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Technical analysis of GBP/USD for 24/02/2020

Technical Market Outlook:

The GBP/USD pair rallied through all the near technical resistance levels located at 1.2871, 1.2904, 1.2939 and 1.2962, but eventually, bulls did not make it through the technical resistance located at the level of 1.2988. The market had made a Bearish Engulfing candlestick pattern around this level and the bears took control over the market. Currently, the price is coming off the hight and traders around the level of 1.2939. The larger timeframe trend remains up, but the recent breakout from the consolidation zone is a signal, that the uptrend might be reversed soon.

Weekly Pivot Points:

WR3 - 1.3255

WR2 - 1.3152

WR1 - 1.3043

Weekly Pivot - 1.2942

WS1 - 1.2840

WS2 - 1.2740

WS3 - 1.2640

Trading recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is up, so all downward market moves will be treated as local corrections in the uptrend. In order to reverse the trend from up to down in the longer term, the key level for bulls is seen at 1.2756 and it must be clearly violated. The key long-term technical support is seen at the level of 1.2231 - 1.2224 and the key long-term technical resistance is located at the level of 1.3512.





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

Trading plan for EUR / USD and GBP / USD on 02.25.2020

What is happening in the currency market raises more and more questions especially if you look at the behavior of the single European currency and the pound, which behave in completely different ways. And it would be nice if this happened under the influence of certain macroeconomic data or political events both in the European Union and Great Britain. So no, nothing of the kind happened yesterday.



At the same time, as usual, the market completely ignored the rather secondary data on Germany. We are talking about the IFO indices, which remained completely without any attention. At the same time, the business optimism index increased from 96.0 to 96.1, but the current situation assessment indicator declined from 99.2 to 98.9. In turn, the expectations index rose from 92.9 to 93.4. At the same time, it is surprising how expectations can grow if the current situation worsens. So, on the whole, the data can be characterized as multi-directional, and no conclusions can be drawn from them. Moreover, the lack of reaction is also associated with this.

IFO Business Optimism Index (Germany):



On the other hand, the single European currency began to grow actively from the very opening of the American trading session, although at the same time, I placed French government securities, the yield on which went down. In particular, the yield on 6-month bonds decreased from -0.587% to -0.589%, while 12-month bills from -0.582% to -0.591%. Only on 3-month bills was an increase in profitability recorded from -0.596% to -0.587%. And yes, this is not a mistake. The yield on them is negative for all. That is, investors will receive less than they invested. And in theory, this situation should scare investors, but the single European currency was growing.



And against the background of all this, the subsequent behavior of the dollar at the time of placement of already US government debt securities, looks extremely untypical. It's just right. The profitability went down and the dollar became cheaper. But then again, only in relation to the single European currency. So, the yield on 3-month bills decreased from 1.545% to 1.505%, while on 6-month bills from 1.51% to 1.44%. And here is where the behavior of the dollar is completely logical and correct. However, another thing is surprising, because the yield on government loans should go down if the market expects a decrease in the refinancing rate of the Federal Reserve. But the fact is that American macroeconomic statistics clearly indicate that Jerome Powell just right to think about the possibility of raising this refinancing rate. So questions are raised by the dynamics of the yield on government debt securities, since it is clearly moving in the wrong direction. Although this may be due to just growing demand associated with a clear deterioration in the economic situation in Europe, while the US economy is doing quite well.



The market continues to demonstrate its indifference to European macroeconomic data since early in the morning. Although in Germany, Europe's largest economy, the fourth quarter final GDP data showed that economic growth did not slow down from 0.6% to 0.4%, as preliminary data showed, but to 0.3%. In other words, the German economy is moving toward recession even faster, but the market does not seem to notice it. Just as he did not notice the slowdown in the decline in producer prices in Spain from -1.9% to -0.8%. Although everything is clear here, since the Spanish macroeconomic data are in any case not as important as the German ones.

GDP growth rate (Germany):



However, today is seriously different from yesterday, as the United States publishes important macroeconomic data. Well, the market reacts extremely sensitive to American statistics. So, the S & P / CaseShiller data should show an acceleration in the growth rate of housing prices from 2.6% to 2.8%. Given the fact that rising house prices is a leading inflation indicator, then inflation will continue to rise. It turns out that American statistics may well be the reason for the resumption of the strengthening of the dollar.

S & P / CaseShiller (United States) Housing Price Index:



The euro / dollar currency pair which is in the correction phase returned to the area of 1.0850, where the quote slowed down and formed a range of 1.0840 / 1.0870. It is likely to assume that the fluctuation in the given framework will continue in the market, where in case the price is fixed lower than 1.0830, a signal of working off the level of 1.0850 will be received and, as a fact, the downward trend will be restored.



The pound / dollar currency pair is within the correctional course of the past week, where the quote tends to a maximum of 1.2976. It is likely to assume that the local upward interest will soon change, and the quote will return to the values of 1.2900 ---> 1.2885 again.



*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 27, 2020

EUR/USD
The euro once again tried to compete with the resistance of the Fibonacci level of 138.2% (1.0898) on Wednesday, the trading volume was high, it is very likely that investors again accumulated short positions. The signal line of the Marlin oscillator reached the boundary of the growth territory. The degree of probability of a reversal from this boundary will be considered on a smaller scale chart.



At H4, the oscillator signal line exited down from the wedge and returned to it. In general, this is still a signal for a price reversal. Confirmation of a reversal will be when the price leaves yesterday's low of 1.0855. The immediate goal of the euro 1.0813 is to support the MACD line. Next, we expect the euro at a quote of 1.0745 - at the Fibonacci level of 200.0% (daily).



But the euro is still growing. The growth limit may be the Fibonacci level of 123.6% at the price of 1.0933.

*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 28, 2020

EUR/USD
The euro showed an abnormal growth of 120 points on Thursday amid moderate (canadian dollar) or even indistinct (Australian dollar) development in other leading currencies.. The reason for this was the widespread risk aversion and the curtailment of European carry trade transactions. The US stock market (S&P 500) fell 4.42%, in one week the decline blocked the previous four-month growth. The market likelihood (in accordance with futures on federal funds) of the Fed's rate cut in March in one day increased from 44.3% to 97.4%, even for April, another cut is 73.1% compared to 27.5% the day before. At a time when the epidemic of the coronavirus began to subside, a storm came to the markets. On the other hand, this is the best time to blow out market bubbles and remove small players from the market. Major players left the market last year. Euro trading volumes were the highest yesterday in the last 5.5 months. The lion's share did not fall on purchases, but on closing stop losses above 1.09. The euro corrected 50% of the entire decline on December 31-March 20. Now you can turn down. The fact is that if investors really consider the collapse to be the beginning of a new global crisis, whether they want it or not, the world will buy dollars even when rates are lowered, but carry trade deals, according to experience, are closed very quickly.



The euro reached a low of January 2020 and the resistance of the embedded line of the price channel on the daily chart. Growth was stopped by the red indicator line of balance, which from a purely technical point of view indicates that the downward mood will continue. The MACD line is also higher than the price. The Marlin has risen, but shows an intention to turn down.



The situation is completely upward on the four-hour chart. The Marlin oscillator in the overbought zone. Taking into account yesterday's volumes, we can expect some price delay in the area of the reached high, investors will need several days to make new decisions. A signal for the resumption of sales will be when the price leaves the under the MACD line, approximately, around 1.0890-1.0900, that is, from the place where there were recent stop losses.

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Forecast for EUR/USD on March 2, 2020

EUR/USD

Good data on the US came out on Friday, which put pressure on most currencies, but the euro ended the day higher after a bit of confusion. Personal incomes of consumers increased by 0.6% in January, expenses increased by 0.2%, business activity in the manufacturing sector of the Chicago region in February amounted to 49.0 points against 42.9 a month earlier. Also, the commodity trade balance improved from -68.7 billion to -65.5 billion in January.

Today the final PMI estimates for February will come out in the eurozone (expectations unchanged), while the US ISM Manufacturing PMI is projected to decrease from 50.9 to 50.5, which may extend the euro's growth amid expectations of a Fed rate cut on the 18th. Markets lay a 94.9% probability of a rate cut immediately by 0.50% to 1.25% and another decrease by 0.25% at a meeting on April 29th. Looking ahead, we note that lowering rates will have a short-term effect on the dollar, the development of the crisis will nevertheless return market sentiment to the purchase of safe haven currency, as it was during the 2008 crisis.



On the daily chart, the price went above both indicator lines - above the red balance line, which shifts the price balance towards growth, and above the MACD line, which indicates a medium-term direction to growth. The immediate goal is the correction level of 76.4% at the price of 1.1130, overcoming the level opens the second goal of 1.1175 - a strong record level (a high on January 16, December 17, etc.).

The daily Marlin oscillator is close to the overbought zone, it has significantly pulled down the growth rate. We are waiting for the euro's next reaction. Labor indicators on Friday will become very important for understanding the Fed's intentions on the rate - good data are unlikely to push the central bank to double the rate cut, and one decrease by 0.25% is already actively included in the price.



The situation is completely upward on the four-hour chart, only the Marlin oscillator forms a kind of consolidation in front of the overbought zone, and a small divergence, which indicates an imminent slowdown in price growth with the likelihood of converting into a short-lived horizontal trend (1-2 days).

*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 March 3, 2020

GBP/USD
The quote of the British pound remained at the Fibonacci level of 123.6% for two days. Investors are waiting for news from the negotiations of the British delegation with European politicians. The current stage of negotiations will end on Thursday. Consolidating the price under yesterday's low opens the target at the Fibonacci level of 138.2% at the price of 1.2670. The second target is 161.8% at 1.2530. It is also possible to continue trading in the range, then the price can once again be marked at the Fibonacci level of 110.0% (1.2844).



On the four-hour chart, the signal line of the Marlin oscillator is moving up, which may be a warning of another local increase before the medium-term decrease (potential, expected). Here, the resistance is the MACD line, which moves to the Fibonacci level of 110.0%. The Marlin oscillator by this time will reach the boundary with the growth territory and will turn down from it.



*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 March 4, 2020

GBP/USD

Yesterday, the growth of the British pound was stopped at the Fibonacci level of 110.0% (1.2843). At the moment, technical indicators do not show any proactive signals of continued growth or a price reversal. The same situation of uncertainty in the political sphere, the results of trade talks between the UK and the EU should become known tomorrow.



On the four-hour chart, the signal line of the Marlin oscillator touched the boundary with the growth territory. There may be a downward turn from this line, but there may be continued growth.



In general, the situation is going down on both scales - the price is lower than the indicator lines, there are no warning reversal patterns. The pound may rise after the price overcomes the Fibonacci level of 110.0% (1.2904), a return to decline is likely after leaving the level of 123.6% at the price of 1.2760. We are waiting for news from Brussels where trade negotiations take place.

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Forecast for EUR/USD on March 5, 2020

EUR/USD
The EUR/USD quote continues to stay at the Fibonacci level of 76.4% on the daily scale chart, in the area of Monday's close. Trading volumes were high, indicating closing positions from purchases since February 21. The euro is unfolding.



The first goal 1.1035 is to support the MACD line on a daily chart. The second target, 1.0990, is an embedded price channel line, overcoming of which, in turn, opens the way to a medium-term decline in the euro. Investors are laying a 90% chance that the ECB will lower the deposit rate from the current -0.50% to -0.60% at its meeting on March 12th.



*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 March 6, 2020

EUR/USD
The expected euro reversal is delayed. Markets are laying the probability of a threefold Fed rate cut by April, that is, from the current of 1.25% to 0.50%. Investors clearly suffered, because on Wednesday the head of the St. Petersburg Federal Reserve Bank of St. James James Bullard spoke and said bluntly that the markets were mistaken, laying even a quarter point rate hike on March 18, since an emergency rate cut on Tuesday was a preventive measure, you need to get at least some information on the impact of coronavirus on the US economy.

Trading volumes sharply fell, but still exceeded the top five-month volumes. This is excessive volumes for yesterday's growth of the euro by 100 points, which means that strategic investors still continued to close positions on the purchase of middle-hand players.



The price stopped at the Fibonacci level of 100.0% - at the top of December 31. The Marlin oscillator began to turn around from overbought zone. Today, US employment data for February will be released. The consensus forecast for unemployment is the previous 3.6%, but there are estimates even lower at 3.5%. Outside the agricultural sector, an increase of 175 thousand new jobs is expected. This news is likely to become a turning point for the entire market.

The first goal 1.1035 is to support the MACD line on a daily chart. The second target, 1.0990, is an embedded price channel line, overcoming of which, in turn, opens the way to a medium-term decline in the euro. Investors are laying a 90% chance that the ECB will lower the deposit rate from the current -0.50% to -0.60% at its meeting on March 12th.



On the four-hour chart according to Marlin, divergence is forming. The purpose of the euro decline is the Fibonacci level of 61.8% (in fact 38.2% of the growth since February 20), the MACD line is striving for this level both on the daily chart and on the four-hour chart.

*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. Trumps of the pound and the dollar's hopeless prospects

EUR/USD
The pound ended the trading week on a major note: paired with the dollar, the pound was able to return to the area of the 30th figure, after falling to around 1.2725 at the end of February. Such dynamics is explained not only by the weakness of the US currency. The buyers of GBP/USD gave a rather positive assessment of the first results of the negotiation process between Brussels and London, although representatives of the parties announced serious disagreements that could not be overcome yet. Nevertheless, the negotiators also voiced encouraging theses - it was on them that the market focused its attention.

In particular, the head of the European delegation Michel Barnier expressed confidence that they will be able to negotiate with the UK, despite the "very, very serious disagreements." He noted that the parties initially had completely different positions on key issues, so these differences in views were not a surprise to anyone. Nevertheless, he was optimistic about the prospects for negotiations.



The market seized on this phrase, although it is actually unclear how the parties plan to find a common denominator. Barnier named four points on which there are serious differences. According to him, if no compromise is reached on these issues, an agreement is unlikely to be signed.

First, it is about maintaining European standards that would guarantee equal trading opportunities. At the moment, London does not want to oblige itself to comply with these standards, and most importantly, it is opposed to the creation of appropriate mechanisms that could monitor the situation and record "unjustified commercial advantages".

Secondly, the British refuse to recognize not only the jurisdiction of the European Court of Justice, but also the European Convention on Human Rights and the rules for the exchange of data. As Barnier noted, if the parties do not come to an understanding on this item, then further cooperation in this area will be "carried out in accordance with the norms of world law". Here you can also mention the contradictions in the field of law enforcement: we are talking about coordinated actions to combat terrorism, financial crime, organized crime and so on.

Another contradiction is more fundamental. We are talking about the legal basis for future relationships. Britain plans to enter into several agreements – in every area where this is necessary. Brussels insists on signing a single, comprehensive agreement. In addition, the UK does not want to agree to common terms for both sides in the deal.

And the last, fourth, disagreement is about fishing. London insists that fishing matters be discussed on a regular basis, that is, annually. On the contrary, Europeans want to include fishing in the structure of the general economic agreement. According to Barnier, the British position on the issue of fishing is "unacceptable".

As you can see, the positions of the parties are still at different poles, and the first round of negotiations was inconclusive. But the market nevertheless "trusted" Barnier's optimism, which expressed confidence that Brussels and London would still come to a common opinion on all key issues.

It is worth noting that last week, figuratively speaking, Brexit "did not prevent" the GBP/USD from growing, while the main driving force of the upward movement was the dollar, which swooped down on all fronts. Yesterday, the Federal Reserve Bank of New York significantly lowered its forecasts for US GDP growth in the first quarter of this year. While the previous estimate was at 2.15%, expectations have now dropped to 1.7%. Comments from Donald Trump's economic adviser, Larry Kudlow, also put pressure on greenback. According to him, certain sectors of the US economy will feel the "strong negative impact" of the epidemic, but it is "too early" to make decisions about supporting the economy with fiscal measures. At the same time, Trump himself is demanding that the Fed should hold another round of rate cuts.

In this case, we can talk about a certain de-correlation. For example, if the head of the Bank of England (Andrew Bailey) insists on applying fiscal responses, the White House is trying to offset the impending threat with monetary policy. And the Fed seems to agree with this scenario. At least, the latest comments from the Fed representatives (Bullard, Kaplan) indicate a willingness to further soften monetary policy. While representatives of the BoE and the ECB are increasingly reminded that they are limited in their actions – in particular, Bailey allowed a rate cut to 0.1%, but at the same time excluded the option of reducing to a negative area.



Thus, the pound is still in a winning position relative to the US currency. According to general market expectations, the Fed will lower the rate by another 25 basis points at the March meeting, and later, by another 25 basis points by the beginning of summer. In turn, the BoE can maintain a wait-and-see attitude on March 26, saving an arsenal of available actions for the future. Such a de-correlation provides support for GBP/USD, especially against the background of quite calm rhetoric of the Brexit negotiators. If this fundamental background for the dollar and the pound persists next week, the pair can test the next resistance level, which is located at 1.3105 - this is the lower boundary of the Kumo cloud on the daily chart.


Analysis are provided byInstaForex.