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GBP/USD. UK after Brexit: waiting for collapse?



The UK will officially leave the European Union in five days. More precisely, the so-called "transition period" will begin, with which many identify the beginning of the real Brexit. Over the next 11 months, little will change for Great Britain. The country will cease to take part in the decision-making of the European Union, the British deputies will leave the European Parliament, however, the established trade relations and other rules and regulations by which the UK has lived in recent years will remain in force. Now, a month and a half after Boris Johnson's victory in the election, when passions and euphoria subsided, many experts conclude that the victory of the Conservatives is a result of the fragmentation of the political views of the opponents of Brexit, and not the excessive popularity of Conservatives among the people. In other words, there was only one option with the end of Brexit - vote for the Conservatives, and there were much more options against Brexit. At the same time, both the Scots, the Northern Irish, and the Welsh, supporting Brexit, had to vote not for "their" parties, but all for those Conservatives. For those who reject Brexit, they voted for the Scottish National Party, for the Labour Party, and for other political forces. As a result, all the voices of the opponents of Brexit were divided into 3-4 parties, all the voices of the supporters of Brexit left the party of Boris Johnson. However, now all this is not important. It's important - what the odious prime minister and his ruling party will lead the country to.

In fact, in the coming year, all questions to Johnson's team come down to whether he will be able to agree with the U on a new trade deal that will operate after the end of the transition period? According to many experts, the main thing that is required of Johnson is to sign such a deal that does not harm the UK economy as much as possible, which has been losing huge amounts over the past three years due to Brexit and, in any case, will continue to lose them in 2020. Nobody believes that the deal will be the way Johnson himself sees it. Johnson is not Trump, but the European Union is not China. The biggest question that causes skepticism among all market participants is the timing of negotiations on trade relations with the EU. Eleven months is very little to conclude such a comprehensive deal. Thus, either Johnson will be able to conclude a "surface" agreement in a short time, or he will have to extend the transition period for two years (which Johnson does not want) and conduct more meaningful negotiations, without forcing events and slowly.

Well, the biggest danger for London now comes from Edinburgh. Nicola Sturgeon, the first Minister of Scotland, has repeatedly stated that "London will not be able to lock us up and hope that everything will work out." Scotland opposes an exit from the EU, but advocates an exit from the UK if its interests are not taken into account by the government of Johnson. "If the UK continues to exist, it is only on the basis of universal consent," said Sturgeon. A formal request for a second independence referendum has already been sent to Johnson and has been rejected. However, it is unlikely that Edinburgh will so simply dwell on the refusal of permission to referendum. In the best case for Britain, the Scots will regularly put this issue on the agenda. At worst, separatism, refusal to subordinate to London, and unauthorized referendum are possible. I don't even want to think about what awaits Britain in the second case. Riots, a military conflict and a host of other "unpleasant things" are possible. Thus, all those who, following Johnson's victory in the elections, exhaled and considered that all the troubles are now behind, all that can be said is that all the troubles are still ahead, and Brexit now looks like the smallest of the problems of Great Britain.

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

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EUR/USD: euro threatened by the epidemic



According to a consensus estimate by Bloomberg analysts, the euro will rise to $1.14 against the US currency by the end of June. The increasing geopolitical risks in the Middle East, the outbreak of coronavirus in China and the threat of a trade war between Washington and Brussels made investors doubt the realism of this forecast.

Although many believe the new virus is less dangerous than SARS in 2003, the worst is probably yet to come. Globalization, more developed than at the beginning of the century, the infrastructure of China and the tendency of the latter to travel to the Lunar New Year are factors that can contribute to the rapid spread of coronavirus throughout the planet.

The world economy did not have time to recover from a trade conflict between the United States and China, as it is already threatened by a new scourge. The fact that in November, global trade fell by 0.6% in monthly terms and 1.1% in annual terms does not please the bulls in EUR/USD.

The problems of the export-oriented economy of the eurozone do not end there. The United States, under the threat of imposing duties on importing cars from the European Union, may demand that American companies expand their access to the European agricultural market. Moreover, Washington could avenge Brussels on its carbon tax. Turning a blind eye to environmental issues, the White House regards the introduction of tariffs by other states as a manifestation of protectionism.

Meanwhile, the US economy is still on its feet. According to IHS Markit, the US composite purchasing managers index reached a ten-month high in January due to increased business activity in the services sector. The data on PMI in the non-manufacturing sector of the eurozone, on the contrary, disappointed, which makes it possible for the EUR/USD bears to win back the divergence factor in US and EU economic growth.

The external background is extremely unfavorable for the euro bulls, so the main currency pair's decline to seven-week lows appears quite logical. Neither the January meeting of the ECB's Governing Session, nor the data on European business activity, could provide adequate support to fans of the euro. Whether the Federal Reserve wants to do this, a meeting of which, along with releases on US and European GDP for the fourth quarter, is one of the key events of this week, is unknown.

The goal of EUR/USD bears at 1.1000 is just around the corner, and then support at 1.0960 will appear on the horizon. As for the bulls, their immediate task is to overcome the powerful resistance of 1.1065, then the resistance of 1.1100 and 1.1175.

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

Analysis are provided byInstaForex.

USD/JPY approaching resistance, potential drop !




Trading Recommendation Entry: 109.31 Reason for Entry: Horizontal overlap resistance Take Profit :108.73

Reason for Take Profit: Horizontal swing low supportStop Loss: 109.79

Reason for Stop loss: Horizontal pullback resistance


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

Forecast for GBP/USD on January 30, 2020

GBP/USD
Yesterday, the British pound, in anticipation of today's decision by the Bank of England on monetary policy, traded in a small range, which only strengthened the technical signs of an upward price movement. On the daily chart, the signal line of the Marlin oscillator outlined a reversal up and thereby formed a wedge with the same probability of exiting from it in any direction.



To break this triangle down, the price needs to gain a foothold at the Fibonacci level of 161.8% (1.2968), the target of the movement will be the Fibonacci level of 138.2% at the price of 1.2820. If the triangle breaks up, prices will go above 1.3070. In this case, the MACD line will be the target level, located near the Fibonacci level of 200.0%, near the price level of 1.3220. Moreover, growth may not stop there.



On the four-hour chart, the signal level 1.3070 corresponds to the MACD line. This strengthens the significance of the level. The driver of the movement, obviously, will be the outcome of the Bank of England meeting. Changes in monetary policy are unlikely to be, as the economic situation in the UK remains neutral, and today's meeting will be Mark Carney's final for the central bank, his term of office will expire. The main intrigue in the distribution of votes for maintaining the rate. The consensus forecast is 3-6 versus 2-7 at the last meeting, but the forecast range itself is wider, up to 4-5, and it is precisely such a voting result that can send the pound to growth much higher than the first target 1.3220.

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Forecast for GBP/USD on January 31, 2020

GBP/USD
Yesterday's meeting of the Bank of England brought a pleasant surprise for the pound - 7 members of the monetary policy committee spoke out for maintaining the rate against the expectation of 6 or even 5 members. The pound grew by 75 points due to this. On the daily chart, the signal line of the Marlin oscillator entered the growth zone and goes above the upper boundary of its own wedge. Price above the balance line. The growth target of 1.3220 is the area of accumulation of the Fibonacci level of 200.0% with the indicator line of MACD.



On a four-hour chart, the price is higher than both indicator lines - balance sheet and MACD, Marlin in the trend growth zone. We look forward to continued growth.



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

Analysis are provided byInstaForex.

Forecast for GBP/USD on February 3, 2020

GBP/USD
The pound rose 110 points on Friday amid the general weakening of the dollar. Growth stopped exactly at the Fibonacci level of 200.0%. Today the market opened with a window (gap) down, which becomes a sign of another upward price surge for its closure and likely testing the MACD line (1.3227). But growth may not end there. Overcoming the MACD line opens the target at the top of December 31, 1.3284, then growth to the Fibonacci level of 223.6% at the price of 1.3352 may follow.



A sign of such strong potential growth is the upward movement of the Marlin oscillator signal line from its own wedge-shaped structure.



A gap in the quote at the opening on the technical side can be a sign of a reversal, since the four-hour chart may form an oscillator divergence when the window is closed. In this case, leaving the triangle on daily may be a false signal.

So, for the British pound, it remains to wait for either a reversal pattern to form or price consolidation above 1.3227.

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

Analysis are provided byInstaForex.

Overview of the EUR/USD pair. February 4. Euro has chance at growth, but with no macroeconomic support

4-hour timeframe



Technical details:
Higher linear regression channel: direction - up.
Lower linear regression channel: downward direction.
Moving average (20; smoothed) - up.
CCI: 78.3586

The first trading day of the week passed in a corrective movement, however, the EUR/USD pair worked out a moving average line, but failed to gain a foothold below it, which saves the bulls chances of a new upward trend. In principle, following the euro's two day growth, the pair has been corrected as expected and now technical factors allow us to count on the resumption of the upward movement. However, in addition to technical factors, there are also fundamental, as well as macroeconomic ones. In brief, I recall that the fundamental factors remain on the side of the US currency for the following reasons: a stronger US economy, a more hawkish monetary policy by the Federal Reserve, the same pace of slowdown in the economies of the United States and the European Union, as well as the same signs of economic recovery. Macroeconomic factors are also in favor of the dollar this week so far: US manufacturing activity indices have increased and left the red zone below 50.0, business activity indices in the manufacturing sector of the EU have shown low growth, but most of them remained in the recession zone. Thus, at the moment, we have a certain conflict between fundamental and technical factors, and we believe that the upward movement will not be strong and long.

Only minor macroeconomic publications are planned in the EU and US on Tuesday, February 4. For example, the producer price index for December will be released in the EU, which, according to experts, will decrease by 0.7% y/y. Production orders for December will be published in the US, with a forecast of +1.1% m/m. However, it is unlikely that traders will react to any of these reports. We can only note the value of the producer price index, as it can affect the value of inflation. We already said in the final article for February 3 on the EUR/USD pair that Donald Trump can already be considered acquitted. Democrats were not able to attract even more witnesses to the case, but managed to stretch the entire process of considering it in the Senate as much as possible. In principle, the fact that the Senate refuses to impeach Trump was known with a probability of 99% from the very beginning. We have already said that the essence of the entire trial for the Democrats was the trial itself. The longer it lasts, the longer Trump is exposed in an unsightly light for himself before the electorate, which already in November 2020 will have to make a choice. Thus, we can only wait for the official results of the Senate vote on Wednesday and put a bullet in this matter. As for Trump's ratings, many agencies note that at this time they are at their highest values. But will these values be enough for the American people to choose an odious president for the second time? Social surveys say that 52% of Americans believe that Trump really violated the law by blocking military assistance to Ukraine, and also urging Vladimir Zelensky to launch an investigation into the activities of the Biden Democrats in Ukraine. 53% of Americans believe that the president did obstruct Congressional work by refusing to cooperate with the investigation of his own impeachment case. Thus, more than half of the electorate is now opposing Trump.

Trump himself feels calm, has stopped criticizing the Fed and Jerome Powell, has stopped scribbling daily opuses on Twitter about the "witch hunt" and in his exceptional style has managed to call Michael Bloomberg, one of the main Democratic presidential contenders, "short." "It's all right," Trump said, "you can be short. He (Michael Bloomberg) wants the box to stand on during the debate, but there is nothing wrong with that." Naturally, Bloomberg's spokesman Julie Wood immediately reacted, saying the US president was lying again. "He's lying all the time, he's a pathological liar," said Wood.

From a technical point of view, we are now waiting for the price to rebound from the moving and resumption of the upward movement with the update of the previous peak price. The macroeconomic background will be extremely weak tomorrow, so nothing should prevent the influence of technical factors on the pair's movement. In the event of consolidating the euro/dollar quotes below the moving average, the trend will change again to a downward trend.



The average volatility of the EUR/USD currency pair has increased due to trading on Friday and Monday to 47 points per day. Now this value is already average. Thus, on the second trading day of the week, we expect movement between the boundaries of the volatility band at 1.1012 and 1.1106. The steam will tend to lean towards the development of the upper boundary.

Nearest support levels: S1 - 1.1047
S2 - 1,1017
S3 - 1,0986
The nearest resistance levels:
R1 - 1,1078
R2 - 1,1108
R3 - 1,1139

Trading recommendations:
The euro/dollar began to adjust. Thus, purchases of the European currency with goals of 1.1078 and 1.1106 are relevant now, but we recommend that you wait for the correction to complete and only then should you start buying. It is recommended to return to selling the EUR/USD pair no earlier than consolidating the price below the moving average line, which will change the current trend to a downward trend, with targets at 1.1017 and 1.0986.

In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of illustrations:
The highest linear regression channel is the blue unidirectional lines.
The smallest linear regression channel is the purple unidirectional lines.
CCI - blue line in the indicator window.
Moving average (20; smoothed) - a blue line on the price chart.
Murray levels - multi-colored horizontal stripes.
Heiken Ashi is an indicator that colors bars in blue or purple. Possible price movements:
Red and green arrows.

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

Analysis are provided byInstaForex.

USD/CAD control zones for February 5, 2020

The test of the weekly control zone 1.3292-1.3276 occurred at the beginning of the week. This made the fixing of the previously opened purchases possible. Meanwhile, the reversal pattern has not yet been formed, so it is quite early to completely exit the long position. The probability of continued growth is still high.



Sales from the current levels are not profitable, as the probability of testing the November high still remains above 70%. On the other hand, an alternative corrective model will be developed if the "false break" pattern of the weekly high is formed today. This will allow sales to be considered in the nearest support zone tomorrow.



Daily CZ - daily control zone. The zone formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone that reflects the average volatility over the past year.

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

Analysis are provided byInstaForex.

Forecast for EUR/USD on February 6, 2020

Yesterday's US data on business activity in the non-manufacturing sector for January showed consistently high readings: the service PMI from Markit in the final assessment was raised to 53.4 from 53.2, and the ISM Non-Manufacturing PMI was 55.5 against 55.0 in December. This is a good sign of the stability of the American economy during the development of the coronavirus. The economic indicators of the Asia-Pacific countries are deteriorating, and the dollar is already becoming unshakeable. It is important to note that the strengthening of the dollar began on February 3, the day of the start of the presidential election campaign in the United States. We don't think it's a coincidence. During his time in office, Trump has repeatedly changed his position on the strength of the national currency, but the facts show one thing – the dollar has steadily strengthened over the past two years. We believe that now Donald Trump will be more specific.



The euro has completed its immediate task - it is fixed under the embedded line of the price channel on the daily chart. Now the pair's immediate target is 1.0925 – the lows of September 12 and 3, 2019. The second target is the minimum of October 1 at 1.0880.



On the four-hour chart, the price is fixed under the indicator lines, and the Marlin oscillator is in the negative trend zone. The decline continues.


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

Forecast for EUR/USD on February 7, 2020

EUR/USD
Yesterday, the euro managed to gain a foothold under the enclosed line of the price channel, which originates from the top of 2008. On the daily chart, the price also went under the Fibonacci reaction level of 138.2%.



Yesterday's publication of industrial orders in Germany for December showed a decrease of 2.1% against expectations of growth of 0.6%. In the US, the weekly report on applications for unemployment benefits showed 202 thousand such applications against the forecast of 215 thousand and 217 thousand a week earlier. The average monthly value of this indicator is 211.2 thousand. Taking into account the excellent data on employment in the private sector from ADP of 291 thousand and good employment sub-indexes in the ISM structure – 46.6 in the manufacturing sector and 53.1 in the non-manufacturing sector, there is a high chance that today's data on new jobs in the non-agricultural sector for January will come out better than the forecast. The forecast for the Non-Farm employment change is 163 thousand against 145 thousand in December. The forecast for wage growth is 0.3% compared to 0.1% a month earlier.



On a four-hour chart, the price drops below the indicator lines, and the Marlin oscillator goes deeper into the negative trend zone. The decline targets are visible on the daily chart: 1.0925 - minimum on September 3 and 12, 2019, and 1.0880 - minimum on October 1.

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

Analysis are provided byInstaForex.