Wave Analysis by InstaForex

Elliott wave analysis of EUR/JPY for August 23, 2018



EUR/JPY still has not broken important short-term resistance at 128.48, but then it has not started to move strongly lower as we normally should expect at the completion of an expanded flat.

Therefore we are shifting our preferred count in favor of wave C and II having completed with the test of 124.86 and wave III now in its infancy. Under this count EUR/JPY should make a small downward correction towards 127.23 - 127.33 area in red wave iv and then move higher towards the 128.92 - 129.32 area in red wave v.

This will complete black wave i/ and should set the stage for a corrective decline in wave ii/ towards the 125.76 - 126.44 area before the next impulsive rally higher. That said, the possibility of a final dip closer to 124.62 remains possible, but time is running out fast.

R3: 128.92
R2: 128.48
R1: 128.24
Pivot: 127.93
S1: 127.72
S2: 127.50
S3: 127.33

Trading recommendation:
We are 50% long EUR from 126.26 with our stop placed at 126.84. We will take profit on the final 50% at 128.75. *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.


Analysis are provided byInstaForex.

Elliott wave analysis of EUR/NZD for August 24, 2018



EUR/NZD has finally broken above short-term important resistance at 1.7355. This former resistance should now act as support if a re-test is needed.

The break above resistance at 1.7355 should have paved the way for a continuation higher towards 1.7484 on the way towards 1.7924 and 1.8369 as the next important upside targets. EUR/NZD is now in a position where it could start accelerate quiet powerfully higher, but we think a clear break above 1.7484 will be needed to see the expected upside acceleration.

R3: 1.7668
R2: 1.7578
R1: 1.7484
Pivot: 1.7366
S1: 1.7355
S2: 1.7325
S3: 1.7281

Trading recommendation:
We bought EUR at 1.7330 and we have placed our stop at 1.7275.

Analysis are provided byInstaForex.

The dollar declined, but it did not last long

The speech of Fed Chair J. Powell at the economic symposium in Jackson Hole, Wyoming, confirmed that the selected course was during the period of J. Yellen to gradually increase interest rates.

The head of the Central Bank was optimistic about the prospects for further growth of the country's economy, pointing out that "he does not see signals of accelerating inflation much higher than the 2.0% target, as well as the risks of overheating of the US economy." Investors took his words optimistically, despite the fact the continuation of the cycle of raising interest rates in general. It seems that market participants believe that the process of a smooth increase in interest rates gives them the opportunity to "have time" to buy risky assets, making a profit until the moment when rates reach absolute neutral values, which can already be perceived as a signal for large-scale profit-taking.

Investors completely switched to Powell's speech, ignoring the failure of the negotiations between the US and China on customs duties. On other hand, this can be explained by the fact that, very few people in general hoped that they would be positive, and on the other is their influence is already taken into account in market sentiments and quotations. Although Friday was positive, we consider it a temporary phenomenon. Markets will pay attention again to trade wars, and probably, this will push up the US dollar rate again. But at the same time we pay attention to the fact that, the overall lateral dynamics of the dollar paired with major currencies will most likely continue in the short term.

The dollar will be bought for a number of reasons. The first and foremost process is the method of capital transfer to the States from emerging markets and from Europe, where the likelihood of a large-scale financial crisis that raged in Turkey has increased significantly, putting European banks at high risk and investing considerable capital in the country's economy. The next problem is Italy, which can get into the debt "bag" on the background of high public debt. The dollar will also receive support in the wake of the trade war between Washington and Beijing as a currency refuge. And, of course, the Fed's position to smoothly continue, as the process of raising interest rates will be a good incentive for its purchases.

Forecast of the day:

After reaching the local maximum on Friday on the wave of J. Powell's speech, the EUR/USD pair may turn down again if it hover below the 1.1620 level. Against this background, it can adjust to 1.1535 after overcoming the 1.1600 mark.

The AUD/USD pair is trading above the 0.7315 mark. It may continue to adjust down to 0.7255 after overcoming this level. The reason is still the continuing tension between the US and China on customs duties.





* The presented market analysis is informative and does not constitute a guide to the transaction.

Analysis are provided byInstaForex.

Confidence in the short-term growth of the euro is gradually declining

The euro continues to rise against the U.S. dollar, which was formed in the middle of this month. It looks like investors are planning to end the month on a positive note, getting close to the large monthly resistance levels.

Data on lending in the eurozone and confidence in France supported the euro in the first half of the day, but a number of international economic agencies predict a slowdown in the euro in the short term.

For many technical indicators, risky assets are in the overbought zone, and a good downward correction has not been observed for a long time. Also, the EUR/USD pair got close to fairly large levels of resistance, from which a strong bearish trend was formed in the middle of summer of this year. This is another signal to the fact that there is no need to hurry with the purchase from the current levels.

As I noted above, bank lending in the euro area continued to grow in July this year.

According to the report of the European Central Bank, lending to non-financial companies increased by 4.1% compared to the same period last year. Good indicators were also noted in household lending, which in July 2018 increased by 3.0%, as in the previous month.

As for the M3 money supply indicator, it turned out to be slightly worse than forecasts. According to the data, the annual growth of M3 monetary aggregate slowed to 4.0% from 4.5% in June. Economists had expected the indicator to grow by 4.3 percent.

Good data on consumer morale in France maintained confidence in further economic growth. According to the report of the statistics agency, the consumer confidence index in France in August this year remained at 97 points against 97 in July. Economists had also forecast the index to be 97 points.

An important report on consumer confidence in the US will be published on Tuesday in the afternoon, which can significantly affect the US dollar. It is expected that the indicator of consumer confidence in the US will decrease to 126.6 points in August against 127.4 points in July this year.



As for the technical picture of the EUR/USD pair, the prospects for the movement of the euro remained unchanged. The failure of breaking the resistance of 1.1700 for today could lead to the decline of the European currency against the background of profit taking and return to the area of the lows of 1.1625 and 1.1590.

News are provided by
InstaForex.

Gold threw "bears" overboard

The fastest intraday gold gain over the past five months, against the backdrop of Jerome Powell's speech in Jackson Hole, forced the market to rack his brains over the question: from what level will the speculators start fixing profit in short positions en masse? Their net shorts by the end of the week by August 21 increased to 90 thousand contracts. Commerzbank notes that over the past few weeks, long positions have remained virtually unchanged, while short positions grew. The speech of the FRS chairman squeezed a part of the "bears" from the market.

From what levels will the others run? From January's highs, gold lost about 11% of its value and speculators continued to actively sell in April-August against the backdrop of the strengthening of the US dollar. The latter took away from the precious metal the function of the asset-refuge and grew rapidly during the escalation period of trade conflicts between the US and other countries. At the same time, the divergence in economic growth and the monetary policy of central banks played into the hands of the "bulls" at the USD index. The Fed raised the federal funds rate, and the US GDP grew by 4.1% in the second quarter. Gold fans found it difficult to counter something to their opponents, which led to the growth of net shorts to record highs.

Dynamics of speculative positions on gold



It did not receive support from the precious metal from the side of physical demand. Along with the drop in ETF stocks to the lowest level since 2016 and the reduction of Chinese net imports from Hong Kong to 44 tonnes in July, which is the worst monthly indicator since the beginning of the year, bad news came from India. Heavy rains and floods inflicted $ 3 billion damage to local farmers, which is this class of buyers that is most active in the Diwali wedding season.

Since mid-August, the situation began to change. Donald Trump confused the dollar bulls with comments about his dissatisfaction with the activities of Jerome Powell as chairman of the Fed, to which the latter responded with "dovish" rhetoric in Jackson Hole. The head of the Central Bank is confident that inflation will not go far above the 2% target, and therefore it is not necessary to raise the federal funds rate aggressively. After his speech, the dollar fell out of favor, marking the worst weekly dynamics since February. On the contrary, the bulls on XAU/USD came to their senses after the knockdown.

I do not think that the dollar's positions are hopeless. The extent of the trade conflict between the US and China did not declined entirely. The chances of the four monetary restrictions in the FRS this year are still high (74%), the leading indicator from the Federal Reserve Bank of Atlanta signals a 4.6% increase in US GDP for the third quarter. The market turned out to be too emotional for the performances of the White House and the chairman of the Federal Reserve, but gradually calmed down. According to RBC Wealth Management, only a break of $ 1225 ounce will launch an avalanche of mass closure towards speculative short positions.

Technically, the necessary condition for continuing the rally is the ability of the bulls to gain a foothold above the 1209 mark.
Gold daily chart



* The presented market analysis is informative and does not constitute a guide to the transaction.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Analysis are provided byInstaForex.

GBP/USD. Trading system "Regression channels". The growth of the pound sterling may be temporary

4-hour timeframe



Technical data:
Higher channel of linear regression: direction - down.
The lower channel of linear regression: direction - down.
The moving average (20; flattened) is up.
CCI: 159.4805

Yesterday, the GBP/USD currency pair showed impressive growth, after Michel Barnier, the main negotiator for Brexit from the EU, announced the forthcoming special offer for London. But according to the European Union, he did not mentioned the proposal's essence and how it will be resolved all disagreements with Britain. However, the markets reacted with strong purchases of the British pound. We believe that this market reaction is short-term and impulsive. So far, even the essence of the proposal is unclear. It is likely that Theresa May will not agree with this proposal, but almost nobody doubts that the negotiations will drag on beyond October. Thus, the pound sterling will remain under market pressure, and even Trump's desire to weaken the dollar may not prevent further strengthening of the pound/dollar, while with other currencies paired with the dollar may decline. The data on personal income adjustments and expenditure of the population in the United States will be publish today. Possibly, this data can affect the traders' mood but the most important agenda for today is about global topics, so these reports are unlikely have a significant effect to the trading course. From a technical point of view, a correction is brewing, as there was a very strong growth yesterday, and the last bar is painted in blue today.

Nearest support levels:
S1 = 1.2939
S2 = 1.2817
S3 - 1.2695
Nearest resistance levels:
R1 = 1.3062
R2 = 1.3184
R3 = 1.3306

Trading recommendations:
The GBP/USD pair may start to adjust. Correction can be worked out (if a second blue bar is formed in a row), since the descending sentiment of the pair remains. The target for short positions is the moving average line in small lots.
Buy-positions are recommended to resume in case of a reversal of the Heiken Ashi indicator above or overcoming the 1.3062 level. The next target for the bulls will be the Murray level of 1.3184.
In addition to the technical picture, one should also take into account the fundamental data and the time of their release.
Explanations for illustrations:
The upper channel of linear regression is the blue lines of unidirectional motion.
The junior channel is linear-violet lines of unidirectional motion.
CCI - the blue line in the regression window of the indicator.
Moving average (20; smoothed) - the blue line on the price chart.
Murray Levels - multi-colored horizontal stripes.
Heiken Ashi is an indicator that color bars in blue or purple.
* The presented market analysis is informative and does not constitute a guide to the transaction.

Analysis are provided byInstaForex.

Elliott wave analysis of EUR/JPY for September 3, 2018



EUR/JPY has declined nicely and is now hovering just below our 128.78 - 129.00 target zone. We are looking for a recovery towards 129.85 next and from there it will be decided, whether more corrective downside pressure is needed or not.

In the short-term, a break above resistance at 129.14 will confirm the expected rally towards 129.85 and maybe even a continuation towards 130.87 and beyond.

If support at 128.54 gives away first, then a minor dip to support at 128.30 should be expected before a recovery is seen, but the potential downside should be limited for now.

R3: 129.85
R2: 129.32
R1: 129.14
Pivot: 128.83
S1: 128.54
S2: 128.30
S3: 127.94

Trading recommendation:
We took profit on our short position at 129.10 for a nice little profit of 58 pips and at the same time bought EUR. We have placed our stop at 128.10.

Analysis are provided byInstaForex.

Brent inspired by hurricanes

While investors are pondering whether OPEC and Russia will be able to compensate for the decline in Iranian exports, the approach of hurricane Gordon to the coast of the Gulf of Mexico allowed the "bulls" of Brent at arm's length to approach the psychologically important mark of $80 per barrel. The share of this territory accounts for about 17% of production and 45% of processing of all American oil, where it does not get agitated and start curtailing production? However, the impact of hurricanes on pricing in the oil market is often temporary. If a natural disaster is not as devastating as originally anticipated, buyers can begin to lock in profits.

According to information gathered with the help of tankers, oil exports from Iran declined by 14% in August. Competent Wall Street Journal sources inside the country report a decrease from 2.3 million b/d in June to 1.5 million b/d in September. Deliveries of oil from the largest OPEC producer are falling by leaps and bounds, and in fact even before the entry into force of US sanctions in early November is still far. Exports to Europe fell by 45% in July, to South Korea-by 40%, India is considering a 50% reduction in purchases, although along with China and Turkey will continue to receive oil from Tehran. The hole should close the cartel, and Bloomberg experts expect production growth to 420 thousand b/d in August, to 32.74 million b/d. If the actual figure is smaller, "bulls" in Brent and WTI will continue their attacks.

Dynamics of oil production by OPEC



Despite the fact that Nigeria has tried to rein in speculators, saying that its efforts and the efforts of Saudi Arabia, the UAE and Angola are sufficient enough to compensate for the reduction of Iranian exports, the big banks are reviewing their forecasts upwards. Thus, Barclays believes that the North sea variety under the influence of US sanctions and the decline in production in several producing countries may exceed $80 per barrel in the short term. The average price forecast for 2020 was raised from $55 to $75 per barrel. BNP Paribas doubts that the decline in supplies from Iran, the occasional interruptions in Libya and the decline in production in Venezuela will be offset by an increase in OPEC production. The bank expects to see Brent averaging at $79 per barrel in 2019.

Favorable market conditions can easily be taken advantage of by American manufacturers. According to the US Energy Information Administration, the volume of production in the United States increased from May to June by 230 b/d and at any time could touch on the psychologically important level of 11 million b/d. Alas, the market still ignores this as a "bearish" driver for Brent and WTI, preferring to win back the factors of the hurricane and American sanctions against Iran.

Technically, on the daily chart, Brent achieved a target of 88.6% on the "Shark" pattern, which increases the probability of rollback in the direction of 23.6%, 38.2% and 50% of the CD wave. If the bulls manage to update the September peak and gain a foothold above it, the risks of continuing the upward campaign to the target will increase by 113%.

Brent, daily chart



Analysis are provided byInstaForex.

Gold wings have been clipped

August turned out to be the fifth consecutive month of gold closing in the red zone. The precious metal lost more than 2% amid the acceleration of the US economy, increasing the chances of four acts of monetary tightening of the Federal Reserve in 2018 and tensions over trade wars. And only moderately - "dovish" rhetoric of Jerome Powell in Jackson hole allowed the "bulls" to lick some of its wounds and try to break above $1210 per ounce. Alas, the joy of buyers was short-lived. In early September, the dollar began to recover in the face of problems in the negotiations between the United States and Canada and Donald Trump's intentions to expand the size of import duties against China by $200 billion.

The dynamics of gold



According to Citigroup Global Markets, investors do not need the gold in a world where stocks and bond yields are rising. The precious metal does not bring dividends and interest as equity and debt securities, and its status as a safe-haven asset has been taken away by the US dollar. As a result, speculators are increasing net short positions on the precious metal for the fifth week in a row and brought them to record highs. The stocks of the largest specialized fund SPDR Gold Shares fell to its lowest levels since November. From the levels of April highs, the index has lost 14%.

However, everything in this world is relative. Silver feels much worse than gold, the loss of which is about 16% since the beginning of the year. Due to the high proportion of industrial use in aggregate demand, this metal is more vulnerable to a slowdown in the global economy than the sector leader. As a result, their ratio has soared to the highest levels since the global financial crisis.

Dynamics of the ratio of gold and silver



Further dynamics of the XAU/USD will entirely depend on the US dollar, whose position looks strong. First, the Atlanta Federal Reserve predicts that US GDP in the third quarter will accelerate to 4.6%. Secondly, the futures market estimates the probability of four Federal funds rate increases in 2018 at 75%. A month ago, the figure was only slightly higher than 60%. Third, Trump is about to expand the size of import tariffs against China, which will increase the risks of a slowdown in the Chinese economy and put pressure on the markets of developing countries.

What can save gold from the sixth consecutive month of closing in the red zone? Correction in the US stock market, verbal intervention of Donald Trump, the deterioration of macroeconomic statistics in the United States and, finally, a breakthrough in the relationship between Washington and Beijing. So far, three of the four above events seem unlikely, and the rhetoric of the US president tends to put pressure on the dollar only in the short term. In this regard, sales of the XAU/USD on growth remain valid.

Technically, the inability of the bulls to hold gold prices above $1209 per ounce indicates their weakness. The initiative moved to the "bears", which broke through the lower border of the short-term upward trading channel and intend to restore the downward trend.

Gold, daily chart



Analysis are provided byInstaForex.

EUR/JPY Testing Support, Prepare For A Bounce



EUR/JPY is approaching its support at 127.94 (61.8% Fibonacci extension, 50% Fibonacci retracement, horizontal pullback support) where the price is expected to bounce up to its resistance at 129.69 (61.8% Fibonacci retracement, horizontal swing high resistance).

Stochastic (55, 5, 3) is approaching its support at 2% where a corresponding bounce is expected.

EUR/JPY is testing its support where we expect to see a bounce.

Buy above 127.94. Stop loss at 127.01. Take profit at 129.69.


Analysis are provided byInstaForex.