GBP/USD. Results of the week. China begins to recover from the epidemic. Boris Johnson enforces full quarantine in the UK

Trading 22 mar 2020 Commentaire »

24-hour timeframe

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After the British pound collapsed by more than 1500 points, it is time for a respite. No, not for a correction, but for a respite. The quotes of the GBP/USD pair rose by 450 points for a moment on Friday, March 20, which is not so small even compared to the previous fall, but eventually, it fell to almost the lows of the week, month, year and decade near the end of trading. Thus, we believe that there is not enough reason to conclude that an upward correction has started, at least on the 24-hour timeframe. The correction looks weak and already completed even on the 4-hour timeframe. Unfortunately, there is nothing to talk about now except the coronavirus epidemic and the countries' fight against it. We would like to note the actions of the Bank of England and the Federal Reserve, the US and UK governments in combating the negative consequences of the epidemic, but, first of all, there is no official information or figures that could confirm that the measures taken have improved the situation. Secondly, the mood of traders is not affected by either macroeconomic reports or the fundamental background. There is panic everyday in the forex currency market, in principle, you can write the same thing, since the situation does not change at all.

Before introducing a general quarantine in the UK, Prime Minister Boris Johnson, as usual, distinguished himself. Recall that initially the prime minister did not want to introduce strict quarantine measures, did not want to close schools, did not want to close pubs, suggesting that it is better that the majority of Great Britain's population got sick with the virus and they developed immunity. However, having come under a barrage of criticism for his actions, as well as for forecasts (according to Johnson, many families will lose their loved ones, and 80% of the British population may get sick), Johnson still ordered to close all establishments except grocery stores and pharmacies. "We ask you to stay at home to protect our health care system and save lives," the prime minister asked. Johnson also said: "I am convinced that we will defeat the coronavirus. I think we can turn the tide over the next 12 weeks, but it depends on collective, decisive action." A statement in the style of Donald Trump. "We will win everyone," "we will win this war," and so on. Well, then everything, as everywhere else in the world now. British citizens are asked not to leave their homes unnecessarily, and not to receive guests.

As for the economy, the Johnson government is developing a plan to compensate all quarantined workers for their wages for the duration of the quarantine. These measures will be taken as part of the fight against the total number of cuts. However, having not yet managed to really calm the British people, who are no longer worried about the coronavirus, but because of the closure of pubs and the lack of football, Johnson immediately made another statement, in which he calmed the people in his own style. The British prime minister believes that the country can repeat the Italian scenario of the spread of the epidemic, if the population does not limit social activity. "The number of deaths in Italy is in the thousands and is constantly growing. If we do not act together and make heroic and collective efforts at the national level to slow down the epidemic, there is a high probability that our national health system will also be overloaded," Johnson said. However, according to experts, it is not even a matter of how closely citizens adhere to the government's decrees. The UK lags behind Italy by about two weeks in the dynamics of the epidemic. At the same time(!!!) there is no strict quarantine in Britain. Public places and places are closed, but there is no direct ban on movement. Thus, Britain has every chance to repeat the fate of Italy, where there are already more than 50,000 thousand cases and almost 5,000 deaths...

The bright spot on the global map of the spread of the virus is now China. The main focus of the epidemic has managed to contain the infection and now, according to the International Monetary Fund, its economy is beginning to recover. Most large businesses have opened, and employees who were quarantined and sent to work remotely have returned to their offices. However, the IMF believes that it is still very early to celebrate the victory, since the COVID-2019 virus may return to China with the resumption of international air traffic and the opening of borders. Also, experts believe that for a long time, many consumers of Chinese goods may avoid these products, fearing to get infected with the coronavirus.

Recommendations for short positions:

The pound/dollar continues to be in a downward trend on the 24-hour timeframe. Thus, short positions remain relevant, although the goals are no longer there, they were all overcome.

Recommendations for long positions:

It will be possible to buy the British pound no earlier than when the price is consolidated above the critical line. However, the price is too far from the Kijun-sen line, so this scenario is not expected in the near future.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicators window.

The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD. March 21. Stock markets crashed down, oil fell in price. Market panic persists. Nearly 300,000 coronavirus cases

Trading 22 mar 2020 Commentaire »

4-hour timeframe

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Amplitude of the last 5 days (high-low): 166p - 152p - 234p - 243p - 326p.

Average volatility over the past 5 days: 225p (high).

The pair spent the last trading day of the week all in the same highly volatile movement, fortunately for the euro, there was no collapse. At the beginning of Friday, March 20, the euro/dollar tried to correct, but this attempt failed, and the downward movement resumed in the afternoon. Needless to say now, bulls are extremely weak? We presented this wording to traders when no one really knew about any coronavirus, and the euro became cheaper against the US currency for periods. So that you understand the scale of the differences, the euro fell two cents with the continued downward trend against the dollar for the whole of 2019. At eight cents over the past seven trading days. This is all you need to know about the realities of the foreign exchange market at this time. Panic does not subside either from the foreign exchange market, or from the stock market, or from the commodity market. Coronavirus continues to spread across the planet and invade europe. There are no good reasons and reasons to expect the end of this chaos in the near future. This means that market participants can only hope that the passions at least slightly subside, because it is extremely difficult to trade the pair in current conditions.

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Looking at the map of the spread of the COVID-2019 virus and the number of officially infected people becomes really sad and scary. According to data for March 21, 2020, the total number of infections is 275,000. It seems that the rate of growth of the epidemic is only increasing. 88,000 citizens managed to recover at the same time, and more than 11,000 died. However, the worst thing is still that the virus is extremely easily transmitted between people. According to the latest information from scientists, coronaviru" can live up to three days on plastic and metal. Thus, if an infected person touches, for example, the handrail of an escalator in a shopping center, this handrail can become a new source of infection for the entire area. In this case, from our point of view, the closure of borders will not help, the authorities can be said to be too late. If the virus is already in the country, it will spread almost in any case. And most importantly, 275,000 infected people are official data. That is, first, provided by the governments or relevant services of countries. It is no secret that many governments are unwilling to disclose the real extent of the epidemic on their territory. Therefore, the actual figures for this one item alone can be much higher. Moreover, no one takes into account the number of infected people in poor countries, in cities with a high population density but a low standard of living. After all, not all seven billion people passed the test for coronavirus and only 275 thousand were infected. Thus, we will not be surprised if the real number of the disease is already approaching a million.

In Europe, the focus of infection is still Italy. According to the latest data, 47 thousand people have become infected and more than 4,000 have died. In terms of mortality, the country has surpassed China's one and a half billion. The Italian government has said that additional quarantine measures may be introduced in the near future, such as banning any outdoor activities. The Governor of Lombardy, Attilio Fontana, as well as the mayors of some other Italian cities, asked for help from the army in order to ensure that the population complies with the quarantine regime.

Unfortunately, the US stock indexes continue to disappoint. At Friday's close, the Dow Jones lost 4.5%, the S&P 500 lost 4.3%, and the NASDAQ lost 3.8%. Thus, we see that the measures taken by the Federal Reserve and the US government to inject huge amounts of cash into the economy have not yet given it any support. The hardest hit is the shares of the Boeing company, which lost more than 36% over the week.

The price of oil showed signs of life on Friday, but, unfortunately, it was not for long. Brent crude fell to $ 27.31 per barrel on Friday, WTI-to $ 20.00 per barrel. Forecasts of world rating agencies and banks are disappointing. Oil will continue to fall in price if the crisis caused by the global epidemic is not overcome. Weighted average forecasts for the oil market are 15-20$ per barrel.

There were times, not so long ago, when currency pairs reacted to macroeconomic statistics, and the decision of any central bank to lower or raise the rate by 0.25% was a loud event for the market. Now, central banks lower rates almost every week, and the Fed has the opportunity to ease monetary policy by 1% at once. Not to mention the huge volume of quantitative stimulus programs and a number of other financial programs, each of which involves injecting money into the economy. However, all these events have a very indirect impact on traders. Market participants, both large and small, continue to try to transfer their funds and assets to the most secure instruments. In the currency market, according to everyone's opinion, the most secure instrument is the US dollar. Therefore, despite the fact that the euro has lost more than 800 points against the dollar in the last seven days alone, and the pound – more than 1500 points in the last ten days, the US currency is still in demand. Any macroeconomic statistics do not matter now. By the way, there were no macroeconomic publications either in the European Union or in the United States on Thursday and Friday. However, many traders are interested in what will be the reduction of the main macroeconomic indicators in the eurozone and the US. Obviously, the cuts will be huge, but no one knows the real numbers yet. Data will begin to arrive in early April for most of the main indicators of the state of the economy...

From a technical point of view, the euro/dollar pair slightly corrected on Friday, but by the end of the day began to show signs of a resumption of a downward trend. Thus, the next week may well be another failure for the euro. Nevertheless, we still believe that panic can move any currency pair in almost any direction.

Recommendations for short positions:

A strong downward movement continues on the EUR/USD currency pair. Thus, we recommend that you continue to sell the euro with targets of 1.0501 and 1.0465, until new signs of the beginning of the correctional movement appear.

Recommendations for long positions:

Euro purchases with the goal of the Senkou Span B line can be considered no earlier than when the pair consolidates above the Kijun-sen line. However, in any case, it is recommended to be as careful as possible with the opening of any positions. Panic in all markets remains.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicators window.

Support / Resistance Classic Levels:

Red and gray dashed lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movements:

Red and green arrows.

The material has been provided by InstaForex Company - www.instaforex.com