to agree among themselves and mitigate the impact of the crisis on Americans and small and medium-sized businesses.

By the way, about the election. Quite unexpectedly, this weekend we received information that the political ratings of Donald Trump began to grow, but the ratings of Joe Biden – to decline. This was stated on Sunday by CNN. According to him, if the vote was held now, Trump would have won 46% of the vote, and Biden – 50%. That is, the gap is only 4%, not 10%, as it was a few weeks ago. It is difficult to say how true this opinion poll is, since previously almost all studies and simulations showed that Biden would win with a probability of almost 90%. Now it turns out that the probability is already somewhere 40 to 60, and such a rapid change in the mood of the electorate can not even be associated with any event in the United States. After all, the vaccine against "coronavirus" has not yet been invented by American companies, mass protests and rallies continue in some US cities, the epidemic itself will continue to spread among Americans, and Americans themselves continue to die from the "Chinese virus". Moreover, he did not de-escalate the conflict between China and the United States, did not ease the tension between Democrats and Republicans, Trump did not stop making unfounded statements, accusations, and the economic situation in the country did not improve. So, on what basis did Trump's ratings begin to rise? We believe that the results of this study are erroneous. It is reported that only about 1,100 people took part in the telephone survey, so the margin of error for such a small sample may be 5-10%. Thus, most likely, the gap between Trump and Biden has decreased, if at all, then by 1-2 % at most.

Based on all the above, we believe that the flat can continue for as long as you want, because it is difficult to imagine what fundamental or macroeconomic event can bring the pair out of the side channel. We have realized that even the all-important GDP data and US and EU are not able to bring a pair of flat, as fundamental events are now a very small number and the vast majority of them is only a background influence. In other words, market participants do not immediately respond to these events by buying or selling. They form the fundamental background, according to which trade is conducted in general. And for the US dollar, nothing changes for the better here. Thus, the fact that this currency has at least stopped depreciating against the euro is already good. However, we still tend to believe that a downward correction will begin (we mean at least a relatively strong downward correction). At the same time, we continue to put technical factors first. Therefore, before overcoming the level of 1.1909 (the upper line of the channel), we do not recommend considering the option of resuming the upward trend. It is the same as considering the option with a downward trend to overcome the level of 1.1710. Therefore, in the current conditions, market participants can either be "on the fence", or trade between the upper and lower lines of the side channel, or trade relative to the moving average line. However, it is always difficult to trade in the flat, so we recommend that you be extremely careful when opening any positions.

The volatility of the euro/dollar currency pair as of August 18 is 79 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1790 and 1.1948. The reversal of the Heiken Ashi indicator downwards signals a turn of the downward movement within the side channel of 1.1719-1.1911.

Nearest support levels:

S1 – 1.1841

S2 – 1.1719

S3 – 1.1597

Nearest resistance levels:

R1 – 1.1963

Trading recommendations:

The EUR/USD pair continues to trade near the sideways moving average, which indicates a flat. Thus, at this time, it is recommended to either trade between the borders of the side channel based on the signals of the Heiken Ashi indicator or wait for the end of the flat and the resumption of the trend movement.

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

EUR/USD. Dollar bulls worry: Washington's anti-China moves and Trump's rating

"Trump is playing the war card": a similar phrase can illustrate the events of recent days. However, we are still talking about a trade and diplomatic war, which, in fact, has been going on for years. But recently, the political conflict between the United States and China has increasingly acquired a "commercial" color. The market reacts accordingly: protective assets (yen, gold, franc) grow in price, the dollar continues to lose its position. Previously, the US currency was also used as a safe haven currency, but now the situation has changed: the greenback is under the weight of its own problems, including domestic political ones. Therefore, the buyers of the EUR/USD pair also get their benefit in this case. Here, the pair's growth is due only to the dollar's weakness, but this is quite enough for the bulls to keep the situation under control.

What happened?

The trade conflict between the US and China has been going on for several years – almost as long as Trump has been in charge of the White House. The months-long talks were repeatedly disrupted, rescheduled, and resumed again. As a result, the parties agreed on the first phase of the trade deal in the fall of 2019, thus preventing the development of a trade war. Washington has pledged not to impose so-called "December duties" on Chinese imports worth $160 billion a year. Beijing, in particular, has pledged to increase the volume of purchases of American goods. A kind of "thaw" occurred in relations between the United States and China, which lasted until the coronavirus pandemic. To be more precise, relations between the superpowers finally soured when the Americans accused the PRC of spreading COVID-19 – US President Donald Trump now calls the coronavirus nothing less than"the Chinese plague".

Since then, Beijing and Washington have been exchanging recriminations and accusations of various kinds. For example, in late July, US Secretary of State Mike Pompeo accused China of spying and stealing American intellectual property, demanding the closure of the Chinese Embassy in Houston. A little later there were also retaliatory measures from the PRC: Beijing has demanded to close the US Embassy in the Chinese city of Chengdu.

Despite political differences, the parties are fulfilling the terms of the trade agreement - or rather, the first part of this deal. Therefore, traders hoped that in spite of loud conflicts, negotiations on the second part of the trade deal would take place as usual. There were certain prerequisites for this: for example, a video conference was planned for this Saturday, during which the negotiators had to outline the trajectory of further prospects. But the video conference did not take place: it was postponed "for an indefinite period" without explanation.

This turn of events disappointed dollar bulls. The fact is that the most difficult and strategically important issues will be discussed by the parties precisely within the framework of the second phase of talks (if they take place at all). According to some reports, the Chinese are counting on a change of power on the American political sphere. Trump has repeatedly put pressure on the PRC, threatening to tighten the terms of the deal if he is re-elected. Many forgot about this circumstance, as the representatives of the Democrats, according to polls, bypassed the incumbent president. In early summer, Biden was ahead of Trump by about 15%, amid the coronavirus crisis.

But the latest ratings no longer speak of Joe Biden's unequivocal leadership. According to the latest polls, Biden's rating is on average at 49% in 15 key states of the country, while Trump's rating is 48%. Trump has significantly reduced the lead over his opponent, and this fact has alarmed many investors. Especially against the backdrop of the strengthening of anti-Chinese rhetoric on the part of the US president.

For example, Trump today admitted that, following ByteDance, which owns the TikTok service, other Chinese companies operating in the United States may be at risk. When asked by journalists about whether the authorities plan to impose restrictions on Alibaba, the Trump did not rule out such an option, adding that his administration is "considering such a scenario." In addition, the United States expanded sanctions against Chinese Huawei: Washington imposed restrictive measures against 38 subsidiaries of this company. The Department of Commerce has also extended the amendments under which foreign companies using US-made chip-making equipment must obtain a US license before supplying certain chips to Huawei.

The announced sanctions are just the tip of the iceberg. Before that, there was the Hong Kong issue, sanctions for oppressing Uighur rights in China, coronavirus charges, and charges of espionage.

That is, on the one hand, Trump is strengthening anti-Chinese rhetoric, and on the other hand, he is strengthening his position in the US electoral field. And all this just three months before the presidential election. The news of the disrupted US-Chinese talks was an eloquent illustration of the situation.

How to trade?

The main beneficiaries of investor anxiety were the yen, the franc and gold. The euro-dollar pair is growing only due to the dollar weakening. Compare, for example, the dynamics of USD/JPY and EUR/USD. Actually, it is difficult to call it growth – the European currency only stays above the resistance level of 1.1810 (the Tenkan-sen line on the daily chart). Theoretically, this allows EUR/USD bulls to approach the nearest resistance level of 1.1900 and the main resistance level of 1.1940 (the upper line of the BB indicator on D1). Buyers still do not have enough news momentum for a price jump, while the dollar's sluggishness will not go far - even to the borders of the 19th figure. But all the prerequisites for the pair's growth are there – at least in the context of testing the 1.1900 mark. Therefore, long positions on EUR/USD remain a priority in the medium term.

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