EUR / USD
Friday, August 30, ended for the EUR / USD pair with a decrease of another 70 base points, which led to the transformation of the wave marking. Now, the entire trend section, originating on June 25, is interpreted as a 5-wave impulse structure. Thus, we have completed waves 1 and 2 in its composition, as well as completed waves 1 and 2 in the composition of future 3.
If the current wave marking is correct, then the euro-dollar pair will continue to decline in the coming weeks as part of the construction of wave 3. On Friday, the one that caused the euro to decline was the speech by Christine Lagarde, who in 2 months will replace the ECB President Mario Draghi. She said that rates will go down, as the current state of the global economy and the EU economy requires intervention and stimulation. This uniqueness of her statement caused a storm of emotions in the foreign exchange market.
Naturally, with direct statements and easing monetary policy, the euro came under pressure. Moreover, the news background implies that the euro will remain under this pressure, since everyone will now expect from the ECB to lower interest rates and other stimulation of the economy. In addition for today, by the way, the index of business activity in the manufacturing sector of the European Union will be released.
As you can see, the index fell in recent months “below the plinth” and there is little hope that it will increase above 50 in the coming months. Thus, the industrial sector of the European Union continues to be in a deplorable state.
Purchase goals:
1.1248 – 0.0% Fibonacci
Sales goals:
1.0969 – 127.2% Fibonacci
1.0893 – 161.8% Fibonacci
General conclusions and recommendations:
The euro-dollar pair continues to build a bearish wave, which is now interpreted as 3, in 3. I recommend selling the pair with targets near the calculated levels of 1.0969 and 1.0893, which corresponds to 127.2% and 161.8% Fibonacci . An unsuccessful attempt to break through the 127.2% level may lead to quotes moving away from the minimums reached.
GBP / USD
On August 30, the GBP / USD pair lost only about 20 bp, since for the first time in a long time, the focus of the Forex currency market was shifted towards the EUR / USD pair. Based on the current wave markings, I expect the completion of the construction of wave b in the near future and the new growth of the pair within the framework of the wave with targets located above 23 figure.
As before, the news background may interfere with this. Also, the news in the UK is expected to be plentiful in the coming days. Tomorrow, British MPs will leave the holidays, who will urgently have to solve the issue of a new vacation, which starts on September 9, and was organized by Prime Minister Boris Johnson. Since this is not just a vacation, but a direct threat to Brexit’s implementation without an agreement, which the Parliament is doing its best, there is very little time left to resolve this issue.
The first and most important question is whether a vote of confidence will be submitted to Boris Johnson? If so, what will be its consequences, will a real war break out inside the parliament between the deputies and the prime minister? As you know, all this can, firstly, affect the pound, and secondly, negatively affect the pound.
The pound is now in an unenviable state, any new negative is a real chance to go below the 20th figure. Today, the UK currency will be able to continue building wave b, since the index of business activity in the UK manufacturing sector comes out and markets do not expect any major changes.
Sales goals:
1.2016 – 0.0% Fibonacci
Purchase goals:
1.2306 – 38.2% Fibonacci
1.2401 – 50.0% Fibonacci
General conclusions and recommendations:
The downward section of the trend is previously considered completed. Thus, now, it is expected to build an upward trend correction section with the first goals located near the calculated levels of 1.2306 and 1.2401, which corresponds to 38.2% and 50.0% Fibonacci. You can buy a pound, but I do not recommend doing it in large volumes. You can open purchases by the “up” MACD signal.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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