EUR / USD
On March 18, the EUR / USD pair lost another 95 basis points and, thus, continued to build a bearish wave, presumably 2. At the end of the trading day, there was a rollback to the top, which initially could be interpreted as the completion of wave 2. However, the decline in quotes of the instrument has resumed today, and the euro has lost another 90 points in just a few hours in the morning. Thus, the decline will most likely continue, and the entire wave marking will take on a completely non-standard and complex form. In turn, markets continue to be in a state of shock, so there is now no question of any standard wave marking.
Fundamental component:
The news background for the EUR / USD instrument on March 18 was weak. The only economic report of the day was the inflation in the EU which did not interest anyone. The European Central Bank announced the launch of a new economic stimulus program worth 750 billion euros. Its essence is the redemption of securities from the market to ensure financial stability. In fact, the same program of quantitative easing (QE), which is regularly carried out in the last decade in both America and the European Union.
It is still difficult to understand what will be the effect of coronavirus as a whole on the US and EU economies. We can only judge by the US stock market, which has already lost 30% of the February highs. However, there are no economic reports confirming that “everything is bad”. Just because they are not yet formed in March, the month has not yet ended. For the same reason, it’s hard to say whether all the actions of the Fed and the ECB, as well as the US and EU governments, had a favorable effect.
Judging by the collapse of the European currency, no. But judging by the growth of the dollar, yes. However, these conclusions are not true. We need to wait for the official statistics for March, and then draw conclusions about the state of a particular economy. So far, markets continue to remain in shock.
General conclusions and recommendations:
The euro-dollar pair continues to build a downward wave. The entire trend section, which began on February 20, may turn out to be not ascending, but practically horizontal with very strong correctional waves, which will be equated to almost 100% of pulsed ones. In addition, the current wave marking may require adjustments and additions at any time. So far, the construction of wave 2 continues, but the decline may continue under the minimum of wave 1.
GBP / USD
On March 18, the GBP / USD pair lost another 480 basis points. Thus, based on the current wave marking, the construction of the downward wave E continues. However, there is no practical sense of this knowledge. Given the specifics of the current market, Wave E may take on an even more extended form, and may complete its construction today. And this does not mean that the instrument will be ready to build a new upward set of waves.
Fundamental component:
The news background for the GBP / USD instrument was present on Wednesday. But the markets continued to sell the pound, and not just sell, but practically give it away for free. All this led to a new collapse of the pound by almost 600 points. So, what will happen next? No one knows. Panic is not going anywhere. Coronavirus continues to spread, including throughout the UK. At the same time, no economic reports were released in Britain yesterday; there will also be none today. However, the markets still do not pay any attention to this information now.
General conclusions and recommendations:
The pound / dollar instrument continues to complicate the current wave count. Thus, I still do not recommend trading, as the situation in the markets is very unstable. Given the complete landslide movement of the instrument, it is difficult to imagine when it will end and what will happen next.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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