EUR / USD
Tuesday, October 22, ended for the EUR / USD pair with a decrease of another 25 basis points. Thus, more and more confidence appears that the first wave of a new upward trend section has actually completed its construction.
If this is true, then the decline in quotations will continue with targets located near the estimated levels of 38.2% and 50.0% Fibonacci. After the completion of the construction of wave b, it is expected that the quotations of the euro-dollar instrument will resume.
Fundamental component:
The news background for the EUR / USD pair remains weak and ambiguous, or rather absent. The markets could easily use the first three days of this week as an additional weekend. Yesterday, in America, a report on sales in the secondary housing market was released, which showed a decrease in September by 2.2%.
And today, the consumer confidence index for October will be released in the European Union. If the news calendar were not completely empty, I would not even mention these reports. Most likely, they will not pay any attention to the currency market.
However, with the current “saturation” of the news background, these reports can cause interest. In any case, the markets are waiting for tomorrow, when so many reports will be released, accurately for all the first three days, when there were none and to top it off, there will be a summing up of the ECB meeting and a speech by Chairman Mario Draghi.
Purchase goals:
1.1208 – 61.8% Fibonacci
1.1286 – 76.4% Fibonacci
Sales goals:
1.0879 – 0.0% Fibonacci
General conclusions and recommendations:
The euro-dollar pair continues to build a new upward set of waves and supposedly completed the construction of wave a, despite a successful attempt to break through the 50.0% Fibonacci level.
The breakdown of the 50.0% level in the opposite direction indicated the readiness of the instrument to build the wave b. Thus, now, I recommend buying the instrument after the completion of the wave b.
GBP / USD
On October 22, the GBP / USD pair lost 90 basis points and supposedly completed the construction of wave 3 or C. If this is true, then the British currency can continue to decline either within the framework of the proposed wave 4, or as part of a new downward trend section.
At the same time, an unsuccessful attempt to break through the 127.2% Fibonacci level indirectly confirms the willingness of the markets to sell the pound. On the contrary, a successful attempt to break through this level will indicate the willingness of the bulls to continue to raise the position of the British currency.
Fundamental component:
The news background for the pound / dollar pair continues to be favorable, as the hard Brexit is gradually moving away. On October 31, London is likely to announce the next postponement of its withdrawal from the EU, as members of the British Parliament continue to persistently reject all Boris Johnson’s proposals to break off relations with the European Union, both with and without an agreement.
Moreover, parliament is not satisfied with either Boris Johnson’s deal, which is not much different from Theresa May’s deal, or exit without a deal. Thus, it is clear to everyone that the situation is unlikely to change by October 31 and the deputies are unlikely to change their position.
Yes, the latest information suggests that British politicians are not going to rush anywhere, and Boris Johnson’s attempt to carry out a “blitzkrieg” was not appreciated. Yesterday, Parliament seemed to agree with the main terms of Brexit’s option with the Johnson deal, but refused to consider it in an accelerated mode, for three days.
Meanwhile, the European Union is preparing an official response to London at Johnson’s request for a postponement of Brexit’s date. Although according to unofficial information, there will be no problems with this since Brussels will gladly provide a respite.
Therefore, it is difficult to say whether the pound will continue to rise amid such news. Not postponing Brexit, but a tough Brexit is a good thing. However, the “Briton” cannot grow constantly on this fact alone.
Sales goals:
1.2191 – 0.0% Fibonacci
Purchase goals:
1.2986 – 127.2% Fibonacci
1.3202 – 161.8% Fibonacci
General conclusions and recommendations:
The pound / dollar instrument supposedly completed the construction of the upward trend section. An unsuccessful attempt to break the level of 1.2986 indicates that the instrument is ready to decline.
Thus, only a successful attempt to break through the level of 1.2986 can be regarded as a complication of the alleged wave 3 or C and become the basis for new purchases of the instrument.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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