EUR / USD
November 14 ended for the pair EUR / USD with an increase of 15 basis points. Thus, an unsuccessful attempt to break through the Fibonacci level of 61.8% led to the departure of quotes from the lows reached and the likely completion of the construction of wave 1 as part of a new bearish trend section.
If the current wave marking is correct, then the quotation of the instrument will resume with targets located below figure 10, after completion of the construction of the correctional wave, presumably 2.
Fundamental component:
On Thursday, the news background for the euro-dollar instrument was very interesting. Firstly, the volume of GDP in the eurozone in the third quarter amounted to 1.2% y / y which is unexpected for many.
Secondly, Fed Chairman Jerome Powell has completed a two-day cycle of his speeches in Congress, and some conclusions can be made. Looking ahead, I’ll say right away that Powell did not make any “shocking” statements.
Nevertheless, he said that the US economy, although “feeling good,” but might face serious problems due to growing government debt. According to Powell, debt is growing much faster than the economy itself, which is unacceptable.
In addition, he notes a recession in the US manufacturing sector, the reasons for which he called a slowdown in global economic growth and trade conflicts.
Powell also noted the excellent state of the labor market. In this way, two of his speeches can be regarded as peculiar hints that there will be no new monetary easing for the economy in the coming months. For the US dollar, this is undoubtedly a bullish factor.
On Friday, the markets will carefully study the inflation report in the EU. The main thing for the European currency is that inflation does not slow down below 0.7% y / y.
Otherwise, the wave2 may finish much faster than I guess now.
General conclusions and recommendations:
The euro-dollar pair allegedly completed the construction of the first wave as part of a new downward trend.
Thus, I recommend now to wait for the completion of wave 2 (its target is about 1.1062, which equates to 38.2% Fibonacci, or slightly higher) and sell the instrument again with targets near the calculated levels1.0993 and 1.0951, which equates to 61.8% and 76.4 Fibonacci.
GBP / USD
On November 14, the GBP/USD pair gained 30 basis points, which fully corresponds to the current wave marking, which involves the construction of wave d with targets located between 1.2900 and 1.2950.
If this is true, then the decline of the instrument will resume after the completion of this wave with targets located about 27 of the figure, as part of the construction of wave e. The trend section, which began on October 21, can still be considered as wave 4 in the upward trend section.
Fundamental component:
The news background for the GBP / USD instrument remains completely unsuccessful, however, wave marking is now a higher priority for the markets, so the British currency has not yet crashed down, as one would expect if the markets paid due attention to all economic reports from the UK this week.
Yesterday, a series of weak reports was replenished with another one – retail sales, which showed an increase of 3.1% y / y, while markets expected to see at least + 3.7% y / y.
Nothing more interesting in the UK happened, no new messages from the Parliament of the country, from Boris Johnson or any other interesting information was received in the media.
General conclusions and recommendations:
The pound/dollar instrument supposedly completed the construction of the upward trend section. Thus, only a successful attempt to break through the level of 1.2986 can be regarded as a complication of this area. Its transformation into a 5-wave one and become the basis for new purchases of the instrument.
At the same time, the trend section after October 21 takes a horizontal view, which allows us to expect a decrease in the instrument to the area of the 27th figure.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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