In the long run, GBPJPY seems to be forming a cycle impulse. Now the third part of this impulse, wave III, is under development.
Only the second half of the bullish impulse wave III is visible on the current chart. It seems that the price reduction within the bearish correction ④ of the primary degree has come to an end in its composition. This correction took the form of an intermediate triple zigzag.
If our assumption is right and the correction has ended, then in the near future the price is likely to rise in the primary wave ⑤. This can take the form of either an impulse or an ending diagonal.
The entire primary wave ⑤ can complete its pattern near 163.38. At that level, it will be at 61.8% of wave ③.
It is possible that the formation of the primary correction ④ can continue. In an alternative scenario, it may take the form of an intermediate double zigzag (W)-(X)-(Y).
The actionary wave (W) is a triple zigzag W-X-Y-X-Z. And it is likely that the second actionary wave (Y) will also be a triple zigzag, as shown on the chart.
If this scenario is confirmed, then we should expect a bearish price movement within the minor sub-waves Y-X-Z to the level of 145.71, where wave ④ will be at 50% of impulse ③.
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The safe-haven Japanese yen soars on news of a vaccine-resistant covid variant. A bearish MA cross on the daily chart indicates weakness in the euro’s previous rebound.
The pair has closed below last September’s low at 127.90, a major floor to keep price action afloat in the medium term. This is a bearish signal that the sell-off is yet to end with 127.00 as the next support.
The RSI’s double bottom in the oversold area may attract some buying interest. However, the bulls will need to lift 129.50 before a reversal could take shape.
GBPUSD struggles to bounce back
The pound continues on its way down against the US dollar over divergent monetary policy. The pair is hovering near a 12-month low around 1.3280.
Sentiment remains bearish after a failed rebound above 1.3420. A bullish RSI divergence suggests a deceleration in the downward momentum.
1.3390 is the first hurdle ahead. Its breach would prompt the short side to cover and open the door to the daily resistance at 1.3510. Otherwise, a bearish breakout would send the price to 1.3200.
GER 40 to test major floor
The Dax 40 plunged as investors fret that new lockdowns could wreck the recovery. The gap below 15760 has forced leveraged buyers to bail out, stirring up volatility in the process.
The momentum is typical of a catalyst-driven sell-off. Below 15150 the index is testing the psychological level of 15000. The RSI’s oversold situation has attracted a ‘buying-the-dips’ crowd in the demand zone.
Further down, 14820 is a key floor to maintain the uptrend. 15530 has become the closest resistance in case of a rebound.
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In the H4 chart, XAUUSD is correcting downwards. After the correction is over, the next upside targets may be 61.8% and 76.0% fibo at 1908.00 and 1969.50 respectively. The key support is the low at 1638.76.
As we can see in the H1 chart, the pair is moving upwards after convergence on MACD. At the same time, there is a possibility that the descending correction may yet continue to break the low at 1773.58 and then reach 76.0% fibo at 1759.10. So far, the first rising impulse is testing 23.6% fibo at 1798.04 and may later continue towards 38.2%, 50.0%, 61.8%, and 76.0% fibo at 1813.21, 1825.35, 1837.49, and 1852.13 respectively. The key upside target is the current high at 1877.09.
USDCHF, “US Dollar vs Swiss Franc”
As we can see in the H4 chart, after breaking the high at 0.9368 but failing to continue its growth, the asset started a new correction, which has already reached 50.0% fibo and may later continue towards 61.8% and 76.0% fibo at 0.9196 and 0.9155 respectively. On the other hand, a breakout of the high at 0.9374 will result in a further uptrend towards the post-correctional extension area between 138.2% and 161.8% fibo at 0.9474 and 0.9541 respectively. The key support is at 0.9085.
In the H1 chart, after completing the correctional decline and breaking 23.6% fibo, the pair is growing to reach 38.2%, 50.0%, 61.8%, and 76.0% fibo at 0.9276, 0.9295, 0.9313, and 0.9336 respectively. The local support is at 0.9215.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
EURUSD is trading at 1.1281; the instrument is moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test the cloud’s downside border at 1.1285 and then resume moving downwards to reach 1.1105. Another signal in favour of a further downtrend will be a rebound from the descending channel’s upside border. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 1.1375. In this case, the pair may continue growing towards 1.1465.
USDCAD, “US Dollar vs Canadian Dollar”
USDCAD is trading at 1.2750; the instrument is moving above Ichimoku Cloud, thus indicating an ascending tendency. The markets could indicate that the price may test Tenkan-Sen and Kijun-Sen at 1.2685 and then resume moving upwards to reach 1.2965. Another signal in favour of a further uptrend will be a rebound from the rising channel’s downside border. However, the bullish scenario may no longer be valid if the price breaks the cloud’s downside border and fixes below 1.2585. In this case, the pair may continue falling towards 1.2495.
GBPJPY, “Great Britain Pound vs Japanese Yen”
GBPJPY is trading at 150.87; the instrument is moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test the cloud’s downside border at 151.30 and then resume moving downwards to reach 149.15. Another signal in favour of a further downtrend will be a rebound from the upside border of the Triangle pattern. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 162.55. In this case, the pair may continue growing towards 153.45. To confirm further decline, the asset must break the support level and fix below 150.10, thus indicating a breakout of the pattern’s downside border.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
Electricity prices in the Eurozone are rising again despite the risk of another lockdown. Inflationary pressures in Germany continue to rise. German import prices have increased to 21.7% in annual terms, the largest value since 1980. Germany will report today on the inflation rate.
From a technical point of view, the EUR/USD on the hour time frame is bearish. The MACD indicator has become positive; there is a buyers’ initiative. Under such market conditions, traders should consider sell positions from the priority change level of 1.1350. Buy trades should be considered only from the support levels of the higher time frame, given the buyers’ initiative, but only with short targets.
Alternative scenario: if the price breaks out through the 1.1350 resistance level and fixes above, the mid-term uptrend will likely resume.
News feed for 2021.11.29:
– Germany Consumer Price Index (m/m) at 15:00 (GMT+2);
– S Pending Home Sales (m/m) at 17:00 (GMT+2);
– ECB President Lagarde’s Speech at 19:15 (GMT+2);
– US FOMC Member Clarida’s Speech at 20:00 (GMT+2);
– US FOMC Member Williams’s Speech at 22:00 (GMT+2);
– US Fed Chair Powell’s Speech at 22:05 (GMT+2).
The GBP/USD currency pair
Technical indicators of the currency pair:
Prev Open: 1.3320
Prev Close: 1.3326
% chg. over the last day: +0.05%
Last month, the price spike in the UK forced some industrial companies to cut production and seek government aid. For the government, it could mean tensions with neighboring countries over supply protection measures. For households, it could mean being asked to use less energy.
On the hourly time frame, the trend on GBP/USD is bearish. The MACD indicator has become inactive but is signaling divergence on several time frames. Under such market conditions, traders should consider sell positions from the support levels around the moving average. The buyers need to get the price back above the 1.3360 level, so buy trades should be considered only if the price returns to the 1.3360-1.3507 corridor, given the buyers’ initiative.
Alternative scenario: if the price breaks out through the 1.3434 resistance level and consolidates above, the bullish scenario will likely resume.
There is no news feed for today.
The USD/JPY currency pair
Technical indicators of the currency pair:
Prev Open: 115.29
Prev Close: 113.23
% chg. over the last day: -1.82%
The Japanese yen strengthened sharply on Friday as a new strain of Covid-19 detected in South Africa sparked a wave of caution in global markets. The Japanese Yen is one of the “safe-haven” currencies in case of emergency shocks. But it is important to understand that this can only be a temporary effect. Fundamentally, there is no reason for JPY to get stronger as the Bank of Japan plans to keep its stimulus program as long as possible while the US FED has been already cutting the program.
Trading recommendations
Support levels: 112.87, 112.30
Resistance levels: 113.79, 114.48, 115.15, 115.50
The global trend on the USD/JPY currency pair has changed to bearish. The price confidently broke through the priority change level and consolidated lower. Under such market conditions, it is best for traders to look for sell positions from the resistance levels around the moving average. Given the buyers ‘ initiative, buy positions should be considered from the support levels of the higher time frames.
Alternative scenario: if the price rises above 115.15, the uptrend will likely resume.
News feed for 2021.11.29:
– Japan Retail Sales at 01:50 (GMT+2);
– Japan BoJ Gov Haruhiko Kuroda’s Speech (Tentative).
The USD/CAD currency pair
Technical indicators of the currency pair:
Prev Open: 1.2647
Prev Close: 1.2786
% chg. over the last day: +1.10%
On Friday, oil prices fell sharply as news of the new strain “Omicron.” caused many countries to rush to restrict travel, which strengthened the concerns that there may be an excess supply in the first quarter of next year. The Canadian dollar is a commodity currency, so the CAD fell sharply against the dollar amid a drop in oil.
Trading recommendations
Support levels: 1.2729, 1.2646, 1.2598, 1.2571, 1.2483, 1.2416, 1.2388
Resistance levels: 1.2807
From a technical point of view, the trend of the USD/CAD currency is bullish. The MACD indicator became positive, the pressure of buyers is increasing. Under such market conditions, it is better to look for buy trades from the support levels near the moving average. Sell deals should be considered from the resistance levels of the higher time frames.
Alternative scenario: if the price breaks down through the 1.2646 support level and fixes below, the downtrend will likely resume.
News feed for 2021.11.29:
– Canada BoC Gov Macklem’s Speech at 21:00 (GMT+2).
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
Germany’s GDP growth estimate for Q3 worsened to 1.7% from 1.8%. Analysts believe the economic performance across Europe will worsen in Q4 due to the introduction of new restrictions to combat the Covid-19 wave.
From a technical point of view, the EUR/USD pair is bearish on the hour time frame. The Euro continues to show weakness, the price is slowly declining, and buyers’ attempts to buy back the movement give only a small intraday bounce. The MACD indicator has become inactive, but there are signs of divergence at several time frames, so traders should expect a technical rebound. Under such market conditions, traders should consider sell positions from the resistance levels near the moving average since the price has strongly deviated from the averages. Buy trades should be considered only from the support levels of the higher time frame, given the buyers’ initiative, but only with short targets.
Alternative scenario: if the price breaks out through the 1.1386 resistance level and fixes above, the mid-term uptrend will likely resume.
News feed for 2021.11.26:
– Eurozone ECB President Lagarde’s Speech at 10:00 (GMT+2).
The GBP/USD currency pair
Technical indicators of the currency pair:
Prev Open: 1.3323
Prev Close: 1.3320
% chg. over the last day: -0.02%
The UK health secretary said that vaccines may be less effective against the new variant of Covid-19. According to an official government report, the UK failed to prepare properly for a coronavirus pandemic because resources were focused on Brexit. The UK not only recorded the highest number of deaths in Europe – more than 140,000 so far – but it also suffered the sharpest economic hit among the developed countries.
On the hourly time frame, the trend on GBP/USD is bearish. The MACD indicator has become inactive but is signaling divergence on several time frames. Under such market conditions, traders should consider sell positions from the support levels around the moving average. The buyers need to get the price back above the 1.3360 level, so buy trades should be considered only if the price returns to the 1.3360-1.3507 corridor, given the buyers’ initiative.
Alternative scenario: if the price breaks out through the 1.3507 resistance level and consolidates above, the bullish scenario will likely resume.
There is no news feed for today.
The USD/JPY currency pair
Technical indicators of the currency pair:
Prev Open: 115.41
Prev Close: 115.31
% chg. over the last day: -0.09%
The Japanese yen strengthened sharply in early Friday trading as a new strain of Covid-19 detected in South Africa sparked a wave of caution in global markets. The Japanese Yen is one of the “safe-haven” currencies in case of emergency shocks.
Trading recommendations
Support levels: 114.38, 113.79, 113.32, 112.87, 112.30
Resistance levels: 115.15, 115.50
The global trend on the USD/JPY currency pair is bullish. But the MACD indicator became negative, and sellers’ pressure is increasing. Under such market conditions, it’s better to look for buy positions from the buyers’ initiative zone near the moving average, but after additional confirmation in the form of a buyers’ initiative. Sell positions should be considered from the resistance levels of higher time frames, given there is sellers’ initiative, but only with short targets.
Alternative scenario: if the price falls below 113.79, the uptrend will likely be broken.
There is no news feed for today.
The USD/CAD currency pair
Technical indicators of the currency pair:
Prev Open: 1.2657
Prev Close: 1.2646
% chg. over the last day: -0.09%
Oil prices fell sharply this morning as a rise in coronavirus cases and a new Covid-19 strain raised concerns about the outlook for energy demand ahead of the OPEC+ meeting. The Canadian dollar is a commodity currency, so it fell sharply against the dollar amid the drop in oil.
Trading recommendations
Support levels: 1.2646, 1.2598, 1.2571, 1.2483, 1.2416, 1.2388
Resistance levels: 1.2729
From a technical point of view, the trend of the USD/CAD currency is bullish. The MACD indicator became positive, the pressure of buyers is increasing. Under such market conditions, it is better to look for buy trades from the support levels near the moving average. Sell deals should be considered from the resistance levels of the higher time frames.
Alternative scenario: if the price breaks down through the 1.2571 support level and fixes below, the downtrend will likely resume.
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
After completing the correctional wave at 1.1228, EURUSD is consolidating below this level. If later the price breaks this range to the downside, the market may resume trading downwards to reach 1.1180; if to the upside – continue the correction with the target at 1.1257.
GBPUSD, “Great Britain Pound vs US Dollar”
GBPUSD is still falling towards 1.3295. Later, the market may start a new correction to reach 1.3350 and then resume trading downwards with the target at 1.3290.
USDRUB, “US Dollar vs Russian Ruble”
USDRUB is still consolidating around 74.70. If later the price breaks this range to the downside, the market may resume trading downwards to reach 74.00; if to the upside – form one more ascending structure with the target at 75.50.
USDJPY, “US Dollar vs Japanese Yen”
USDJPY has finished the correctional wave at 114.60. Possibly, the pair may start a new growth with the target at 115.70 and then resume falling to reach 114.50.
USDCHF, “US Dollar vs Swiss Franc”
After completing the correction at 0.9316, USDCHF is expected to grow and reach 0.9383. Later, the market may start another decline with the target at 0.9315.
AUDUSD, “Australian Dollar vs US Dollar”
After forming a new consolidation range around 0.7190 and breaking it to the downside, AUDUSD has completed the descending wave at 0.7138. Possibly, today the pair may continue trading downwards with the target at 0.7107.
BRENT
After breaking the consolidation range to the downside, Brent is expected to continue falling towards 78.00. Later, the market may grow to reach 80.00 and then resume trading downwards with the target at 77.40.
XAUUSD, “Gold vs US Dollar”
Gold has completed the ascending wave at 1800.80. Today, the metal may resume trading downwards to reach 1789.0 and then form one more ascending structure with the target at 1813.30.
S&P 500
After rebounding from 4720.0 to the downside, the S&P index has completed the descending structure at 4652.0; right now, it is consolidating around the latter level. If later the price breaks this range to the downside, the market may resume trading downwards 4596.6.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
The euro has weakened against the US dollar since the beginning of 2021, from around US$1.23 to its current exchange rate of US$1.13. That’s a fall of about 9%, which is significant, especially since these are the two major currencies of the world. The drop has also intensified in November, falling 3% since the turn of a month, which has seen violence in European capitals over COVID restrictions, migrant problems at the Belarus-Poland border and Russian troops amassing on the border of Ukraine.
The decline should be seen in a broader context, though. The euro is still stronger than a couple of years ago, when it was about US$1.10. It also went through some heavy weekly volatility from February to April 2020 in the early part of the COVID pandemic, bouncing between about US$1.07 and US$1.13 at a time when lots of investors were fleeing to the US dollar for safety and there was much uncertainty about what lockdowns would mean.
Explaining currency movements on a weekly or even monthly basis is well known to be extremely difficult, especially when it comes to major economies like the US and the countries in the eurozone. But certainly we need to look at what is happening in both regions and not just one or the other. Using this simple idea, there are several explanations for the recent euro depreciation.
Inflation differences
The first explanation relates to the Federal Reserve and the European Central Bank (ECB) stimulating their economies using quantitative easing (QE), which is essentially creating money to buy financial assets such as government bonds from banks and other major investors. Both central banks have been doing this extensively since the start of the pandemic.
However, with annual inflation in the US now reaching a serious level of 6.2%, compared with a less troublesome 4.1% in the eurozone, the feeling is that the Fed will end its asset purchases sooner. This is because increasing the money supply has the potential to stoke inflation. Indeed, the Fed has recently already started “tapering” or slowing down the rate of QE with a view to stopping it in the second half of 2022. On the other hand, the ECB has been discussing a replacement for its US$2.2 trillion (£1.7 trillion) QE programme when it ends in March 2022.
Connected to this is an increasing expectation that the US may also have to begin a series of rises to interest rates from the middle of 2022 to curb inflation, while ECB president Christine Lagarde has just made it clear that the ECB is unlikely to start raising rates until at least 2023. These emerging differences in the monetary-policy stances of the US and eurozone have clearly favoured a strengthening of the dollar (since QE and lower interest rates tend to make a currency depreciate).
COVID and politics
A second pivotal factor has been the recent relative strength of the US economy in its recovery from the pandemic compared with the eurozone. In 2021, the US is forecast by the International Monetary Fund to grow 6% compared to 5% in the eurozone, while in 2022 they are respectively expected to grow 5.2% and 4.3%. Again, this points to dollar strength.
More COVID lockdowns in the US seem unlikely (even though cases are rising again), though not in the eurozone area, where the rate of infections has been picking up sharply in recent weeks in countries like Germany, France, the Netherlands, Austria and Belgium. Austria is now back in lockdown, and other eurozone countries could follow suit.
A final driver of the recent strength of the dollar is greater political stability. The Biden administration still has three years in office and has recently succeeded in passing its US$1.7 trillion Build Back Better stimulus package.
By contrast, countries in the eurozone face a period of greater political instability. Germany is seeing the 16 years of relative stability under Angela Merkel coming to an end. The question of whether Emmanuel Macron will succeed in the French elections in April 2022 against Marine Le Pen is also weighing on investors’ minds, as are the continued trade frictions between the EU and the UK over Brexit.
It is happening at a time when Russia’s build-up of forces close to Ukraine raises the prospect of military conflict on the edge of Europe – not to mention that Russia has already been limiting the region’s gas supply and one of its main pipelines runs through Ukraine. In addition, there have been significant anti-vaccine protests in France, the Netherlands, Germany and Italy, and European governments are now under intense pressure to bring their spending under control.
So while short-term currency movements are very difficult to predict, there are many reasons to believe that the recent period of euro weakness will continue. This is making imports to the eurozone more expensive – not least energy – and while it has some benefits for a major exporter like Germany, it also undermines the credibility of the eurozone as a global economic force.
The gamechanger might be if the ECB acknowledged that there is an inflation problem that needs to be tackled, by ending its experiment with QE and beginning the process of raising interest rates. That, however, does not look likely any time soon.
The formation of the USDCAD currency pair suggests the development of a large correction trend. This takes the form of a standard Ⓐ-Ⓑ-Ⓒ zigzag.
At the end of October, the downward movement of the market ended within the primary correction Ⓑ. This took the form of a bearish double zigzag (W)-(X)-(Y) of the intermediate degree. Then we saw an impulsive growth within the primary wave Ⓒ.
Currently, impulse wave (1) and the intermediate correction wave (2) have ended. In the near future, the upward movement of the price in the intermediate sub-waves (3)-(4)-(5) is likely to continue.
The final of the entire primary impulse wave is possible around the level of 1.295. Thus, there is a good chance to make money on purchases, in order to take profit at the end of the wave Ⓒ.
An alternative scenario shows the primary double Ⓦ-Ⓧ-Ⓨ zigzag is being constructed, with the actionary wave Ⓨ under development.
Wave Ⓨ can take the form of an (A)-(B)-(C) zigzag of the intermediate degree. So far, the first impulse wave (A) has ended. To confirm the alternative, we should see a decline in the currency pair within the intermediate correction (B).
Most likely, if the market goes down, the price will drop to 1.246. At that level, wave (B) will be at 61.8% of wave (A). After that, the final impulse wave (C) could lead the market higher than 1.296.
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The US dollar consolidates gains after the FOMC minutes signaled for rate hikes if inflation stays high. A bullish MA cross on the daily chart is strong evidence for an upbeat sentiment.
The pair is testing last September’s peak at 0.9365. A breakout would flush the short interest out and attract momentum buyers.
An extended rally may carry the price to April’s high at 0.9470, a major resistance from the daily chart. An overbought RSI may cause a brief pullback. 0.9300 from the previous consolidation would be a new support.
EURGBP remains under pressure
The euro struggles due to fears of a new round of covid lockdowns across the continent.
The fall below the daily support at 0.8400 has put the few buyers under pressure. A faded rebound suggests that the bears are still in control of the direction.
The RSI’s bullish divergence points to a deceleration in the sell-off. However, in the absence of confirmation, the current sideways action could be a mere consolidation. Buyers may remain cautious unless offers around 0.8435 get lifted. A break below 0.8380 may send the pair to 0.8300.
XAUUSD lacks support
Gold extended losses as expectations for higher interest rates grew. The break below 1823 has forced leveraged buyers to liquidate their positions, stirring up volatility in the process.
The price is heading towards the origin of the November rally at 1760. A bullish RSI divergence shows that the downward pressure could be waning.
As the RSI dips into the oversold territory, buyers have started to bid again from the demand area. 1812 is a key hurdle to lift or the metal could plunge to September’s low at 1730.
Orbex is a fully licensed broker that was established in 2011. Founded with a mission to serve its traders responsibly and provides traders with access to the world’s largest and most liquid financial markets. www.orbex.com
Article by Orbex
