Indicator analysis: Daily review for EUR / USD pair 19/10/2020

Trend analysis (Fig. 1).

Today the market may start moving down from the level of 1.1722 (which was the closing of Friday's daily candle) in order to reach the pullback level of 76.4% - 1.1665 (blue dotted line). If this line is tested, it is likely that the downward movement will continue with the target of 1.1648 which is the support line (black bold line).

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Figure 1 (daily chart).

Complex Analysis:

  • Indicator Analysis – down
  • Fibonacci Levels – down
  • Volumes – down
  • Candle Analysis – up
  • Trend Analysis – down
  • Bollinger Bands – down
  • Weekly Chart - down

General conclusion:

Today, the price may make a downward movement with the goal of reaching the pullback level of 76.4% - 1.1665 (blue dotted line). If this line is tested, it is likely that the downward movement will continue with the target of 1.1648 - the support line (black bold line).

Unlikely scenario: from the level of 1.1722 (which was the closing of the Friday daily candle) work up with the goal of 1.1766 to the pullback level of 38.2% (red dotted line). After testing this level, it is possible to continue working up with the goal of 1.1812 50% pullback level (red dotted line).

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Brief trading recommendations for EUR/USD on 10/19/20

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Last Friday, the EURUSD currency pair found a foothold near the support level of 1.1700, where a stop occurred naturally, followed by a pullback in the direction of 1.1745.

The level of 1.1700 has been acting as a support in the market for a long time, where there is a regular stop with a successive pullback. It is worth considering that although the market is strong, it can also not stand with a large number of sellers, as happened in September. Thus, in such situations, it is worth working both for a rebound and for a breakdown just like last Friday.

Regarding the current location of the quote, you can see a variable price fluctuation within the support level of 1.1700, where the quote re-tests the pivot point for strength.

Based on the location of the quote and the reference support level, you can make a trading forecast from several possible market development scenarios.

First, a repeated approach with the level leads to a slowdown.

The quote already reached the level of 1.1700, where a variable fluctuation in the range of 1.1695/1.1730 is possible, which will lead to the accumulation of trading forces and consecutive acceleration.

Second, the volume of sellers increased.

The repeated approach to the level of 1.1700 led to an increase in the volume of short positions (sell positions), which caused the key level to break down.

The best entry point is the level of 1.1685, with a development prospect of 1.1650-1.1615.

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Indicator analysis. Daily review for the GBP / USD currency pair 10/19/20

Last Friday, the pair moved in a sideways channel and tried to break through the retracement level of 50% - 1.2878 (red dashed line). Today the price is likely to continue its upward movement based on the economic calendar news expected at 12.00 UCT (dollar).

Trend analysis (Fig. 1).

Today, the market from the level of 1.2919 (closing of Friday's daily candle) may continue to move upward with the target of 1.2983 - the retracement level of 38.2% (blue dotted line). When testing this level, it is possible to continue working upward with the target at 1.3078 - the retracement level of 50.0% (blue 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 will try to start moving upwards with the target at 1.2983 - the 38.2% retracement level (blue dotted line). When testing this level, it is possible to continue working upward with the target at 1.3078 - the retracement level of 50.0% (blue dashed line).

Unlikely scenario: from the level of 1.2919 (the close of Friday's daily candlestick), the price may start moving upward with the target of 1.2983 - a retracement level of 38.2% (blue dotted line). When testing this level, there'll be further work going down with the target of 1.2873 - support line (red bold line).

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Uncertainties support USD despite its fundamental weakness

The US dollar added to the basket of major currencies last week. At the moment, its ICE index is at 93.75 points, which is higher than the week before, which was 93.06 points.

The exchange rate of the US currency still fully depends on three important factors that affect the overall dynamics of world markets. This is the expectation of the US presidential election, which can still lead to unpredictable consequences in the form of acts of defiance by the losing party, the second wave of COVID-19, and the expectation of new stimulus measures in the US.

Based on media reports, J. Biden is still leading the elections, which generally benefits the demand for company shares, as investors believe that his presidency will be positive for the country's economy. With regard to the impact of the COVID-19 pandemic, we note that it certainly has an impact, but it is unlikely to cause new closures of entire countries' economies, as it did in the spring of this year, because this will already lead to more severe social consequences. Meanwhile, the expectation of new incentives has already been exhausted. Thus, investors will now be interested in their adoption, which is still a problem.

As we can see, it is in this environment that a new week begins, which will be similar to the previous one. In general, unclear movements are expected to continue in the currency markets. Unlike last week, the USD may come under pressure against the basket of major currencies, but its overall dynamics will remain sideways until the end of this month, which is quite justified.

The US currency continues to be supported only due to its main function - the world reserve currency. As long as it is believed in, it will receive support in the wake of various uncertainty factors, the main of which are described above. It will not even be negatively affected by the monstrously record US budget deficit, which reached $ 3.132 trillion during this year.

Today, the market's attention will be focused on the speeches of Fed Chairman Powell, ECB President Lagarde, as well as ECB spokesman Mersch and Fed members Williams, Clarida, Bostic and Harker.

Forecast of the day:

The EUR/USD pair is consolidating above the level of 1.1700, breaking through which will become the basis for the price decline to 1.1650.

The NZD/USD pair may also test the level of 0.6585, if it does not rise above the 0.6630.

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US dollar continues to be in demand, Britain is preparing for a no-deal Brexit and the ECB is looking to expand economic

Markets opened in different directions this morning with a small positive margin, which, first of all, comes from the increasing probability of reaching an agreement in Congress on the scale of the next wave of QE. Despite the fact that Democrats did not accept Trump's proposal for a $1.8 trillion fiscal stimulus package, Trump announced that he is ready to offer even more. Today, there will be negotiations on this key issue and positive news could dramatically increase volatility.

The moods of investors are typically changing. Some improvement in the overall position was due to the corporate sector – investors assume that the US financial authorities will find a way to stimulate the economy, which will result in additional income for corporations, hence the increase in demand for stocks and corporate bonds. At the same time, there is no positive news on government securities, which clearly means that foreign investors do not believe in plans to restore US financial stability.

All this is a caution both for the US dollar and for the global financial system based on the dollar. Here, it is expected that the next QE will not bring any positive result for the economy, but will only give an opportunity to earn extra money on financial speculation.

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The CFTC report confirmed the main trends of the previous weeks. The total short position on USD fell by 979 million mainly due to the protective currencies EUR, JPY, CHF. In turn, commodity currencies did not show a single dynamic.

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According to a combination of factors, investors are more likely to expect positive results in the coming weeks. Gold's net long position declined by 1.17 billion, which is in favor of the dollar. For oil, changes in general in favor of growing demand is in favor of risky assets.

The US dollar is in demand again at the beginning of the week, so we should proceed from the fact that the trend towards its strengthening will most likely continue.

EUR/USD

Eurozone's inflation in September is in line with forecasts. However, the markets did not receive new information from Eurostat. Last week, ECB's President, Ms. Lagarde confirmed plans to revise the stimulus policy at a meeting in December if inflation does not show growth in line with forecasts. This was also considered by ECB's Chief Economist, Mr. Lane.

Thus, we should assume that the ECB will most likely offer a new stimulus package in December, since there are few chances for exceeding inflation.

The long position in the euro continues to decline in the futures market. The latest CFTC report showed a decline of 806 million. At the same time, the target price declines, which indicates that the bearish mood is in demand for the euro.

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Thus far, the euro/dollar pair remains at the support area of 1.1680/1700, but there is a high probability that it will not hold. So the next target is the level of 1.1612, while the main one is 1.15.

GBP/USD

The pound continues to trade in conditions of uncertainty, which does not allow it to leave the range. The uncertainty, in turn, is a direct consequence of the lack of any progress in the Brexit negotiations.

The net short position for GBP fell by 117 million and the estimated price is still directed downward. Apparently, investors assume that Britain will not be able to impose its position on the EU, and the process launched by the Queen of Great Britain in her throne speech on May 27, 2015 will eventually get what was planned – the UK's exit from the EU without any deal.

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Today, EU and UK negotiators will try again to create the ground for continuing negotiations in a telephone conversation. If the results of the conversation are announced in a positive way, then the pound may rise to the resistance level of 1.3180, but if not, then the most probable scenario will be implemented – a decline to the limit of the channel 1.2780/2800, followed by a movement to the level of 1.22.

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Analysis and trading recommendations for the EUR/USD and GBP/USD pairs on October 19

Analysis of transactions in the EUR / USD pair

The release of good US retail sales report decreased the demand for the European currency, so as a result, the quote stopped moving after rising by only 15 pips from the level of 1.1719.

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Trading recommendations for October 19

Fed Chairman Jerome Powell has a scheduled speech today, during which he will talk about the US monetary policy, as well as the need for additional fiscal support to sustain economic growth. At the same time, ECB head Christine Lagarde will also deliver important statements today, and it could lead to increased pressure in the European currency.

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  • Open a long position when the euro reaches a quote of 1.1731 (green line on the chart), and then take profit at the level of 1.1769.
  • Open a short position when the euro reaches a quote of 1.1688 (red line on the chart), and then take profit at the level of 1.1625.

Analysis of transactions in the GBP / USD pair

Boris Johnson once again criticized the EU and accused them of breaking the UK-EU trade agreement. As a result, long positions from the level of 1.2916 saw a 20-pip rise and profit in the GBP / USD pair, whereas short positions from the level of 1.2883 found losses.

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Trading recommendations for October 19

Since there are no important statistics scheduled for release today, the attention of traders will be focused on Brexit negotiations, which, until, has not been settled yet. A bad news will continue the decline in the pair, whereas a good news, that is, when both parties finally sign an agreement, or if there is no news at all about it, the pound will rise against the US dollar in the market.

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  • Open a long position when the pound reaches a quote of 1.2947 (green line on the chart), and then take profit around the level of 1.3006 (thicker green line on the chart).
  • Open a short position when the pound reaches a quote of 1.29153 (red line on the chart), and then take profit at least at the level of 1.2855. Bad news on Brexit, as well as the continuation of the downward trend, will continue the ongoing decline in the GBP/USD pair.
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Technical Analysis of GBP/USD for October 19, 2020

Technical Market Outlook:

The GBP/USD pair keeps testing the upper channel line after the market had been rejected from the supply zone located between the levels of 1.3059 - 1.3081. This zone will be the key short-term zone for both bulls and bears and only a clear and sustained breakout will show the traders the next direction for Pound. In a case of a bullish scenario, the next target would be 1.3121 and the next target for bears is seen at the level of 1.2868 and 1.2848.

Weekly Pivot Points:

WR3 - 1.3222

WR2 - 1.3147

WR1 - 1.3005

Weekly Pivot - 1.2924

WS1 - 1.2790

WS2 - 1.2718

WS3 - 1.2567

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 19, 2020

Technical Market Outlook:

The EUR/USD pair has been seen moving lower at the beginning of the trading week. The last lower low was made at the level of 1.1688, just below the technical support seen at the level of 1.1696 and this is the next target for the bears. The nearest technical resistance is seen at the level of 1.1746. Despite the oversold conditions, the momentum remains weak and negative, which support the short-term bearish outlook.

Weekly Pivot Points:

WR3 - 1.1924

WR2 - 1.1873

WR1 - 1.1783

Weekly Pivot - 1.1733

WS1 - 1.1641

WS2 - 1.1593

WS3 - 1.1509

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 seen at the level of 1.2004. 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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GBP/USD: plan for the European session on October 19. COT reports. Traders leave the pound as uncertainty grows on Brexit

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

The bulls had to defend support at 1.2865 last Friday afternoon, but this level was not reached, and we missed it by around a dozen points. The same cannot be said about the resistance of 1.2945, from which I recommended opening short positions. Speeches by British Prime Minister Boris Johnson on the Brexit trade deal are weighing on the pound, which could decline earlier this week.

There were no particular changes in the futures market, but it is worth noting the fact that traders are closing positions and prefer to be out of the market. Bears are still in control of the situation, and the horizontal channel, in which the pair has been spending the last few weeks, has remained. Uncertainty about Brexit and the prospects for the recovery of the British economy, together with risks that the Bank of England might impose negative risks and the introduction of restrictive and quarantine measures due to the surge in the number of coronavirus infections, will continue to restrain demand for the pound and put pressure on it. The Commitment of Traders (COT) reports for October 13 showed that both long and short non-commercial positions have decreased. Long non-commercial positions declined from 40,698 to 36,195. At the same time, short non-commercial positions significantly dropped from 51,996 to 45,997. As a result, the negative value of the non-commercial net position slightly increased to -9 802 , against -11,298 a week earlier, which indicates that sellers of the British pound retain control and also shows their slight advantage in the current situation.

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From a technical point of view, there have been no global changes in the pair. Buyers of the pound will continue to focus on resistance at 1.2945, since they failed to go above this area last Friday. Getting the pair to settle at this level will open the possibility for a new wave of GBP/USD growth in the 1.3007 area, but a lot will depend on how the Brexit issue will progress. We can expect a slight decrease in tension on this issue, which will provide short-term support for the pound at the beginning of the week. Therefore, settling above 1.3007 will lead to a test of the 1.3080 high, where I recommend taking profits. Protecting support at 1.2865, which the bulls coped with at the end of last week, will also be an important task. In case the pair repeatedly falls there, and this will be the fifth consecutive test, forming a false breakout in this area will be a signal to open new long positions in hopes to strengthen GBP/USD. In case bulls are not active in this range, it is better not to rush to buy, but to wait until the nearest large support level in the 1.2807 area has been tested. You can also open long positions immediately on a rebound from the low of 1.2749, counting on a correction of 20-30 points within the day.

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

Sellers need to defend resistance at 1.2945, but a lot will depend on news regarding the Brexit trade deal, since we do not have fundamental reports on Monday. Forming a false breakout at 1.2945 creates a sell signal for the pound, but big bearish pressure requires bad Brexit news, similar to the one we heard from Boris Johnson last Friday. We can only expect a significant fall from the pound when we have gotten the pair to settle in the area below support at 1.2865, afterwards it could return to the 1.2807 area. A low of 1.2749 will be a distant target, which is where I recommend taking profit. In case the pair grows in the first half of the day and there is no activity in the resistance area of 1.2945, it is best to postpone short positions until the high of 1.3008 has been tested, where you can sell the pound immediately on a rebound, counting on a 20-30 point correction 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 how buyers and sellers find the pair's succeeding direction quite difficult.

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 in the 1.2945 area will lead to a new wave of growth for the pound. A breakout of the lower boundary at 1.2895 will lead to renewed pressure on 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.
The material has been provided by InstaForex Company - www.instaforex.com

Technical Analysis of ETH/USD for October 19, 2020

Crypto Industry News:

The Ethereum 2.0 test network, Medalla, turned out to be a complete flop, and the share of users who test it fell to just 1.5%. Due to the low activity of the testers, the risk of a hard fork is quite significant. On Ethereum block 515616, the Medall update threw an error and stopped working. Therefore, a hard fork may be needed to resolve the problem.

Currently, Ethereum users have turned back to the Zinken update. One of the developers working on ETH 2.0 - Preston van Loon, developer of Prysm, stated:

"We were delighted with the successful launch of our dress rehearsals thanks to the short-lived Zinken test network, and now it's time to bring our attention back to Medall."

Although there are no real ETHs at Medalla, there is also no incentive for users to just leave the network. Even if the worst happens, no one will lose their funds. Unfortunately, this situation also creates problems, because many users stay in Medalli just to "see what happens" and that only creates more problems.

Technical Market Outlook:

The ETH/USD pair has bounced from the local low made at the level of $360.97 and managed to retrace 50% of the last wave down. The target for bulls is still seen at the level of $400, but for now the local high was made at $379.16 and the Pin Bar candlestick pattern was made at the end of the move. The nearest technical resistance is seen at the level of $389.90 and at the swing top at $394.95. On the other hand, the target for bears is seen at the level of $360.60 and $355.60 and the nearest technical support is seen at the level of $369.37.

Weekly Pivot Points:

WR3 - $424.52

WR2 - $408.88

WR1 - $391.97

Weekly Pivot - $376.47

WS1 - $357.63

WS2 - $341.22

WS3 - $328.22

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. Moreover, bulls had bounced from the weekly trend line support last week and now are away from it. 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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EUR/USD: plan for the European session on October 19. COT reports. Euro buyers leave the market. Breakout of 1.1722 necessary

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

Sell positions on the euro could only be observed during the European session, where the bulls were actively defending the 1.1722 area. I analyzed this signal in more detail in last Friday's review. No signals to enter the market in the afternoon, and the breakout of 1.1722, which took place before the good US retail sales growth report was released, did not form a convenient long entry point, since there was no downward test at 1.1722. As a result, by the end of the day the market returned to the area below the aforementioned range, keeping the market under the control of sellers.

Before talking about today's prospects for the pair's movement, let's look at the situation in the futures market, which tells us that the number of people willing to buy euros has decreased in October this year. The weak prospects for European economic recovery, expectations of a new monetary stimulus program from the European Central Bank and a new wave of COVID-19 in many EU countries are forcing traders to take a wait-and-see attitude, as well as reduce their long positions in the European currency. The Commitment of Traders (COT) report for October 13 showed a decrease in long positions and an increase in short ones, which led to an even greater decline in the delta. Despite this, buyers of risky assets believe that the bull market will continue, but they prefer to act with caution, as there is no good news for the eurozone yet. Thus, long non-commercial positions decreased from 231,369 to 228,295, while short non-commercial positions increased from 57,061 to 59,658. The total non-commercial net position decreased to 168,637, against 174,308 a week earlier. which indicates a wait-and-see attitude from new players, however, bullish sentiments for the euro remain rather high in the medium term. The more the euro will decline against the US dollar at the end of this year, the more attractive it will be for new investors.

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As for the technical picture of the pair, it hasn't changed much compared to last Friday. Bulls are focused on the 1.1722 level and the pair's direction for the long term will depend on their actions in this range. Now the bulls are trying to gain a foothold above this area, but only a real breakout and a test of this range from top to bottom, which buyers could not show during last Friday's US session, forms a signal to open long positions in anticipation of sustaining the upward correction to the resistance area of 1.1756, where I recommend taking profits. If the bears manage to protect this range in the first half of the day, and today we only have speeches from the heads of the European Central Bank and the Federal Reserve, then it is best to postpone taking buy positions and wait for an update of the weekly low of 1.1688, where forming a false breakout will be a signal to open long positions. It is dangerous to buy from this level immediately on a rebound, since this will be the fifth consecutive test. Otherwise, I recommend buying EUR/USD only for a rebound from the new low of 1.1644, counting on a correction of 15-20 points within the day.

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

Sellers will continue to try to protect resistance at 1.1722, but there is no need to rush to sell from this level. It is best to wait until bulls make another unsuccessful attempt to go beyond 1.1722 and then to return to this range. This scenario will lead to producing a larger downward wave to the support area at 1.1688. An equally important task for continuing the bear market is a breakout of this range, settling in the area below it produces a new signal for selling the euro with the main goal of testing a new low around 1.1644, where I recommend taking profit. The pressure on the euro could significantly increase if ECB President Christine Lagarde speaks directly about easing monetary policy in today's speech. If the bulls turn out to be stronger in the first half of the day, then it is best to postpone sell positions until the high of 1.1756 has been updated, counting on a correction from it by 15-20 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 market uncertainty regarding its direction for the long term, but with a slight advantage for sellers of the euro.

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 around 1.1705 will increase pressure on the euro. The breakout of the upper border in the 1.1730 area will lead to another attempt to strengthen 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.
The material has been provided by InstaForex Company - www.instaforex.com

Technical Analysis of BTC/USD for October 19, 2020

Crypto Industry News:

Although the recent developments around BitMEX seemed to shake up the entire market, bitcoin itself remained indifferent. Despite the fact that the largest cryptocurrency felt enormous pressure to sell, it did not give up and was able to go up to $ 11,731. This is a price level that we haven't seen for a long time.

Interestingly, even as Square announced its investment in Bitcoin, the market absorbed the news and did not behave very volatile. Many investors have pointed out that bitcoin has developed a maturity that the largest institutions are not indifferent to.

According to Arcane Research, the Bakkt exchange witnessed another record month of trading between September and October. The increased interest on the part of institutions resulted mainly from the interest of companies such as Microstrategy and Square. As the stock exchange is dedicated to institutional investors in the US, the above volume increase suggested a growing demand for BTC among institutions.

Arcane Research highlights the importance of this growth. He notes that 400 BTC contracts expired on Bakkt in October. This was an increase of 14% from September. The number of open contracts for Bakkt has been gradually increasing since mid-September. Open Interest was about $ 18 million as of October 15, but a day later it was down $ 3 million.

Other platforms widely used by institutions were LMAX Digital and CME, which also saw an increase in volume in October. According to Skew, LMAX Digital came second in terms of 24-hour BTC spot volume, right after Coinbase.

Technical Market Outlook:

The BTC/USD pair has been consolidating in the narrow zone located between the levels of $11,439 - $11,250 for all the weekend. Bitcoin keeps trying to enter into the supply zone located between the levels of $11,646 - $11,785, so some kind of the bearish pressure might be seen. In that case, the price might pull-back towards the technical support seen at the level of $11,223 or $11,062. Any violation of the last one will likely result in a further correction towards the level of $10,940 or below.

Weekly Pivot Points:

WR3 - $12,229

WR2 - $11,973

WR1 - $11,678

Weekly Pivot - 11,375

WS1 - $11,077

WS2 - $10,755

WS3 - $10,461

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

Elliott wave analysis of GBP/JPY for October 19, 2020

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GBPJPY dipped to a low of 135.38 before starting to move higher again. We are looking for a solid break above minor resistance at 136.4. It will indicate that red wave ii has been completed and red wave iii is in motion for a break above the former peak at 147.72. The next obstacle is seen at 137.33 and 137.87

Support is now seen at 135.86 which we expect to protect the downside for the break above 136.41.

R3: 136.90

R2: 136.65

R1: 136.41

Pivot: 136.20

S1: 136.04

S2: 135.86

S3: 135.57

Trading recommendation:

We bought GBP at 135.45 and we have placed our stop at 135.35.

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Elliott wave analysis of EUR/JPY for October 19, 2020

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Short-term key-support at 123.00 has protected the downside and we are now looking for a break above minor resistance at 123.77 as a strong indication that wave ii has completed and wave iii to above the former peak at 127.02 is in motion.

Short.term support is now seen at 123.09 and this support should be able to protect the downside or a new test of key-support at 123.00 will be seen.

R3: 124.21

R2: 123.95

R1: 123.77

Pivot: 123.46

S1: 123.21

S2: 123.09

S3: 123.00

Trading recommendation:

We are long EUR from 123.48 with our stop placed at 123.00.

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AUD/USD. A dull start to the day: China's economic data release and Australian pessimism

At the start of trading, the Australian dollar paired with the US currency made an attempt to demonstrate a correction and even reached the borders of the 71st figure. But at the end of the Asian session on Monday, it lost all its positions. Contradictory macroeconomic reports from China put pressure on the Aussie, after which the AUD/USD pair slowed its corrective growth. By and large, the Australian currency is still under pressure from numerous negative factors, so any northern impulse should be used as a reason to open short positions. The bears have a "power reserve" at least up to the base of the 70th figure, where a powerful support level of 0.7000 is located. Judging by the investors' sentiments, sellers of AUD/USD will test this target in the near future.

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The published data on the growth of the Chinese economy today could well support the Aussie, since they are not openly negative. On the contrary, according to the official report, China's GDP growth rate from January to September (inclusive) was positive, amounting to 0.7%. For the first time this year, the indicator crawled to the territory above zero. Last year, it fluctuated in the range of 6.1%-6.4%. Meanwhile, traders were disappointed by the dynamics of the Chinese economic recovery in the third quarter – experts expected to see this component of the release at 3.2% QoQ and 5.5% YoY, while the result was significantly worse – 2.7% QoQ and 4.9% YoY. This suggests that in the period of July to September, the Chinese economy recovered at a slower pace relative to the overall forecast estimates.

The rest of the reports published today were released in the "green zone." For example, industrial production in China for the period of three quarters of this year increased at an annual rate of 1.2% (the forecast was at the level of 1.0%). The volume of retail trade (compared to the corresponding month a year earlier) increased by 3.3%, and from January to September inclusive decreased (on an annual basis) by 7.2%. Both indicators came out better than expected. The report emphasizes that in the first nine months of this year, the volume of sales of goods in online mode increased significantly-by 9.7%. Investment in fixed assets of commercial organizations in China has also increased – in the period of three quarters, this indicator increased at an annual rate of 0.8%.

In spite of the positive aspects of today's release, the Australian dollar was still under pressure – paired with the greenback, it retreated from the borders of the 71st figure, demonstrating its vulnerability.

Recall that last week, the Aussie became the main outsider among all B10 currencies. First, traders were disappointed by the Australian Labor Market data – the unemployment rate rose, while the indicator of growth in the number of employees fell into negative territory. Moreover, the full employment component showed a more significant decline relative to the part-time employment indicator.

However, the Aussie received the main blow of a fundamental nature from the head of the Reserve Bank of Australia, Philip Lowe, who announced a reduction in the interest rate to 0.1%. Previously, he ruled out such a scenario, maintaining an optimistic and wait-and-see attitude for many months. But in early October, there were rumors in the market that the RBA would still cut the interest rate, and possibly below zero. Members of the RBA in their speeches covertly allowed such a scenario (indicating that the option of reducing the rate is one of the options being discussed) for several weeks. But last Friday, Lowe put an end to the doubts of the market, stating the regulator's intentions to reduce the rate by 15 basis points, that is, to 0.1%. Following this statement, markets are pricing in an easing of the RBA's policy at the November meeting, which will be held in two weeks.

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Furthermore, political factors also exert background pressure on the Aussie. As it is known, relations between Canberra and Beijing are highly unsatisfactory – since the spring of last year, the two countries have been in constant conflict after the Australians called for an investigation into the origin of the coronavirus. Last week, this conflict was continued: it became known that Chinese power plants and steel mills received verbal instructions to stop using Australian coal. According to unofficial information, ports were also instructed not to unload Australian coal. The terms of the import ban are not specified, although according to unofficial information, this situation will last at least until the end of this year. The Australian authorities have already sent a letter to Beijing demanding compliance with the terms of the China-Australia free trade agreement and their obligations to the World Trade Organization. However, such appeals are usually ignored by representatives of the People's Republic of China. The situation in this regard has not changed for the better, at least to date.

Thus, the Australian dollar remains under pressure from the negative fundamental background. The last RBA meeting's minutes will be published tomorrow, but it is quite uncertain that it can change the overall situation for the AUD/USD pair – except if the October meeting discussed the option of lowering the rate to the negative area, which is unlikely.

In general, short positions remain a priority for the pair – for any more or less large-scale corrective jumps, you can consider a short with the main goal at 0.7000.

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Forecast for EUR/USD on October 19, 2020

EUR/USD

The euro slightly increased last Friday due to data on the increase in the incidence of coronavirus in the world and strong growth in US retail sales. The report showed an increase of 1.9% in September against 0.6% in August. At the same time, US industrial production contracted by 0.6% in September after growing by 0.4% in August. But the euro is still under pressure. The price is falling below the balance indicator line on the daily chart, while the Marlin oscillator is in the negative zone - downward trend area. The targets remain the same: 1.1650, 1.1550.

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The four-hour chart shows that the euro's corrective growth did not reach the MACD line, while the Marlin oscillator also failed to move into a positive growth zone, the downward trend continues.

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Forecast for GBP/USD on October 19, 2020

GBP/USD

The pound sterling met two strong negative factors at once last Friday: the announcement of the 3rd level quarantine in Lancashire (with the closure of pubs) and Prime Minister Boris Johnson's statement about Great Britain's preparation regarding its relations with the EU along the lines of the EU-Australia, which is practically Brexit without a deal, without access to the EU internal market. The intraday fluctuations of the pound reached 100 points and it seems like it simply did not have time to show a noticeable drop before the stock exchanges closed.

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Today opened with a falling gap, it closed and at the moment the price has stopped before the balance indicator line. Marlin showed slight growth in the positive zone. In general, the situation is neutral, the market is waiting for a push from the outside.

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The price develops below the balance line (red indicator) and the MACD line (blue indicator) on the four-hour chart, while the Marlin oscillator is in the negative zone. When the price falls below Friday's low of 1.2861, this will be a signal to move to the first target at 1.2674. This is the main scenario. It is possible for the correction to continue up to the MACD line at 1.3020.

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Forecast for AUD/USD on October 19, 2020

AUD/USD

The Australian dollar was 12 points lower on Friday, but it looked like a consolidation after a significant drop on Thursday. If this consolidation is completed, then today we are waiting for the price to move under Thursday's low of 0.7058 and for it to decline further to the nearest target of 0.6960 or slightly lower, to support the embedded blue price channel line.

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The aussie's consolidation looks more like a correction on the four-hour chart. We have not yet observed any changes in indicators in order for the price to possibly increase. Nevertheless, false movements in the market are an "eternal technical aspect", therefore, it is also possible that the correction would reach the MACD line to the 0.7155 area. Here, the false movement will be the exit of the signal line of the Marlin oscillator into the growth zone. We are waiting for the development of the main declining scenario.

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Forecast for USD/JPY on October 19, 2020

USD/JPY

The USD/JPY pair slightly dropped as US stock indices closed mixed on Friday, but the pair remained close to the balance indicator line and had a clear intention to attack it on Monday. Japanese and Chinese economic data came out in the morning. China's GDP increased by 4.9% y/y in the third quarter against the expected 5.5% y/y, the quarterly growth was 2.7% against the forecast of 3.2% and 11.5% in the second quarter... Industrial production rose by 6.9% in August against expectations of 5.8%, retail sales added 3.3% (forecast 1.7%), and unemployment dropped to 5.4% from 5.6%. The Japanese trade balance weighed on investors - the September balance reached 0.48 trillion. yen against the forecast of 0.85 trillion. Asian stock indices did not dare to grow on such data, now it is up to European and US indices.

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The problem in Europe comes from Brexit. The negotiator from the EU, Michel Barnier, needs to obtain an EU mandate for the final negotiations to a conclusion in the treaty. The only thing to do is to wait, in two weeks the situation will be completely resolved.

The currency pair's situation is decreasing on the daily chart, the target is 104.94.

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The situation is neutral on the four-hour chart - Marlin is in the growth zone, and the price is below the indicator lines. The growth in the price before it enters the MACD line on the daily chart (105.78) seems to be drifting. The price falling below the signal level of 105.20 opens the target at 104.94. And formally it is also a decline within the framework of being able to roam freely. The uncertainty from the previous week continues.

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Hot forecast and trading signals for GBP/USD on October 19. COT report. Professional traders leave the market, refuses to

GBP/USD 1H

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The GBP/USD currency pair traded in different directions on Friday, October 16 and failed to overcome either the support area of 1.2857-1.2873, nor the Senkou Span B line. Thus, the pound/dollar pair may continue high-volatility movements that are quite complex, which is extremely difficult to work out even for experienced traders. Formally, the downward trend remains, since there is a downward trend line, however, the movements are quite strong, accompanied by deep corrections. In simpler terms, we can call this a "storm". Therefore, the buyers have no initiative now, and the bears need to try to overcome the area of 1.2857-1.2873 in order to expect further downward movement.

GBP/USD 15M

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The lower linear regression channel turned upward on the 15-minute timeframe, which reflects an unsuccessful attempt to overcome the 1.2857-1.2873 area on the hourly timeframe. Thus, the bulls may attempt to take the pair to the psychological level of 1.3000.

COT report

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The latest Commitments of Traders (COT) report on the pound showed that from October 6-12, non-commercial traders continued to mostly close contracts for the British currency, rather than open new ones. The pound sterling increased by around 60 points during this period, which is very small, despite the rather volatile trading within each individual day. During this time, the "non-commercial" group of traders opened 149 Buy-contracts (longs) and closed 6,144 Sell-contracts (shorts). Thus, the net position of professional traders has grown again, by 6,000 contracts. However, as with price changes, these changes in the mindset of professional traders are purely formal. Moreover, the net position of non-commercial traders is growing for the third consecutive week, which casts doubt on the pound's succeeding decline, which is much more expected than growth. Even more interesting is the fact that the total number of contracts for the "non-commercial" group has been decreasing in recent months. That is, large traders do not believe in the pound and do not want to deal with it, whether it is about buying or selling it. The same case with the "commercial" group, which also mainly closes any contracts for the pound. In such circumstances, we would not make a long-term forecast based on the COT report.

No macroeconomic reports released in the UK last Friday. However, traders don't really need it now. Market participants are completely absorbed in the topic of negotiations between Brussels and London, which fail over and over again. In such conditions, it is quite difficult to buy the pound, especially in the long term, since the British economy is almost expecting a new recession in 2021, and companies, firms and capitals continue to leave Great Britain. If relations between the eurozone and the UK become even more tense due to the "Johnson Bill" and the absence of a trade deal, then no one has a reason to envy the pound at all. So far, this currency continues to stay afloat due to the very unstable situation in the United States and the complete uncertainty of the future of this country and its economy. Traders are just as wary of investing in the dollar as they are in the pound. At the same time, there is even an element of panic in the market, since the pound is quietly moving two hundred points in different directions within a short period of time. There are no UK macroeconomic reports scheduled for Monday, but traders are encouraged to continue to monitor any news regarding the epidemic in that country, negotiations with the European Union, and any speeches by Prime Minister Boris Johnson.

We have two trading ideas for October 19:

1) Buyers for the pound/dollar pair have released the initiative from their hands. Thus, long positions are not relevant right now, however, in case the new trend line has been broken, you can consider longs while aiming for 1.3105 and 1.3177. Take Profit in this case will be from 100 to 150 points. However, we draw your attention to very frequent changes in the direction of movement and high volatility, so we recommend trading in small lots.

2) Sellers keep the initiative, but at the same time they cannot overcome the 1.2857-1.2873 area. If they manage to settle below this area, then we can recommend new sell positions on the pair while aiming for the support level at 1.2773. Take Profit in this case can be up to 70 points.

Explanations for illustrations:

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

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

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

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

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Hot forecast and trading signals for EUR/USD on October 19. COT report. Frustrating European data. EU gripped by second wave

EUR/USD 1H

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The euro-dollar pair was unable to overcome the support area of 1.1692-1.1699 on the hourly timeframe on October 16, instead the pair rebounded off it and traded higher for most of the day, reaching the upper line of the descending channel. The downward movement resumed since it failed to go beyond its limits. Thus, buyers have shown that they are rather weak. On the other hand, take note that the pair continues to almost trade in a horizontal channel with vague borders, which is clearly visible on higher timeframes. Therefore, the bulls and bears simply alternate their trends on the hourly timeframe. It is possible that sellers may not be able to overcome the support area of 1.1692-1.1699, from which the price has repeatedly rebounded off.

EUR/USD 15M

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The lower linear regression channel turned to the upside on the 15-minute timeframe, indicating that a correction is about to start and an unsuccessful attempt to overcome the 1.1692-1.1699 area. The future prospects of the pair will depend on this particular area.

COT report

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The EUR/USD pair has grown by around 30 points during the last reporting week (October 6-12). This is very small and, as a whole, there are still no significant price changes for the pair. Trades are held in a horizontal range of 250-300 points. Therefore, data from any COT report can only be used for long-term forecasting. Nonetheless, pro traders continue to become more and more bearish. We remind you that the most important group of traders is called "non-commercial". This group closed 2,500 Buy-contracts (longs) and opened 5,300 Sell-contracts (shorts) during the reporting week. Thus, the net position for this group immediately fell by 7,800. At the same time, the "commercial" group, which almost always trades in the opposite direction, has become more bullish. This group of traders increased their net position by 10,000 contracts at once. The first indicator continues to signal the convergence of the lines of net positions of these two groups of traders. We remind you that when the green and red lines diverge strongly, this is a signal of an impending reversal of the trend globally. Now these lines have begun to narrow, so we can assume that the high around the 1.20 level will remain the peak of the entire uptrend.

The macroeconomic background for the pair remained unchanged on Friday, October 16, since we did not receive any important news for the euro or the dollar. Several rather important reports were published during the day, which were, as always, ignored by market participants. Nevertheless, inflation in the European Union remained at an unprecedented level of -0.3% y/y. That is, in fact, deflation that has been going on. So far, traders do not react to this indicator in any way. Possibly because deflation is driven in part by the euro's sharp rise over the past six months. Or perhaps because market participants still fear the uncertainty associated with the US presidential elections, which are only two weeks away. However, we are now still inclined to believe that the euro will begin to slightly fall. First of all, the Commitment of Traders (COT) report supports this. Secondly, a full-scale second wave of coronavirus has begun in Europe. There are anti-morbidity records in many European countries. This affects the pace of economic recovery after the first wave, respectively, the euro's appeal is also decreasing in international markets. Also a fairly strong report on retail sales was released in the United States on Friday, which showed an increase of as much as 1.9% m/m. Unfortunately, industrial production was disappointing, which turned out to be negative, while traders were expecting a 0.6% gain.

We have two trading ideas for October 19:

1) The pair continues to trade within a new descending channel, so buyers are not dominant in the forex market now. You can consider long positions if the quotes return to the area above the critical line (1.1752) and the Senkou Span B line (1.1758), while aiming for the resistance level of 1.1868. Take Profit in this case will be up to 100 points. We do not expect this scenario to come true in the near future.

2) Bears continue to hold the initiative, but cannot overcome the 1.1692-1.1699 support area for now. Thus, sellers can now open short positions with targets at the 1.1664 and 1.1620 support levels if this area is overcome. The potential Take Profit in this case is from 20 to 60 points. Not much, but the current volatility remains low.

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 EUR/USD pair. October 19. Europe is covered by the "coronavirus". The US continues to prepare for the elections.

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - downward.

CCI: -72.8936

For the EUR/USD pair, the last trading day of the past week was again very quiet. Three of the last five business days ended with a volatility of 52 points or less. This is not much even for the euro/dollar pair, which has never been highly volatile. Thus, we can say that traders are not very willing to trade now. And first of all, this applies to major professional traders, because they set the tone for trading. This may be due to the upcoming US elections or it may be due to the generally unfavorable situation in both the US and the EU. One way or another, the pair continues to trade rather sluggishly, inactive and is still in a side-channel about 300 points wide. That is, if in the most short-term prospects (for example, on the hourly chart) you can still find a trend and work it out, then from the perspective of the 4-hour chart and above, the trend has been absent for several months. Market participants still do not want to risk making large or long-term purchases of the US currency, because no one knows who will win the US election. This will affect the economy, politics, and foreign economic policy of the country with the largest economy in the world, which in one way or another affects all other countries of the world and their economies. As for the euro, traders continue to be afraid to buy it due to the fact that since April, it has already risen by 1300 points (not counting the pullback) and continues to trade near two-year highs. Moreover, a full-scale second "wave" of COVID-2019 has now begun in the European Union. And this is a problem for the European Union and its economy, which has just begun to recover from the crisis of the first "wave" of the pandemic.

In general, now it is difficult to give the advantage of one of the currencies of the EUR/USD pair. And the key topic for the pair is still the topic of the presidential election, although it does not have any immediate impact on quotes and the mood of traders. The election is about 2 weeks away, and the situation with the ratings of Joe Biden and Donald Trump does not change. All opinion polls suggest that Biden is leading by at least an 11% margin. All forecasts say that Biden will win with a probability of at least 80%. That's a lot. And even on issues such as the economy, most Americans no longer trust Trump, although, throughout his presidential term, the economy was considered his strongest trump card. However, times are changing, and the attitude of Americans towards the President is also changing when America experienced one of the most severe economic collapses in its history. We will not once again list the "merits" of Trump since we have already said this many times. By and large, it doesn't make much difference to the US dollar who becomes the next President. After all, there are no "convenient" or "inconvenient" presidents for the currency. The question is about a number of different factors that affect exchange rate formation. And all these threads in the US lead to the President and the Fed since the Fed in America is not subject to the White House. And how many factors are outside the United States? For example, paired with the euro currency to the European Union. Thus, it is impossible to say that if Joe Biden wins the presidential race, the US dollar will immediately perk up and begin to actively rise in price. Maybe this will be the reaction of the markets in the first week or two, but no more. Joe Biden, as well as Trump, by the way, may be an adherent of the "cheap" dollar. And given the huge US government debt and the trade war with China, Washington will benefit from the cheapest possible dollar. However, at the very beginning of his presidential term, Trump set out to devalue the US currency. And it didn't work out. Thus, the election is just one of the factors that will affect the US dollar exchange rate in the next 4 years.

Meanwhile, protests against Donald Trump have begun in America. American media reports that at least 100,000 people in all states of the country on Saturday, October 17, took part in movements against the current US President. It is also noted that most of the protesters are women. Demonstrators carried placards criticizing Trump and his Deputy, Mike Pence. Also, criticism related to Trump's desire to appoint Amy Connie Barrett instead of the deceased Ruth Ginsburg (US Supreme Justice).

As for the macroeconomic news, they simply do not exist now. And all macroeconomic statistics will continue to be strenuously ignored by traders. Republicans and Democrats have failed to agree on a new stimulus package for the US economy, which is why unemployed Americans and businesses are suffering. However, it seems that both sides are not very eager to agree on a new package of stimulus measures. As we have stated many times, everything in America is now viewed through the lens of elections. Thus, both sides want such a large-scale bill as a multi-trillion dollar package of assistance to the economy to improve the position of their candidate in the elections and do not allow a competitor to gain a few additional percent of support. For example, Donald Trump wants every unemployed American to receive a "coronavirus surcharge" of $ 1,200 in a check with their signature. Such a populist step is a desire to improve their positions before the elections. House Speaker Nancy Pelosi, who is one of the most ardent opponents of Trump, even gave the White House a 48-hour deadline after which the parties must agree on the issue of supporting the economy. Otherwise, the negotiations will be completed. Recall that the Democrats are pushing for $ 2.2 trillion in aid to unemployed Americans and businesses. Republicans do not agree to such an impressive package and offer no more than 1.8 trillion, although their initial offer was much lower.

From a technical point of view, the euro/dollar pair continues to be located below the moving average line, however, the downward trend is so weak and uncertain that the pair may at any time consolidate above the moving average. It is also worth noting that last week traders again failed to go below the level of 1.1700, which for a long time was the lower limit of a clear side channel.

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The volatility of the euro/dollar currency pair as of October 19 is 60 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1659 and 1.1779. A reversal of the Heiken Ashi indicator down may signal the resumption of a downward movement.

Nearest support levels:

S1 – 1.1658

S2 – 1.1597

Nearest resistance levels:

R1 – 1.1719

R2 – 1.1780

R3 – 1.1841

Trading recommendations:

The EUR/USD pair has started a round of corrective movement. Thus, today it is recommended to open new sell orders with a target of 1.1658 as soon as the Heiken Ashi indicator turns down or the price bounces off the moving average. It is recommended to consider buy orders if the pair returns to the area above the moving average line with targets of 1.1780 and 1.1841.

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

Overview of the EUR/USD pair. October 19. Europe is covered by the "coronavirus". The US continues to prepare for the elections.

4-hour timeframe

Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - downward.

CCI: -76.3766

The British pound sterling was trading more or less calmly against the US currency on Friday. It seems that traders also need a break from time to time. The last two weeks for the pound/dollar pair have been frankly stormy. The pair were thrown from side to side and passed 150-200 points in different directions. This is not to say that such movements were unfounded or illogical, although perhaps unexpected for many. The problem is that the fundamental background for the pair remains extremely strong and important. We have already discussed the American situation many times. The presidential election, especially the 2020 presidential election, will be one of the most important in the country's history, so many traders try not to take unnecessary risks when working with the US currency. If paired with the euro currency, such caution looks like a flat or a very similar movement on the chart, then paired with the pound, which has its no less strong fundamental background, it looks like utter chaos. For the UK and the British pound, the fate for the coming years continues to be decided. A lot has already been said about Brexit, however, the problem itself does not go away. Last week, the next EU summit was to be held, where issues related to the trade deal between Brussels and London were to be resolved. However, a few days before the start of the summit, several high-ranking officials from the European Union said that at the end of the summit, insufficient progress in the negotiations will be announced and no important decisions will be made. Adding fuel to the fire was British Prime Minister Boris Johnson, who once again accused the European Union of unwillingness to provide Britain with a "Canadian" version of the trade agreement. Johnson said that the European Union, despite Brexit, wants to bind the UK to itself as much as possible, which Britain itself wants to avoid since it wants to be as independent as possible. According to Johnson, the European Union should have met Britain, which has been in the bloc for 45 years. Thus, even before the summit began, it became clear that there was no news to be expected from there. Already during the summit, it became known about the possible infection with the "coronavirus" of the head of the European Commission, Ursula von der Leyen, who left it in the midst of it. And, accordingly, the official statement that followed the summit and spoke about the lack of progress was not a surprise to anyone.

The European Council called on all market participants to prepare for a "divorce" without an agreement. Of course, there were calls from London for prudence. According to the Europeans, London must make certain concessions if it wants to get a deal. European Council President Charles Michel said: "Michel Barnier continues to negotiate, and we are ready to continue doing this. We want an agreement, but not at any cost. Equal competition, fisheries, and governance are extremely important issues for the European Union, for all its 27 member states." Michel also expressed bewilderment at the criticism of Boris Johnson. According to him, London initially knew about the requirements of the European Union, thus, it is not clear what London's claims are now. Thus, the negotiations will continue as expected. It seems to be as futile as before. Boris Johnson also said that the EU "refuses to engage in serious negotiations" and that he is waiting "for European leaders to change their approach to negotiations in a fundamental way". Foreign Minister Dominic Raab, in turn, said that the European Union should not force the UK to compromise alone. In his opinion, "the parties are close to an agreement, it remains only to agree on issues of fishing and competition".

However, although negotiations continue, even many top EU officials do not believe in the success of the deal. The EU refuses to change its position. This was stated by Michel Barnier: "If the UK wants to access the 450 million consumers in the European Union and the single market with 22 million companies, it must ensure fair and transparent competition." German Chancellor Angela Merkel believes that "both sides must make compromises to finally reach a deal". However, all these are words that we have been hearing for several months, and there is no real process in the negotiations. Thus, as before, we tend to assume that there will be no deal. And this threatens the British economy with serious problems in 2021. Of course, the volume of trade between the EU and the Kingdom will decrease and become less profitable for both sides. But especially for the UK, where more than 50% of exports go to the EU countries. Thus, the absence of a deal threatens Britain with the loss of a few more percent of GDP. The Kingdom will lose up to 10% of GDP by the end of 2020, and no one knows what will be the losses from the second "wave" of COVID-2019. It is worth noting that the incidence rates in the Foggy Albion remain high. Thus, it is not necessary to talk about the retreat of the epidemic yet. In general, the failure of the parties to agree will cost the British economy very dearly.

And of course, in such conditions, it is very difficult to wait for the strengthening of the British currency. If the flight of companies and firms from the Foggy Albion began in 2019. UK businesses have already asked the government to sign an agreement several times. And he does it for a reason. If the "hard" scenario could be prepared without particularly heavy losses, as Boris Johnson calls for, then this would be done. Therefore, the decline in investment in the British economy and capital outflows will continue in the coming years. This threatens a serious drop in demand for the British currency in the foreign exchange market and, in general, a drop in the attractiveness of the British pound, which a few years ago was considered one of the strongest and most stable currencies. However, times are changing. Only time will tell whether the British were right when they voted "yes" to leave the EU. As for forecasts for the further movement of the pound, we would not make it even one day ahead. It is likely that the "storm" will continue, and even based on a purely technical picture, it is extremely difficult to make assumptions now.

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The average volatility of the GBP/USD pair is currently 134 points per day. For the pound/dollar pair, this value is "high". On Monday, October 19, therefore, we expect movement inside the channel, limited by the levels of 1.2780 and 1.3048. A reversal of the Heiken Ashi indicator downwards signals a new round of downward 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 started a new strong downward movement on the 4-hour timeframe, however, it is difficult to say how long it will last. Thus, today it is recommended to trade lower with the targets of 1.2878, 1.2848, and 1.2817 when the Heiken Ashi indicator turns down again. It is recommended to trade the pair for an increase with targets of 1.3000 and 1.3031 if the price returns to the area above the moving average line.

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