EUR/USD analysis for March 12, 2019

Trading 12 mar 2019 Commentaire »

EUR/USD has been trading upwards as we expected. EUR tested the level of 1.1284.

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Our yesterday's analysis is still valid. EUR has been extending the gains since our previous analysis. According to the daily time frame, we found that Keltner lower band (support) at 1.1177 was held successfully and that sellers didn't have power for the follow-up, which is a strong sign that sellers became oversold so the buyers reacted. Stochastic is creating the bullish divergence which may set the tone for the future. The key resistance level at the price of 1.1234 got broken, and we expect the further upward movement. The key resistance level is set at the price of 1.1315.

Trading recommendation: We are still long EUR from 1.1248 and with the target at 1.1315. Protective stop is placed at 1.1175.

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Analysis of Gold for March 12, 2019

Trading 12 mar 2019 Commentaire »

Gold has been trading upwards. The price tested the level of $1.299.00. Buyers in control, careful with short positions.

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Nothing specially changed since our previous analysis. According to the H1 time – frame, there is a confirmed accumulation phase and successful re-test, which is sign that buyers are in control and that we may expect further upward movement. Key support is seen at the price of $1.280.60 and key short-term resistance at the price of $1.300.00. The breakout of the $1.300.00 would confirm test of $1.311.10 and $1.320.00.

Trading recommendation: We are long on gold from $1.296.00 and with targets at $1.311.50 and $1.320.40. Protective stop is placed at $1.280.00.

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What will happen to the pound?

Trading 12 mar 2019 Commentaire »

Pound still follows the news headlines as it sharply reacts to any more or less significant informational guide. On the eve of the key vote, the European Union made a serious curtsy towards Britain and this fact can change the whole situation.

Thus, tonight, the key event of this week will take place at approximately 4 to 5 o'clock London time. The British Parliament will express its opinion on the "updated" deal with the European Union while the British currency today is reeling from the very morning. The GBP/USD pair will either rose to the boundaries of 1.33 and then went down to the base of the 30th figure. Such volatility is fully justified because the most important question at stake is whether the agreement will be approved by the House of Commons or the negotiating saga will continue. In the morning, it became known that there was a ghostly chance of negotiating a deal and although this assumption looks incredible given the previous rhetoric of British parliamentarians and EU representatives, certain prerequisites for such a scenario exist.

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Late yesterday evening, Theresa May arrived in Brussels, where she met again the head of the European Commission, Juncker. Negotiations ended far after midnight but their results gave some hope to traders. Both in Europe and in Britain they started talking about a long-awaited breakthrough that can put together the general puzzles of the "divorce process". Thus, the British government said that May was able to agree on amending the Agreement on withdrawal from the European Union.

The essence of these changes is reduced to the lack of control on the border between Northern Ireland and the Republic of Ireland. This is a temporary measure until 2020. Having developed a legal mechanism of control on the Irish border, Britain and the European Union must conclude a new agreement. Going to such concessions, Junker warned that there will not be another chance for the British, either they vote for the deal today or there will be no deal at all; no additional interpretations, clarifications, guarantees or memorandums. Thus, Juncker hinted that the postponement of Brexit would not solve anything. In the month of June or July, deputies will receive the same draft of the transaction since the European Union will not move a bit from their positions.

Initially, the pound initially reacted quite positively to this news, updating the multi-week price high. However, then optimism was replaced by pessimism as rumors appeared on the market that this proposal of Europeans would not find its support within the walls of the British parliament. In addition, according to the same rumors, the Prosecutor General of Britain, Geoffrey Cox, presented to the government legal assessments of the updated deal and these estimates are pessimistic. Thus, the deal was threatened again, as well as the expediency of extending the negotiation period.

However, according to a number of European journalists, the head of the European Commission is disingenuous. In fact, Brussels is considering another scenario, according to which Britain will remain in the European Union until 2020 or 2021 by prolonging the operation of Article 50 of the Lisbon Treaty. According to press reports, Europe is developing this option in case the parties will not be able to find a compromise after the postponement of Brexit until the beginning of the summer. A broader time frame is needed for the next or extraordinary parliamentary elections to be held in Britain and Brussels and negotiated new terms of the deal with the new government, which in turn was appointed by the new parliament.

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The leitmotif of this scenario is obvious. In Europe, we are confident that the idea of Brexit no longer has the former support of the British, confirmed by the conducted opinion polls. Hence, the next convocation of parliament will be less rigid about future relations between London and the EU. There is one significant flaw in this scenario: the British should at least initiate such a long delay. The implementation of this clause may be problematic since the country will actually take not "an extra minute" to complete the negotiations but will completely cancel the will of its citizens.

In other words, the long-term prospects of the negotiation process look too vague, therefore, the market responds only to the news flow in the "here and now" mode. Hence, such strong volatility for the pair amid the morning news about Juncker's new offer has allowed the pair to update price highs, while the subsequent legal assessment of the Prosecutor General returned the pair to the bottom of the 30th figure. According to unofficial information, Geoffrey Cox warned cabinet ministers that there were still some risks for Britain: London. According to Cox, there will be no legal levers to get out of the backstop. Such comments have reduced the likelihood of approval of the transaction in the framework of today and given the recent statements by Juncker, the postponement of Brexit will only postpone the problem by several months but will not solve it in essence.

However, the chances of approval of the transaction in the framework of today still remain, despite the position of the Prosecutor General. The European Union made a rather serious curtsy towards Britain and this fact can change the whole situation. Everything depends on what moods are among the conservatives after the updated Juncker proposal. In turn, the pound will continue to follow the news headlines, sharply reacting to any more or less significant information. Talking about any predictions in such conditions is impossible because if the pendulum still sways towards the approval of the transaction, with which this option is by no means excluded, the GBP/USD pair will not only catch up but at the same time, update the annual maximum price.

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Greece Inflation Rises In February

Trading 12 mar 2019 Commentaire »

Greece's consumer price inflation rose in February after easing in the previous month, data from the Hellenic Statistical Authority showed on Tuesday.

The consumer price index rose 0.6 percent year-over-year in February after a 0.4 percent climb January. In December, inflation was 0.6 percent.

The biggest increase was in communication, where costs rose 6.2 percent annually, followed by a 2.1 percent rise in prices of food and non alcoholic beverages.

Meanwhile, clothing and footwear decreased the most, down 2.7 percent in February.

On a monthly basis, consumer prices edged up 0.1 percent in February, after a 1.8 percent decline in the previous month.

The harmonized index of consumer prices, or HICP, rose 0.8 percent year-on-year in February after a 0.5 percent increase in January. The latest inflation rate was the fastest in three months.

Compared to the previous month, the HICP edged up 0.3 percent after a 1.3 percent decrease in January. The increase was the first in four months.


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Yen Slides Amid Risk Appetite

Trading 12 mar 2019 Commentaire »

The Japanese yen drifted lower against its most major counterparts in the European session on Tuesday amid improved risk appetite, after the U.S. retail sales report for January showed a rebound and as U.K. Prime Minister Theresa May obtained some last minute changes to the divorce agreement from the European Union.

May claimed that the new documents to be added to the Brexit deal would provide additional legal guarantees that the UK can't be retained indefinitely inside the backstop arrangement.

The changes eased concerns over the possibility of U.K. leaving the European Union without a deal.

The British Parliament is due to hold a series of votes on Brexit starting today, after having voted down original withdrawal deal in January.

The U.S. economic calendar remains light, with investors awaiting the Labor Department's closely-watched report on consumer price inflation for February.

The yen dropped to a 4-day low of 111.47 against the greenback, 6-day low of 78.87 against the aussie and a weekly low of 76.29 versus the kiwi, from its early highs of 111.16, 78.55 and 75.93, respectively. If the yen falls further, 113.00, 80.00 and 78.00 are likely seen as its next support levels against the greenback, the aussie and the kiwi, respectively.

Reversing from its early highs of 124.98 against the euro and 109.98 against the franc, the yen fell to 5-day lows of 125.77 and 110.58, respectively. The yen is poised to find support around 128.00 against the euro and 112.00 against the franc.

On the flip side, the yen climbed to 145.13 against the pound, from a 1-week low of 147.79 hit at 6:00 pm ET. The next key resistance for the yen is seen around the 142.00 region.

The yen edged up to 82.93 against the loonie, off its early 5-day low of 83.19. The yen is likely to find resistance around the 81.00 area.

Looking ahead, U.S. CPI for February is scheduled for release in the New York session.

At 9:45 am ET, Federal Reserve Governor Lael Brainard will give a speech on "Community Reinvestment Act Modernization" at the National Community Reinvestment Coalition's Just Economy Conference in Washington DC.


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Sweden Inflation Stable In February

Trading 12 mar 2019 Commentaire »

Sweden's consumer price inflation held steady in February, after slowing in the previous month, data from Statistics Sweden showed on Tuesday.

Consumer prices climbed 1.9 percent year-over-year in February, the same rate of increase as in January. Economists had expected the inflation rate to rise to 2.0 percent.

On a monthly basis, consumer prices increased 0.7 percent in February, after a 1.0 percent fall in the previous month. The rise was the biggest since February last year, when prices grew at the same pace.

The statistical office attributed the monthly increase to higher prices for food and non-alcoholic beverages, clothing and higher transport costs.

The inflation rate, according to the CPI with a fixed interest rate, or CPIF, eased to 1.9 percent from 2.0 percent in January. Economists had expected a 2.1 percent rise.

Meanwhile, electricity costs dropped 2.5 percent.

On a month-on-month basis, the CPIF went up 0.7 percent in February.


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March 12, 2019: GBP/USD is losing ground

Trading 12 mar 2019 Commentaire »

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On January 2nd, the market initiated the depicted uptrend line around 1.2380.

This uptrend line managed to push the price towards 1.3200 before the GBP/USD pair came to meet the uptrend again around 1.2775 on February 14.

Another bullish wave was demonstrated towards 1.3350 before the current bearish pullback was demonstrated towards the uptrend again.

A weekly gap pushed the pair slightly below the trend line (almost reaching 1.2960). However, significant bullish recovery was demonstrated yesterday rendering the mentioned bearish gap as a false bearish breakout.

Bullish persistence above 1.3060 (Fibonacci 50%) is mandatory to pursue the bullish momentum towards 1.3130 and then 1.3190-1.3200, where the next Fibonacci levels are located.

On the other hand, bearish breakout below 1.2990 (Fibonacci 50%) invalidates this bullish setup rendering the short-term bearish outlook towards 1.2890 and then 1.2770.

Trade Recommendations:

The GBP/USD pair remains bullish as long as the price is holding above 1.2990 (61.8% Fibonacci level).

Target levels are projected towards 1.3130, 1.3200 and 1.3250. H1 candlestick closure below 1.2990 invalidates this bullish setup as mentioned above.

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Wave analysis of GBP / USD pair on March 12. Justified expectations or complete disappointment on Brexit?

Trading 12 mar 2019 Commentaire »

Wave counting analysis:

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On March 11, the GBP/USD pair rose by 210 bp, thus preparing to vote in parliament for the Brexit agreement, which will be held today. I can conclude that the markets are set positively for the evening vote but this does not mean that the parliament will approve Theresa May's initiatives today. A very likely option is with the failure of the vote and the postponement of Brexit to a later date. The UK will have to pay the European Union for this transfer with such lengthy transfers, like the Brexit hard scenario, which is not what the UK needs. In general, we are waiting for the evening and see how the first vote will end, which can cause again strong movements in the instrument analyzed.

Purchase targets:

1.3348 - 0.0% Fibonacci

Sales targets:

1.2891 - 50.0% Fibonacci (senior Fibonacci grid)

1.2784 - 61.8% Fibonacci (senior Fibonacci grid)

General conclusions and trading recommendations:

The wave pattern still assumes the construction of a downward set of waves and yesterday's rise interpreted with the 2nd wave as part of this set. Therefore, sales are now expedient with targets of 1.2891 and 1.2784, which equates to 50.0% and 61.8% Fibonacci. I recommend placing a protective order above the maximum of wave e, which is very convenient in current conditions. Evening voting may result in strong movements that may lead to the need for clarifying the wave marking.

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Trading plan for 03/12/2019

Trading 12 mar 2019 Commentaire »

Well, how are we without Brexit? Of course nothing! Last night, Theresa May made another loud statement that brought enthusiasm to the entire financial world. The Prime Minister announced that she will submit new additions to the divorce agreement to the House of Commons for today. This will happen exactly before the parliamentarians cast their votes on this most unfortunate agreement. This alone was enough to pound, making the single European currency rush up. It is true when we say that it feels like no one was listening to what was said. After all, the text of the agreement itself remains unchanged. This is not surprising, since the Europeans completely refused to even discuss the possibility of amending the text of the agreement, which they have already approved. Theresa May brought not regular promises of the Brussels bureaucracy but a new agreement to London. Chief of Staff of the Prime Minister of Great Britain David Lidington said that two documents will be submitted to parliamentarians, supplementing the existing divorce agreement. One of them is supposedly a promise of the European Union not to include the mechanism of "backstop", implying the preservation of the existing border regime between Northern Ireland and Ireland. After all, if the UK leaves the European Union and the border and customs situation on the Emerald Isle remains the same, the United Kingdom is not only in a very disadvantageous economic situation, but also risks acquiring a threat to its territorial integrity. The second document talks about the assurance of the parties on their desire to replace "backstop" with a full-fledged trade agreement by December 2020. Moreover, Teresa May said that obviously, before voting in the House of Commons, a pullback is worth noting both in pound and in the single European currency. But then, the situation is almost unpredictable.

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After all, Jeremy Corbin, unlike many, did not only read the headlines, but also read the question more deeply. And immediately, he saw that no new agreement was made, but only regular promises and best wishes. Great Britain has a vast experience in the management of the colonial empire. In fact, its politicians are well aware on their promises to do something about the prices in the future. The leader of the Labor Party has already declared that parliamentarians should reject the agreement and all related promises that are cheaper than the paper on which they are written. Thus, it is most likely that the House of Commons will again reject the agreement with the European Union, and after which, the question of postponing the eviction of Great Britain from a European dormitory will be considered. Therefore, we are expecting for a sharp decline in the pound, as well as the single European currency. In this case, a new growth against the background of new optimistic expectations shows that London will finally agree with Brussels.

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The euro / dollar currency pair showed moderate movement, aimed at the correction. Probably, a temporary fluctuation in the range of 1.1250 / 1.1270 is assumed. Also, we will be listening to the information background and we'll be waiting for possible bursts.

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The currency pair pound / dollar on the information background has managed to show high volatility, jumping up to the level of 1.3286. We'll probably assume for a temporary rollback to 1.3170, then continue to listen to the background information and wait for new bursts.

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Forecast for GBP / USD pair on March 12, 2019

Trading 12 mar 2019 Commentaire »

Wave counting analysis:

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On Monday, March 11, trading of the EUR/USD pair ended and increased by 15 bp increase. Thus, there are more and more reasons for assuming the completion of the descending trend section. The unsuccessful attempt to break through the level of 127.2% according to Fibonacci also indirectly indicates the end of the downward wave. The pair may continue to raise the quotes as part of building a new upward wave and possibly a new uptrend trend. Thus, I now expect an increase in the area of 1.1330. Today, I recommend paying attention to inflation in America, which is an important indicator and may have an impact on trading in the analyzed instrument.

Sales targets:

1.1184 - 127.2% Fibonacci

1.1119 - 161.8% Fibonacci

Purchase targets:

1.1419 - 0.0% Fibonacci

General conclusions and trading recommendations:

The pair is presumed to have completed the construction of the 5th wave. Thus, only a breakthrough of the level of 127.2% Fibonacci will return us to sales. Now, I recommend buying a pair of small volumes with targets located around 13 and 14 figures, based on the construction of the ascending 1st wave or a.

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