Hot forecast and trading recommendations for GBP/USD on 11/02/2020

After Germany and France reintroduced quarantines due to a sharp increase in the number of new cases of coronavirus infection, it was only a matter of time that other European countries would follow their example. This is exactly what happened in the UK. Prime Minister Boris Johnson announced a full-scale quarantine over the weekend. Similar to Germany, only stores selling essential goods, pharmacies, medical and educational institutions remain open. The quarantine comes into effect on November 5. There was no serious market reaction, since this step was quite expected. To be honest, it was expected earlier, but Boris Johnson had to overcome serious resistance, firstly, from his own Conservative Party. But after the total number of cases exceeded the one million mark, all questions regarding the need for this step were removed. Nevertheless, although we do not observe any panic sell-off of the pound due to the predictability of such a measure, there is clearly no need to talk about its growth potential in the near future.

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Rather, we should talk about how the pound will weaken further. Although not strong. The formal reason will even be the introduction of quarantine, and the final data on the index of business activity in the manufacturing sector, which should confirm the fact of its decline from 54.1 to 53.3. So there are no reasons for the pound to rise.

Manufacturing PMI (UK):

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The same index of business activity in the manufacturing sector, but in the United States, will also contribute to the gradual strengthening of the dollar. The final data may confirm the preliminary estimate, according to which the manufacturing index rose from 53.2 to 53.3.

Manufacturing PMI (United States):

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The GBPUSD pair is under selling pressure, where the area where trading forces interact at 1.2885 serves as a variable support level. The sequential downward move from the local high of 1.3175 indicates a recovery process relative to the movement 1.2674 ---> 1.3175, which may lead to the resumption of the downward tick set in September.

If we proceed from the quote's current location, we can see that the sellers prevailed during the Asian session, who returned the quote to the area of the deviation of the level of 1.2885.

As for volatility, a slowdown took place last Friday with a local manifestation of speculative interest.

Considering the trading chart in general terms, the daily period, you can see a reversal pattern from an upward to a downward trend, where the breakdown of the 1.2885 area will become the starting point for updating local lows.

We can assume that if the price settles lower than 1.2880 in a four-hour period, there will be an increase in the volume of short positions and, as a result, a sequential move in the direction of values 1.2770 - 1.2674.

An alternative scenario would consider a local deceleration in prices within the 1.2885 area where trading forces interact in the form of a slight pullback or a range fluctuation.

From the point of view of a complex indicator analysis, we see that the indicators of technical instruments on the minute and hour periods signal a sell due to price fluctuations within the 1.2885 level.

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Fractal analysis for major currency pairs on November 2

Outlook on November 2:

Analytical overview of major pairs on the H1 TF:

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The key levels for the euro/dollar pair are.1715, 1.1676, 1.1654, 1633, 1.1594 and 1.1558. The development of the downward trend cycle from October 21 is being followed here. The pair is expected to continue to decline after breaking through the level of 1.1633. In this case, the target is 1.1594. On the other hand, we consider the level 1.1558 as a potential value for the bottom. Upon reaching which, an upward pullback is expected.

Meanwhile, a short-term growth is expected in the range of 1.1654 - 1.1676. If the last value breaks down, it will lead to a deep correction. Here, the potential target is 1.1715, which is the key support for the downward structure.

The main trend is the downward cycle from October 21

Trading recommendations:

Buy: 1.1655 Take profit: 1.1674

Buy: 1.1677 Take profit: 1.1715

Sell: 1.1631 Take profit: 1.1595

Sell: 1.1593 Take profit: 1.1560

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The key levels for the pound/dollar pair are 1.3005, 1.2955, 1.2923, 1.2875, 1.2850, 1.2794 and 1.2751. Here, we are following the development of the downward pattern from October 21. A short-term decline is expected in the range of 1.2875 - 1.2850. If the last value breaks down, it should be accompanied by a strong decline. The goal here will be 1.2794. For the potential value for the bottom, we consider the level 1.2751. Upon reaching which, an upward pullback can be expected.

A short-term growth is possible in the range of 1.2923 - 1.2955. If the last value breaks down, it will lead to a deep correction. Here, the potential target is 1.3005, which is the key support for the downward structure.

The main trend is the downward cycle from October 21

Trading recommendations:

Buy: 1.2923 Take profit: 1.2953

Buy: 1.2956 Take profit: 1.3005

Sell: 1.2875 Take profit: 1.2850

Sell: 1.2848 Take profit: 1.2796

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The key levels for the dollar/franc pair are 0.9217, 0.9200, 0.9182, 0.9149, 0.9132 and 0.9110. The development of the upward pattern from October 23 is being followed. Here, the growth of the pair is expected after breaking through the level of 0.9182. In this case, the goal is 0.9200. Price consolidation is near this level. If the goal breaks down, it will encourage movement to a potential target of 0.9217. Upon reaching which, a downward pullback can be expected.

A short-term decline, in turn, is possible in the range of 0.9149 - 0.9132. In case that the last value breaks down, it will lead to a deep correction. Here, the target is 0.9110, which is the key support for the top.

The main trend is the upward cycle of October 23

Trading recommendations:

Buy : 0.9182 Take profit: 0.9200

Buy : 0.9202 Take profit: 0.9215

Sell: 0.9149 Take profit: 0.9134

Sell: 0.9130 Take profit: 0.9112

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The key levels for the dollar/yen are 105.73, 105.47, 105.28, 105.01, 104.82, 104.49, 104.31, 104.04 and 103.84. Here, we are following the upward pattern of October 29. Now, a short-term growth is expected in the range of 104.82 - 105.01, breaking through the last value will lead to a strong movement. The goal here is 105.28. On the other hand, there is a short-term growth and consolidation in the range of 105.28 - 105.47. For the potential value for the top, we consider the level 105.73. Upon reaching which, a downward pullback can be expected.

A short-term decline is possible in the range of 104.49 - 104.31. In case that the last value breaks down, it will encourage the development of a downward trend. In this case, the first goal is 104.04. For the potential value for the bottom, we consider the level 103.84. Upon reaching which, price consolidation is expected.

The main trend is the potential upward cycle from October 29

Trading recommendations:

Buy: 104.82 Take profit: 105.00

Buy : 105.02 Take profit: 105.28

Sell: 104.49 Take profit: 104.32

Sell: 104.29 Take profit: 104.05

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The key levels for the USD/CAD pair are 1.3451, 1.3413, 1.3378, 1.3275, 1.3251 and 1.3216. The development of the upward cycle of October 21 is being monitored here. The growth of the pair is expected to continue after the level of 1.3378 breaks down. In this case, the goal is 1.3413. There is consolidation near this level. As a potential value for the upward trend, we consider the level 1.3451. Upon reaching which, a downward pullback can be expected.

A short-term decline is possible in the range of 1.3275 - 1.3251. Now, breaking through the last value will lead to a deep correction. Here, the target is 1.3216, which is a key support for the top.

The main trend is the upward cycle of October 21

Trading recommendations:

Buy: 1.3378 Take profit: 1.3413

Buy : 1.3415 Take profit: 1.3450

Sell: 1.3275 Take profit: 1.3251

Sell: 1.3249 Take profit: 1.3216

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The key levels for the AUD/USD pair are 0.7161, 0.7115, 0.7086, 0.7062, 0.7013, 0.6995, 0.6950, 0.6919 and 0.6875. Here, we are watching the formation of potential for the downward cycle of October 28. The price is expected to continue to decline after the price passes the noise range 0.7012 - 0.6995. In this case, the goal is 0.6950. Meanwhile, price consolidation is in the range of 0.6950 - 0.6919. For the potential value for the bottom, we consider the level of 0.6875. Upon reaching which, an upward pullback can be expected.

A short-term growth, in turn, is expected in the range of 0.7062 - 0.7086. If the last value breaks down, it will lead to a deep correction. In this case, the potential target is 0.7115, which is the key support for the bottom.

The main trend is the formation of the descending structure from October 28

Trading recommendations:

Buy: 0.7062 Take profit: 0.7084

Buy: 0.7087 Take profit: 0.7115

Sell : 0.6993 Take profit : 0.6950

Sell: 0.6948 Take profit: 0.6920

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The key levels for the euro/yen pair are 123.61, 123.03, 122.69, 122.30. 121.57, 121.16 and 120.77. The development of the downward trend cycle from October 20 is being followed here. Now, the downward movement is expected to continue after breaking through the level of 121.57. In this case, the target is 121.16. For the potential value for the bottom, we consider the level of 120.77. Upon reaching which, consolidation and upward pullback can be expected.

On the other hand, a short-term growth is possible in the range of 122.30 - 122.69. In case that the last value breaks down, it will lead to a deep correction. Here, the target is 123.03, which is a key support for a downward cycle. The price passing through this level will cancel the formation of strong initial conditions for an upward cycle. In this case, the potential target is 123.61.

The main trend is the downward cycle from October 20

Trading recommendations:

Buy: 122.30 Take profit: 122.67

Buy: 122.70 Take profit: 123.01

Sell: 121.55 Take profit: 121.18

Sell: 121.14 Take profit: 120.80

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The key levels for the pound/yen pair are 137.19, 136.83, 136.32, 135.87, 135.05, 134.72, 134.29, 133.86 and 133.43. We are following the formation of an upward cycle from October 30. Here, the pair is expected to continue rising after breaking through the level of 135.87. In this case, the target is 136.32. There is consolidation near this level. If the target level breaks down, it will lead to a strong movement. The next goal is 136.83. As a potential value for the top, we consider the level of 137.19. Upon reaching which, we expect consolidation and downward pullback.

A short-term decline is possible in the range of 135.05 - 134.72. We expect a key reversal to the top from here. If the last value breaks down, it will lead to the development of a downward structure. In this case, the goal is 134.29.

The main trend is the descending structure from October 21, building up potential for the top from October 30

Trading recommendations:

Buy: 135.87 Take profit: 136.30

Buy: 136.33 Take profit: 136.82

Sell: 135.05 Take profit: 134.73

Sell: 134.71 Take profit: 134.30

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Technical Analysis of GBP/USD for November 2, 2020

Technical Market Outlook:

The GBP/USD pair keeps going lower in a descending channel. The last low was made at the level of 1.2893, which is at the short-term trend line support. Any violation of this level will indicate more bearish pressure that can push the prices to the level of 1.2868, 1.2848 or even 1.2816. The weak and negative momentum supports the short-term bearish outlook despite the oversold market conditions. Only a sustained breakout above the level of 1.2982 would change the intraday outlook to bullish.

Weekly Pivot Points:

WR3 - 1.3236

WR2 - 1.3153

WR1 - 1.3037

Weekly Pivot - 1.2956

WS1 - 1.2835

WS2 - 1.2757

WS3 - 1.2653

Trading Recommendations:

The GBP/USD pair is in the down trend on the monthly time frame, but the recent bounce from the low at 1.1411 made in the middle of March 2020 looks very strong and might be a reversal swing. In order to confirm the trend change, the bulls have to break through the technical resistance seen at the level of 1.3518. All the local corrections should be used to enter a buy orders as long as the level of 1.2674 is not broken.

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Technical Analysis of EUR/USD for November 2, 2020

Technical Market Outlook:

The EUR/USD pair keeps making lower lows and keeps trading in a descending channel. The last low was made at the level of 1.1629, but the target for bears is seen at the level of 1.1612. The momentum is weak and negative and the market conditions at the H4 time frame chart are extremely oversold, so please keep an eye on a temporary rebound. The nearest technical resistance is seen at the level of 1.1655 and 1.1695. Bears are in full control of the market and the weekly outlook is bearish.

Weekly Pivot Points:

WR3 - 1.1974

WR2 - 1.1916

WR1 - 1.1756

Weekly Pivot - 1.1698

WS1 - 1.1531

WS2 - 1.1471

WS3 - 1.1314

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. The recent correction towards the level of 1.1612 seems to be completed and now market is ready for another wave up. This means any local 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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Trading plan for the EUR/USD pair on November 2. Persistent rise of COVID-19; Strong resistances in the euro.

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A world record of 573 thousand new COVID-19 cases was observed two days ago, but thankfully it fell to 475 thousand the very next day. At the moment, it has decreased to 436 thousand, however, it is still way higher than the peak record during the earlier pandemic wave. The highest incidence at this time is still from the United States, at 101 thousand cases per day.

As for Europe, everything remains bad. Thus, new quarantine restrictions have been introduced in Belgium, Czech Republic and Austria. If the situation does not improve, Italy will undergo a lockdown as well, the same as what Britain has implemented already. For Germany, small businesses have been closed to minimize contact and the spread of the virus.

With regards to the vaccine, one is expected to be available at the end of November, however, its effect will only be noticeable no earlier than a month after the start of vaccination.

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The technical picture of the EUR / USD pair today, November 2: There is a continuation of the downward trend, however, there are very strong resistances ahead - 100-day average and three-month low of 1.1612. As a result, a strong rebound upwards is possible.

Open short positions from 1.1690.

Open long positions from 1.1710.

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Technical Analysis of ETH/USD for November 2, 2020

Crypto Industry Outlook:

Orbit, a new commercialized renewable energy company, has announced that it will use the Ethereum blockchain to enable ordinary people to engage in buying and selling solar energy. According to reports, special ORBT tokens will be distributed and used to make these transactions. Given the fact that they will take place using the Ethereum blockchain, they will also be completely anonymous.

In a statement on their website, we read:

"We have decided to use an ICO instead of an IPO to respect the anonymity of our investors and also allow access to a wider group of people. This way our investors can earn from our success and support us at the same time as we do not have to give up any shares in our company".

The Orbit network focuses on commercialize renewable energy, including generators and solar cells for commercial and residential use. The idea is that the value of the ORBT token will be supported by people buying and selling products and services offered by Orbit. This provides a "safety net" for investors in the Orbit marketplace, even if the value of tokens is set to decline in the future.

Currently, $ 1 million ETH has been invested in Orbit tokens. Pre-order tokens not sold will reportedly be burned to prevent blur when $ ORBT is listed on Uniswap, Coingecko, Kyber, etc.

Technical Market Outlook:

The ETH/USD pair has bounced from the level of $375.52 and made a high at the level of $403.72, which is just at the short-term trend line resistance. The bears are trying to reverse the up move, but so far the pull-back was shallow. The next target for bears is seen at the level of $394.85, which is a technical support for the price. The rest of the support is seen at the levels of $389.90 and $#79.93.

Weekly Pivot Points:

WR3 - $456.03

WR2 - $431.91

WR1 - $415.05

Weekly Pivot - $393.33

WS1 - $376.79

WS2 - $355.02

WS3 - $337.80

Trading Recommendations:

The up trend on the Ethereum continues and the next long term target for ETH/USD is seen at the level of $500, so any correction or local pull-back should be used to open the buy orders. This scenario is valid as long as the level of $309.61 is broken.

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US election will influence the dollar's direction. Overview of USD, EUR, GBP

The consolidated short position on the dollar declined again – by 887 million to -27.066 billion this time. The preponderance of short positions is still significant, but the trend is clear.

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If we look at the detailed report, it does not give grounds for categorical statements about the dollar's strong growth. The dynamics are in its favor, but it was reached due to the total positions for the euro and the pound. The dollar, in turn, does not have any advantage for the rest of the range of currencies. For commodity currencies, slight changes are observed, but it is significant that both CAD, NZD, and AUD were bought, not sold. This consensus clearly contradicts the strong decline of oil and indicates that high uncertainty about the results of the US election forces to change their forecasts on the way.

As for the elections, forecast patterns point to a landslide victory for Biden, despite Trump's victory in the last debate. Any result that is not challenged by the losing side will lead to a pullback in the stock market and a temporary weakening of the dollar. In contrast, challenging the results is currently the strongest market fear that will help the dollar strengthen.

EUR/USD

Futures and options on the euro continue to sell off and the net long position is rapidly declining. Moreover, it declined by 1.586 billion to 22.937 billion during the reporting week. The estimated fair price also continues to decline.

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The ECB has significantly narrowed the space for speculation, informing markets as effectively as possible that it expects to expand easing at the December meeting. In fact, this is exactly what the markets expected, so the decline in the Euro on Thursday and Friday is quite understandable.

At a press conference, Lagarde said that the economic recovery has lost momentum, and explained that various ECB committees are already working to explore the potential for mitigating the effects of various ECB instruments. In addition, the ECB will not stand by when the second wave of the pandemic unfolds, and even if the Central Bank's monetary policy is ineffective under quarantine, new incentives will be very useful after the economy starts.

November is expected to be the worst month. GDP may go into a negative zone, risks will increase, and updated forecasts will be worse than in September. It is obvious that the labor market recovery may stop, and inflation may slow down to zero, such a risk is now considered high.

There is no reason to expect EUR/USD to reverse upwards due to a combination of factors. A breakdown of the channel has taken place. At the same time, the decline is held back by the only strong resistance at the level of 1.1612, so a decline to 1.15 is likely, after which attempts to form a base may begin.

GBPUSD

The pound's total position declined by 381 million to +543 million. The advantage is only small, but the pound never managed to gain positivity, which means that there are no factors that could support the upward trend. The estimated price is significantly lower than the current one, but there is no direction, and the uncertainty is high.

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As expected, the UK economy is going into quarantine, which will lead to a decline in GDP and a drop in demand for the pound. In September, the Bank of England recorded a decline in consumer lending instead of the forecasted growth. Moreover, the British Retail Consortium confirmed the fall in retail prices, so we should expect a drop in inflation expectations and a slowdown in budget revenues.

On another note, Brexit negotiations are at an impasse. Apparently, Johnson's Cabinet is waiting for the results of the US elections, but a day without activity increases the probability of an exit without a deal, which negatively affects the pound's prospects. The Bank of England held a meeting on November 5, from which a rate cut is not expected; however, the prospects for seeing a negative value will most likely be confirmed this year.

The large gap between the current and estimated prices for the pound puts a lot of pressure on it. Another downward wave is forming, support for 1.2670 is under threat, and its fall will stimulate the pound's decline. Nevertheless, a decline is unlikely before the US election.

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Brief trading recommendations for the EUR/USD pair on 11/02/20

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The EUR/USD pair was able to maintain the previously set downward movement last Friday. This resulted in a consolidation of the quotes below the support level of 1.1650, which gives a signal for an even huge decline of the European currency in the long term.

Looking at trading signals in detail, it can identify the main levers for sellers:

The technical analysis is based on a consistent decline, where the price managed to break through several important support levels (1.1810; 1.1700 and 1.1650), which may indicate the prevailing downward interest in the market.

The fundamental analysis comes from the negative COVID-19 background, where the rapid rise of new cases is forcing European countries to tighten quarantine measures, which leads to a similar scenario that happened in spring and an economic downturn.

Regarding the quote's current location, it can be seen that the price is consolidating below the level of 1.1650, which increases the chances of reaching and breaking the local low (1.1612) from September 25.

We can assume that if the price consolidates below 1.1612, it will lead to even more hype on sellers' part, which may lead to the restoration of the downward course set in the September period. In such a scenario, the market development prospect considers a consistent change in the price trend from an upward to a downward one.

The price coordinates of the possible prospects are 1.1550; 1.1350; 1.1180; 1.1000.

Alternatively, we can consider a natural price rebound from the area of the local low (1.1612) on September 25. In this case, there will be a slowdown followed by a pullback/correction, where the downward interest will likely remain in the market.

Looking closely, the market is more focused on further weakening the euro.

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Technical Analysis of BTC/USD for November 2, 2020

Crypto Industry Outlook:

Bitcoin's transaction costs continue to rise, while the most popular cryptocurrency network suffers from its heaviest overload in almost three years. According to Glassnode's data source, the average transaction fee, or average transaction cost, has been 0.00086764 BTC since Wednesday, the highest since June 2018. In dollar terms, the average transaction fee was $ 11.66.

Average fees per BTC increased by 573% in the last 12 days as the price of cryptocurrency increased from $ 11,200 to $ 13,800. As you can see, even small increases can translate into a significant impact of activity in the BTC network.

Technical Market Outlook:

The BTC/USD pair has been trading in a narrow rage located between the levels of $13,552 - $13, 776 for all the weekend. The market is still consolidating the gains after the yearly top at the level of $13,994 was made. The market conditions are extremely overbought on H4 and daily time frame, so a pull-back or correction might occur any time now. The nearest technical support is seen at the levels of $13,296 and $13,116.

Weekly Pivot Points:

WR3 - $15,648

WR2 - $14,723

WR1 - $14,351

Weekly Pivot - $13,475

WS1 - $13,116

WS2 - $12,252

WS3 - $11,845

Trading Recommendations:

Bitcoin is trading at the yearly highs and bulls are in control of the market. The up trend continues and the next long term target for Bitcoin is seen at the level of $14,000, so any correction or local pull-back should be used to open the buy orders. This scenario is valid as long as the level of $10,000 is broken.

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Indicator analysis. Daily review on GBP / USD for November 2, 2020

The pair traded downward on Friday testing the support level 1.2915 (red bold line). Today, the price may continue to move down. As per the economic calendar, pound news is expected at 09:30 UTC, and dollar news is at 15:00 UTC.

Trend analysis (Fig. 1).

The market may move down from the level of 1.2942 (closing of Friday's daily candlestick) with the target at 1.2868 - a 61.8% pullback level (red dotted line). Upon testing this level, the downward trend may continue with the next target of 1.2792 - a 76.4% pullback level (red dashed line).

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Figure: 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - up;

- Trend analysis - down;

- Bollinger lines - down;

- Weekly chart - down.

General conclusion:

Today, the price may continue to move downward with the target at 1.2868 - a 61.8% pullback level (red dotted line). Upon testing this level, the downward trend may continue with the next target of 1.2792 – a 76.4% pullback level (red dashed line).

Another possible scenario: from the level of 1.2942, the price may continue to move downward with the target of 1.2867 – a 61.8% pullback level (red dashed line). Upon testing this level, the price may move upward with the target at 1.2983 – a 38.2% pullback level (blue dashed line).

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Analysis and trading recommendations for the EUR/USD and GBP/USD pairs on November 2

Analysis of transactions in the EUR / USD pair

Euro bulls tried to turn the market into their direction after a series of good economic reports, particularly on the more active growth of the European economy in the 3rd quarter of this year. However, it wasn't that successful because in the morning, short positions from the level of 1.1671 led to a decrease in the euro by about 30 pips.

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Trading recommendations for November 2

Today, the most notable report will be the latest statistics on EU production activity, on the basis of which it will be possible to conclude whether this sector will be able to grow strongly in the 4th quarter of this year. Good data may lead to strengthening of the euro within the day.

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  • Open a long position when the euro reaches a quote of 1.1661 (green line on the chart), and then take profit at the level of 1.1716. However, growth will only occur if good reports come out on EU production activity.
  • Open a short position when the euro reaches a quote of 1.1631 (red line on the chart, and then take profit around the level of 1.1579. Trade according to the trend, most especially if bad economic data comes out.

Analysis of transactions in the GBP / USD pair

Long positions from the level of 1.2931 brought good profit, about 20 pips from the market. Then, the next buy transactions were successful as well, especially since the quote managed to reach the target level of 1.2982.

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Trading recommendations for November 2

There is still not much progress on the trade agreement between the UK and the EU. Aside from that, Britain is again under a lockdown, which heightens the chances of a downturn in the UK economy, and accordingly, a strong decline in the British pound. A weak data on UK manufacturing activity will add pressure on the GBP / USD pair.

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  • Open a long position when the quote reaches the level of 1.2931 (green line on the chart), and then take profit around the level of 1.2982 (thicker green line on the chart).
  • Open a short position when the quote reaches the level of 1.2900 (red line on the chart), and then take profit at least at the level of 1.2852. Bad news on Brexit, as well as weak data on the UK manufacturing sector, will continue the downward trend in the GBP/USD pair.
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Indicator analysis. Daily review on EUR/USD for November 2, 2020

The pair traded downward on Friday and broke through 1.1651 - an 85.4% pullback level (red dotted line). Today, the price may continue to move down. As per the economic calendar, euro news is expected at 08:55 UTC, and dollar news at 15:00 UTC.

Trend analysis (Fig. 1).

The market may continue to move down from the level of 1.1647 (closing of Friday's daily candlestick) with the target at the support level 1.1612 (white thick line). If this line is tested, an upward trend is possible with the target at 1.1667 - a 14.6% pullback level (blue dashed line).

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Figure: 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - down;

- Bollinger lines - up;

- Weekly chart - down.

General conclusion:

Today, the price may move downward with the target at the lower fractal 1.1612 (white bold line). If this line is tested, an upward trend is possible with the target at 1.1667 – a 14.6% pullback level (blue dashed line).

Another possible scenario: from the level of 1.1647, the price may move downward with the target at the lower fractal 1.1612 (white bold line). If this line is tested, the downward movement will continue with the target at the historical support level 1.1579 (blue dotted line).

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GBP/USD: plan for the European session on November 2. COT reports. Bulls' attempts to regain control of the market remain

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

The bears tried to continue the downward trend last Friday, taking support at 1.2918 in the first half of the day. The 5-minute chart shows that this level was tested from the bottom up, which led to producing a point of entry into short positions, however, it did not result in a major drop, and the market reversed. However, it was possible and necessary to sell on a rebound from the resistance of 1.2991 in the afternoon, which I mentioned in my morning forecast, which brought more than 50 points of profit.

Changes are noticeable in the futures market, which play on the side of the sellers of the pound. But not that there are more people willing to sell the pound. Rather, the number of those who want to buy it have not increased. The fact that traders are closing both short and long positions indicates a wait-and-see attitude due to the next quarantine of the UK economy. Lack of clarity on the trade deal also does not add optimism and confidence to the buyers of the pound. The risk of introducing negative interest rates at the next meeting of the Bank of England in November also puts pressure on the British pound. The Commitment of Traders (COT) reports for October 27 showed a reduction in both short and long positions. Long non-commercial positions fell from 39,836 to 31,799. At the same time, short non-commercial positions fell from 41,836 to 38,459. As a result, the negative non-commercial net position was at -6 660, against -2000 a week earlier, which indicates that the sellers of the British pound retained control and also shows their minimal advantage in the current situation.

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Buyers of the pound need to protect support at 1.2915 as soon as possible, since the pair's long term movement will depend on this. Forming a false breakout at this level in the first half of the day, together with good data on manufacturing activity in the UK, will lead to a wave of growth for the pound and a return to Friday's high of 1.2984. Getting the pair to settle above this range and having it tested from top to bottom forms a good signal to open long positions with the goal of rising to a high of 1.3058, where I recommend taking profits. In case buyers are not active around 1.2915, it is best not to rush into buy positions, as the data may disappoint traders. In this case, forming a false breakout in the support area of 1.2865 will be a signal to open long positions against the trend. I recommend buying the pound immediately on a rebound from the low of 1.2807, counting on a correction of 15-20 points within the day.

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

Sellers need to regain the 1.2915 level, being able to settle below it will increase the pressure on the pair and could bring back the bear market, which temporarily paused last Friday. Testing the 1.2915 level from the bottom up, similar to Friday's entry point, will be a signal to open short positions in hopes to update the low of 1.2865, a breakdown of which may pose as a problem for the first time. Getting the pair to settle below this range will increase the pressure on the pound and lead to a larger sell-off to the 1.2807 low, where I recommend taking profits. In case GBP/USD grows in the first half of the day after the release of the production activity data, it is best to wait until the 1.2984 high has been tested, and forming a false breakout there will be a signal to open short positions. Selling the pound immediately on a rebound is possible from the resistance of 1.3058, counting on a correction of 20-30 points within the day.

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Indicator signals:

Moving averages

Trading is carried out just below 30 and 50 moving averages, which indicates a slight advantage for sellers of the pound.

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

Bollinger Bands

A breakout of the lower border of the indicator in the 1.2910 area will increase the pressure on the pair. Growth will be limited by the upper level of the indicator in the 1.2984 area.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • Total non-commercial net position is the difference between short and long positions of non-commercial traders.
The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD: plan for the European session on November 2. COT reports. Euro buyers under pressure. Bulls have nothing to catch

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

The euro was under pressure after buyers made several unsuccessful attempts to turn the market over to their side due to the good fundamental data on the European economy. However, the new quarantine measures in the eurozone countries are likely to dash all hopes for a faster economic recovery, which could be observed in the third quarter of this year.

Before talking about today's prospects for the pair's movement, let's look at the situation in the futures market, where the positive delta has been contracting for the fifth consecutive week. This once confirms the fact that the pair is in a downward trend, especially after the news about the partial lockdown of Germany and France. Great Britain joined the same countries over the weekend. The future prospects for the recovery of the European economy are now clouded due to the second wave of Covid-19, and no one knows how much the service sector will sink, which forces traders, if not to sell the euro, then clearly choose a wait-and-see attitude, especially against the background of the start of the presidential elections in the United States. The Commitment of Traders (COT) report for October 27 showed a reduction in both long and short positions. Despite this, buyers of risky assets believe that the bull market will continue and so they prefer to act with caution. Thus, long non-commercial positions fell from 229,878 to 217,443, while short non-commercial positions also fell to 61,888 from 63,935. The total non-commercial net position decreased to 155,555 from 165,943 a week earlier. However, the bullish sentiments for the euro remains 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, especially following the US presidential elections, when additional pressure on the market on this issue eases.

Buyers of the euro have one task today, which is to regain control of the resistance at 1.1651, which will not be easy. Even with good data on the manufacturing sector of the eurozone countries, it is unlikely that the euro will be able to demonstrate large growth. Getting the pair to settle above 1.1651 and testing it from top to bottom will be a signal to open long positions in order to restore EUR/USD to the resistance area of 1.1701, where the moving averages play on the side of buyers. In this case, trading may move to a horizontal channel. If the bulls rise above 1.1701, the target of the bulls will be the high of 1.1754, where I recommend taking profits. If the euro is still under pressure, which is most likely, you can consider buying EUR/USD but only on condition of a false breakout at the 1.1617 level. In case of bad macroeconomic data, I recommend postponing long positions until we have tested the next low in the 1.1585 region, counting on a correction of 15-20 points within the day.

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

Sellers need to form a false breakout in the resistance area of 1.1651, which will be another signal to open short positions in continuing the emerging trend. The first target will be a low of 1.1617, but I recommend that you only take profit after the pair reaches support at 1.1585. If the data on production activity manages to surprise traders, and the bears are not active in the resistance area of 1.1651, it is best to postpone sell positions until we have tested Friday's high at 1.1701, or open short positions immediately on a rebound from resistance at 1.1754, counting on a correction of 15-20 points within the day.

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Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates the continued pressure on the pair.

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 around 1.1617 will increase pressure on the euro. The breakout of the upper border in the 1.1701 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

US dollar is rising amid investors' unwillingness to take risks

The US dollar continues to be supported by the entire currency market, which is due to investors' carefulness before the US presidential election and the second wave of COVID-19.

The details regarding the importance of these main factors and their qualitative impact on the dynamics of world markets in general and currency market in particular were already mentioned before. As a result, we will just recall their contents today.

The impact of the presidential election results is based on the uncertainty factor of who will win it – either Mr. Biden or Mr. Trump. Here, we should observe how the losing side will behave, whether an act of defiance or not will begin. It is already known that supporters of both Biden and Trump express great determination to resist after the election, if their candidate does not win, which can lead not only to street riots, but also to a military confrontation with the risk of developing into a civil war. In any case, this probability is considered by many authoritative political experts. In such circumstances, investors are very cautious and reduce their presence in risky assets, buying the dollar as a safe haven currency.

Now, the second reason is the impact of the COVID-19 pandemic. The second wave that began this fall has already caused a partial closure of the economies of European countries. In view of this, France and Germany have already taken these measures, and the United Kingdom has joined them today. The economies of these countries continue to suffer from low economic activity, which will decline even more against the background of the resumption of quarantine measures, which will hinder its growth, albeit limited.

Thus, we believe that these two factors will continue to support the US dollar rate today, putting pressure on the demand for risky assets, primarily company shares.

This week will be filled with events that will certainly affect the dynamics of financial markets. This is the US presidential election on November 3, Fed's monetary policy meeting and its results, which will be known on Thursday, and, of course, the publication of latest employment data in the US.

Forecast of the day:

The EUR/USD pair remains under pressure. So, it is very likely that it will continue to decline first to the level of 1.1615, and then to 1.1600.

The GBP/USD may decline to 1.2855 after overcoming the level of 1.2895 amid the UK government's decision to introduce quarantine measures in the country to limit the spread of COVID-19.

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

Forecast for EUR/USD on November 2, 2020

EUR/USD

Last Friday the euro settled below the balance indicator line on the daily timeframe. The MACD indicator line turned down, while the Marlin oscillator settled in the downward trend zone. The situation is completely downward in the medium term. The closest target is the 1.1590 level, then 1.1495.

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A weak convergence formed according to Marlin on the four-hour chart, this gives a precondition for the price to settle before the presidential elections in the United States. The price will likely settle in a narrow range below the 1.1650 level.

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As for the price's behavior after Biden's victory, the dollar will most likely strengthen, since we see no reason for the opposite due to the victory of the Democrats. In the current economic cycle and with geopolitical events, a strong dollar is beneficial to the United States, regardless of the party that came to power. Moreover, the euro's growth back in July-August was speculative, since no financial institution in the United States, be it a bank or an investment company, gave an intelligible answer to this growth. The Commitment of Traders (COT) data shows the largest volume of accumulated long positions in the euro over the past nine months, it's time to send the bulls to the slaughterhouses. We expect the euro to start falling from 1.1165-1.1200 within 2-3 weeks.

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

Forecast for AUD/USD on November 2, 2020

AUD/USD

On Friday, the Australian dollar traded in Thursday's range below 0.7058, which strengthened it even more. Now we are waiting for the price to drop to the previously determined target levels of 0.6970 and 0.6938. All indicators on the daily chart indicate the AUD/USD pair's succeeding decline.

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No changes occurred during the day on the four-hour chart. We still have a falling trend, we wait for the price at the indicated levels.

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

Forecast for USD/JPY on November 2, 2020

USD/JPY

The yen traded in the 60-point range last Friday, but the indicators did not change, since it closed the day near its opening. This morning, the signal line of the Marlin oscillator has left its own narrow range (gray area), but according to historical analogies, the most likely Marlin exit was expected to go down, so the growth may turn out to be false.

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The main reason for the fall, as we expect, will be a decline in the stock market after Biden's victory in the US presidential election. Or, which more accurately describes the situation, after Trump's defeat in the presidential elections. Obviously, before the first election results, the yen's behavior will be unpredictable. Getting the price to settle above the trend line at 104.83 will allow it to rise to the MACD line at 105.40 for a short period of time. A price retracement below 104.20 will extend the fall to 103.75 and below.

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The price is still hesitating to go under the MACD line on the four-hour chart, trying to reach the nearest resistance at 104.83. A price lag before reaching the level will move the Marlin oscillator into the negative zone and the potential for a decline will increase.

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Forecast for USD/CAD on November 2, 2020

USD/CAD

The price settled above the balance indicator line and the Fibonacci level of 76.4% on the daily chart. The combination of the two supports is a good platform for further growth. The signal line of the Marlin oscillator is moving horizontally, which is also a sign of vigorous growth. The first target for growth is the Fibonacci level of 110.0%, which coincides with the July 30 high at 1.3460. It is possible for the price to grow to the Fibonacci level of 123.6% at 1.3525.

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The four-hour shows that the consolidation at the 76.4% Fibonacci level is visually complete. The Marlin oscillator has discharged from the overbought zone and is now ready to grow further. We are waiting for the price at the first target level of 1.3460.

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

ot forecast and trading signals for GBP/USD on November 2. COT report. Traders await the outcome of trade deal talks

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The GBP/USD pair failed to overcome the support level of 1.2897 and, after rebounding from it, corrected to the critical Kijun-sen line on October 30. The descending channel has been rebuilt and is now supporting bearish traders again. The fact that the price failed to gain a foothold above the Kijun-sen line preserves excellent chances for the pair to resume the downward trend. Thus, the initiative remains in the hands of sellers, while buyers should continue to wait for the price to settle above the Senkou Span B line (and at the same time the descending channel). From a fundamental point of view and in our opinion, it is most preferable for the pound to fall.

GBP/USD 15M

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The lower linear regression channel turned to the upside on the 15-minute timeframe, which indicates that a weak correction has begun on the hourly chart. However, it could have already ended near the critical line.

COT report

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The latest Commitments of Traders (COT) report on the British pound showed that non-commercial traders were quite active in the period from October 20-26. However, their sentiment changed again, as can be seen from the green line of the first indicator in the chart. The mood of the "non-commercial" group of traders became more bullish for three consecutive weeks, but the net position decreased by 5,000 contracts over the last reporting week, so we can conclude that professional traders are again inclined to sell off the pound. However, if you look at the COT reports over the past few weeks or look at the first indicator, it becomes clear that commercial and non-commercial traders do not have a clear trading strategy right now. Perhaps this is due to an extremely unstable and complex fundamental background. The fact remains. The pound lost 90 points in recent trading days, and we believe that it will continue to fall. However, in the near future, we might receive important information about the progress of negotiations on the UK-EU trade deal, and the results of the vote for the US president will also become known. This information can change the mindset of professional traders. You need to be prepared for this.

The fundamental background for GBP/USD did not change on Friday. Traders were waiting for information about the course of talks in London, but did not wait for it. And, in principle, Great Britain did not provide any particularly important macroeconomic information on Friday. Minor reports on changes in personal income and spending for September were published in America, as well as the University of Michigan consumer confidence index for October. However, this information had no effect on the course of the auction. Britain will publish an index of business activity in the manufacturing sector on Monday, which has a fairly neutral forecast of 53.3. Perhaps some information will finally come in about how the next round of negotiations with the European Union went. And this information can cause a surge in activity for the pound/dollar pair. Well, do not forget that there will be Presidential Election Day in America tomorrow, so you also need to be prepared for increased volatility. Not the fact that we might face increased volatility, but it is possible. In general, the fundamental background remains extremely complex and confusing for the pound (especially with the introduction of a lockdown in England), but we are inclined to expect that quotes would fall further.

We have two trading ideas for November 2:

1) Buyers for the pound/dollar pair failed to settle above the Kijun-Sen line. Thus, the initiative remains in the hands of the bears, and long positions, accordingly, are irrelevant. You are advised to reconsider long deals in case the price settles above the Senkou Span B (1.3018) and Kijun-sen (1.2979) lines with the target of the resistance area of 1.3160 -1.3184. Take Profit in this case will be up to 110 points.

2) Sellers continue to pull down the pair and have reached the 1.2897 level, which they have not been able to overcome so far. Since a rebound followed from the Kijun-sen line, traders could already open new sell orders with targets at the 1.2897 level and the support area of 1.2854-1.2874. If these targets are overcome, then you are advised to trade down while aiming for the 1.2754 level. Take Profit in the first case will be 30-60 points, in the second - up to 80.

Hot forecast and trading signals for EUR/USD

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.

Indicator 1 on the COT charts is the size of the net position of each category of traders.

Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.

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

Hot forecast and trading signals for EUR/USD on November 2. COT report. European economy recovered quickly enough. Until

EUR/USD 1H

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The EUR/USD pair tried to start a more or less tangible correction on the hourly timeframe on October 30, but failed to do so. Buyers failed to take the pair above the resistance area of 1.1691-1.1698. The pair rebounded off this area and the bears got down to business again. As a result, the pair dropped to the support level of 1.1637 by the end of the day. The price is far from the descending channel, so it can no longer be considered relevant. There are no new channels or trend lines at this time. Therefore, when making trading decisions, you can only rely on rebounds/overcoming from one or another resistance/support. By the way, the price failed to quickly return to the 1.1700-1.1900 area, so it is quite possible that a new downward trend will actually begin now.

EUR/USD 15M

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Both linear regression channels are directed to the downside on the 15-minute timeframe, which eloquently indicates the current trend on the hourly chart and indicates that there are no signs of a noticeable upward correction.

COT report

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The EUR/USD pair rose quite a bit during the last reporting week (October 20-26). Therefore, we can conclude that professional market participants did not make any extremely large purchases and sales of the European currency. However, the new Commitment of Traders (COT) report showed that non-commercial traders were actively closing Buy-contracts (longs) during the reporting week. In total, 12,000 of them were closed. But professional traders were in no hurry to get rid of Sell-contracts (shorts), having closed only 1,000. Thus, the net position of this group of traders decreased by 11,000 contracts at once. It is possible that the main closing of the Buy-contracts took place at the end of the reporting week, because in the following days a more tangible drop in euro's quotes began. Within its framework, the euro/dollar pair lost about 160 points. We remind you that if the net position decreases, it means that the traders' sentiment becomes more bearish. Thus, so far, our forecast is coming true. In the analysis of previous COT reports, we said that the high around the 1.2000 level could remain as the peak for the entire upward trend. The first indicator and its green line clearly show that non-commercial traders have been cutting back on long deals on the euro for two months now. And non-commercial traders are the most important group of large traders in the foreign exchange market. It is believed that it is the one responsible for driving the market.

There were a lot of macroeconomic publications on Friday, October 30. It all started in Germany, where the GDP for the third quarter was published in the first estimate. It turned out that the growth of the indicator in quarterly terms was 8.2%. We think this is quite small. For example, the increase was 16.1% in Italy, and 16.7% in Spain. It is another matter that all these numbers are not of particular importance now, since the second wave of COVID-2019 continues to gain momentum in the European Union, and the German economy has already entered the second lockdown. Quarantine measures are tightening in all European countries, so at the end of the year, we can again expect a reduction in GDP. The European Union also published its GDP indicator, which increased by 12.7%, offsetting almost all losses of the second quarter. However, traders were more impressed by the words of European Central Bank President Christine Lagarde, who made a very pessimistic statement about the prospects for the European economy a day earlier, so they did not appreciate the recovery of the EU economies. After all these data, the inflation rate did not matter much for the markets.

We have two trading ideas for November 2:

1) The EUR/USD pair resumed its downward movement. Thus, buyers are encouraged to wait for more favorable conditions to open a position. For example, when the price settles above the 1.1691-1.1698 area. In this case, you can open small longs while aiming for the Kijun-sen line (1.1739) and the Senkou Span B line (1.1784). Take Profit in this case can be up to 70 points.

2) Bears are active, but gradually, pull down the pair. Thus, sellers are advised to continue to trade down while aiming for the support level of 1.1570, if the price settles below the 1.1637 level. A price rebound from any target can trigger a round of corrective movement. Take Profit in this case can be up to 50 points, which is not so little, given the current volatility levels.

Hot forecast and trading signals for GBP/USD

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.

Indicator 1 on the COT charts is the size of the net position of each category of traders.

Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.

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

Overview of the GBP/USD pair. November 2. The UK is going into quarantine. Boris Johnson announced the introduction of a

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: -78.7393

The British pound sterling paired with the US currency on Friday began a new round of upward correction. However, in general, it continues to trade quite calmly in recent days and with a clear downward bias. We have repeatedly said that we expect a resumption of the downward trend, as there are a lot of technical factors in favor of this. Starting from the price rebound from the 61.8% Fibonacci level after the fall on September 1, ending with another overcoming of the moving average line and overbought of the British pound in the current fundamental conditions. "Foundation" is generally a separate conversation that has a complex impact on the foreign exchange market and its participants. Perhaps it is for the pound/dollar pair that the "Foundation" is the most complex and confusing. In addition to all the American problems and the upcoming elections, which we have already written about many times, there are still extremely big British problems for the GBP/USD pair, extremely weak prospects for the British economy, and the problem of the lack of a trade deal with the European Union. Thus, for the pound sterling, the fundamental background is bad, and for the US currency, it is also "no sugar".

The situation with the "coronavirus" in the UK is also no better than in the US. If in the States there is now an increase in cases of the disease to 100 thousand per day (with a population of 328 million), then in the UK there is an increase to 25 thousand per day (with a population of 66 million). That is, in relative comparison, the numbers are approximately the same. However, this weekend it became known that Boris Johnson decided to follow the example of his German and French colleagues and also introduced a second "lockdown" from November 5 to December 2. "From Thursday, the main message will be the same as during the spring lockdown - stay at home," Johnson said. However, "lockdown" this time will still not be as "tough" as in the spring. Firstly, schools, colleges, and universities will work. Britons will be allowed to go to the store, to work, to the doctor, and their loved ones. By and large, all restrictions apply only to services and entertainment. Shops (all but grocery stores), hairdressers, beauty salons, gyms, and various entertainment venues will be closed. All trips abroad, except for workers, are prohibited. Thus, the British were restricted access to services and entertainment, while Johnson tried to keep the economy itself open as much as possible. However, earlier the British Prime Minister stated that there will be no repeated "lockdown". And earlier that "he would rather die in a ditch than ask the European Union to extend the deadline for negotiations." Thus, it is not the first time that Johnson has "forgotten" about his previous statements. By the way, literally one of these days we will be able to find out what results of such a policy will be for Donald Trump, who also very often makes unfounded, unsubstantiated, misleading statements. Also, Johnson said that this year's Christmas celebration may be very different from the usual, and small and medium-sized businesses may suffer serious losses. However, we still approve of the actions of the British government in this matter, since we are still talking about the lives and health of British citizens.

Meanwhile, there is still no information about the negotiations on the Brexit trade agreement. The next round of talks was supposed to end last Thursday, however, there were no speeches from Boris Johnson, Michel Barnier, David Frost, Ursula von der Leyen, or Charles Michel on this occasion. Thus, we conclude that negotiations are ongoing, but we can only guess at the presence or absence of progress. On the one hand, if the negotiations continue all this time, then there is some progress. None of the previous rounds lasted more than a week. Usually, the parties very quickly concluded that no one wants to give in to anything and parted until the next stage. This time, however, the groups of Michel Barnier and David Frost are taking a long time to discuss the future relationship between the UK and the European Union. Thus, it is possible to assume that the parties are still moving towards each other. The question here is different. Will this progress be enough for a trade agreement? After all, there are at least several important and controversial issues between the parties, in which it will be extremely difficult to reach a compromise. But Brussels and London want to conclude not just an agreement, but an agreement within the established time frame, so that from January 1, 2021, they do not have to trade with each other under WTO rules. Thus, they have a maximum of two weeks to reach a consensus, after which the negotiations can once again be curtailed. In principle, the situation here is the same as with the US elections. Traders have no choice but to wait for information. We do not recommend trying to guess how the negotiations will end, as this is a thankless task.

Well, in the new week, there will be another important event for the British pound. This is a meeting of the Bank of England. Recall that the British regulator has been talking about expanding the quantitative easing program for a long time. Also, market participants have little doubt that the BA will go to the introduction of negative rates. However, if negative rates are expected by the markets in 2021, the Bank of England will most likely decide to expand the QE program this Thursday. In principle, this is an logical and expected decision of the Bank of England, since the British economy is not only experiencing problems now but is almost guaranteed to continue experiencing them in 2021. The recovery of British GDP in the third quarter, according to preliminary estimates, is not too high, about 15% q/q after losses of 19.8% q/q in the second quarter. Moreover, the repeated "lockdown" will affect the economy of the Foggy Albion, although, in our opinion, this quarantine will be less "tough" than the spring one. Thus, the British regulator simply has no other options but to continue to ease monetary policy.

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The average volatility of the GBP/USD pair is currently 109 points per day. For the pound/dollar pair, this value is "high". On Monday, November 2, thus, we expect movement inside the channel, limited by the levels of 1.2833 and 1.3051. The reversal of the Heiken Ashi indicator down may signal a possible resumption of the downward movement.

Nearest support levels:

S1 – 1.2939

S2 – 1.2878

S3 – 1.2817

Nearest resistance levels:

R1 – 1.3000

R2 – 1.3062

R3 – 1.3123

Trading recommendations:

The GBP/USD pair has started a new round of corrective movement on the 4-hour timeframe. Thus, today it is recommended to open new short positions with targets of 1.2878 and 1.2833 as soon as the Heiken Ashi indicator turns down. It is recommended to trade the pair for an increase with targets of 1.3062 and 1.3123 if the price is fixed back above the moving average line.

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