Forex forecast 10/05/2020 from Sebastian Seliga

Today we will take a look at the most important data releases which are ISM Non Manufacturing data and BOJ Governor Haruhiko Kuroda speech. In addiction, we will take an early look at the RBA Interest Rate Decision data release. The video analysis will include the macro data review, technical analysis and possible trading plan to trade the USD/JPY and AUD/USD pairs.

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

Analytics and trading signals for beginners. How to trade EUR/USD on October 5? Plan for opening and closing trades on Monday

Hourly chart of the EUR/USD pair

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The EUR/USD pair began a new round of upward movement last Friday night. However, this round was only 25 points, which does not necessarily convince us that the upward trend is resuming. Nevertheless, the pair was moving up, not down, so we, as we mentioned earlier, we adjusted the upward trend line for new realities. Now this line supports bull traders. The upward movement is also supported by the fact that the price failed to gain a foothold below the 1.1696 level, which acted as the lower border of the horizontal channel of $1.17-1.19 for a long time. The EUR/USD pair has already rebounded off this level several times, so the downward movement could not gain momentum. In general, the technical picture for the pair remains rather complex and ambiguous. Novice traders are still advised to be very careful or not trade at all, as we wait for a more favorable situation.

The fundamental background for the dollar remains rather complex and has not changed in recent days. Therefore, the US currency seems to be reluctant to grow, and traders are also very reluctant to buy it. The most inconvenient thing about this is that market participants continue to ignore almost all macroeconomic data. We have already said that quite important reports on inflation in the European Union and NonFarm Payrolls in the United States were ignored on Friday. Usually these reports provoke quite a strong market reaction, but this was the case before the pandemic and the crisis caused by it. We can take note of the following reports on Monday: the business activity indices for the service sectors of countries of the eurozone, the European Union as a whole and the United States. However, it is very unlikely for the market to pay attention to these data. The same goes for retail sales in the eurozone in August. We believe that only the ISM report in the US services sector can affect the market today, and even then only if its real value turns out to be much worse than the forecast. But we recommend that novice traders continue to monitor the US news feeds. We might receive more news from America that could affect the pair's movement. Starting from the illness of US President Donald Trump, ending with information about elections or negotiations between Democrats and Republicans concerning a new aid package for the American economy.

Possible scenarios for October 5:

1) Buy positions on the EUR/USD pair have become relevant again at the moment, since we rebuilt the ascending trend line, and the price failed to gain a foothold below the 1.1696 level. Thus, we advise beginners to trade upward while aiming for the resistance levels of 1.1745 and 1.1773. As before, a downward reversal of the MACD indicator will indicate the end of the upward movement and the need to close long positions.

2) Sell positions may become relevant again if the pair settles below the trend line. However, we believe that it is better to wait until the price settles below the 1.1696 level and only after that should you consider the possibility of opening sell orders in the current situation. Take note that the dollar is very reluctant to rise in price, and the fundamental background is not in its favor.

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.

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

Analysis and trading recommendations for the EUR/USD and GBP/USD pairs on October 5

Analysis of transactions in the EUR / USD pair

The euro failed to reach any of the indicated support or resistance levels last Friday, so as a result, strong movements were not observed in the EUR / USD pair, even amid the release of important reports on the US economy.

Trading recommendations for October 5

As for today, a number of crucial reports are scheduled to be published, one of which is the data on the state of the service sector of eurozone countries. Since this area has been hit hardest during the coronavirus crisis, a rather weak data is expected, which may lead to pressure on the European currency.

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  • Buy a position only when the euro reaches a quote of 1.1742 (green line on the chart), and then take profit at the level of 1.1810. However, a bullish move will only occur if data on the eurozone services sector come out better than the forecasts.
  • Sell a position in case of bad data on the eurozone services sector, as well as if the quote reaches the level of 1.1715 (red line on the chart). Afterwards, take profit at the level of 1.1642.

Analysis of transactions in the GBP / USD pair

Like the euro, the pound failed to reach any of the indicated support and resistance levels, as a result of which large profitable movements were not seen on the GBP / USD pair last Friday.

Important reports on the US economy also failed to move the pound.

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Trading recommendations for October 5

The upcoming PMI report for the UK services sector will be of particular value, especially since it will act as the main driver of the UK economy. So, if data comes out weaker than the forecasts, pressure on the pound will increase. But if the data signals good condition, a new wave of growth in the GBP / USD pair can be expected.

  • Buy a position when the pound reaches a quote of 1.2955 (green line on the chart), and then take profit around the level of 1.3020 (thicker green line on the chart).
  • Sell a position after the pound reaches a quote below 1.2909 (red line on the chart), and then take profit at least at the level of 1.2844.
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Indicator analysis. Daily review on GBP / USD for October 5, 2020

The pair tried to break through the resistance level 1.2940 (black thick line) on Friday. Today, the price may roll back down. According to the economic calendar, pound news is expected at 08:30 UTC, and dollar news is at 14:00 UTC.

Trend analysis (Fig. 1).

The market may move downward from the level of 1.2935 (closing of Friday's daily candlestick) with the target of 1.2863 - a 38.2% pullback level (red dotted line). Upon testing this level, the downward trend may continue with the next target of 1.2827 - a 50.0% pullback level (red dotted line).

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Figure: 1 (daily chart).

Complex analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - up;

- Trend analysis - down;

- Bollinger lines - up;

- Weekly chart - up.

General conclusion:

Today, the price may move down with the target at 1.2863 - a 38.2% pullback level (red dotted line). Upon testing this level, the downward trend may continue with the next target of 1.2827 - a 50.0% pullback level (red dashed line).

Another possible scenario: from the level of 1.2748, the price may move down with the target at 1.2863 - a 38.2% pullback level (red dotted line). From this level, the price may begin to move upward with the target at the resistance level 1.2932 (black bold line).

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Recovery period ended and the CFTC report showed growing demand for the dollar. Overview of EUR, USD, GBP

The CFTC report was released on Friday evening, but was already formed on Tuesday, and so, it could not include the market's reaction to the news of US President D. Trump's coronavirus infection. Nevertheless, the weekly changes in the futures market fully correspond to the logic of growing demand for defensive assets amid negative economic changes of the world's leading countries and the threat of the rapid spread of the second wave of COVID-19.

A clear growth in the demand for the dollar against most currencies was shown in the report. The dollar's total short position declined from 3.56 billion to -30.98 billion, which was the best result in 8 weeks. It should also be noted that the net long position in gold clearly increased and the correction period is most likely completed. Therefore, gold is ready to continue its upward movement.

On another note, the biggest negative effect regarding Trump's health due to the coronavirus was caused by the message of the head of the White House staff Mark Meadows. He said that the blood sugar of the US president dropped sharply on Friday morning, and his condition only stabilized in the hospital. This message led to a sharp drop in oil prices – November futures for WTI lost more than 4.5% by the end of the day, dropping below $ 37 per barrel.

On Monday morning, markets partially recovered, oil is gaining about 2%, and demand for bonds is declining. Nevertheless, we should start with the premise that this week's dominant factors will be the growth in demand for the dollar and for defensive assets.

EURUSD

For the second month in a row, core inflation in the euro zone has updated its historical low, dropping to 0.2% in September. At the same time, very low inflation rates increased the risk of deflation in the euro area, although Lagarde said last September that based on the latest forecast, deflationary risks declined, which were slightly higher in June.

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From the ECB's perspective, service prices are the most worrisome subset of prices that could create wider deflationary pressures. They cover almost 45% of the total HICP basket and an even higher proportion of the main components. In addition, the pricing of services is largely domestic, as opposed to non-energy manufactured goods.

As Lagarde recently explained, rate cuts are not the preferred tool, but as for QE, unconventional measures are becoming traditional. Consequently, low inflation increases the likelihood of PEPP expansion in the near future. Still, according to ECB's research, deposit rates should have fallen to -2% by now, if not for asset purchases from 2015. Accordingly, a record decline in inflation is the way to expand QE, which means that the euro will be in a high bearish pressure.

The market reacted negatively to the publication. The euro declined, while forming the third consecutive local high below the previous one, which technically is a strong bearish signal. The net long position on the futures market has dropped by 311 million, the estimated price continues to decline, and the trend is stable.

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EURUSD's corrective growth will be temporary. Meanwhile, the formation of the top is likely in the area of 1.1750/70, after which a downward reversal is expected. The medium-term goal will be 1.15.

GBPUSD

The pound turned out to be the record holder of the week in terms of sales, which amounted to 1.26 billion, and a net short position was formed on CME. On the other hand, the estimated price is much lower than the spot price and continues to fall.

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Apparently, investors do not expect anything good from the approaching end of the Brexit deal. There is a growing probability of a rate cut by the Bank of England, which will lead to a drop in yields.

It can be assumed that the local top 1.2977 has been formed, and the nearest target is 1.2730/40. If this level is broken, we can continue to further decline to 1.20.

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GBP/USD: plan for the European session on October 5. COT reports. Pound buyers expect a breakout of 1.2975 and a new wave

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

There was only one signal to buy the British pound last Friday, after the breakout and consolidation above the resistance level of 1.2903, which now acts as the middle of the sideways channel. If you look at the 5-minute chart, you can see the bulls pushing through this range and then there was a chance to test this area from top to bottom during the middle of the US session, which forms a good entry point into long positions.

But despite the pound's growth, the reports from the futures market indicated a deterioration in the situation of buyers. More people are willing to sell the British pound when it is higher. The Commitment of Traders (COT) reports for September 29 recorded a sharp rise in short positions and a reduction in long positions, which affected the net position and led to its larger negative value. This once again confirms the desire of traders to build up short positions with any growth in the level, counting on uncertainty over Brexit and the prospects for the recovery of the British economy. The pressure on the pound will gradually increase as the second wave of coronavirus spreads. Short non-commercial positions increased from 40,523 to 51,961 during the reporting week. Long non-commercial positions decreased from 43,487 to 39,216. As a result, the non-commercial net position became negative and reached -12,745, against 2,964 a week earlier, which indicates that control over the market is gradually returning to large sellers.

As for the current picture of the GBP/USD pair, traders need to get out of the horizontal channel, which is where it spent the entire period of the previous week. A breakout and being able to settle above 1.2975 will be a signal to open long positions, which may lead to removing a number of sellers' stop orders and also strengthen the pair's correction towards highs of 1.3029 and 1.3089, where I recommend taking profits. In case the pair falls, the emphasis will be placed on protecting the middle of the channel at 1.2897. Forming a false breakout there will be a signal to open long positions. If bulls are not active at this level, and it is quite possible that weak data on activity in the UK services sector might scare off new buyers, I recommend not to rush into buy positions, but to wait until the lower border of the horizontal channel at 1.2819 has been tested and buy the pound there on a rebound based on a correction of 30-40 points within the day.

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

Sellers need to defend resistance at 1.2975 once again, where forming a false breakout will be a signal to open short positions in the hopes of returning to the bear market. Settling below the middle of the horizontal channel at 1.2897 will be an additional signal to sell the pound with the main goal of breaking through the major support of the previous week at 1.2819, which will then lead to a new, more serious wave of GBP/USD movement down to the 1.2754 and 1.2689 areas, where I recommend taking profits. In case the pound grows above the resistance of 1.2975, it is better not to rush to sell, since the market may shift to the side of buyers. Most likely, the bears will resort to protecting resistance at 1.3029, or it will be possible to sell GBP/USD immediately on a rebound from the 1.3089 high, counting on a correction of 30-40 points within the day.

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Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates uncertainty regarding the direction 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 D1 daily chart.

Bollinger Bands

A breakout of the lower border of the indicator in the 1.2900 area will lead to a new wave of decline for the British pound. A breakout of the upper border in the 1.2945 area will lead to an upward correction of the pair.

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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Simplified wave analysis and forecast for EUR/USD, AUD/USD, and GBP/JPY on October 5

EUR/USD

Analysis:

As part of the dominant upward wave of the European currency, a downward correction has been forming since the end of July. The wave has reached the limits of support. The structure of this wave does not show completeness. The upward movement of the last week does not have a reversal potential.

Forecast:

In the next 24 hours, the bullish mood of the movement, a reversal, and the beginning of a price decline is expected. A breakthrough in the calculated support zone cannot be ruled out today.

Potential reversal zones

Resistance:

- 1.1750/1.1780

Support:

- 1.1670/1.1640

Recommendations:

Today, purchases have small potential and can be risky. In the area of the calculated resistance, it is recommended to track signals for selling the instrument.

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AUD/USD

Analysis:

The Australian major chart has been dominated by a bullish trend since March. On September 25, the counter correction ended. The subsequent upward section has a reversal potential and can be the beginning of a new trend wave.

Forecast:

The current price rally is expected to end during the next trading sessions. Then you can wait for a reversal and the beginning of the price move down. If the exchange rate changes, a short-term puncture of the upper limit of the resistance zone is not excluded.

Potential reversal zones

Resistance:

- 0.7220/0.7250

Support:

- 0.7150/0.7120

Recommendations:

Trading on the pair's market today is only possible within the intraday, according to the expected sequence. A short sale is possible only after the appearance of a clear reversal signal.

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GBP/JPY

Analysis:

Since March of this year, an ascending wave of daily scale has been forming on the pair's chart. Within its framework, a new correction develops in the form of a shifting plane. The bullish section that lasts for the last 3 weeks does not have a reversal potential and does not go beyond the correction.

Forecast:

In the next 24 hours, an upward movement is expected up to the lower border of the potential reversal zone. A short-term rebound to the support zone is possible in the European session.

Potential reversal zones

Resistance:

- 137.50/137.80

Support:

- 136.30/136.00

Recommendations:

There are no conditions for sales in the pair's market today. Purchases of the tool are recommended. The lift potential is limited by the design resistance.

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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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Indicator analysis. Daily review on EUR / USD for October 5, 2020

The pair traded downward on Friday and almost tested 1.1690 - a 38.2% pullback level (blue dotted line). Today, the price may move up. According to the economic calendar, dollar news is expected at 14:00 UTC.

Trend analysis (Fig. 1).

The market may move upward from the level of 1.1719 (closing of Friday's daily candlestick) with the target of 1.1766 - a 38.2% pullback level (red dotted line). If this line is tested, the upward movement may continue with the next target at 1.1814 - a 50.0% pullback level (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 - down;

- Weekly chart - up.

General conclusion:

Today, the price may move upward with the target of 1.1766 - a 38.2% pullback level (red dotted line). If this line is tested, the upward movement may continue with the next target at 1.1814 - a 50.0% pullback level (red dashed line).

Another possible scenario: from the level of 1.1719, the price may move upward with the target at 1.1766 - a 38.2% pullback level (red dotted line). Upon testing this level, the price may move downward with the target at the support level 1.1660 (black bold line).

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Markets are trying to be hopeful albeit weak NFP data and Trump being infected by COVID-19

The previous week was quite stormy despite being filled with events and published economic statistics.

First, let's focus our attention to the publication of employment data and GDP in the United States. It can be noted that the updated revised GDP value for the 2nd quarter came out slightly better than the forecast, it was managed albeit being little. Together with it, we have the values of new jobs in the non-agricultural sector of the US economy from the ADP which was released last Wednesday. This turned out to be stronger than forecasted and supports the demand for risky assets and thus, put pressure on the dollar.

Considering these optimistic values, investors expected the values from the US Department of Labor to show growth at least by 850,00 last Friday, however, it did not happen. According to the data presented, the US economy in September received a clear value of only 661,000. Against this background, the only reassuring figures were the August revision of values of new jobs to 1.489 million and the decline in unemployment rate from 8.4% to 7.9%, which was forecasted to decline to 8.2%.

As expected, the currency market reacted to the US employment data with a slight weakening of the dollar, but then it received the same slight support, but already because of unexpected news that D. Trump and his wife were infected with COVID-19. In view of this news, the local stock market came under pressure, since the illness of a very elderly president and a candidate for a second presidential term could lead to unpredictable consequences of the presidential election results.

How will Trump survive the virus and how will it affect the markets?

In our opinion, after the doctors' optimistic statements this weekend about the state of the US president, it is too early to talk about any negative consequences. Today, it is likely that the market will be distracted from this problem and the desire to buy risky assets will return, which in turn, will restrain the possibility of the dollar's local strengthening.

Forecast of the day:

The EUR/USD pair remains in a narrow range of 1.1700-1.1755. The lack of development regarding Trump's health will support the demand for risk. Now, the pair, breaking out of the range, will rise to the level of 1.1810.

The USD/CAD pair is trading below the level of 1.3285. It is declining in the wake of a strong growth in oil prices, which comes amid the optimistic statements by doctors about Trump's health. If such moods persist, the pair will decline to 1.3235.

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Bitcoin Within An Ascending Triangle

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BTC/USD is trading higher at 10,666 but it seems undecided in the short term. A valid breakout above the black downtrend line signal upside continuation. The rate failed to reach the trendline or the $10,000 psychological level in the last attempts. This is why we have to wait for a fresh trading signal.

  • Bitcoin Trading Tips

Breaking above the downtrend line and above the $11,179.90 former high suggests buying as the rate could climb towards the $12,485 former high.

A drop and consolidation below $10,000 psychological level suggest selling as the price is expected to return to the $9000 level.

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

Technical Analysis of ETH/USD for October 5, 2020

Crypto Industry News:

Recently, the ECB published a report which lists the advantages and disadvantages of introducing the digital Euro. Its authors wonder whether digital currency should be available directly to households. They also draw attention to the problematic issues related to the possession of the digital Euro by individual users. Importantly, the digital Euro would give residents of the Euro area the opportunity to deposit deposits directly with the European Central Bank. Currently, this option is only available to commercial lenders, governments and other central banks.

As the authors of the report emphasize, digital Euro would be a supplement to cash, not a substitute. "Our role is to secure confidence in money," said Christine Lagarde, President of the European Central Bank. - This means making sure the Euro is fit for the digital age. We should be prepared to digitally issue the Euro, if necessary, she added.

It is worth recalling that earlier, while still the head of the International Monetary Fund, Lagarde announced that, as the head of the ECB, she would try to facilitate the adaptation of EU institutions to the changing financial environment by, inter alia, openness to cryptocurrencies.

The name of the currency has already been reserved by the European Central Bank in the European Union Intellectual Property Office, but a decision has not yet been issued. Meanwhile, on October 12 this year. Public consultations and a digital currency test are to begin. The decision to launch is to be made by mid-2021 at the latest. If this stage of work is successful, the research phase will begin.

The European Central Bank is not the only entity that is currently working on the solution described above. The information that the Bloomberg agency was able to obtain shows that the People's Bank of China will probably be the first institution to implement its digital currency. The US Federal Reserve and the Bank of England are also working on similar projects.

Technical Market Outlook:

The ETH/USD pair has bounced from the 61% Fibonacci retracement located at the level of $334.85 and keeps moving higher. The next target for bulls is seen at the level of $362.60 and $369.37. The momentum is positive, but not that strong, so the move up might take some time. The immediate technical support is seen at the level of $345.40.

Weekly Pivot Points:

WR3 - $403.75

WR2 - $387.38

WR1 - $368.10

Weekly Pivot - $351.05

WS1 - $333.15

WS2 - $315.51

WS3 - $296.13

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 is currently seen at the level of $305.20 - $321.95, so 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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Technical Analysis of BTC/USD for October 5, 2020

Crypto Industry News:

Estonian central bank - Eesti Pank - has announced the launch of a research program to test how to build a digital currency infrastructure.

According to the statement, Eesti Pank will collaborate on the research project with technology companies SW7 Group and Guardtime. The initiative aims to test whether a blockchain-based keyless signature (KSI) solution can help create virtual currency.

It is worth adding that Estonia is already using blockchain and KSI technology in its e-government services. The bank's project will also address new payment solutions "that may be possible through the use of electronic identifiers and other Estonian e-government solutions."

The project will consist of several phases and will last approximately two years. The first phase will be to create a scalable, practical and secure platform that meets the requirements of CBDC. At the same time, it was emphasized that the platform is to operate quickly, securely and ensure privacy.

Rainer Olt, head of the bank's Payment Systems Department, said:

"As a small central bank, Eesti Pank carefully selects the development projects of the Eurozone central banks to which we can make a significant contribution. Over the years, Estonia has developed unique know-how in maintaining a secure, private and efficient eGovernment. Estonia's unique wealth of experience is a good impetus to launch the project with technology companies SW7 and Guardtime to explore [new] technological opportunities. "

The bank emphasized that it is constantly striving to develop its financial environment and payment system in order to keep up with the times and respond to the needs of citizens.

Technical Market Outlook:

The BTC/USD pair has been slowly moving up towards the level of $10,679, which is the 61% Fibonacci retracement of the last wave down. There is a change for the market to continue to move higher if the level of $10, 697 is clearly violated. The next target for bulls is seen at the level of $10,890, which is the last swing high. On the other hand, the nearest technical support is seen at the level of $10,586 and $10,547.

Weekly Pivot Points:

WR3 - $11,471

WR2 - $11,178

WR1 - $10,858

Weekly Pivot - $10,602

WS1 - $10,300

WS2 - $10,024

WS3 - $9,715

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 corrections 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 $10,000.

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EUR/USD Comes Under Bullish Pressure

EUR/USD is located in a neutral zone. On the chart., we can see an upside signal, while a new low suggests selling. The pair has changed little after the disappointing NFP report.

The economic indicator came in at 661K, below 900K estimate and far below 1489K in the previous reporting period. The Average Hourly Earnings increased only by 0.1%, less versus 0.5% expected. The greenback was saved from a sharp depreciation by the Unemployment Rate which decreased unexpectedly from 8.4% to 7.9%. Economists expected a drop only to 8.2%.

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EUR/USD is trapped between 1.1694 and 1.1753 levels. An upside breakout signals an increase at least till the 1.18 psychological level. On the other hand, a downside breakout could lead to a drop towards 1.1611 former low.

The US ISM Non-Farm Manufacturing PMI report will be unveiled later today. Better than expected data could help the USD to increase, while an expansion slowdown could send EUR/USD towards new highs.

  • EUR/USD Trading Tips

We will have a great buying opportunity if EUR/USD jumps and stabilizes above 1.18 psychological level. This scenario validates a significant upwards movement. 1.2 could be used as a short term target.

A deeper drop will be confirmed by a new low, drop below 1.1611 level. The 1.1495 is seen as a downside target.

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Technical Analysis of GBP/USD for October 5, 2020

Technical Market Outlook:

The GBP/USD pair has been trading in a narrow range located between the levels of 1.2868 - 2979 where the Bearish Sandwich candlestick pattern had been made at the H4 time frame chart. The price pulled-back towards the level of 1.2848, which is just in the middle of the wide demand zone. Nevertheless, the target for bulls is still seen at the level of 1.2979 and 1.3017 and strong and positive momentum support this short-term outlook despite the overbought market conditions. The technical support for bears is seen at the levels of 1.2848, 1.2816 and 1.2786.

Weekly Pivot Points:

WR3 - 1.3265

WR2 - 1.3116

WR1 - 1.3034

Weekly Pivot - 1.2892

WS1 - 1.2811

WS2 - 1.2658

WS3 - 1.2571

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. The key long-term technical resistance is still seen at the level of 1.3518. Only if one of these levels is clearly violated, the main trend might reverse (1.3518 is the reversal level) or accelerate towards the key long-term technical support is seen at the level of 1.1903 (1.2589 is the key technical support for this scenario).

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Technical Analysis of EUR/USD for October 5, 2020

Technical Market Outlook:

The EUR/USD pair keeps testing the short-term trend line resistance, but there is no upside breakout yet. The level of 1.1772 had not been violated clearly and the market reversed towards the technical support located at 1.1696. Nevertheless, the next target for bulls is seen at the level of 1.1772 and 1.1790. The next target for bears is seen at the level of 1.1655. Only a sustained move above the level of 1.1758 would put bulls back into control again. The weekly time frame trend remains up.

Weekly Pivot Points:

WR3 - 1.1938

WR2 - 1.1852

WR1 - 1.1782

Weekly Pivot - 1.1691

WS1 - 1.1632

WS2 - 1.1548

WS3 - 1.1473

Trading Recommendations:

Since the middle of March 2020 the main trend is on EUR/USD pair has been up, which can be confirmed by almost 10 weekly up candles on the weekly time frame chart and 4 monthly up candles on the monthly time frame chart. Nevertheless, weekly chart is recently showing some weakness in form of a several Pin Bar candlestick patterns at the recent top. This means any corrections should be used to buy the dips until the key technical support is broken. 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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Gold Shows Negative Signs

XAU/USD is trading again below the $1,900 psychological level signaling that the rebound could be over soon. The price failed for the second time in a few days to fix above the psychological level indicating strong selling pressure.

USDX rally could force the price of gold to drop deeper in the short term. It remains to be seen how EUR/USD will react to the NFP report. Today, the US ISM Non-Manufacturing PMI, the Final Services PMI, and the Euro-zone data are the main drivers in the market.

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Gold is trading in the red on the H4 chart, a bearish drop below the Pivot Point ($1,888) level could attract more sellers. The pressure remains high as long it stays under the black downtrend line.

You should be careful as long the price floats $1,900 level. Only a fresh new lower low, drop under $1,848 could really activate a broader drop. A buying opportunity should appear after a valid breakout above the downtrend line.

  • GOLD Trading Tips & Conclusion

Buy a valid breakout above the downtrend line and above the R1 ($1,927) level. The $2,000 and $2,075 levels could be used as upside targets.

Sell from below the $1,848 level with an immediate downside goal at the $1,800 psychological level.

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GBP/USD purchases by major players. Trading plan for the week.

The commencement of today's trading in the European session will be the basis for creating a trading plan for the week. The GBP/USD pair is currently trading above the WCZ 1/2 1.2938-1.2914, making it possible to hold purchases that were opened last week. A new opening of long positions will be possible after today's closing occurs above the maximum of last week. This will make the growth model promising in the medium term. The target of the upward movement will be the weekly control zone 1.3202-1.3154. The probability of reaching this zone will increase to 75%.

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The formation of an accumulation zone has been very evident over the past three weeks. An exit and consolidation above this area will indicate the direction for the entire current month, so purchases opened last week may become medium-term. They must be moved to breakeven and leave a part, in case of a growth to the September maximum. This will allow us to take up to 500 points of profit and compensate for the fall of the previous month.

In order for the flat formation to resume, it will be necessary to hold the maximum of the previous week and form the engulfing pattern during its retest. This will indicate the need to search for favorable sales prices. Continuing to work in the flat requires you to look for sales from the upper border with fixing transactions at the lower border. This model has not lost its relevance yet. However, its probability is below 50%, which requires confirmation.

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Forecast for GBP/USD on October 5, 2020

GBP/USD

The British pound continues to rise this morning, above the 76.4% Fibonacci level. The Marlin oscillator, which has penetrated into the growing trend zone, helps in this situation. The 1.3025 target at the Fibonacci level of 61.8% has been opened. The basic branch of the Fibonacci grid is taken from the movement on December 13, 2019-February 28, 2020. As long as it remains active.

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The price has settled at the 76.4% Fibonacci level on the four-hour chart, the Marlin oscillator is in a neutral position. But a little earlier, its signal line rebounded twice from the trend border in the direction of growth, which increases the likelihood of growth in both the indicator and price. Aim for 1.3025. Larger growth is associated with higher fundamental risks such as the health of US President Donald Trump and a tough Brexit.

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Forecast for AUD/USD on October 5, 2020

AUD/USD

The Australian dollar retreated from the 0.7190 resistance on Friday and closed the day with a black candle at 23 points. The price reached the same resistance this morning. The Marlin oscillator does not show a downward reversal, so it is possible for AUD/USD to rise to 0.7270. The price must overcome the Thursday high at 0.7210 for this. In order for the price to return to the local downward trend, it must drop below Friday's low of 0.7132.

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The situation on the 4-hour chart does not provide clues as to which direction the price intends to take. The leading Marlin oscillator moves almost horizontally above the neutral line. We are waiting for the development of events. Tomorrow, the Reserve Bank of Australia will announce its monetary policy decision and the Australian trade balance will also be released. Investors are waiting for this news.

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Forecast for USD/JPY on October 5, 2020

USD/JPY

The yen strengthened by 56 points last Friday and reached the lower shadow of support for the trend line of the price channel, afterwards it moved up following the recovery of the stock market. The price continues to rise today in the Asian session, and is also trying to overcome the resistance of the balance indicator line. The Marlin oscillator has moved into a positive trend zone, which it failed to do for the past three days. This is a good sign of the growing market interest in buying the pair. The nearest target is now the Fibonacci level of 100.0% at the price of 106.00. The MACD line is located near this level. Overcoming such strong resistance will open the second target at 106.35.

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The price turned upwards from the MACD line on the four-hour chart. The signal line of the oscillator is ready to enter the growth zone. We are waiting for the price at the first target of 106.00.

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Hot forecast and trading signals for the EUR/USD on October 5. COT report. Market entry points on Monday

EUR/USD 1H

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The euro/dollar pair traded all day on the hourly timeframe on October 2 as if it were a semi-weekend or a holiday. All trades were held between the Senkou Span B and Kijun-sen lines, which are generally strong lines and signals appeared upon breaking or rebounding from them. However, we had a distinct flat on Friday. We even formed a horizontal channel capped at 1.1683 and 1.1756. And the pair has been trading between these levels for several days. What caused the new flat? Most likely a fundamental background. From a technical point of view, the dollar should continue to rise, since we have not seen a sane correction following the 1300-point rally.

EUR/USD 15M

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Both linear regression channels are directed to the downside on the 15-minute timeframe, indicating that traders are now more inclined to overcome the lower channel line at 1.1683-1.1756. The euro/dollar rose in price by around 30 or 40 points during the last reporting week (September 23-29). We cannot even call it growth, just a normal market noise. The previous Commitment of Traders report showed that non-commercial traders opened 15,500 new Buy-contracts (longs) and almost 6,000 Sell-contracts (shorts). Thus, the net position for this group of traders increased by around 9,000. The new report clearly reflects what is currently happening in the foreign exchange market. Professional traders closed 4,500 contracts for buy positions on the euro and 3,300 contracts for sell-positions during the reporting week. That is, the net position for the "non-commercial" group has decreased by around a thousand contracts, that is, the mood of large traders has become a little more bearish. However, these are not changes that can be acknowledged as global. Therefore, we conclude that the situation has not changed dramatically. The EUR/USD pair generally stood in one place for the next three trading days (after September 29). Therefore, the next COT report can be as uninformative as possible.

The European Union recently published a report on inflation for September (preliminary value). It turns out that the consumer price index fell even more and now stands at -0.3% y/y. Core inflation also fell to just 0.2% y/y. This is very, very bad news for the euro and the European Union. It is extremely difficult for an economy to show growth without inflation. News from overseas did not fare any better. We have already mentioned that US President Donald Trump has been infected with the coronavirus. The NonFarm Payrolls report turned out to be weaker than the experts' forecasts and reached 661,000 new jobs in September instead of the expected 850,000. Average hourly wages rose by only 0.1% in September. And traders were only pleased by the unemployment rate, which dropped to 7.9%. However, all these rather important reports did not have any impact on the foreign exchange market, which continued to move throughout the day in a range of no more than 50-60 points wide.

We have two trading ideas for October 5:

1) Buyers did not have enough strength to sustain the upward movement so that it could go beyond the 1.1756 level. Thus, further strengthening of the euro is now in question. A horizontal channel at 1.1683-1.1756 has appeared and we recommend that you wait until the price settles above it in order to possibly open new long positions while aiming for 1.1798 and 1.1886. Take Profit in this case will be from 20 to 110 points.

2) Bears have finally released the market from their hands, but may still return to it if they manage to get the pair to settle below the 1.1683-1.1756 horizontal channel. In this case, we recommend opening new short positions while aiming for 1.1538. All support and resistance levels will be reviewed tomorrow. In this case, the potential Take Profit is up to 130 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. October 5. Boris Johnson blamed the EU. David Frost "began to see the outlines of a trade agreement"

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) - upward.

CCI: 123.2782

On Friday, October 2, the British pound continued to be in the "storm" mode. The pair's quotes continued to be tossed from side to side. In principle, this behavior of market participants is quite justified, since recently news of such a plan has been received from the UK that it was really time to panic. However, the fundamental background on the last trading day of the week became even more unclear, and reports about the illness of Donald Trump did not add to the calmness of market participants and did not lift their spirits. As a result, the pound once again corrected to the moving average line, then bounced off it, and resumed its upward movement. However, it again failed to overcome the Murray level of "+1.8" - 1.2970, which is located very close to the psychologically important mark of 1.3000. This mark was not overcome by buyers two weeks ago, so there is reason to assume that this time the attempt to continue moving north will be unsuccessful. In the situation with the pound, it should be understood that the fundamental background is now equally bad for it and for the US dollar. Therefore, if the European currency can really continue to rise in price against the dollar, then the strengthening of the pound is a very big question. We would even say that the pound is the main contender for a fall in the last quarter of 2020, given all the events of recent weeks.

After the European Union officially notified London and Boris Johnson that it was starting legal proceedings against the UK and its non-compliance with the Brexit agreement, Boris Johnson became restless and once again began to gather for an official visit to Brussels to hold talks with the head of the European Commission, Ursula von der Leyen. The meeting was scheduled for last weekend, and the results are still unknown. However, in principle, we do not understand what Johnson wants to achieve with this meeting? The European Union has been threatening for about a month that it will start legal proceedings if London does not withdraw the "Johnson bill". Instead, the UK Parliament approved the bill in the second reading. Thus, what Johnson wants to achieve with a visit to Brussels is unclear. Moreover, it is already absolutely clear to everyone that the European Union is not "led" to attempts of blackmail and bluff, which are regularly used by the British Prime Minister. Ursula von der Leyen stated: "The situation in the Brexit negotiations remains very difficult. We have already announced that the internal market bill directly contradicts the terms of the Brexit deal, in particular the protocol on the border between Ireland and Northern Ireland. We asked our British colleagues to review this act within a month, but they refused."

Meanwhile, Boris Johnson himself very cleverly "threw the ball" to the side of the European Union, saying that he wants to conclude an agreement with the European Union to avoid a "hard" Brexit at the end of the year. "I hope we make a deal, but it's up to our friends," Johnson said. Also, the British Prime Minister has once again stated that he wants to get an agreement on the type of Canadian or Australian. In our humble opinion, Johnson's plans will not be implemented, because, to paraphrase the Prime Minister, it turns out "we want to get the agreement we want, and we are not ready to give in."

Also last week, the ninth round of negotiations on a trade agreement between the EU and Brussels ended. At the end of this week, British negotiator David Frost said that "we are beginning to see the outlines of a future agreement, although there are still a lot of contradictions". Also, David Frost absolutely does not understand why the EU does not want to make concessions to London and give them the same agreement as with Canada. "They have signed an agreement with Canada that we would like to have. So why can't they make it with us? We are very close, because we have been members of the EU for 45 years," says Frost. But the EU's chief negotiator, Michel Barnier, does not share the optimism of his British counterpart. "The round ended with serious disagreements remaining on the main important issues," Barnier said. Both sides note that most of the differences remain in the "fishing issue". In general, from our point of view, the parties are not so much closer at the end of the next round. Recall that the parties are going to complete the negotiations before October 15. At least London is going to finish. We believe that negotiations will continue beyond this date. It's just that if an agreement can still be reached, for example, in December, then it will be ratified next year, so both sides will live without a trade agreement for several months. However, London and Brussels have already started to clash over the draft law "on the internal market", which will greatly complicate any negotiations in principle.

Thus, by and large, there is no positive news for the pound. If it were not for the difficult political, economic, and epidemiological situation overseas, we would give about an 80% probability that the fall of the British currency will resume. However, it is the failed fundamental background in the US that continues to keep the pound afloat. The prospects for this currency and the currency pair are not fully defined at the moment. In the next month or even until the very end of the year, serious questions will be resolved about who will become the next US President, how Donald Trump will be treated, what will be the future negotiations and relations between London and Brussels. And any of these topics can potentially send the pair down or up 500 points or even more. Thus, for the coming weeks and months, we recommend that all traders, as they say, keep their finger on the pulse of the market. Although even taking into account the negative fundamental background in America, we still tend to believe that the fall of the British currency will resume. The GBP/USD pair is bitterly held above the moving average line, and buyers do not have enough strength to continue moving north.

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The average volatility of the GBP/USD pair is currently 135 points per day. For the pound/dollar pair, this value is "high". On Monday, October 5, therefore, we expect movement inside the channel, limited by the levels of 1.2790 and 1.3065. A new reversal of the Heiken Ashi indicator downwards signals a new round of corrective movement.

Nearest support levels:

S1 – 1.2909

S2 – 1.2878

S3 – 1.2848

Nearest resistance levels:

R1 – 1.2939

R2 – 1.2970

R3 – 1.3000

Trading recommendations:

The GBP/USD pair on the 4-hour timeframe hardly continues its upward movement, bouncing off the moving average line once again. Thus, today it is recommended to stay in the longs with the targets of 1.2970 and 1.3000 as long as the Heiken Ashi indicator is directed upwards. It is recommended to trade the pair down with targets of 1.2817 and 1.2787 if the price returns to the area below the moving average line.

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Overview of the EUR/USD pair. October 5. Donald Trump is hospitalized. The situation with the elections and the future of

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: 23.6373

Last week, the European currency paired with the US dollar was able to strengthen by about one cent. This is not much, given the fact that the euro has risen by 13 cents over the past few months. The price rose so much that even the European Central Bank began to "sound the alarm", and its chief economist Philippe Lane and Christine Lagarde herself said several times publicly that the current euro exchange rate is too high, which creates additional problems for the economy and also slows down inflation even more. All this week's macroeconomic reports were ignored, as usual. Or the reaction to them was so weak. These are the results of the past week. In principle, it does not even make any sense to consider macroeconomic reports. There were no performances by Jerome Powell last week. Christine Lagarde did not make loud statements, and all the top officials of the European Union are now directed at absolutely inappropriate behavior in London. There was information that the European Union had new problems with the recovery fund, which was adopted a couple of months ago in the amount of 750 billion euros. There are reports that many countries do not agree with the distribution of funds among the most affected countries, which was proposed by the European Council. However, we consider this information to be either untrue or unworthy of attention. If the 27 EU member states managed to reach a consensus on the size of the recovery fund, the budget for 2021-2027, and the sources of their funding, it is unlikely that the whole process will now stall due to the fact that countries will not be able to agree on the distribution of these funds. Moreover, immediately after the EU summit, at which everything was agreed, there was information about which country will receive how much money.

Thus, again, it turned out that all the most important and interesting news came from overseas. At the beginning of the week, the first round of debates between Donald Trump and Joe Biden took place, and at the end of the week it became known that Trump and his wife Melania fell ill with "coronavirus". Many experts and participants of this show have already spoken out on the debate. According to the absolute majority of the media and publications, this was the weakest and even "shameful" debate in the history of the country. It is reported that Trump constantly interrupted Joe Biden, put pressure on both his opponent and the host, in the end, the host even lost control of this show and it became quite "chaotic". Most Americans wanted to use the debate to find out the campaign promises of both presidential candidates in order to make a conclusion for themselves who they should vote for. Instead, they saw a reality show or something similar. For several decades, it has been believed that TV debates allow both candidates to collect the remaining votes of those who have not yet decided on the choice. The debate between Trump and Biden could only worsen the position of both. "This was an absolutely terrible debate that did absolutely nothing to educate the public about the two candidates and what they would do if they were given four years to serve as President of the United States of America," CNN reporters wrote. Fox News, which is usually loyal to Donald Trump, has the following opinion: "Both candidates resorted to swearing and insults, constantly interrupting each other. Joe Biden called Trump a "clown" and a "racist," and the President taunted the former Vice President for not being able to gather a crowd, questioned him about his son's alleged misdeeds in Ukraine and China, and reminded him of the former Vice President's poor academic performance." In general, all the debates were devoted to insulting each other and trying to compromise each other. There was no civilized discussion.

And now the election is just under a month away, and Donald Trump is sick. It is likely that there will not be two more scheduled rounds of debates. And in general, it is not clear how easy or difficult will Trump suffer from the disease. Recall that Boris Johnson, who is also overweight, had quite a hard time with COVID-2019 and was even in intensive care. Trump is also overweight, however, he is also aged. Recall that the US President is currently 74 years old. Thus, it is in the most serious risk group. In general, one month before the election, the situation becomes even more complicated.

Meanwhile, the White House raised the question of who will lead the country and make decisions while Trump is being treated? In addition to this very important question, there is also the question of who else was infected with the "coronavirus" from Trump's entourage? So far, it is reliably known that former presidential adviser Kellyanne Conway, Trump's closest aide Hope Hicks, Republican Senators Mike Lee and Tom Tillis have fallen ill. Trump campaign chief of staff Bill Stepien was also confirmed to have "coronavirus". The most "tough" thing about this whole situation is that Trump was in contact with many Republicans and Democrats on duty. And most politicians in the United States are very old people. For example, Joe Biden is 78, speaker Nancy Pelosi is 80, and Senate Republican majority leader Mitch McConnell is 78. Almost all senators in the Upper House are over 60. Thus, they can potentially carry the virus extremely hard. So far, the reins of government have passed to Vice President Mike Pence, whose "coronavirus" has not been confirmed. Also, Steven Mnuchin, the US Treasury Secretary, has so far avoided the fate of infection. And most importantly, it is now completely unclear how the elections will be held? It's good if Trump gets better in a week. And if not? Who will be the Republican nominee then? What about Supreme Court Justice Amy Coney Barrett, who should have been appointed under the patronage of Trump himself to replace the deceased Ruth Ginsburg in the very near future?

Just a week ago, we said that the times are not better for dollar investors and traders, as the level of uncertainty is too high. With Trump's illness, it has become even higher. We believe that this is a very convincing factor for the US currency to continue to weaken.

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The volatility of the euro/dollar currency pair as of October 5 is 66 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1650 and 1.1781. A reversal of the Heiken Ashi indicator back upward may signal the resumption of the upward movement.

Nearest support levels:

S1 – 1.1719

S2 – 1.1658

S3 – 1.1597

Nearest resistance levels:

R1 – 1.1780

R2 – 1.1841

R3 – 1.1902

Trading recommendations:

The EUR/USD pair continues to be located just above the moving average line. Thus, today it is recommended to consider options for opening new long positions with a target of 1.1780 in the event of a price rebound from the moving average or a reversal to the top of the Heiken Ashi indicator. It is recommended to consider sell orders again if the pair is fixed back below the moving average with the first target of 1.1658.

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