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AUD/JPY profit target reached perfectly, prepare to buy

The price has dropped perfectly and reached our profit target. We now prepare to buy above major support at 88.39 (Multiple Fibonacci retracements, horizontal overlap support) for a push up to at least 89.10 resistance (Multiple Fibonacci retracements, recent swing high resistance).

Stochastic (21,3,1) is seeing support above 1.2% where we expect a corresponding bounce from.

Buy above 88.39. Stop loss is at 88.17. Take profit is at 89.10.

Analysis are provided by InstaForex

Technical analysis of EUR/USD for Oct 26, 2017

When the European market opens, some Economic Data will be released, such as Minimum Bid Rate, Italian 10-y Bond Auction, Private Loans y/y, M3 Money Supply y/y, Spanish Unemployment Rate, and German GfK Consumer Climate. The US will release the Economic Data, too, such as Natural Gas Storage, Pending Home Sales m/m, Prelim Wholesale Inventories m/m, Goods Trade Balance, and Unemployment Claims, so, amid the reports, EUR/USD will move in a medium volatility during this day.

TODAY'S TECHNICAL LEVEL:
Breakout BUY Level: 1.1875.
Strong Resistance:1.1868.
Original Resistance: 1.1857.
Inner Sell Area: 1.1846.
Target Inner Area: 1.1818.
Inner Buy Area: 1.1790.
Original Support: 1.1779.
Strong Support: 1.1768.
Breakout SELL Level: 1.1761.

Analysis are provided by InstaForex

Daily analysis of GBP/USD for October 27, 2017


EUR / USD pair
Trend analysis (Figure 1)
The downward trend prevailed last week. The market tested again the resistance line and drove downwards. The price may fend off the support line and move higher in the following week. Complex analysis will accurately show the price direction.

Fig. 1 (weekly chart).
Indicator analysis on the weekly schedule (Figure 2).
The system of indicators ADX (Figure 2).
On the last run, the fast line (indicator 5 - white) and the slow line (indicator period 8 - blue) moved up.
In this case, the trend should be determined by trend type indicators.
MACD Indicator (period 5/8/13).
The linear part of the MACD indicator. Fast line (signal) - a line of white color.
The slow line (main line) is the blue line.
The result of the MACD indicator is a downward trend (100 points down). Histogram of the MACD indicator.
Histogram - columns of black color.
The result of the histogram of the MACD indicator is a downward trend (100 points down).
Overall: the MACD indicator on the weekly chart gives a downward trend.
Middle lines of the EMA.
On the weekly chart, the following midlines are used.
1 middle EMA line - color white (first shadow).
5 the middle line of the EMA - the color is red (the first shadow).
8 middle EMA line - the color is blue (trend of the week).
13 the middle line of the EMA - the color is yellow (the trend of the week).
21 middle EMA line - brown color (trend of the week).
At the last run 8, the middle EMA line (blue) is moving down over the 13th EMA midline (yellow), which also moved down - the signal is up. At the last run 13, the middle EMA line (yellow) is moving down above the 21 middle line of the EMA (black), which moved downward - the signal gain of the upper work.
The bottom line: the EMA mid-line system on the weekly chart gives an upward signal. The probability distribution of the indicators are as follows:
- average EMA lines - 24% up;
- MACD indicator (linear part) - 38% down;
- MACD indicator (histogram) - 38% down.
Overall: on technical analysis: the price on the weekly chart should have a downward trend.
Calculation of the first shadow of the week (Monday) on a weekly chart.
The middle lines of the EMA 1/5/8 are the lower signal.
The indicator "three lines" (the direction of the lines of indicators CCI (5), RSI (5), stochastics with a period of 3/3/4) is the lower signal.
Calculation of the RSI indicator system for the first tail is the bottom signal.
The bottom line: the calculation of the weekly candle from October 30 to November 04 showed that the price movement on Monday should move downward, but the final outcome depends entirely on the daily chart. Calculation of the second shadow of the week (Friday).
The calculation for the MACD linear part showed a downward trend (100 points down).
Calculation of the MACD histogram gave a downward trend (100 points down).
The bottom line: the calculation on Friday for the technical analysis showed that the price may have a downward trend, which should be confirmed by the daily chart.


Fig. 2 (weekly chart).
Complex analysis:
- indicator analysis - down;
- Fibonacci levels - down;
- volumes - down;
- candle analysis - neutral;
- trend analysis - up;
- Bollinger lines - up;
- monthly chart - down.

Conclusion on complex analysis - up.
The entire result of the calculation of candle currency pair EUR/USD on a weekly chart indicates the weekly price would likely to have an upward trend with the presence of the first lower shadow in the weekly white candle and the presence of a second upper shadow. The upper goal is 1.1670.

GBP / USD Pair
Trend analysis (Figure 1)
The downward trend prevailed last week. The price reached the support line at 1.3087 (white thick line). Most likely, there will be an upward trend next week. The level of probability for this scenario is likely shown in a comprehensive analysis.

Fig. 1 (weekly chart).
Indicator analysis on the weekly schedule (Figure 2).
The system of indicators ADX (Figure 2).
On the last run, the fast line (indicator 5 - white) moved upward, and the slow line (indicator period 8 - blue) moved down. In this case, the trend should be determined from the indicators of the oscillator type.
Stochastic indicator (period 3/3/4) on the weekly chart gives an upward trend (Fig. 2).
The system of indicators RSI (Figure 2).
When working with the daily chart, the following periods are used in the RSI indicator system: 21 (brown), 8 (blue), 13 (yellow), 5 (red).
On the last closed candle.
The calculation of the indicator RSI (5) on properties gives up.
Calculation of the indicator RSI (8) by properties gives up.
The bottom line: the RSI indicator system gives a downward trend.
The calculation of the indicator CCI on the properties moves down.
The bottom line: the CCI indicator system gives a downward trend.
Overall: according to the indicator analysis, the price on the weekly chart should have an upward trend.
Calculation of the first shadow of the week (Monday) on a weekly chart.
Middle lines EMA 1/5/8 - the upper signal.
The indicator "three lines" (the direction of the lines of indicators CCI (5), RSI (5), stochastics with a period of 3/3/4) is a neutral signal.
Calculation of the RSI indicator system for the first tail is the upper signal.
Result: the calculation of the weekly candle from October 30 to November 04, according to technical analysis showed that on Monday there will be an upper trend, but the price movement will determine the daily schedule.
Calculation of the second shadow of the week (Friday). The calculation for the MACD linear part - gave a downward trend (100 points down). Calculation of the MACD histogram - gave a downward trend (100 points down).
The bottom line: the calculation on Friday for the technical analysis showed that there will be a lower trend, but the price movement will determine the daily schedule.

Fig. 2 (weekly chart).
Complex analysis:
- Indicator analysis - up;
- Fibonacci levels - down;
- volumes - down; - candle analysis - neutral;
- trend analysis - up; - Bollinger lines - up;
- monthly graph - up.

Conclusion on the complex analysis is an upward movement.

The total result of the GBP / USD currency pair candlestick calculation according to the weekly chart shows the weekly price would likely to have an upward trend with the absence of the first lower shadow of the weekly white candle and the presence of the second upper shadow. The initial target is 1.3336.

* 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 by InstaForex

NZD/USD profit target reached perfectly, prepare to sell

The price has continued to rise perfectly to our profit target. We now prepare to sell below major resistance at 0.6968 (Fibonacci retracement, Fibonacci extension, bearish divergence) and we expect to see a strong reaction from this level to push the price down to at least 0.6827 support (Fibonacci extension, horizontal swing low support).

Stochastic (55,3,1) is seeing strong resistance below 96% and also sees bearish divergence vs price signaling that a reversal is impending.
Sell below 0.6968. Stop loss is at 0.7043. Take profit is at 0.6827.

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

Analysis are provided by InstaForex

Gold recalled its old ties

The uncertainty surrounding the tax reform, the growth of geopolitical risks in the Middle East and the visit of Donald Trump to Asia allowed the bulls in gold to restrain their opponents who are on the offensive. There were rumors in the market that the start of the transformation of the fiscal system in the US could be postponed for a year due to the fact that the US economy is in good shape. If you add an incentive to this, it will increase the risks of overshooting inflation and a future recession. Given its current position, there is no certainty that the reform will be passed through the Congress: Democrats criticize the bill because of the losses of the middle class, while the number of dissatisfied Republicans is increasing. In general, the revision of the tax system is seen as a "bullish" factor for gold. Therefore, the problems with its implementation allows buyers of the XAU/USD to strike a counterattack.

Investors have raised their share of haven assets in portfolios, looking at events in the Middle East. The mass arrests in Saudi Arabia, the attack on Riyadh by rebels from Yemen, the conflict between Turkey and Kurdistan, and the dissatisfaction of Donald Trump with decisions of his predecessors on Iran's nuclear program have pushed up oil and bond prices. The yield of the latter is under pressure, which, due to the existing correlation, has a positive effect on precious metals.

Dynamics of gold and yield of US bonds

Source: Trading Economics.

An additional factor in supporting gold is U.S. President Donald Trump's tour in Asia. In Japan, Trump has already tickled the nerves of local businessmen, accusing them of non-commercial and non-mutually beneficial trade. In China, the US president raised the issue of ending its economic ties between Beijing and Pyongyang, which certainly provoked North Korea's discontent. Let me remind you that one of the most important drivers of almost 12% of the XAU/USD rally since the beginning of the year have been geopolitical tensions on the Korean peninsula and the US protectionist policy.

At the same time, from the point of view of macroeconomics, the precious metal's situation is not the best. While the euro area and Japan's GDP are growing above the trend, the US economy has been expanding by 3% or more for two consecutive quarters, and is also prepared to increase the rate. In the case of tax reform, investors prefer risky assets. Moreover, global inflation is characterized by sluggish growth. In this scenario, real world market rates have the prerequisites for a movement upwards, which should be considered as a "bearish" factor for XAU/USD.

In my opinion, the situation in the Middle East will soon stabilize, and the absence of conflicts with North Korea and the passage of tax reform through the Congress would raise the demand for the US dollar and return the quotes of precious metals futures for a downward short-term trend.

A technically successful test of the upper limit of the consolidation range at $1262-1281 per ounce will increase the risks of rising gold prices towards $1,299 and $1,320. On the other hand, a breakthrough of support at $1262 will allow the "bears" to count on the implementation of the targets for 161.8% and 200% for the AB=CD pattern.

Gold, daily chart

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

Analysis are provided by InstaForex

Gold emerges from sleep mode

The problems surrounding the tax reform and the related weakness of the US dollar allowed "bulls" for the XAU/USD to go into a counter-attack. Gold enjoys an increased demand for safe-haven during conditions when the risks of correction of the S&P 500 significantly grows. Indeed, the desire of Senate Republicans to connect its plan of repairing the fiscal system with the dismantling of Obamacare, appears to be ideal. To a certain degree, the chances of a compromise plan through Congress before the end of 2017 are extremely low, even though Secretary of the Treasury Steven Mnuchin and economic adviser to the President Gary Cohn claim otherwise. Along with the approaching date when the problem of the ceiling of the national debt should be solved, this factor forces investors to get rid of the shares.

The tightening of monetary policy and the reduction in the balance sheet of the Fed are "bearish" drivers for the S&P 500, which grew due to hopes of an implementation in the tax reform. Now this prize at the stock index is ready for the taking. As a result, investors flee from risk, which is clearly visible as currencies of developing countries are being sold. I do not think that the panic will last long. The Fed remains committed to an extremely slow normalization, the health of the US economy does not cause concern, and the devaluation of the dollar contributes to improved corporate earnings reports. This is not the best news for the recovery of the precious metal from the "bullish" trend in the US stock market.

For more than a month, gold traded in the range of 3.3%, the narrowest since February 2013, while its volatility is at its lowest level in the last 7 years. The yellow metal went into a sleep mode, bulls expect to support short-term drivers of growth, while the medium and long-term outlook for XAU/USD appears "bearish." When central banks move from unconventional to traditional monetary policy, and the global yield of debt markets begins to move away from the area of long-term lows, it is possible to forget about the recovery of the long-term upward trend.

Dynamics of the yield of US and gold bonds

Source: Bloomberg.
At the same time, record shows that from June 2004 to June 2006, when the federal funds rate increased to 5.25%, gold prices rose 50%. From June 1999 to May 2000, the growth rate to 6.5% allowed the precious metal to add 6% to its value. What's the problem? In my opinion, parallels are unlikely to hold parallels, because the asset reacts sensitively to real rates of the debt market, and in conditions of sluggish inflation, the increase in nominal yield will put pressure on prices. Simply put, reasons must be sought in different CPI growth rates in the 2000s and now. It is highly unlikely that the XAU/USD pair will rise above $1,500 an ounce before the US economy plunges into a new recession.

Technically, the release of precious metals beyond the downstream channel increases the risk of an activation of the "Dragon" pattern and the continuation of a downward trend in the direction of $1320 per ounce and above. In order for this scenario to turn into reality, a strike on $1302 is required.

Gold, daily chart

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

Analysis are provided by InstaForex

The Euro used its chance

Eurozone
The euro took full advantage of the rise of political risks in the US when it passed the tax reform plan through Congress, restoring half of the losses from the reduction of the last one and a half months, but in order to question the reversal of the trend to the south, something more important is required.

Inflation in the eurozone continues to be low. The price growth in October was only 0.1%, the while growth of the core indicator slowed to 0.9% year-on-year. The weak indicators call into question the ECB's willingness to continue the policy of exiting the soft monetary policy.

The head of the ECB, Mario Draghi, speaking on Friday at a conference in Frankfurt, said that the low-interest policy does not harm the income of European banks that have remained stable over the past two years and, moreover, added that the asset repurchase program can be continued after September 2018, "if it is necessary".

The euro, therefore, immediately lost the driver to growth and went into the lateral range. Most likely, it will continue to be cautious about the direction of the movement and at the beginning of the new week due to the lack of significant macroeconomic releases. On Thursday, the report PMI Markit on the eurozone countries, the forecasts are favorable, with the production index very close to the highs of the last nine years, the service sector index lags behind insignificantly.

Given that the earlier reports released earlier by Ifo and ZEW indicated further growth of consumer confidence, the growth of Markit indices should be expected, which in turn can support the euro.

Also on Thursday, the minutes of the ECB meeting of October 26 will be published. In the light of Draghi's latest comments, the market will be looking for an answer to the question whether the probability of announcing the exact date of completion of the asset buy-back program was announced at the meeting, as the answer to this question may change the long-term expectations for the euro.

For a break above 1.1850 euros more weighty reasons are required. More likely is the consolidation at the achieved levels with the resumption of the activity of bears and the move towards support level of 1.16.

United Kingdom
The report on retail sales published on Thursday could not provide the pound any support, despite the fact that the dollar was exposed to considerable pressure. Retail sales increased by 0.3% in October; this was slightly higher than market expectations, but on an annual basis, it showed a decline of 0.3%, meaning consumer activity continues to be very low. Despite the fact that prices grew quite confidently, the physical volume of goods sold remained at the levels of a year ago, which indicates certain problems in the consumer sector.

Oil
Oil by the close of the week resumed growth, responding to the reduction of the threat of Venezuela's default and the weekly report of Baker Hughes, according to which the rise in the number of active drilling rigs stopped. The current level of quotes , apparently, by the shale industry is perceived as insufficient to significantly resume investments, and without new drilling wells it is difficult to keep production at current levels, given the high rate of their depletion.

The threat of deep correction has decreased, but the chance to update the two-year high, on the contrary, has increased. The market will catch the insider about the upcoming meeting of OPEC +, one must assume that the general background remains favorable for oil.

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

Analysis are provided by InstaForex

The growth potential of the pound is limited

The British pound declined against the US dollar following the release of a report, which indicated that the UK government in October this year was forced to borrow more money compared to the same period last year.

This is directly related to the acceleration of inflation, which led to an increase in the costs of debt servicing.

According to the official report of the National Bureau of Statistics, the net borrowing of the UK public sector in October 2017 had amounted to 8 billion British pounds, which is 0.5 billion pounds higher than it was in October of last year. Economists had expected that borrowings would amount to £7.5 billion.

In case the GBPUSD pair drops to catch hold of the resistance at 1.3260, pressure on the British pound would only increase in the near future, which will lead to the renewal of 1.3180 and 1.3140.

Data on the balance of foreign trade will positively affect the overall GDP of Switzerland for the 3rd quarter of this year. As noted in the report, the surplus increased due to the weakening of the Swiss franc in October this year, which had a positive impact on the foreign trade balance.

Therefore, the positive balance of foreign trade in October 2017 amounted to 2.4 billion francs, while exports grew by 2.3% compared to the same period in 2016.

The Australian dollar rose against the US dollar following a speech by the Governor of the Reserve Bank of Australia. Let me remind you that the morning minutes of the RBA, which were prepared after the last meeting, had a negative impact on the Australian dollar.

Philip Lowe said that at the moment there is no special reason to raise interest rates in the near future, and it will be more appropriate to keep rates low for quite a long time.

The growth of the Australian dollar could also occur due to the fact that some major players were afraid of hints from the RBA's governor about the possibility of further lowering of rates. However, Lowe said that in case of further improvement in the economic situation, the increase in rates is more likely than its decrease. According to the head of the RBA, in the economy of Australia there are unused capacities, while restrained growth of wages continues to subdue inflation.

As for the technical picture of the AUDUSD pair, after going beyond the large support level of 0.7630, the pressure on the Australian dollar increased, which led to the renewal of new large levels of 0.7530 with the formation of the forecast for the exit at 0.7500, where a significant profit taking on short positions will occur.

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

Analysis are provided by InstaForex

Euro does not have enough momentum

The euro returned to the high of the day following the release of upbeat data for Germany and the eurozone as a whole, indicating a resurgence of economic growth in the 3rd quarter of this year.

According to the data, Germany's economy in the third quarter of this year has expanded due to growth in exports and investments of companies. The report of the National Bureau of Statistics of Germany Destatis says that the gross domestic product in the third quarter of 2017 increased by 0.8% compared to the previous quarter. Compared to the same period in 2016, GDP grew by 3.3%.

Germany's exports in the third quarter grew by 1.7% compared to the previous quarter, while investments increased by 1.5%.

The Manufacturing PMI in Germany also increased significantly, reaching 62.5 points, better than the forecasts of economists, who expected growth to reach 60.4 points.

The sentiment in the manufacturing sector of France rose in November. According to the report of the National Bureau of Statistics of France, Insee, the composite index of purchasing managers in France rose to 60.1 points in November, compared to 57.4 points in October. The Bureau of Statistics also pointed out that the broader indicator of confidence increased by two points in November, to 111 points.

The euro zone's purchasing managers index can also provide good support to the European economy, which will lead to an increase in demand for the European currency at the end of the year.

According to the research company IHS Markit, the index of supply managers in November 2017 rose to 57.5 points from 56.0 points in October.

Minutes of the ECB did not lead to a new wave of growth in the euro.

The report indicates that the ECB management at the meeting in October had differed on the timing of the completion of the quantitative easing program. However, it agreed to assess the impact of the program of buying corporate bonds. It should be noted that the European Central Bank announced that it is extending the program of bond purchasing until September 2018. However, since December of this year, the volume of monthly purchases will be reduced to 30 billion euros from 60 billion euros earlier.

As a result of the Thanksgiving holiday in the US, market volatility remains low. The technical picture remained without significant changes.

Buyers of risky assets are prepared to enter new monthly highs. However, in order for this to happen it is necessary to break through a large resistance of 1.1840, which may lead to an increase in long positions and an update to levels like 1.1880 and 1.1910.

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

Analysis are provided by InstaForex

Technical analysis of EUR/USD for Nov 28, 2017

When the European market opens, some Economic Data will be released such as German GfK Consumer Climate, Private Loans y/y, M3 Money Supply y/y, and German Import Prices m/m. The US will release the Economic Data, too, such as Richmond Manufacturing Index, CB Consumer Confidence, S&P/CS Composite-20 HPI y/y, HPI m/m, Prelim Wholesale Inventories m/m, and Goods Trade Balance, so, amid the reports, EUR/USD will move in a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:
Breakout BUY Level: 1.1962.
Strong Resistance:1.1955.
Original Resistance: 1.1944.
Inner Sell Area: 1.1933.
Target Inner Area: 1.1905.
Inner Buy Area: 1.1877.
Original Support: 1.1866.
Strong Support: 1.1855.
Breakout SELL Level: 1.1848

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

Analysis are provided by InstaForex

Daily analysis of GBP/USD for December 01, 2017

The pair remains following a bullish structure above the 200 SMA at H1 chart and looks forward to testing the 1.3541 level, amid USD weakness against the Pound. Corrective moves might happen in the short-term, with the nearest target placed around the 200 SMA and the 1.3303 level. MACD indicator remains in the negative territory, favoring to the downside.

H1 chart's resistance levels: 1.3440 / 1.3541
H1 chart's support levels: 1.3303 / 1.3244

Trading recommendations for today: Based on the H1 chart, buy (long) orders only if the GBP/USD pair breaks a bullish candlestick; the resistance level is at 1.3440, take profit is at 1.3541 and stop loss is at 1.3337.

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

Analysis are provided by InstaForex

Pound is selected from the politics

Over the past two weeks, the British pound added 2% versus the US dollar and more than 1% versus the euro, against a background of lower political risks. Popular newspaper, like The Times, reported that London and Brussels managed to agree on the amount of compensation for the divorce, as well as on the issue of the Irish border. It seems like investors are satisfied that Theresa May is paying for a mild Brexit loss of government members. The market will closely follow the phrasing from the table of her talks with Jean-Claude Juncker and Michel Barnier, in order to understand whether it is worth selling due to the fact on initial rumors of buying.

Weekly dynamics of the pound

Source: Bloomberg.
Positive news from Brexit, the problems of promoting tax reform in the United States, as well as the surfaced story of Russia's interference in the US presidential election, helped the GBP/USD pair to rise to a two-month high. The rate of the sterling, weighted by trade, jumped altogether to a peak record in the last six months. At the same time, some people are concerned that Britain's GDP is growing much slower than its US and European counterparts. Investors win back political risk and are ready to turn a blind eye to the long-term pessimistic prospects of the UK economy in order to obtain immediate benefits. Therefore, Credit Agricole believes that the hopes for progress on Brexit will push the GBP/USD pair to 1.4, near which it traded in the first half of 2016.

Commerzbank, on the contrary, is confident that investors are already sold on the factor of positive rhetoric of Brussels at the EU summit in mid-December. If they do not get what they expected, we should prepare for a selling of the sterling. On the other hand, if everything goes according to plan, then it's unlikely that the GBP/USD pair will sharply strengthen. In such circumstances, market attention can shift to macroeconomic data and not related to it, the continuation of the cycle of normalization of the monetary policy of the Bank of England. In this regard, the pound is able to respond sensitively to the release of data on business activity in the services sector, scheduled for December 5. The index of purchasing managers in the manufacturing sector has already pleased the fans of sterling. The figures from the largest sector of the economy of the UK is awaited.

The alignment of forces in the analyzed pair will be influenced by events in the United States. The Senate passed a tax reform project with 51 votes to 49, but now both chambers of Congress are required to find a compromise on the timing of its implementation and on other issues. The dollar could not benefit from the "bullish" news, as uncertainty persists. At the same time, the willingness of former National Security Adviser Michael Flynn to cooperate with the FBI can cast a shadow on the US president, which will negatively affect the USD index.

Technically, updating the November, and then the autumn peak, activates the AB = CD pattern with a target of 127.2%. It corresponds to 1.385. However, we should not rule out a retest of the upper limit of the range of the previous consolidation of 1.304-1.332.

GBP/USD, daily chart

Analysis are provided by InstaForex

Technical analysis of USD/JPY for Dec 07, 2017

In Asia, Japan will release the Leading Indicators and 30-y Bond Auction data, and the US will release some Economic Data, such as Consumer Credit m/m, Natural Gas Storage, Unemployment Claims, and Challenger Job Cuts y/y. So, there is a probability the USD/JPY will move with a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:
Resistance. 3: 113.02.
Resistance. 2: 113.80.
Resistance. 1: 112.58.
Support. 1: 112.30.
Support. 2: 112.08.
Support. 3: 111.86.

Analysis are provided by InstaForex

Pound fled from politics

A busy economic calendar and the departure of political risks into obscurity allows us to hope for the return of investors in actively trading the pound. Semiannual negotiations between London and Brussels, judging by the statements of the latter, were completed successfully, which makes it necessary to shift attention to macroeconomic data. In general, there is plenty of data at the beginning of the second week of the month for the UK. Inflation, the labor market, retail sales and the meeting of the Bank of England will satisfy even the highest demands of trade analysts on the news.

The fall of sterling in response to positive news from the negotiation table on Brexit has become a classic example of the implementation of the principle of "buy on the rumor, sell on the facts." Traders sold the GBP/USD quotes on the factor of harmonizing the conditions of the divorce between Britain and the EU, and the message that the round-the-clock work was over and the issue of the Irish border was resolved. This launched a wave of selling against the backdrop of profit taking. Moreover, popular media referring to competent sources reported that the trade deal before the spring of 2018 will not be achieved. However, the bridgehead is laid, and the bulls on sterling, including Nomura and ING, believe that the reduction of political risks of the UK will push the GBP/USD pair in the direction of 1.4 in 2018 and 1.36 in the near future.

On the contrary, "bears" criticize the agreement that was reached, blaming it for lack of details, and referred to the futures market, where the value of options to sell sterling is higher than the purchase. Derivatives are used for risk insurance, and the current dynamics of an indicator such as the risk of reversal (the ratio of premiums on call and put), indicates that investors still fear the sterling's collapse.

Dynamics of the ratio of premiums on options

Source: Bloomberg.

On the other hand, speculators in the futures market held a net long position on the pound for 6 of the last 10 weeks, although before that they acted as net sellers for 98 five-day consecutive days.

Lately, there have been too many news with political coloring, and it's time for the sterling to turn its focus on the economy. In general, the outlook for upcoming releases is moderately positive. Bloomberg experts do not expect inflation to exceed the critical level of 3%, while the acceleration of average wages from 2.2% to 2.5% y/y. In addition to that, the exit from the negative territory of retail sales inspires optimism for bulls in the GBP/USD pair. Moreover, it is beneficial for the Bank of England to maintain a strong pound with the help of "hawkish" rhetoric, and the dollar cannot take advantage of strong data on the US.

It is possible that the growth of the fiscal deficit as a result of the implementation of the tax reform, the reluctance of Donald Trump to see the US currency strong and the recovery of the economies of the competing countries will force the USD index to restore the downward trend in 2018.

Technically, the GBP/USD pair is preparing to retest the upper bound of the previous consolidation range at 1.304-1.332. Assuming that it, like the previous one, ends with the defeat of the "bears", the likelihood of a restoration of the uptrend in the sterling will then increase.

GBP/USD, daily chart

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

Analysis are provided by InstaForex

British income levels drop

The British pound did not pay attention to data on pay cuts in the UK from August to October of this year, and this could negatively affect retail as well as GDP growth.

Let me remind you that the fall in real incomes of citizens started last year, when the UK decided on a vote to leave the EU. According to the report, from August to October 2017 compared with the same period of last year, real wages fell by 0.4%. The unemployment rate in the UK for the same period remained unchanged at 4.3%. Economists expected a drop in the unemployment rate by 0.1 percentage points.

As for the pound's immediate prospects, much of it will depend on the decision of the Bank of England on Thursday. Although it is projected that the regulator will leave interest rates unchanged. It will be important to know how the members of the Committee on Monetary Policy will vote for constant interest rates and quantitative easing.

If the Bank of England mentions good progress in Brexit talks during the comments, it will also benefit the British pound, which can significantly strengthen its positions against the US dollar.

As for the technical picture of the GBP/USD pair, further growth is directly dependent on the breakthrough of a large resistance located in the area of 1.3375. Levels that are above 1.3425 and 1.3480 are considered good. In the event of a channel breakout in the lower limit of 1.3300, one can expect an increase in pressure on the pound with a decline towards 1.3225 and 1.3150.

Inflation data in Germany slightly affected the quotations of the European currency during the first half of Wednesday, as it coincided with the forecasts of economists.

According to a report of the statistics agency, the final consumer price index of Germany in November this year increased by 0.3% compared with October. Economists also expected the index to increase by 0.3%. As for the same period for 2016, prices have increased by 1.8% overall.

As for the important events in the afternoon, attention should be focused on the Fed hiking the interest rate, as well as a signal about what will be the acceleration of the normalization of monetary policy next year.

As for the technical picture of the EUR/USD pair, the bulls managed to win back Tuesday's euro decline in the afternoon and returned to the intermediate level of support 1.1740 without much difficulty. While the trade is going above this range, we can count on a further upward trend for the euro with an update of 1.1775 and an exit to weekly highs around 1.1810.

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

Analysis are provided by InstaForex

Technical analysis of EUR/USD for Dec 18, 2017

When the European market opens, some Economic Data will be released, such as German Buba Monthly Report, Final Core CPI y/y, Final CPI y/y, and Italian Trade Balance. The US will release the Economic Data, too, such as NAHB Housing Market Index, so, amid the reports, EUR/USD will move in a ... volatility during this day.

TODAY'S TECHNICAL LEVEL:
Breakout BUY Level: 1.1805.
Strong Resistance:1.1798.
Original Resistance: 1.1787.
Inner Sell Area: 1.1776.
Target Inner Area: 1.1748.
Inner Buy Area: 1.1720.
Original Support: 1.1709.
Strong Support: 1.1698.
Breakout SELL Level: 1.1691.

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

Analysis are provided by InstaForex

AUD/JPY reversing nicely below major resistance

The price has started to form a really nice reversal pattern with bearish divergence being formed. We look to sell below major resistance at 86.67 (Multiple Fibonacci retracements, horizontal overlap resistance, bearish divergence) for a push down to at least 84.69 support (Fibonacci extension, horizontal swing low support).

Stochastic (55,3,1) is seeing major resistance below 98% where we expect a corresponding drop from. We're also seeing bearish divergence vs price signaling that a reversal is impending.

Sell below 86.67. Stop loss is at 87.34 Take profit is at 84.69.

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

Analysis are provided by InstaForex

The US dollar returns to the game

Data in the first half of the Thursday exerted pressure on the European currency, not allowing it to get beyond its weekly highs against the US dollar. According to the report of a statistics agency, the level of confidence in the manufacturing sector in France in December of this year declined. Thus, the index of sentiment of companies in the manufacturing sector was at 112 points against the November value of 113 points. Despite this, a high level of confidence supports the economic growth of France. Restrained demand for the euro is also associated with early parliamentary elections, which took place in Catalonia. It is expected that the majority of seats in parliament can go to parties that advocate integrity, and which are against the independence of Catalonia. Coupled with another result, the pressure on the European currency may rise again. Weak data on the annual growth of US GDP in the 3rd quarter of this year did not allow the US dollar to further strengthen its positions against the European currency in the afternoon at the beginning of the US session. According to the report of the US Department of Commerce, the US economy in the third quarter of this year expanded by 3.2% compared with the same period in 2016, which is lower than the previous estimate. According to the previous estimate, the annual growth of US GDP in the third quarter was 3.3%. Economists forecast that GDP will remain unchanged at the level of 3.3%.

The main reason for the decline in the indicator was consumer spending, which dropped further during the reporting period than previously thought. Growth was noted in company investments and exports.

As for the technical picture of the EURUSD pair, an unsuccessful attempt to get beyond the resistance level of 1.1885 led to the expected downward correction in the trading instrument, which will likely be limited to support levels around 1.1830 and 1.1805.

The British pound rose after data on reduced borrowing of the UK public sector. According to the report, in November of this year, the net borrowing of the UK public sector decreased and amounted to 8.7 billion pounds compared to the same period of last year. As noted in the report, borrowing declined due to increased tax revenue.

As for the technical picture of the GBPUSD pair, it is likely that the pressure on the pound will continue and that will lead to a decline in the trading instrument towards the lower border of the channel to the area of 1.3330 and 1.3300, from which it was possible twice to see the return to the market of large buyers of the British pound.

Analysis are provided by InstaForex

Prepare to sell below major resistance

The price is approaching major resistance at 113.76 (76.4% Fibonacci retracement, Fibonacci extension, horizontal overlap resistance) and we expect a strong reaction off this level to push the price down to at least 112.13 support (Fibonacci retracement, multiple horizontal swing low support).

Stochastic (55,3,1) is dropping nicely from our 97% resistance with good downside potential.

Sell below 113.76. Stop loss is at 114.54. Take profit is at 112.13.

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

Analysis are provided by InstaForex

Wave analysis of the USD / JPY currency pair. Weekly review

Analysis of wave counting:
At the end of last week, the pair USD / JPY still began to decline, losing about 90 pp and was able to work out the mark of 112.50 in the middle of the Friday session. Thus, it seems that the currency pair has attempted to confirm the transition to the stage of formation taking a rather complex form of the waves c, b, a, (C). If this is the case, then in the process of the development of the wave structure of this wave c, b, a, (C), the currency pair can continue the already identified downward movement in the direction of the levels of the 111th or even 110th figure.

Targets for the downward wave option:
111.01 - 50.0% of Fibonacci
110.14 - 61.8% of Fibonacci

Targets for the upward wave option:
115.43 - 61.8% of Fibonacci
116.32 - 76.4% of Fibonacci

General conclusions and trading recommendations:
The pair USD / JPY continues to build the upward wave (C). Thus, the increase in quotations may continue within the wave c, a, (C) with targets located near the estimated levels of 115.43 and 116.32, which corresponds to 61.8% and 76.4% of Fibonacci (these goals will be reviewed). The assumed wave b, a, (C) can resume its construction, complicating its internal wave structure.

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

Analysis are provided by InstaForex

Euro and pound win back their positions against the US dollar

Good data for the euro area and the UK in the first half of the day led to a slight strengthening of the European currency and the British pound after yesterday's decline, which was noticed after the publication of the Fed's protocols.

According to the IHS Markit report, the composite PMI of the euro zone's supply managers rose to 58.1 points in December from 58.0 points. This once again confirms the fact that economic activity in the eurozone at the end of 2017 remained at a fairly strong level. This allows you to count on excellent indicators for GDP growth. Also, it is most likely that in early 2018, the current growth rate of activity will continue due to the flow of new orders.

As for the technical picture of the EURUSD pair in the short term, the exit beyond the level of 1.2035, which I recommended to pay attention to in the morning review, led to the resumption of purchases of the European currency. The next target is a break above the monthly highs, which will lead to the renewal of new resistance levels of 1.2125 and 1.2170.

The British pound strengthened its position against the US dollar against the backdrop of good data on the service sector, which accounts for a significant portion of the UK GDP.

According to IHS Markit's report, PMI's supply managers index for the UK services sector increased to 54.2 points in December 2017 against 53.8 points in November. Economists had expected the index in December to be at 54.0 points. The IHS Markit report noted that business growth accelerated at once in all regions of the UK.

Today, the number of approved mortgage loans in the UK was published for November which increased compared to October. Despite this, growth is gradually slowing down, indicating a decrease in activity in the housing market.

So, according to the Bank of England, the number of approved mortgage loans in the UK in November 2017 was at 65 140 against 64 890 in October. Meanwhile, the average for the last 6 months was at 66 562, indicating a likely decrease in activity. According to the Nationwide Building Society, housing prices in the UK in December last year rose by 2.6% compared with the same period in 2016.

Unsecured consumer lending in the UK also began to gradually slow down.

According to the same Bank of England, unsecured consumer lending in November 2017 grew by only 1.4 billion pounds, while economists expected a 1.6 billion pounds increase in lending. Compared to November 2016, lending grew by 9.1%.

Analysis are provided by InstaForex

European Economics Preview: Eurozone Economic Confidence Data Due

Economic confidence and retail trade from euro area and factory orders from Germany are due on Monday, headlining a busy day for the European economic news.

At 2.00 am ET, Destatis is scheduled to issue Germany's factory orders data. Economists forecast orders to fall 0.2 percent on month in November, reversing a 0.5 percent rise in October.

In the meantime, industrial production data from Norway is due.

At 3.00 am ET, the Czech Statistical Office releases industrial and construction output and foreign trade figures. Also, Hungary's industrial output and retail sales reports are due.

At 3.15 am ET, the Swiss Federal Statistical Office publishes inflation data.

At 4.30 am ET, Eurozone Sentix investor confidence data is due. The indicator is forecast to rise slightly to 31.2 in January from 31.1 in December.

At 5.00 am ET, the European Commission publishes Eurozone economic sentiment survey results. The index is seen at 114.7 in December versus 114.6 in November.

In the meantime, Eurostat releases retail sales data. Economists forecast euro area retail sales to grow 1.2 percent on month in November in contrast to a 1.1 percent fall in October.

News are provided by InstaForex

Good data on the labor market did not help the euro

Good data on industrial production in Germany, as well as on the labor market in the euro area, did not provide the expected support to the European currency, which continued to decline in Tuesday's trading against the US dollar. The single currency was affected by discussions related to the increased likelihood of verbal intervention from the European Central Bank.

Let me remind you that yesterday there were rumors that the ECB could opt for an intervention in order to weaken the current high rate of the European currency, thus preventing the fall in economic growth rates and the decline in the trade surplus due to the appreciation of exports.

In the first half of the day, data showed that industrial production in Germany in November 2017 increased by 3.4% compared with October, significantly exceeding the forecasts of economists. Compared to the same period in 2016, production increased by 5.6%. Economists had expected that in November 2017 industrial production in Germany would grow by only 1.9%.

Production in the manufacturing industry of Germany in November increased by 4.3%, and in construction by 1.5%.

As expected, in 2017 the labor market in the euro area continued to strengthen.

According to the report of the statistics agency, the unemployment rate in the euro area in November 2017 decreased and amounted to 8.7% against 8.8% in October. The increase was 107,000 jobs.

Regardless, some experts believe that an overly early winding up of the bond repurchase program by the European Central Bank could negatively affect the main factors that positively affect the euro area economy, which will lead to a slowdown in the decline in the unemployment rate. However, this forecast does not affect the first half of 2018, as, according to the results of the December survey of manufacturing companies, it is expected to increase the rate of hiring of labor.

On Tuesday, it was also announced that France's trade deficit in November increased. This happened due to the reduction of energy exports and transport equipment.

Thus, according to the report of the French government, the foreign trade deficit in November 2017 amounted to 5.7 billion euros against 5.3 billion euros in October. The current account deficit in the balance of payments in November was 3.3 billion euros against 2.6 billion euros in October.

The British pound also continued to decline against the US dollar after the release of data from the British Retail Consortium. Thus, retail sales excluding volatile categories of goods in the 4th quarter of last year decreased by 1.9%, compared to the same period in 2016, the fall was 1.4%.

Analysis are provided by InstaForex

Elliott wave analysis of EUR/JPY for January 15, 2018

Wave summary:
The corrective rally from 133.09 spikes just above our upper target at 135.25 and should now be ready to turn lower again for a decline towards 131.11 before another corrective rally is expected towards 134.10.

Short-term a break below minor support at 134.79 will be a strong indicator that the corrective rally from 133.09 has completed and the expected decline to 131.11 has begun.

R3: 136.64
R2: 136.05
R1: 135.66
Pivot: 134.79
S1: 134.25
S2: 133.65
S3: 133.09

Trading recommendation:
We sold EUR at 134.74. We will place our stop at 136.75, but expect to move it lower soon. Upon a break below 134.79, we will move the stop lower to 135.75.

Analysis are provided by InstaForex