Technical analysis of EUR/USD and GBP/USD on September 18

EUR / USD

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The euro/dollar pair retested the most important levels of 1.1700-40 (lower limit of the monthly cloud + weekly short-term trend + upper limit of the daily cloud) which resulted in the formation of a daily rebound. After that, the pair returned to the day cross, the levels of which can be assigned today at 1.1827 - 1.1875 - 1.1907. On the other hand, it is possible that next week's closing will not make important changes to the current situation, so uncertainties around the pair's movement and development within the past formed limits will continue.

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The euro formed a rebound from the supports of the bigger time frames yesterday. Due to this, the bulls used them in the smaller time frames and now, they have support from all analyzed technical instruments. If the rise continues, the classical pivot points (1.1887-1.1928-1.2002) will be resistances during the day. In turn, the key supports that are currently pulling are located today at 1.1844 (weekly long-term trend) and 1.1813 (central pivot level). If the price consolidates below the mentioned levels, it can affect the current balance of forces on one-hour chart. Nevertheless, it will be likely to discuss the advantages and prospects for the bears only after breaking through the support of 1.1740-00 in the upper time frames.

GBP / USD

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Yesterday, the bears attempted to obtain dominance, but they gave up by the end of closing and returned to their original positions. As a result, the pair is still in the several significant Ichimoku levels of the bigger time frames (daily cross levels + the upper limit of the daily cloud + the weekly short-term trend) in the level of 1.30. A consolidation above this level will allow bulls to make further plans and hope for a rise to the next pivot points 1.3121 (daily medium-term trend) and 1.32 (historical level + final level of the daily Ichimoku cross). If the players failed to take initiative and break through the levels can inspire again the opponent to new feats. In this case, the pivot point will be the level of 1.27 (weekly and monthly Fibo Kijun + the lower limit of the daily cloud).

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Despite yesterday's correction to the weekly long-term trend, the bulls retained their advantage in the smaller time frame. Today, the key supports are located at 1.2944 (central pivot level) and 1.2891 (weekly long-term trend). If we work above these mentioned levels, the bulls will remain dominant. Now, the reference points for the upward movement to continue are R1 (1.3024) - R2 (1.3078) - R3 (1.3158). A consolidation below 1.2944 - 1.2891 will affect the distribution of forces and changes in the current balance. In this case, support levels will be S2 (1.2810) and S3 (1.2756). Here, the main task will be to restore the downward trend, the minimum extremum of which is now located at 1.2762.

Ichimoku Kinko Hyo (9.26.52), Pivot Points (classical), Moving Average (120)

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

The pair traded downward on Thursday and tested the support level 1.1758 (white bold line), then the price moved up by 111 points. Today, the upward trend may continue. No news is expected as per the economic calendar.

Trend analysis (Fig. 1).

The market may continue to move upwards from the level of 1.1850 (closing of yesterday's daily candlestick) with the target at the historical resistance level 1.1912 (blue dotted line). In case of testing this line, the upward trend may continue with the next target at the upper fractal 1.2012 (red dashed 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 move upward from the level of 1.1850 (closing of yesterday's daily candlestick) with the target at the historical resistance level 1.1912 (blue dotted line). In case of testing this line, the upward trend may continue with the next target at the upper fractal 1.2012 (red dashed line).

Another possible scenario: upon testing the historical resistance level 1.1912 (blue dashed line), the price may move down with the target of 1.1813 - a 23.6% pullback level (red dotted line).

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Elliott wave analysis of EUR/JPY for September 18, 2020

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EUR/JPY has stalled at 123.28 for a minor correctiv rally close to 124.31 from where we expect the next downside attack towards 123.03 and after another corrective rally towards 123.91 the final decline towards 122.15 should be in stall for us. This final decline to 122.15 should complete the corrective decline in wave 2/ and set the stage for a new impulsive rally that ultimately breaks above the former peak at 127.08.

R3: 124.81

R2: 124.52

R1: 124.31

Pivot: 123.99

S1: 123.77

S2: 123.28

S3: 123.00

Trading recommendation:

We sold EUR at 123.90 and has placed our stop at 125.22 for now.

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Technical Analysis of ETH/USD for September 18, 2020

Crypto Industry News:

The US Department of Justice announced sanctions against two Russians and the arrest of two Malaysians for separate seven-figure crypto frauds.

On September 16, the United States Department of Justice, the United States Department of Homeland Security, and the Office of Foreign Assets Control of the Department of the Treasury announced that they had imposed sanctions on two Russian citizens who used a sophisticated phishing campaign to steal at least $ 16.8 million from customers of three crypto exchanges in 2017 and 2018 years, including two in the United States.

Danil Potekhin and Dmitrii Karasavidi have created many websites pretending to be legitimate cryptocurrency exchanges to steal login credentials from unsuspecting victims. This happened before they used verified accounts with stolen identities to move crypto assets through various brokers and run pumping and dump programs targeting low-cap altcoins.

On the same day, the US Department of Justice announced that two hackers had been arrested in Malaysia in connection with hacking campaigns targeting more than 100 companies, universities, governments, and non-profit organizations around the world.

The fraudsters mentioned in the article face a sentence of up to 77 years in prison. Five Chinese citizens are still at large, including one who claims to have ties to the Chinese Ministry of State Security. The group penetrated computer infrastructure to steal source code and other proprietary business information, customer account data, and to launch ransomware and cryptojacking programs.

Technical Market Outlook:

After the ETH/USD pair had bounced from the lower channel line around the level of $355.24 the market slowly moved up and hit the local high at the level of $389.90. The bulls are testing the level of $389.90 and if this level is violated, the next target for bulls is seen at the level of $407.03 (technical resistance). The key technical support is seen at the level of $332.28 (outside of the channel). The key demand zone is seen between the levels of $305.20 - $321.95 and if violated, then the next key long term support is seen at the level of $288.

Weekly Pivot Points:

WR3 - $460.14

WR2 - $422.13

WR1 - $395.03

Weekly Pivot - $357.60

WS1 - $326.67

WS2 - $291.16

WS3 - $261.17

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. The key mid-term technical support, seen at the level of $364.95 had been violated, but 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.

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Simplified wave analysis and forecast for EUR/USD and GBP/JPY on September 18

EUR/USD

Analysis:

A corrective wave has been forming in the upward wave of the European major since the end of July. It has the form of a shifting plane. Its wave analysis shows the completeness of the structure. Yesterday's upward price segment has a reversal potential. This may be the beginning of a new wave of the main trend of the pair.

Forecast:

Today, in the first half of the day, a flat movement is possible with a downward vector. The lower limit of the price range is shown by the calculated support. By the end of the day, you can expect a reversal and a sharp activation, with a repeated attempt to break through the resistance zone.

Potential reversal zones

Resistance:

- 1.1860/1.1890

Support:

- 1.1800/1.1770

Recommendations:

Until the upcoming pullback is completed, trading the euro in the market is risky. After clear signals of exchange rate change appear in the area of the support zone, it is recommended to buy the pair.

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GBP/JPY

Analysis:

As part of the bullish wave that has been dominant since March, the corrective wave from July 31 ends. In recent weeks, it has turned from shifting to a stretched plane, reaching a strong zone of a potential reversal. The sideways flat that started on September 10 creates conditions for changing the short-term trend.

Forecast:

Today, the pair's sideways mood is expected to end and the price rally will start. If the upper limit of the nearest zone breaks, you can expect the exchange rate to rise to the next level today.

Potential reversal zones

Resistance:

- 137.70/138.00

- 136.60/136.90

Support:

- 135.60/135.30

Recommendations:

There are no conditions for selling on the pair's market. It is recommended to track reversal signals for instrument purchases in the area of settlement support.

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

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

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Trading idea for the USD/CAD pair

Betting on an increase in the USD / CAD pair, the strategy presented yesterday was to open short positions in the market, relative to the ABC pattern on the daily chart.

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However, instead of just a short pullback in the pair, the quotes closed with a bearish pin bar, which supports the downward trend:

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Thus, in this regard, the next step is to close the short positions and cancel the long signal, following the framework of the classic Price Action and Stop Hunting techniques.

Of course, controlling the risks is necessary to avoid losing profit.

Best of luck!

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Trading idea for the AUD/USD pair

Betting on a fall in the AUD / USD pair, the strategy presented yesterday was to open long positions in the market, relative to the ABC pattern on the daily chart.

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However, instead of just a short pullback in the pair, the quotes closed with a bullish pin bar, which supports the upward trend:

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Thus, in this regard, the next step is to close the long positions and cancel the short signal, following the framework of the classic Price Action and Stop Hunting techniques.

Of course, controlling the risks is necessary to avoid losing profit.

Good luck!

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Brief trading recommendations for EUR/USD and GBP/USD on 09/18/20

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The EUR/USD pair, following the path of the side channel 1.1700/1.1810/1.1910 from lines No. 1, 2 and 3, managed to locally decline to the area of 1.1755, where a slowdown occurred on August 21, August 27 and September 9 followed by a price rebound. Yesterday was no exception. The quote, following from the border of 1.1910, reached the level of 1.1755, where there was a sharp slowdown and a reversal movement above the average level of 1.1810.

What we have now is the price movement of the upper part of the side channel (1.1810/1.1910), and it is worth considering trading positions relative to these coordinates. If we assume that the price fluctuation within the established limits may be unstable, then the breakdown of the boundaries will give a local acceleration, as it happened in history.

Based on the obtained data, it is possible to consider several development scenarios for the quote:

First, the breakdown of line No. 3 (1.1910).

The quote returned to the original range of 1.1810/1.1910, where if the price is consolidated above 1.1920, the structure of the side channel may change, which will lead to a repetition of the plan on August 18 and September 1.

Second, a temporary swing followed by decline.

The price movement of the upper part of the side channel 1.1700/1.1810/1.1910 leads to the accumulation of short positions, which leads to a downward move. In this scenario, the price immediately broke the average level of 1.1810, and market participants will go to the level of 1.1755 once again.

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On the other hand, the GBP/USD pair is in the stage of correction from the support level of 1.2770, where the psychological value of 1.3000 has become the conditional peak. The development of the quote in the upward plan is limited to the level of 1.3000, where buyers still do not have enough trading forces to break through.

If we proceed from the natural basis associated with the level of 1.3000, then we can assume that the variable rise within it will end with another price rebound in the direction of 1.2885, as it was in the previous period.

An alternative scenario will be considered only after a clear price consolidation above 1.3035, which may lead to a surge in buying and a breakdown of the psychological level of 1.3000.

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

Hourly chart of the EUR/USD pair

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The EUR/USD currency pair continued to move up last Friday night, which began as a correction after quotes fell, triggered by the results of the Federal Reserve meeting and Chairman Jerome Powell's speech on Wednesday. In practice, however, it turned out that this correction in strength is approximately the same as the main downward movement. Yesterday we even tried to build a downward trend line, hoping for the price to rebound from it, which would enable novice traders to consider new opportunities for opening short positions today. However, as you can see from the graph, the quotes did not stop near the trend line even for a minute. This suggests that either the trend line is irrelevant or extremely weak. In general, we failed to use it so we can receive a sell signal, and the buy signal is weak. In general, it is now the most unfavorable time for trading over the past few weeks.

The most interesting thing now concerns the fundamental background. Recall that the European Central Bank held a meeting last week, while the Federal Reserve held its own this week. As we have already mentioned many times, there was a lot of interesting information at both meetings, but it did not change the general fundamental background, which could lead the EUR/USD pair out of the horizontal channel at 1.17-1.19 in the future. The European Union released its inflation report yesterday, which showed deflation of 0.2% y/y for the second consecutive month. First, it is very bad for the eurozone and for the single currency (euro). Secondly, everything is also very bad in comparison with the US inflation (+1.3% y/y). However, the euro did not fall, but instead it continued to strengthen all day.

In addition, not a single important macroeconomic report is scheduled at all on the last trading day of the week. In news calendars, the US University of Michigan Consumer Confidence Index is marked in red, indicating its highest level of importance. However, we would like to note that this indicator rarely causes any market reaction. Thus, we can assume that there will be no reports and news from both the eurozone and the United States today. The only possible exception is unscheduled messages from, for example, US President Donald Trump. But this information cannot be predicted and taken into account in advance.

Possible scenarios for September 18:

1) Novice traders are still not recommended to buy the pair, since the upward movement taking place at this time is very unexpected and in no way predictable from a technical point of view. In such an unexpected way, the pair's quotes returned to the upper area of the horizontal channel at 1.17-1.19, in which, again, it is better to consider selling rather than buying. We recommend novice traders to not force events and wait for the situation to clear up. You can consider long positions if the pair breaks through the upper channel line, but even if this happens today, the price is unlikely to go up for any significant distance.

2) Selling still looks more attractive now, however there are no technical patterns that could provide a sell signal. There was no rebound from the trend line. Thus, the MACD indicator, having turned to the downside, may provide a sell signal, however, we believe that it will be fuzzy and weak. Novice traders themselves must decide whether to work with this signal or not. MACD may turn down in the next hour or two. The nearest target for short positions is 1.1772.

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 better to trade now.

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

The MACD indicator (10,20,3) 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 that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.

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

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USD/JPY: ignoring Japanese inflation and weakening dollar again

The USD/JPY currency pair reached one and a half month lows this week at the middle of the 104th figure. In this price area, the southern momentum has faded and now traders are at crossroads: on the one hand – the weakening greenback which again began to lose its positions and on the other hand – the lack of weighty arguments for continuing the downward movement. The results of the September meeting of the Bank of Japan and the data published today on the growth of Japanese inflation did not provide any clarity as the USD/JPY pair continues to trade against the background of a contradictory fundamental picture.

The key indicators of Japanese inflation were published during the Asian session on Friday. The overall consumer price index came out in the "red zone", falling short of the weak forecast values as the indicator slowed to 0.2%. There was an increase to 0.6% last month and over the previous three months, the indicator was released at the level of 0.1%. Therefore, we can see here a rollback to the minimum values of this year when the coronavirus crisis was in full swing. This suggests that inflation remains at an extremely low level and the July growth was temporary. The core index was also disappointed. For example, the consumer price index excluding prices for fresh food in July came out at zero and it fell into the negative area up to -0.4% in August. This is a multi-year low because the last time the indicator was at such lows like this was in December 2016. The indicator fluctuated in the range of -0.2% up to 0% this year. The consumer price index excluding food and energy prices also fell short of forecasts, falling into negative territory (for the first time this year), reaching 0.1% with growth forecast to 0.4%.

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The indicators of Japanese inflation (in particular) and the economy (in General) began to cause alarm at the end of last year even before the coronavirus crisis. Part of the economic downturn was due to tax policy – after Japan raised the sales tax as consumer spending collapsed by three percent at once. But on the other hand, today's figures indicate a slowdown in the recovery process.

The yen reacted badly in today's release because the Japanese currency fell by only 30 points against the dollar. First, the market was ready for a weakening of Japanese inflation as preliminary forecasts of experts prepared traders for this result. The fact that some components came out in the "red zone" did not really upset investors. The Bank of Japan admitted that CPI inflation will remain in the negative zone for quite some time at their September meeting. Therefore, today's result served only as a confirmation of these statements.

In General, the Japanese regulator held a brief meeting voicing the usual rhetoric. Haruhiko Kuroda tried to maintain a certain balance, so the text of the accompanying statement contained both optimistic and pessimistic assessments. For example, the Bank of Japan noted that the country's economy began to show signs of recovery particularly in the export and production indicators as it revived. In lieu of these findings, the Central Bank raised its economic forecasts including estimates of exports and production. The Japanese regulator pointed out that business investment is in line with a downward trend as their setback – capital spending is falling, corporate profits and business sentiment are deteriorating. As a result, Kuroda assured reporters that the regulator will continue to support the economy through aggressive monetary easing and will not hesitate to ease policy if necessary. He voices such discourse literally every meeting, so the market ignored his statements.

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Based on the yen's weak reaction up to today's release, we can conclude that the USD/JPY pair focuses primarily on the "health" of the US currency and on events of the external fundamental background. The US dollar index is now losing ground again. The US currency clearly unreasonably strengthened following the results of the last fed meeting – only due to the alleged split in the fed's camp. But the "separate opinion" of one of the members of the regulator (Robert Kaplan) does not change the weather as a whole. While in reality, the Central Bank moved the possible date of an interest rate increase by another year from the end of 2022 to the end of 2023. Therefore, when the first emotions subsided, only the "dovish" theses of the fed appeared in the dry balance which now exerted background pressure on the greenback.

All this suggests that in the short term, the USD/JPY currency pair may return to the local price minimum up to the level of 104.55. If the greenback weakens further, the pair may break through this support level and go down even more up to 104.20 – this is a multi-month low that was reached on July 31.

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The rising oil prices helped the Canadian dollar recover

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Rising oil prices helped the Canadian dollar recover, said Ronald Simpson, Global Currency Analyst at Action Economics.

"Oil is one of the main indicators of the economy for Canada's exports," Simpson added.

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In August, Canada lost 205,400 jobs outside of agriculture.

According to the report of the Canadian Payroll Service. it is the sixth month in a row that there is a decrease

The report painted a darker picture than that of the government's latest data on the labor market.

The Canadian retail sales report for July will be published today. This could be evidence of a strong jump in economic activity, which was noted by the Bank of Canada last week.

Canadian government bond yields were virtually unchanged.

Strategists say setting a bond yield target could help the Bank of Canada reduce the amount of debt it buys to save low bids.The share of central bank bonds has more than doubled this year.

On Thursday, the bank announced that the first Deputy Governor of the Bank of Canada will not run for a second term.

Caroline Wilkins was ranked second at the Bank in 2014 and former Governor Stephen Poloz praised her crisis management abilities before retiring earlier this year but the government chose Tiff Macklem to replace Poloz.

Wilkins led the Bank's first-ever quantitative easing program, which was created after rates were cut to 0.25%.

"She led a lot of the hard work behind the scenes in terms of forecasting and rolling out the Bank's unprecedented stimulus so she will be missed and will be difficult to replace," said Derek Holt, Vice President of capital markets Economics at Scotiabank.

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Elliott wave analysis of GBP/JPY for September 18, 2020

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The pair declined after the prolonged sideways consolidation between 135.41 and 136.59. We saw a clear break below support at 135.41 for a dip to 134.50 to test the channel-support. This support held well. We need a break back above resistance at 136.59 to confirm that red wave iv/ finally has completed and red wave v/ can take hold for a new impulsive rally. It should break above the former peak at 142.72.

R3: 137.08

R2: 136.59

R1: 136.10

Pivot: 135.60

S1: 135.35

S2: 135.06

S3: 134.50

Trading recommendation:

We will buy GBP upon a break above 136.59

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Trading idea for the GBP/USD pair

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The GBP / USD pair traded downwards in the market yesterday, as a result of which a bearish pin bar has formed on the daily chart. Its shadow even updated the low of the previous daily range and left good targets for a rate hike.

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So far, the quote is fluctuating around 1.30, thus, continuing the earlier strategy presented last September 16 is fairly easy:

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Along the current ABC pattern in GBP / USD, open long positions to 1.35 in order to get decent profit, about 1:1. Such a strategy is good until the quotes break out of the previous daily range. This follows the classic and trusted Price Action and Stop Hunting methods.

Of course, risks must still be controlled to avoid reducing or losing profit.

Good luck!

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GBP/USD: plan for the European session on September 18. Bank of England's decisions did not affect the pound. COT reports.

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

After some good longs in the British pound, which brought some profit, I paid attention to the likelihood of short positions in my afternoon review after returning and testing resistance at 1.2921 on the opposite side, which happened. On the 5-minute chart, you can see how the bears updated this level, but, unfortunately, the downward movement did not take place, although the entry point was just excellent. It is not entirely clear why the pound sharply grew by almost 80 points in five minutes, but it's what we have. Today, the buyers will focus on the resistance level of 1.2996, and consolidation above this range forms a good entry point into long positions in the hopes of continuing the bull market and updating the high of 1.3089, which is where I recommend taking profits. Persistent bulls will wait for a test of the 1.3178 area, but this is more like a dream, since such a movement requires positive Brexit news. In case the pair falls in the first half of the day, you can count on long positions from support at 1.2867 counting on a correction of 30-40 points within the day.

The Commitment of Traders (COT) reports for September 8 showed that long positions decreased, but there was an even larger drop in short positions, which indicates profit taking after a fairly large bear market that we saw quite recently. This is also evidence that downward momentum in the long term may start to gradually slow down, but much will depend on the terms of the Brexit deal. Short non-commercial positions dropped from 42,901 to 33,860 during the reporting week. Long non-commercial positions fell just slightly, from 49,213 to 46,590. As a result, the non-commercial net position increased to 12,730 against 6,312 weeks earlier.

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

Sellers of the pound need to do everything to prevent the pound from going beyond the weekly high, or else they will completely lose control of the market. Therefore, forming a false breakout at the 1.2996 level will be a signal to open short positions in the hopes of falling towards the support area of 1.2867, which is where I recommend taking profits. Persistent sellers will still be looking for an update to their monthly lows in the 1.2777 area. Testing this level will mark the beginning of a new downward trend for the pair. In case GBP/USD grows in the first half of the day on very bad data on the volume of retail sales in the UK, I recommend postponing short positions and wait until the high of 1.3089 has been updated, where you can sell the pound immediately on a rebound, counting on a 30-40 point correction day.

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Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, and it is difficult to say who will be the winner in the short term.

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 daily D1 chart.

Bollinger Bands

A breakout of the lower border of the indicator in the area of 1.2875 will lead to a new wave of decline for the pound. A breakout of the upper border of the indicator in the 1.3000 area will cause the pair to rise.

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) Quick EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial speculative traders, 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.
  • Total non-commercial net position is the difference between short and long positions of non-commercial traders.
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EUR/USD: plan for the European session on September 18. Euro buyers defended the support level of 1.1756, returning optimism

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

Yesterday, I paid attention to longs in the support area at 1.1756 and also analyzed the entry point into long positions in more detail. Look closely at the 5 minute chart. You will see how the bulls regained the 1.1756 area, testing it from top to bottom, thereby forming an excellent entry point into long positions, which brought about 45 points of profit. Then we had a signal to sell the euro from the 1.1800 level, however, since the bears did not try to do anything slightly above this level, and the emphasis in the afternoon forecast was shifted to the resistance of 1.1810, this did not lead to a larger sell-off and instead it continued to rise. Unfortunately, we could not wait for a new convenient entry point for long positions, and the rest of the movement passed by. Today, the key struggle between buyers and sellers will unfold for resistance at 1.1852, around which the trade is now being conducted. A breakout and consolidation above this level, similar to buying from 1.1756, forms a good entry point for long positions. After that, we can expect an upward correction for the euro towards a weekly high of 1.1900, where I recommend taking profit. The 1.1949 area will be the long term target, but it will not be easy to get to it. If the euro is under pressure on the first half of the day, and there are data on inflation in Germany and a number of less important statistics for the eurozone today, then it is best not to rush into longs, but calmly wait until a larger support at 1.1803 has been tested, which is where the moving averages are also concentrated. ... Open long positions from there immediately on a rebound, counting on a correction of 20-30 points within the day.

Let me remind you that the Commitment of Traders (COT) reports for September 8 showed that long non-commercial positions decreased from 250,867 to 248,683, while short non-commercial positions also fell from 54,130 to 51,869. Political uncertainty in the US and central bank meetings forced many traders to wait and see ahead of the fall marathon. As a result, the positive non-commercial net position slightly increased to 196,814, against 196,747, a week earlier.

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

Euro sellers need to recuperate, since they have a chance to lose everything they won after the Federal Reserve's decision on interest rates. It is necessary to form a false breakout in the resistance area at 1.1852, which forms a good entry point in short positions, thereby allowing us to expect EUR/USD to return to the support area of 1.1803, where I recommend taking profit. I don't think the bears will manage to break through the area below this range, since there are no important reports scheduled for today, except for consumer sentiment from the University of Michigan in the US. A breakout of 1.1803 would pull down the pair to a low of 1.1756. If the demand for the euro persists in the first half of the day, and we don't see bears at the 1.1852 level, it is best to postpone short positions until the high of 1.1900 has been updated and then you can sell the euro from there immediately on a rebound, counting on a correction of 20-30 points within the day.

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Indicator signals:

Moving averages

Trading is carried out above 30 and 50 moving averages, which indicates an attempt to intercept the initiative on the part of euro buyers.

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 daily D1 chart.

Bollinger Bands

A breakout of the upper border of the indicator around 1.1870 will lead to a new wave of euro growth. The euro's fall will be limited by the lower border of the indicator in the 1.1790 area.

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) Quick EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • NOn-commercial speculative traders, 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.
  • 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

Forecast for EUR/USD on September 18, 2020

EUR/USD

On Thursday, the euro fully won back all the negative effects the Federal Reserve meeting had caused on Wednesday. Trading volumes were slightly lower than on the day the monetary policy decision was announced, which means more than a 100% correction. Perhaps the euro will continue to grow for some time, or it might trade sideways in the range it did for the last two and a half months.

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The price went above both indicator lines on the daily chart - the balance line and the MACD line. The Marlin oscillator has formed a small convergence, further enhancing the local growing mood. Perhaps, as part of the consolidation, the euro will grow to the upper limit of the price channel, in the 1.1988 area. This level may not be reached, as is the case with a sideways/horizontal trend, also, the euro has strong levels ahead, 1.1917, 1.1966 in particular. It is possible for the price to move down after a reliable consolidation below the MACD line (1.1825), but we can judge the price's final exit from the range down when the euro falls below the lower limit of 1.1760.

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The price settled above the MACD line on the four-hour chart, while the Marlin oscillator entered the zone of positive values this morning. Both signals are weak, but nevertheless the price intends to continue growing, even if it is short-term.

Today the situation is unlikely to be resolved, so we expect the price to continue moving sideways. The probability of continued growth is at 65-68%.

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

Forecast for AUD/USD on September 18, 2020

AUD/USD

The Australian dollar was unable to develop a downward movement, as it is under pressure from related markets. The dollar index fell 0.20%, copper rose 0.66%, while oil climbed 1.82%. At the moment, AUD/USD is quoted in the range it was in on Wednesday, staying below the MACD indicator line on the daily chart.

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At the same time, the price does not go below the red balance indicator line, which indicates that the market is still interested in growth, and this also explains why the Australian currency has been growing very slowly over the past week. But the situation regarding a downward reversal persists throughout this week. In order to do this, the price needs to overcome the first target (0.7249), which it failed to do yesterday.

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The price went above the MACD line on the four-hour chart, but the line itself is moving with a barely noticeable slope, almost horizontally, which means the price is also neutral. With the same ease, the aussie can continue the sine wave for several more days. The same remark applies to the Marlin oscillator, which is in a neutral position. In general, we expect the pair to fall towards the 0.7065-0.7110 range, but this may happen in two weeks.

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

Forecast for USD/JPY on September 18, 2020

USD/JPY

The USD/JPY pair retested the trend line from below and continued to decline on Thursday. The yen lost 21 points, but today there is a correction in the Asian session. The signal line of the Marlin oscillator is reversing to the upside, which indicates the price's intention to continue doing so until the evening or Monday. After the correction is completed, the price can fall to the previously indicated target of 103.75.

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The price formed a short convergence with the Marlin oscillator on the four-hour chart, this is a sign of the upcoming sideways price movement. There will probably be no strong movements in the market until the beginning of next week.

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

Hot forecast and trading signals for GBP/USD on September 18. COT report. Bulls need to overcome 1.3024. Otherwise, the pound

GBP/USD 1H

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The GBP/USD currency pair traded even more sluggish than the EUR/USD pair on September 17. A rising channel with a minimum slope appeared, which, in fact, reflects a corrective movement after the pair fell by 700 points. The pound/dollar pair fell to the critical Kijun-sen line, rebounded from it and resumed an indistinct rising movement. Also, over the past two days, buyers could not overcome the resistance area of 1.3004-1.3024. Thus, the prospects for strengthening the British currency even more are also in doubt. Therefore, bulls need to overcome the 1.3004-1.3024 area in order to expect anything more than 200 points of correction. The bears need to urgently regain the initiative by setting the price below the rising channel.

GBP/USD 15M

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The lower channel turned down on the 15-minute timeframe, a downward movement is possiblel due to the price rebound from the 1.3004-1.3024 area. The latest Commitments of Traders (COT) report for the British pound was completely unexpected. Non-commercial traders (the most important group of traders) closed Sell-contracts (shorts) during September 2-8, despite the fact that the pound only lost 700 points during this period. Sell-contracts decreased by 8,000. Buy-contracts (longs) were also closed, but in smaller quantities, down by only 3,500. Thus, according to the logic of things, the pound should have increased in price during this period, since the net position in the "non-commercial" category increased. One might think that other categories of traders have had a greater impact on the pound. However, this is not the case either, since commercial traders opened 14,000 Buy-contracts and 9,000 Sell-contracts in the same period of time. That is, the net position for this category of traders has grown, in other words, traders have become more bullish. Therefore, we have witnessed a paradoxical situation when the report absolutely does not correspond to what is happening on the market. The next report, therefore, may show even more serious changes.

The fundamental background for the GBP/USD pair was absolutely neutral on Thursday. There was no news on the conflict situation between Brussels and London. The Bank of England disappointed market participants instead of making them happy. The central bank allowed the introduction of negative rates in the future and noted high risks for the economy due to the new wave of the pandemic and also because of the high probability of the UK leaving the EU without a trade deal. Traders also believe that the BoE will have to expand its quantitative stimulus program from its current £745bn during 2020. No major macroeconomic events and publications in the UK and the United States are scheduled on the last trading day of the week. Thus, most likely, we can expect calm trading in a weak rising channel.

We have two trading ideas for September 18:

1) Buyers are slowly becoming active, but they failed to overcome the 1.3004-1.3024 area twice, so moving up in the long term is in doubt. You can open new long positions after breaking through this area and aim for the resistance level of 1.3121. Take Profit in this case will be about 80 points.

2) Sellers temporarily let go of the initiative, but not overcoming the 1.3004-1.3024 area gives them hope for returning the downward trend. Thus, in case the price settles below the critical line (1.2891) and the rising channel, we recommend trading down again while aiming for 1.2661. The target is distant and may take several days to reach it. Take Profit in this case can be about 200 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.

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

Hot forecast and trading signals for EUR/USD on September 18. COT report. Neither bears nor bulls can pull the pair out of

EUR/USD 1H

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The EUR/USD pair, as part of the downward movement that had begun the day before, reached the support level of 1.1760 on the hourly timeframe on September 17. However, sellers, as usual, failed to overcome this level. "As usual" - because neither bulls nor bears have the necessary strength and desire to, in principle, bring the pair out of the horizontal channel, in which it has been for almost two months. The channel is limited by the levels of 1.17 and 1.19, therefore, rebounding from important levels / support areas / resistance constantly occurs within this channel, especially when not approaching its upper or lower line. At the moment, the pair's quotes have settled above the Kijun-sen line, so it can continue to move up while aiming for the Senkou Span B line. It will be quite difficult for the bulls to overcome this line, since it also borders on the resistance area of 1.1884-1.1910, from which prices only rebound twice in the last few days.

EUR/USD 15M

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The lower linear regression channel turned up on the 15-minute timeframe, signaling an upward movement on the hourly chart. The latest Commitment of Traders (COT) report, which, recall, comes out with a three-day delay and so it only covers September 2-8, turned out to be absolutely predictable. We expected that the report would not show any fundamental changes in the mood of large traders, because the EUR/USD pair continues to trade in a horizontal channel. At the end of the reporting week, the non-commercial trader category closed 3,073 Buy-contracts (longs) and opened 789 Sell-contracts (shorts). The changes are minimal considering that the total number of contracts for this category exceeds 300,000. Take note that the net position for players in this category has slightly decreased, which means a weakening of the bullish sentiment, but again minimal. The commercial trader category was much more active and closed as many as 30,000 contracts during the reporting week. However, we remind you that the actions of non-commercial traders are more important, since they are considered to be the ones driving the market, and commercial traders usually open positions opposite to them. The last three trading days of last week were not included in the latest COT report, however, no serious price changes were recorded on those days. There are also no major price changes during the current trading week.

The European Union published a report on Thursday, September 17, that deserves attention. The report shows that EU inflation was in the negative area at -0.2% y/y in August. The situation with the so-called core inflation is slightly better, as it reached 0.4% y/y (the indicator does not take into account changes in energy prices and food prices, which tend to change frequently and strongly). However, these are still very low values, which create a headache for the European Central Bank. It is unlikely that this indicator alone should sound the alarm and immediately call for new stimulus from the ECB, but the worse the statistics from the eurozone is, the more likely it is for the euro to fall against the dollar. For example, inflation in the United States was solid, as for the crisis, 1.3% y/y in August.

We have two trading ideas for September 18:

1) Buyers have not been able to break through several resistances near the upper line of the horizontal channel at $1.17-1.19. Therefore, we recommend considering long positions once the 1.1884-1.1910 area is overcome, afterwards, you can aim for the resistance level of 1.2003. Take Profit in this case will be about 60 points. You can also reject the Senkou Span B line (1.1882), since the price has crossed the Kijun-sen line (1.1819).

2) Bears managed to pull down the pair to the lower area of the 1.17-1.19 horizontal channel, but did not stay there for a long time. The upward movement resumed, and sellers showed their weakness once again, since they could not even reach the 1.1700 level. Now the bears need to wait for the price to settle below the Kijun-sen line (1.1819) in order to open short positions while aiming for the support level at 1.1760. The potential Take Profit in this case is about 45 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.

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

Overview of the GBP/USD pair. September 18. The second "wave" of the COVID-2019 epidemic in the UK.

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - sideways.

CCI: 89.2458

Now, what about the British pound, which has recently been hit by new misfortunes thanks to Boris Johnson and London's position in negotiations with the European Union? The British currency has completely repeated the movements of the euro/dollar pair over the past two days. After the Fed meeting ended and the markets became aware of all the necessary information, the US dollar rose by 100 points, after which it also rushed in the opposite direction, as if showing that it rose for no reason. Over the past day, all losses of the British currency were leveled. Thus, in general, the pound/dollar pair just continued to correct in the last two days after the 700-point drop that began on September 1. In total, the pound managed to win back more than 220 points. The pound has risen in price in recent days with great difficulty, which indirectly indicates that the fall may resume with a new force at almost any moment. However, there is one "but".

This "but" is the meeting of the Bank of England that took place yesterday, which almost went unnoticed. In the article on the euro/dollar, we focused the traders' attention on two theses of Jerome Powell. The first is "the outlook for the economy remains uncertain". We fully agreed with this. Thus, the Bank of England in its final communique used the same wording for the prospects of the UK economy. "Absolutely indeterminate." Naturally, for the same reasons – the "coronavirus" epidemic. "The recent increase in COVID-19 cases in some parts of the world, including the United Kingdom, may have an additional impact on economic activity, although probably on a smaller scale than seen earlier this year," BA said in a statement. It should be noted that in the UK, there has been a recent increase in cases of "coronavirus", which can be called the "second wave". The maximum daily levels of the disease at the peak of the previous wave were 4-5 thousand per day. In recent weeks, 3-4 thousand people have been infected every day in Britain. Thus, just like this, Britain has reached almost maximum levels of morbidity. And this creates the risks of a new quarantine, a new "lockdown" (whatever Boris Johnson says), as well as increased risks for the economy, which is still in a state of shock after Brexit and is preparing for a new "knockout" in the form of a new trade deal with the EU. As for the second thesis – about the pace of economic recovery – the Bank of England refrained from assessing, saying only that the economy grew by 6% in July.

The main parameters of monetary policy remained unchanged. The rate is 0.1%. The program of quantitative stimulation – in the amount of 745 billion pounds. However, there is one more thing that should be noted – the British Regulator again started talking about negative rates. This time in the context that it is openly considering the possible use of this tool. BA also emphasizes that not only the second "wave" of the "coronavirus" creates high risks for the economy. Leaving the European Union without a deal (which is almost guaranteed to the Kingdom) will also leave its mark on the "face" of the British economy. Thus, it is likely that BA refrained from enthusiastic assessments of the economic recovery for good reason. Most likely, before the end of 2020, the British Regulator will still resort to another expansion of the quantitative stimulus program. Well, what will happen in 2021 is anyone's guess. As for inflation and the timing of the key rate increase, the Bank of England also considers the 2% level as a target and reports that it is not going to raise rates until inflation returns to this value, which it does not expect for the next two years. Meanwhile, many British experts believe that the unemployment rate in the UK will continue to grow and reach its maximum value in the fourth quarter of 2020. The regulator may have to introduce negative rates. All this is a bearish factor for the British pound.

Meanwhile, Boris Johnson said that the UK government is doing everything in its power to avoid a new wave of the pandemic and prevent another nationwide "lockdown". However, even if the number of new cases increases significantly, a new "lockdown" is unlikely to be introduced. Boris Johnson, like his colleague Donald Trump, is an ardent opponent of "total quarantine" and believes that the consequences of the "lockdown" will be even more serious than from the epidemic. Therefore, Johnson is already stating that " Britain cannot afford a second lockdown, as its financial consequences will be disastrous". According to Johnson, "Britain must cope with the methods and tools at its disposal now, namely mass testing, social distancing, the rule of six, and the mandatory wearing of masks in public places".

Based on all of the above, we conclude that the pound and the dollar now remain absolute outsiders of the currency market. If you look at the euro/dollar pair, you can see that the US dollar is not strengthening. It only strengthens against a currency that is as weak at the moment as it is, against the pound. The outlook for both the dollar and pound issuing economies remains extremely uncertain. At the same time, much more uncertain than the prospects for the European economy or any other. In the United States, elections are approaching. Also, a constitutional crisis is planned in the United States if Trump loses the election and refuses to leave the post of president. This is also possible, and the American media regularly write about it. Britain has its own "Santa Barbara" called "Brexit, negotiations with the European Union", which recently also risks being continued in the form of a new series "violation of the Northern Ireland Protocol by Boris Johnson". Overall, the outlook for the pound is even bleaker. Thus, none of the currencies has a pronounced advantage now. Anyone can fall. It is best to make decisions now based on technical analysis and only taking into account the general fundamental background. For example, if there are new reports of disagreements between London and Brussels, then a new round of downward movement of the pair may immediately begin.

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The average volatility of the GBP/USD pair is currently 125 points per day. For the pound/dollar pair, this value is "high". On Friday, September 18, thus, we expect movement inside the channel, limited by the levels of 1.2818 and 1.3064. The reversal of the Heiken Ashi indicator downward may signal about a possible resumption of the downward movement.

Nearest support levels:

S1 – 1.2817

S2 – 1.2695

S3 – 1.2573

Nearest resistance levels:

R1 – 1.2939

R2 – 1.3062

R3 – 1.3184

Trading recommendations:

The GBP/USD pair continues to correct on the 4-hour timeframe and the price has already been fixed above the moving average line. Thus, today it is recommended to consider options for opening long positions with targets of 1.3062 and 1.3128 as long as the price is above the moving average. It is recommended to trade the pair down with targets of 1.2817 and 1.2695 if the price returns to the area below the moving average line.

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

Overview of the EUR/USD pair. September 18. The Fed announced a direct correlation between monetary policy and the "coronavirus".

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - sideways.

Moving average (20; smoothed) - sideways.

CCI: -83.1883

The EUR/USD pair marked the fourth trading day by multidirectional movements. Since the Fed meeting ended late last night and at the same time, its results were summed up and the speech of the head of the organization Jerome Powell took place, in principle, the rest of the day before yesterday and all of yesterday was held under the auspices of this event. Markets do not react to such an important event for only one hour after it. For example, last night, the European markets were already closed, so European large institutional traders were not able to win back the information they received. Now, when more than a day has passed since the results of the next Fed meeting were summed up, we can say with confidence that this meeting can also be considered completely neutral and "passing". There was a lot of new and fundamentally important information, however, nothing that could affect the US economy or monetary policy in the near future. The rhetoric of Fed Chairman Jerome Powell also remained virtually unchanged from previous meetings.

At the end of the last day, the pair's quotes first fell to the level of 1.1738, then they began to return to the positions from which the fall began. Thus, by the end of the last trading day, almost all losses of the European currency were leveled. What does this mean? First, the fact that the words of Jerome Powell and the results of the Fed meeting can not be considered unambiguous. They are rather neutral, however, some traders have made "their conclusions" based on them. Someone saw Powell's optimism and ignored his concerns and fears. Someone noted only negative points but did not see any positive ones. Therefore, the US dollar rose by 100 points and then lost about the same amount. Recall that just a week ago, the same thing happened at the ECB meeting and Christine Lagarde's speech. Then the European currency rose by 100 points and lost the same amount over the next day. And with all this, the euro/dollar pair continues to trade inside the side channel of 1.17-1.19, from which it has not been able to exit for almost two months. However, let's take a closer look at the most important event of this week.

The most important thing is what Powell said. 1) The US Economy, in his opinion, is recovering at a faster pace than the regulator expected. 2) The outlook for the US economy remains very dim due to the coronavirus pandemic and the complete uncertainty associated with it. It is from these two theses that we should start when analyzing everything that is happening. The second thesis does not raise any questions or doubts. It is clear even to a child that it is impossible to predict the scale of growth, decline, or recovery of the economy if the whole world is covered by an epidemic that has already killed about 200,000 people in America alone. It is impossible to predict when the vaccine will appear and how much longer the COVID-2019 virus will terrorize humanity and leave a negative imprint on the economy of each country. Tomorrow, the second or third "wave" may begin and any economy may start to decline again. Thus, Powell is right to say that the American economy will not fully recover until the virus is over and that the future of the economy is uncertain. However, the first thesis raises a lot of questions. In general, we can note that only the inflation indicator shows really good dynamics in the States. The latest report showed that inflation is holding steady at around 1.5%, which is not so bad for the biggest crisis in the last 100 years. The unemployment rate has also started to decline sharply recently, however, it remains quite high. Also, it is very difficult to judge the GDP now. We have data only for the second quarter, according to which the economy lost almost 32%. For example, if 20% of growth is recorded in the third quarter, will this be a good recovery rate or not? After all, we should not forget that the European economy lost only 12%, while the American economy lost 32%. It is logical to assume that the American one will recover longer and harder. Plus, in Europe, the situation with the "coronavirus" is much more favorable than in the United States. Thus, Powell's first thesis may be overly optimistic.

A few more important theses. First, the Fed said that rates will not be raised until the labor market is fully restored, which is the unemployment rate, not exceeding 3-3.5%. Also, inflation should be stable at 2% or slightly higher. Even if we calculate that the US economy is recovering at a high pace, then according to the most conservative estimates, the rate increase will not begin until 2022-2023. Thus, traders should not even be interested in such forecasts at this time. Does it matter for the euro/dollar exchange rate if the Fed plans to raise rates in 2 or 3 years?

Also, we remind you that not everything in America and its economy depends only on the Fed. For example, for a faster recovery, the US Congress has already allocated several trillion dollars during 2020. However, this money ran out relatively quickly and now the issue of providing a new aid package is still open on the agenda. This is a huge problem since Democrats and Republicans can't agree on the size of this package. Powell has previously stated that the support from the US government is of great importance to the economy. Therefore, it is logical to assume that without the help of Congress, the recovery will not be fast again. Moreover, Congress is now busy preparing for the 2020 presidential election.

Based on all of the above, we can conclude that the day before yesterday's meeting of the Fed was passable. Interesting information came to the markets, however, this is not the information that radically changes something. Thus, the ECB and the Fed failed to influence the euro/dollar pair and withdraw it from the 200-point side channel.

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The volatility of the euro/dollar currency pair as of September 18 is 77 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1754 and 1.1892. A reversal of the Heiken Ashi indicator back downward signals a round of downward movement in the remaining side channel of $ 1.17 - $ 1.19.

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 has fixed below the moving average line but continues to trade in an absolute flat. Thus, formally, we can now consider short positions with the goal of the volatility level of 1.1754, after the Heiken Ashi indicator turns downward. It is recommended to re-consider options for opening long positions if the pair is fixed back above the moving average with a target near the level of 1.1892.

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

Europe's recovery plan: crypto assets to help the economy

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The COVID-19 pandemic has shaken and damaged health systems and economies in Europe and around the world. At the end of May this year, the European Commission presented its proposals for a recovery plan, according to which the full potential of the EU budget will be used. It is necessary to use this measure to protect lives and livelihoods, regulate the single market and ensure sustainable recovery.

An informal meeting of the EU economy and finance ministers was held in Berlin last Saturday, at which the Executive Deputy Chairman of the European Commission, Valdis Dombrovskis announced the readiness of the EU government to use crypto assets in the implementation of the recovery and economic transformation plan. He also added that the EU financial sector should make the most of the opportunities offered by digitalization, and investors should take a global dominant position. All European consumers and industries should benefit from the digital currency, which will help minimize risks.

On the other hand, the updated EU digital Finance Strategy is expected to be announced in the second half of September. The strategy aims to adjust EU regulations to the digital age, which is necessary to promote innovation and contain risks. Therefore, a legislative proposal regarding the crypto asset market is expected. However, some ministers at the Berlin meeting were also concerned about the risks associated with "stablecoins" that do not comply with current EU rules, but Dombrovskis assured that the new legislative project should solve this problem. The European Union should minimize risks when calculating with stablecoins.

In July, the Next Generation EU or "Next Generation of Europe" was agreed by EU leaders and aimed to restart the EU's internal market after the pandemic. Moreover, this plan is intended to increase competitiveness and innovative opportunities, as well as to promote the implementation of the "green course" of the EU countries. This is a kind of financial instrument for post-crisis reconstruction, with a fund of 750 billion euros. Brussels will acquire this money on the financial markets and include it in the Union budget, which previously consisted exclusively of contributions from EU member States.

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