Indicator analysis. Daily review on EUR / USD for August 25, 2020

Trend analysis (Fig. 1).

The market may continue to move upward from the level of 1.1789 (closing of yesterday's daily candle) with the target at the upper fractal 1.1884 (candle from 08/21/2020). From here, the price may continue to move upwards with the target at the upper fractal 1.1967 (red dotted line).

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Figure: 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger lines - up;

- Weekly chart - up.

General conclusion:

Today, the price may continue to move upward from the level of 1.1789 (closing of yesterday's daily candle) with the target at the upper fractal 1.1884 (candle from 08/21/2020). From here, the price may continue to move upwards with the next target at the upper fractal 1.1967 (red dotted line).

Another possible scenario is from the level of 1.1789 (closing of yesterday's daily candle), the price may continue to move upward with the target of 1.1823 - a 61.8% pullback level (blue dashed line). Upon reaching this level, the price may begin to move downward with the target at the support level of 1.1700 (black thick line ).

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USDX Price Movement On August 25, 2020

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If we look at the 4-hour chart of the USD Index, we see USDX is actually moving in a down slope Pitchfork Channel, BUT after the index failed to touch for the second time the Middle line of the down slope Pitchfork, USDX is now moving upward. It looks like it wants to reach the 93.44 level. Although USDX is already moving above the Moving Average, the Stochastic Oscillator now is already at the overbought level. This means there is a potential for USDX to get a turning point to the downside again. If the price goes down and closes below 92.84, that means the upward movement scenario will be automatically cancelled.

(Disclaimer)

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Fed policy to raise USD rates on Thursday

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The dollar strengthened against other currencies recently, rising in price slightly even amid weak macroeconomic data in the EU and recovery in the US economy.

However, strategists in Wells Fargo say that dollar is "trading in a flat," and that "positions are incredibly stretched, so another pullback is needed to move up another notch."

Hence, the upcoming speech of Fed chairman Jerome Powell on monetary policy this Thursday is expected to be main driver of growth for the US dollar, with which investors will observe closely, awaiting presumptive signs of a mid-level inflation target, which will allow inflation to rise before the Fed raises rates to offset decades of favorable price increases.

"If Powell does not announce that we are targeting average inflation, then the dollar should strengthen, and, accordingly, some pullback in foreign currencies," said Erik Nelson, Macro Strategist at Wells Fargo.

Meanwhile, Republicans say that the US' politics and economic prospects depend only on the re-election of Donald Trump.

On Monday, analysts at NatWest Markets said in a report that when Trump is re-elected, his administration will be able to realize economic recovery, even after its collapse during the pandemic under the sensitive and firm leadership of Donald Trump.

In addition, the upcoming speech by Fed chairman Powell may "revive" and raise the price of gold, as strategists at TD Securities believe that on the upcoming speech, the Fed will announce its adoption of average inflation targeting, which will lead to new buying interest that could raise demand for gold and silver.

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Technical Analysis of ETH/USD for August 25, 2020

Crypto Industry News:

Coinbase and Apple are still not getting along months after Coinbase warned customers it might remove the app from the Apple Store.

Coinbase CEO Brian Armstrong tweeted that Apple continues to block some cryptocurrency features, including the ability to make money and unlimited decentralized applications (dApp) of the browser:

"Apple has been very restrictive and hostile to cryptocurrencies over the years. They still block some features now, including the ability to make money with cryptocurrency through task execution and unlimited Dapp browsers," Armstrong said.

In December, Coinbase warned its customers that it might be necessary to remove the dApp browser from its app to comply with Apple App Store policies. At the time, both Apple and the Google Play Store with Android apps wanted to remove dApps from their network.

Apple, especially its App Store, has been under fire recently due to unfair terms it imposes on app developers and publishers. The Wall Street Journal, The New York Times and game developer Epic Games have called on Apple to find fairer conditions for developers.

Technical Market Outlook:

The ETH/USD pair has hit the target seen at the level of $407.03 - $414.11 with a local top at the level of $409.67 and then was capped. Currently, the price is trading below the level of $400 and the next target for bears is seen at the level of $396.45 (itraday techncial support). The momentum keeps increasing as the market bounces from the oversold conditions as well. All the bigger time frame charts looks very bullish and the up trend should be continued after the correction is completed.

Weekly Pivot Points:

WR3 - $491.79

WR2 - $470.70

WR1 - $424.12

Weekly Pivot - $402.20

WS1 - $357.21

WS2 - $333.72

WS3 - $286.54

Trading Recommendations:

The weekly and monthly time frame trend on the ETH/USD pair remains up and there are no signs of trend reversal, so buy orders are preferred in the mid-term. All the dynamic corrections are still being used to buy the dips. The next mid-term target for bulls is seen at the level of $500. The key mid-term technical support is seen at the level of $364.95.

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Technical Analysis of BTC/USD for August 25, 2020

Crypto Industry News:

Open interest in Bitcoin option contracts returned to $ 2 billion after briefly breaching the level before expiring in July. Since the beginning of 2020, the BTC options market has grown sixfold, prompting investors to wonder if its potential impact on price has become too extreme.

Slightly more than a third of these contracts expire on August 28, which corresponds to 57,000 BTC. For this reason, traders have every reason to be concerned about the potential impact of an expiry on the markets, especially given the timeframe for these settlements.

The Chicago Mercantile Exchange (CME) expires at 8:00 UTC and Deribit and OKEx is at 15:00 UTC. Some exchanges list weekly contracts, but monthly contracts usually cover most of the volume.

Deribit currently holds 80% of the Bitcoin options market share. Therefore, it will be analyzed in detail below. Namely, there is open interest in the 9.9k BTC options in Deribit, which are expected to expire below 25% delta next Friday, which means that the market is currently pricing them at no less than 25% of the rates. As widely discussed, these out-of-the-money options account for more than 40% of the open call options in August.

After a 27% increase in the last 30 days, most put options have become worthless. In this situation, 17.5 thousand BTC put options are open, which entails 85% expiry in August. After adding the call (buy) and put (sell) options in Deribit, there are 46.6 thousand BTC with the August expiry. Almost 60% of them are considered unprofitable. This drastically reduces potential pressure from such a market.

It should be noted that both futures and options markets expire simultaneously, hence it is difficult to identify the responsibility of any derivative for intense price fluctuations.

Technical Market Outlook:

The BTC/USD pair has bounced from the level of $11,756 which is a 38% Fibonacci retracement level of the last wave down. The Doji candlestick pattern made at the top of this move might indicate a rejection and reversal of the higher prices. Despite the fact, that the BTC is clearly trying to bounce higher, the market is still trading below the supply zone located between the levels of $12,269 - $12,431. The nearest technical resistance is seen at the level of $11,461 (for intraday traders) and the level of $11,358 will act as a support from now. The key short-term technical support is seen at the level of $11,062.

Weekly Pivot Points:

WR3 - $13,245

WR2 - $12,828

WR1 - $12,122

Weekly Pivot - $11,728

WS1 - $11,022

WS2 - $10,628

WS3 - $9,978

Trading Recommendations:

The weekly trend on the BTC/USD pair remains up and there are no signs of trend reversal, so buy orders are preferred in the mid-term. All the dynamic correction are still being used to buy the dips. The next mid-term target for bulls is seen at the level of $13,712. The key mid-term technical support is seen at the level of $10,463.

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Technical Analysis of GBP/USD for August 25, 2020

Technical Market Outlook:

The zone between the levels of 1.3253 - 1.3077 on GBP/USD pair is now a clear battle zone between bulls and bears, so the winner will determine the next move of GBP. For now the market moves only inside of a smaller zone located between the levels of 1.3059 - 1.3121, so the breakout is highly anticipated. If the weekly high is violated, then the next target is seen at the level of 1.3283, but the long-term target for bulls is still located at 1.3518. The immediate technical support is seen at the level of 1.3077 and 1.3017.

Weekly Pivot Points:

WR3 - 1.3388

WR2 - 1.3323

WR1 - 1.3185

Weekly Pivot - 1.3117

WS1 - 1.2973

WS2 - 1.2907

WS3 - 1.2796

Trading Recommendations:

On the GBP/USD pair the main, multi-year trend is down, which can be confirmed by the down candles on the monthly time frame chart. Nevertheless, the recent rally form the multi-year lows seen at the level of 1.1404 has been successful and the trend might be reversing. The key long-term technical resistance is seen at the level of 1.3518. Only if one of these levels is clearly violated, the main trend might reverse (1.3518) or accelerate towards the key long-term technical support is seen at the level of 1.1404.

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Technical Analysis of EUR/USD for August 25, 2020

Technical Market Outlook:

The EUR/USD pair has made a Bearish Flag price pattern and is still trading below 61% Fibonacci retracement (weekly time frame target for bulls), so the odds for another wave down are high. The next target for them is seen at the level of 1.1822 and 1.1882. In order to make a new high, the bulls will have to break through the short-term trend line resistance seen at the level of 1.1900. The immediate technical support is located at the level of 1.1720 and 1.1710. The larger time frame trend remains up.

Weekly Pivot Points:

WR3 - 1.2107

WR2 - 1.2031

WR1 - 1.1883

Weekly Pivot - 1.1825

WS1 - 1.1682

WS2 - 1.1616

WS3 - 1.1470

Trading Recommendations:

On the EUR/USD pair the main trend is up, which can be confirmed by 8 weekly up candles on the weekly time frame chart and 3 monthly up candles on the monthly time frame chart. This means any corrections should be used to buy the dips. The key long-term technical support is seen at the level of 1.1445. The key long-term technical resistance is seen at the level of 1.2555.

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Control zones for USD/CHF on 08/25/20

The pair tested the WCZ 1/2 0.9154-0.9141 last week, which led to the formation of an accumulation zone. The downward impulse remains a priority, however, the formation of a flat may become the first stage for a deeper corrective growth. To break the formation, it is necessary to close today's trading above the WCZ 1/2.

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If this happens, purchases will come forward, and the growth target will be the weekly CZ 0.9304-0.9276.

To continue the formation of the accumulation zone, it is necessary to form an "absorption" pattern by retesting the WCZ 1/2. This will allow us to sell the pair with the goal of retesting the monthly low and let the pair further decline. The probability of implementing the ascending and descending patterns is approximately the same, so both patterns should be considered as part of the daily trading plan.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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Control zones for USDJPY on 08/25/20

Purchases made last week after the test of WCZ 1/2 105.43-105.28 continue to be relevant. The first goal of the upward movement is the monthly high. The main growth target for implementing the priority model is the weekly CZ of 107.75-107.42. Testing this zone will complete the bullish cycle.

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Working in an upward direction is a priority, so any reduction to the WCZ 1/2 should be considered for buying the instrument.

To break the upward momentum, today's trading will have to close below the WCZ 1/2. This will require closing the purchase and opening a short position after a corrective pattern has formed. The probability of this reversal is at 25%.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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Control zones for NZDUSD on 08/25/20

The downward movement remains impulsive, as yesterday's test of the WCZ 1/2 0.6568-0.6561 caused an offer to emerge and an absorption absorption to form. The first goal of the decline is the previous week's low. Once it is reached, the short position must be partially consolidated, and the rest of it must be converted to breakeven.

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Working in a downward direction is still a priority, so any growth that does not exceed the levels of the WCZ will be corrective.

To break the downward momentum, it will take absorbing yesterday's fall and closing above the WCZ 1/2. The probability of developing this is at 20%. Once it is implemented, you will have to give up sales and consider purchasing the instrument.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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EUR/GBP price movement, August 25, 2020.

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On the 4 hour chart, we can see that the EUR/GBP pair may decline to the SELL Stop Liquidity Pool bellow the 0.9001 level as its prime target. If the bearish momentum is strong, the pair will continue to fall. It may even try to break through the 0.8943 level as its secondary target. It has already been confirmed by the hidden divergence (convergence) between the price and the Stochastic Oscillator. The scenario is unlikely to occur If the pair rises and closes above the 0.9043 level.

(Disclaimer)

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Control zones for USD/CAD on 08/25/20

The pair continues to trade within the medium-term accumulation zone. An "absorption" pattern of the daily level has formed after yesterday's rally. Today, the nearest resistance zone will be the WCZ 1/2 1.3261-1.3249. Testing this zone will be decisive for the pair's further movement.

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If testing the WCZ 1/2 leads to a stop in growth and the formation of a sell pattern, then short trades will come forward. The lower border of the flat will be the target of the decline.

To break the flat structure and exit the accumulation zone, it will be necessary to close today's trading above the WCZ, which will allow us to consider buying tomorrow. The growth target will be the weekly CZ 1.3392-1.3369. It should be noted that the downward trend remains a medium-term impulse.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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Control zones for GBPUSD on 08/25/20

Sales that were opened last week near the week's high are still the main ones. Yesterday's growth did not break the corrective decline. The nearest target for partially taking a short position is the WCZ 1/2 1.3050-1.3029. Testing this zone will be decisive for the entire upward movement in the medium-term. Closing today's trading below the zone will indicate a change in the trend.

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If the pair settles below the WCZ 1/2, further decline will turn into a momentum, so sales of the instrument will come to the fore in the second half of the week.

If testing the WCZ 1/2 leads to a large demand, it will allow you to enter the purchase after an "absorption" pattern forms on a timeframe not lower than H1. This will allow you to continue the upward medium-term momentum without breaking its structure.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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

Control zones for EURUSD on 08/25/20

A correction model was formed yesterday for the pair's previous decline. Last week's low is the first goal for the decline. When retesting it, you will need to partially fix the position. The remaining part can be converted to breakeven and kept until the next target zone of the WCZ 1/2 1.1675-1.1666.

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Work in the downward direction remains a priority, so any growth should be perceived as an opportunity to re-enter a short position.

To change the direction of trade, it will be necessary to absorb yesterday's fall and close today's trading above the WCZ 1/2. This will indicate the emergence of a large interest in buying euros and will make it possible for you to refuse to sell it. The probability of developing this pattern without testing last week's low is only at 20%.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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

Forecast for EUR/USD on August 25, 2020

EUR/USD

Monday was quite calm for the market, the dollar index added 0.13%, the euro fell by only 6 points, and the technical situation on a daily chart did not change. The price is also developing in a wide range of uncertainty at 1.1710-1.1905, but the euro's sentiment is shifting more and more to the downside, which is signaled by the leading Marlin oscillator, further deeper into the negative trend zone.

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Data on sales of new homes in the US for the month of July will be released today, the forecast for which is optimistic at 787,000 against 776,000 in June. The Conference Board consumer confidence index for August will also be published, the forecast for which is 93.2 against 92.6 the month earlier. Perhaps the data will provide more optimism to the bears.

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The rising spike in price was limited by the resistance of the MACD line on the four-hour chart. Today we expect the price to drop to the lower border of the range to the 1.1710 area.

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Forecast for AUD/USD on August 25, 2020

AUD/USD

The Australian dollar's reluctance to break through the support of the MACD line on the daily chart for three days has led the price to a fragile balance and strengthened the potential for growth. The signal line of the Marlin oscillator began to reverse from the border of the decline zone, which, together with the support of the MACD line, gives the price the opportunity to reach the target level of 0.7240 and even, after breaking it, reach 0.7296, after which a six-fold divergence will be created on the oscillator.

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The price is compressed into a triangle directly along the MACD line on the four-hour chart, which once again indicates how the balance is fragile.

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To maintain the downward trend, the price needs to settle below the daily MACD line, that is, below the 0.7157 level. Pinning the price above the four-hour MACD line will cause the price to reach the first target of 0.7240.

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Forecast for USD/JPY on August 25, 2020

USD/JPY

The Japanese yen is making great efforts to maintain its strategic weakness, then it plans to rise on the USD/JPY chart. The price added 18 points yesterday. The signal line of the Marlin oscillator has penetrated the growth zone on the daily chart. The 106.68 target along the embedded price channel line slightly became easier to reach since it was also closer.

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The price settled above the balance line on the four-hour chart - market sentiment tends to lean on buying more. The Marlin oscillator is moving more and more into the growth zone. The price still needs to overcome the resistance of the MACD line at 106.25, and in this case the 106.68 target will become more tangible.

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Forecast for USD/CAD on August 25, 2020

USD/CAD

The USD/CAD pair moves up from the price channel from its lower border on the daily chart. This reversal is confirmed by the extended convergence on the Marlin oscillator. The price is practically at the bottom of a five-month downward trend. It needs additional help and time to increase the price, at least from the technical side, for example, the Marlin oscillator – its transition to the zone of positive values will mean a shift in the market trend towards purchases. The growth target is the MACD line and the price channel line around 1.3380.

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The price consolidated above both indicator lines on the four-hour chart - balance and MACD. Marlin in the growth zone. We are waiting for the development of an upward trend.

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Hot forecast and trading signals for the GBP/USD pair on August 25. COT report. Bears need to pass the 1.3040 level

GBP/USD 1H

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The GBP/USD pair tried to start a new round of upward movement and even crossed the Senkou Span B line on August 24, however, the bulls did not want to re-invest in the pound sterling and the downward movement quickly and abruptly resumed. A new downward trend channel was formed yesterday, which looks more like a sideways channel, but still has a slight downward trend. The pair's quotes are now trading near its lower border. Thus, there can be two ways out of the current situation. Either the bears will manage to break through the lower line of this channel, then the chances for continuing the downward movement will significantly increase, or the attempt to overcome it will be unsuccessful, then it will be quite possible to expect the pound to grow, at least to the critical line.

GBP/USD 15M

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The lower linear regression channel turned sideways on the 15-minute timeframe, but the downward movement has resumed, so the channel may turn down again soon. The latest Commitments of Traders (COT) report for the British pound, which came out on Friday, was quite predictable. Non-commercial traders reopened 5,880 Buy-contracts units and closed 2,232 Sell-contracts in the period from August 12 to 18. Thus, the net position for this category of traders has grown again, by as much as 8,000 contracts, which is a lot for the pound. Actually, the pound continued to grow against the dollar until August 18 inclusive, so the COT report accurately reflected what was happening on the market at that time. But even the remaining three days of the week, which were not included in the COT report, do not suggest that the mood of professional traders has changed or will change in the near future. The pound was thrown from side to side, by more than 200 points, and then it could not go down again. The British currency failed to update the previous week's lows on Monday. Therefore, it is quite possible to expect that the upward trend will continue, at least until we receive additional technical signals to continue the downward movement. By the way, take note that thanks to the last reporting week, the "non-commercial" category now has more Buy-contracts than Sell-contracts (52,000 versus 49,000).

The fundamental background for the GBP/USD pair was flat on Monday. Markets quickly digested the information that the next round of talks between Brussels and London failed. And there is no other important news at this time. The British currency seems to have begun to fall in price in recent days, but sellers clearly need help in this process. And it is not known when help will come. In theory, the British pound needs a little help to continue falling against the dollar. Because all the negativity in the UK is still there. Accordingly, Brexit alone without a deal with the EU and a serious contraction of the British economy should be enough to move down by at least 400-500 points. Moreover, the pound is now clearly overbought. Only complete uncertainty in the future of the US economy is holding back traders from new purchases of the dollar. It is unclear who will win the election, what kind of relationship will be with China, and how quickly the American economy will recover.

There are two main options for the development of events as of August 25:

1) Buyers continue to gain strength and are taking a rest. However, they can be active at any moment. For example, in case of an unsuccessful attempt to overcome the lower channel line, a rebound up to the Senkou Span B line may follow. However, you are advised to open long positions if the Kijun-sen line (1.3162) has crossed with the target of the upper channel line. Take Profit in this case will be up to 60 points.

2) Bears are trying to dominate again, but the bulls, as well as the lower channel line, do not let them go far down. If sellers manage to overcome the lower channel line, then it will be possible to open shorts with targets at the support levels of 1.3009 and 1.2930. Take Profit in this case will be from 30 to 100 points.

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.

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Hot forecast and trading signals for the EUR/USD pair on August 25. COT report. Boring, corrective Monday. Will the dollar

EUR/USD 1H

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The EUR/USD pair continued to move up as part of an upward correction on the hourly timeframe on August 24, and it only began a smooth decline by the end of the trading day. The price without any effort managed to overcome the Senkou Span B line, which is considered the strongest among all the lines of the Ichimoku indicator. Thus, there was no rebound from it, and the quotes did not manage to go above the Kijun-sen line. The price eventually settled below the Senkou Span B line, so the downward movement resumed with targets in the area of 1.1702-1.1727.

EUR/USD 15M

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The lower linear regression channel turned up on the 15-minute timeframe, however, this may be a round of an upward correction, which may already be completed. A new Commitments of Traders (COT) report was released last Friday. According to this report, non-commercial traders were extremely calm during the reporting week (August 12-18). During this period, the "non-commercial" category of traders, which is considered the most important, closed 4,500 Buy-contracts and 4,500 Sell-contracts. Thus, the net position for this category of professional players has not changed at all. And along with it, the mood of traders has not changed either. Thus, the COT report still does not give any reason to assume the end of the upward trend. Even if we take into account the fact that the pair fell by 200 points in the period from 19 to 21 August, it still does not change anything. During the current upward trend, which has been forming for three months, the pair has already lost 200 points. This value continues to remain small, since the overall growth of the pair during this period reached around 1200 points. Thus, it is difficult to call 200 points of decline a correction. Therefore, even considering that the last three trading days were not included in the COT report, we still cannot expect a sharp change in mood from non-commercial traders. As you can see, the pair itself is reluctantly getting cheaper.

Fundamental background for the EUR/USD pair was simply absent. During the past day, no interesting news and messages were at the disposal of traders. Thus, market participants can only wait for important and interesting information on the China-US trade confrontation, which threatens to turn into a Cold War, as well as coronavirus, US elections, and agreeing on a new package of economic assistance to the American economy. No macroeconomic publications from the United States and the EU are scheduled for Tuesday. Thus, the pair can continue to trade in a very calm direction, with low volatility.

Based on the above, we have two trading ideas for August 25:

1) Bulls continue to take profits on previously opened trades and do not intend to return to the market in the near future. The pair dropped below the Senkou Span B line again and may continue to fall. Thus, in order for the upward trend to resume, the quotes must return to the area above the 1.1886-1.1910 range. In this case, we will recommend buying the euro again with the target at the resistance level of 1.2051. Take Profit in this case will be up to 110 points.

2) Bears have finally seized the initiative in the market and are slowly pulling down the pair. However, so far, more and more depends on the bulls, which simply continue to take profits on long positions. Nevertheless, we advise you to continue selling the pair with the target of the support area 1.1702-1.1727, as traders managed to overcome the Senkou Span B line (1.1835) again. Potential Take Profit in this case is 60-70 points.

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.

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Overview of the GBP/USD pair. August 25. Britain's national debt is growing, Brexit negotiations have failed, and all hopes

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - sideways.

CCI: -106.1092

The British pound finally calmed down after three stormy days and traded in a very narrow price range yesterday. At the same time, the pound/dollar pair continues to trade dangerously close to the moving average line and can overcome it at any time. Thus, as in the case of the euro currency, there are very few prospects for the pair to go down. Let's start with the fact that the bears did not manage to at least get to the previous local lows, located near the Murray level of "5/8" - 1.3000. Not to mention trying to overcome them. Thus, the level of 1.3000 keeps the quotes from falling further, and the level of 1.3245 keeps the pair from rising again, from which the pair bounced twice. Thus, the situation is similar to the situation for the euro/dollar pair. And everything still revolves around the US dollar and the US. Today, we even tend to think that the fall in the pound on Friday was not related to information about the failure of negotiations between London and Brussels. If you look at the previous movements of the pair, it is even more difficult for them to find the reason and justification. Moreover, this was not the first failure in the negotiations, the previous six rounds also ended in nothing. At the same time, Michelle Barnier and David Frost begin to contract the disease of Donald Trump called "promise everything you can; say everything you want". The chief negotiator from the UK has repeatedly stated that it is quite possible to reach an agreement with the European Union, and it is even possible to do so before the end of September (initially, the deadline was until the end of summer), despite the fact that it usually takes at least several years to discuss all aspects of the agreement. But Boris Johnson and David Frost are not interested or concerned about this fact. Moreover, neither Frost nor Johnson say what is needed to conclude at least a trade agreement with the European Union? Michel Barnier, in turn, also from time to time stated that it is possible to negotiate, but it will be difficult to do so because of the very tight deadline. And the question is, on what basis did Barnier and Frost make statements about the possibility of a deal? From the fact that formally the chances remain until the very last day of negotiations? There has been no progress on the key four issues almost from the very beginning of the negotiations. In the end, it was only at the end of August that Barnier finally stated what was clear to many back in March. It will be almost impossible to conclude a trade deal, and in the current environment, it is best to focus on a narrowly focused agreement that deals only with trade. Actually, this is what London wanted from the very beginning. Recall that Boris Johnson was not going to initially conclude any agreement with the EU. There were even rumors that in order to subsequently conclude a trade agreement with the States, Johnson was given a condition – no agreements with the EU. However, a little later, under pressure from the public and opposition political forces, Johnson still entered into negotiations, but immediately said that Britain is primarily interested in a trade deal, not a comprehensive agreement. London was not going to remain under the jurisdiction of Brussels, was not going to comply with any EU rules and intended to get full independence. Thus, it was immediately clear that there would be no agreement that Brussels wants. Now there is only one question: will the EU board agree to conclude only a trade agreement with London and will negotiations on it also stall?

And the question remains for market participants, when will they finally remember that in the UK, thanks to the absence of a trade agreement with the EU and the US, as well as Brexit and the "coronavirus crisis", the economic situation is not much better than in America? The US dollar has already fallen quite a bit against the pound. Such a fall looks more or less justified when paired with the euro currency, but not with the pound. Meanwhile, Britain's national debt is growing. For the first time in the history of the UK, the national debt exceeded the value of 2 trillion pounds. These are the results of maintaining the economy after the "coronavirus crisis". Also in the UK, unemployment is expected to rise to 9% in the near future. In Britain, the government almost completely covered the salaries of employees during and after the quarantine. Therefore, the official unemployment rate has not increased at all. But the government of the Kingdom cannot constantly pay out of its own pocket such fabulous amounts, and the country's economy will recover with all the shocks not earlier than in a few years. Thus, as soon as state funding decreases or stops completely, unemployment will creep up. In general, the situation in the Foggy Albion remains difficult, so it is not clear on what grounds the pound can continue to grow.

The macroeconomic background was not available on Monday, and it will be available on Tuesday. Thus, traders have no choice but to continue to track the common fundamental themes. Technical factors are also important now, but the trend is largely absent at this time. It is very difficult to imagine what can make traders buy the pound around 5-month highs, and market participants do not want to sell the pair. As a result, the quotes have been trading almost in a side channel for more than a month, near the moving average line, overcoming it with a frequency of once every few days. Thus, it is very difficult and inconvenient to trade these movements. At the same time, the upward trend remains, as indicated by both channels of linear regression, directed upwards. In general, the situation is quite ambiguous and confusing.

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The average volatility of the GBP/USD pair is currently 151 points per day. For the pound/dollar pair, this value is "high". On Tuesday, August 25, thus, we expect movement within the channel, limited by the levels of 1.2915 and 1.3217. Turning the Heiken Ashi indicator upward will indicate a possible new round of upward correction.

Nearest support levels:

S1 – 1.3062

S2 – 1.3000

S3 – 1.2939

Nearest resistance levels:

R1 – 1.3123

R2 – 1.3184

R3 – 1.3245

Trading recommendations:

The GBP/USD pair is trying to start a new downward trend on a 4-hour timeframe. Thus, today it is recommended to consider short positions with the goals of 1.3000 and 1.2939 and hold them until the MACD indicator turns upward. It is recommended to open buy orders again before fixing the price above the moving average with the goals of 1.3217-1.3245.

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

Overview of the EUR/USD pair. August 25. The European economy may start to slow down

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - sideways.

CCI: -89.7316

The EUR/USD currency pair spent the first trading day of the week in an absolutely calm trading, which was to be expected, given the absolutely empty calendar of macroeconomic events. However, during the day, the bears again failed to develop a downward movement, and also failed to develop their local success. Thus, for most of the day, the US currency was again under pressure, and this is what we have repeatedly discussed in our recent articles. Despite the fact that the pair broke out of the side channel of 1.17-1.19, it still can't get a foothold below its lower line. Moreover, there has not been a normal downward correction in the past three months. And even now, when it would seem that the quotes are fixed below the moving average line, sellers have huge difficulties with continuing to move down. As a result, we still believe that the probability of a fall in the US dollar is very high, however, this is based only on technical factors. It is worth remembering that a particular currency becomes more expensive or cheaper solely based on supply and demand for it. Thus, if traders do not start buying the dollar, then whatever the fundamental background or technical factors, the US currency will not grow. This is approximately the picture we are now seeing. For almost a month, the markets have been waiting for the fall of the euro/dollar pair, however, there is no demand for the dollar. Previously, it was absent due to the absolutely failed fundamental background and macroeconomic statistics. Now the situation has become a little better, however, the US currency has not felt any relief. Moreover, the euro continues to get more expensive, without any good reasons for this. In other words, no important and positive information is being received from the European Union at the moment. The latest business activity indices have alerted traders, as it is now possible to expect that the EU economy will begin to slow down in its recovery. Moreover, in France and Spain, a fairly high number of cases of "coronavirus" is again recorded, which again threatens to fall in business and economic activity. Thus, the situation in Europe is now better than in the United States, however, it is beginning to deteriorate.

At the same time, America is fully focused on the upcoming elections, which will be held in two and a half months. Despite the fact that the country barely managed to suppress mass rallies and protests of "Black Lives Matter", despite the record decline in the economy in the second quarter, despite the full-fledged second "wave" of the "coronavirus" epidemic, the talk now in the States is only about the elections. Donald Trump continues to give daily interviews in which he continues to criticize and insult the "corrupt media" that do not appreciate his activities, the Democrats who opposed him even before winning in 2016, separately goes to Joe Biden and Barack Obama. According to Trump, the first has too low IQ and is generally incompetent, the second is the reason that it is Trump who is now President. Also, Trump continues to criticize the idea of voting in elections using mail. "They allow a person to vote several times. Who controls them, whether they are in the districts of Republicans or Democrats? They are not disinfected by COVID-19. Great deception!", - Trump wrote on his Twitter account. And Twitter, in turn, continues to label Trump's messages "as violating the network's rules and misleading". Not so long ago, Kamala Harris, who was nominated for the post of Joe Biden's deputy, also came under criticism of the US President. According to the leader of the American nation, Harris is "nasty and angry, and also commands the least respect among all senators". Joe Biden himself believes that "Trump utters a lot of things that should distract the attention of Americans from his daily duties, which indicates neglect, negligence and harm to the US people, as well as his incompetence".

At the same time, Donald Trump allows a complete break of all ties with China. According to the American President, "China continues to rob America, treat it absolutely unfairly and incorrectly, which may eventually lead to the termination of any business with the Middle Kingdom". "We are losing hundreds of billions of dollars. We don't get anything from China. Yes, we buy some products that we could produce ourselves. But all we do is lose money," Trump said. The President also drew the attention of Americans to the fact that if Biden becomes President, China will take over America.

In general, passions continue to boil in the United States, and everyone seems to have forgotten about the "coronavirus" and that there is still no vaccine against this disease. Donald Trump's "coronavirus briefings" have disappeared again. However, official statistics show that every day in America, 40-50 thousand people are infected. In general, if the situation has improved a little in the United States, it was possible to suppress at least the social crisis and ease the epidemiological crisis a little, then nothing has changed dramatically for the better yet. We still believe that little will change in the country before the elections. Thus, we need to wait for November 3 and carefully monitor events related to the United States, since the European Union is now full of calm news.

As for the technical picture, fixing the quotes of the euro/dollar pair above the moving average will again allow traders to trade for an increase. Both channels of linear regression are still directed upwards, and the price cannot go down more than 200 points. Thus, the pair still has excellent chances of resuming the upward trend, the only "but" - buyers also need good reasons to resume buying the euro near its two-year highs. And these same reasons and grounds are also not present now. Because the situation in the United States is not improving, but it is not getting worse. No important macroeconomic publications are scheduled for Tuesday in the EU and the States. Therefore, all attention is still on Donald Trump and the information flows from overseas.

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The volatility of the euro/dollar currency pair as of August 25 is 97 points and is characterized as "high". Thus, we expect the pair to move today between the levels of 1.1703 and 1.1897. A reversal of the Heiken Ashi indicator to the top will signal a possible resumption of the upward trend or a new round of upward correction.

Nearest support levels:

S1 – 1.1719

S2 – 1.1597

S3 – 1.1475

Nearest resistance levels:

R1 – 1.1841

R2 – 1.1963

R3 – 1.2085

Trading recommendations:

The EUR/USD pair is trying to continue its downward movement and is located slightly below the moving average. Thus, today it is recommended to open new long positions with targets of 1.1897 and 1.1963, if the pair returns to the area above the moving average line. Since the price still overcame the moving, it is now recommended to trade lower with the goals of 1.1719 and 1.1703. Further downward movement will be possible only after confident overcoming of these goals.

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

Jackson Hole: Powell could pull down the dollar this week

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The dollar index managed to go up and down on Monday, but there were no fundamental changes in the indicator. The greenback is still going around the 93.00 point mark. Nevertheless, the expectations of currency strategists are more related to the dollar's decline against a basket of competitors this week. Multi-year highs can be updated. Thus, the dollar index may go below 92.00.

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Let's try to figure out what this movement might be related to. So, this week will be very informative for greenback. Data on GDP and inflation in the US will be released. Given that almost all previous macroeconomic publications were quite weak, most analysts began to predict a slower economic recovery than initially expected. Much will depend on the situation with the coronavirus and the measures taken by monetary officials.

Traders are now focused on the opening of the Federal Reserve's annual conference in Jackson Hall. Fed Chairman Jerome Powell is likely to confirm his commitment to a low-rate policy, as well as his reluctance to control the bond yield curve. Given the reaction of traders to the minutes of the last meeting, Powell's comments may put serious pressure on the dollar. Sellers will become more active if we talk about additional monetary policy easing.

If you look more closely at all the conditions under which the dollar fell in the previous two months, you can see that there were outpacing forecasts of economic growth in the US and expectations of aggressive easing by the Fed. Now both conditions are in question. The Fed minutes shows that if the central bank decides to soften its policy, it will not be as aggressive as previously stated. In addition, the macroeconomic data, as everyone noticed, began to show weakness.

The dollar has reasons to decline, but it is becoming more difficult for it to get to new lows. Anyway, the Jackson Hole Symposium will clarify a lot. The Fed will indicate updated benchmarks, and traders will choose the direction for the dollar based on this. It is possible that it will also be new and unexpected.

As for the euro, it may once again take advantage of the dollar's weakness, if it will be traced further. Today, its growth was associated with an increased appetite for risk, which, among other things, is due to the successes achieved in trade talks between the US and the EU. The parties agreed to reduce tariffs and expressed their hopes that this deal will be followed by new agreements in the field of trade. In general, the euro-dollar rally is growing tired.

The euro bulls have cause for concern, as there is a serious bias in the positions of speculators in favor of longs, a decrease in the number of new cases of COVID-19 in the United States and their growth in European countries. However, attempts by euro sellers to attack look weak, at least for now. JPMorgan, for example, maintains its third-quarter forecast for the EUR/USD pair at 1.19 and for the fourth at 1.20.

Banking strategists admit the possibility of consolidation and even correction, but do not see any serious reasons for the development of a downward movement. They also call the correction of the major pair to 1.17 and below a good buying opportunity.

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