EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair performed a reversal in favor of the US currency and continues the process of falling towards the correction level of 127.2% (1.1025). The euro has nothing to oppose the US dollar. In America today, the indicator of consumer confidence for August is higher. This is far from the most important indicator, but it was better than traders' expectations, showing a minimal decrease compared to the previous month. It turns out that even such a report supported the US dollar. Today, August 28, traders will not wait for any economic reports from the European Union or America, because the news calendar is empty. Under such conditions, the attention of the foreign exchange market may shift even more towards the pound-dollar pair, as the market regularly receives a lot of interesting information on Brexit and the "Boris Johnson – Parliament" confrontation. In the euro/dollar pair, I now single out the level of 1.1107, which, although it is not super strong, still acts as resistance to the growth of the euro. Thus, below the level of 1.1107, bears will prevail. Bulls will be able to count on anything only above this level.
What to expect from the currency pair on Wednesday?
First of all, nothing unexpected. Since there will be no economic reports today, and political news is not very interested in traders, then sharp spikes in activity should not be expected today. Most likely, the pair will continue to decline towards the correction level of 127.2% (1.1025) or will move just under the Fibonacci level of 100.0%. Of course, you should always remember the force majeure circumstances, but on August 28, something like this is unlikely to happen. However, in the case of closing quotations of the euro/dollar above the Fibonacci level of 100.0% allow traders to expect some growth of the pair towards the correction level of 76.4% (1.1180), even if there is a negative information background for the euro currency or a complete absence of any information background.
The Fibo grid is built on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
I recommend buying the pair today with a target of 1.1180 if traders manage to close above the correction level of 100.0% again.
I recommend selling the EUR/USD pair with a target of 1.1025 since it was closed under the correction level of 100.0% (1.1107). Bears are now returning to the market, and the euro is once again preparing for a weakening.
GBP/USD – 4H.
The most interesting thing is still happening in the UK and is associated, of course, with Brexit. I have already written in previous reviews that between British Prime Minister Boris Johnson and the leaders of the European Union, there have been tough verbal battles with mutual accusations and putting the responsibility for potential Brexit "No Deal" on each other. There is little constructiveness in these negotiations, or, better to say, "debate". So far, no constructive proposal has been put forward by any party regarding the main deadlock issue – the regime that will operate on the border between Ireland and Northern Ireland after Brexit. But the leader of the Labor Party Jeremy Corbyn is working hard to unite the political forces of the UK, parties and individual deputies, to oppose Boris Johnson, his policies and prevent the exit from the European Union without an agreement. 116 members of the House of Commons received letters from Jeremy Corbyn, including Theresa May and Philip Hammond, who are also considered opponents of Brexit "No Deal." Even members of the Conservative Party, whose leader is Johnson himself, are involved in the case, and among which there may be deputies who voted "for" Johnson in the elections. However, it doesn't matter who voted for whom. Now, Britain needs to escape from the irrepressible desire of its Prime Minister to leave the EU "quickly and in any way." At least, if not a large part of the parliament, then a sufficient number of deputies think so.
I believe that the successful opposition of Corbyn against Johnson will reduce the chances of leaving the EU on October 31. Perhaps these chances have already begun to fall but remain very high, since the opposition of Corbyn has not yet done anything that could be said. And any reduction in the chances of Brexit "No Deal" will support the pound. Therefore, the coming weeks will be very important for the pound.
What to expect from the currency pair on Wednesday?
The second bearish divergence, this time at the MACD indicator, allows traders to count on a reversal in favor of the US dollar and some fall. Or a return to the correction level of 127.2% (1.2180). The information background plays a huge role in the pound. The closure of the pound/dollar pair above the peak of bearish divergence allows expecting the continuation of growth towards the correctional level 100.0% (1.2437). Bears are activated below the correction level of 127.2%. I don't expect anything concrete from the pair on Wednesday. The best thing to do now is to closely monitor any news and reports regarding Brexit. Most traders react to them.
The Fibo grid is based on the extremes of January 3, 2019, and March 13, 2019.
Forecast for GBP/USD and trading recommendations:
I recommend buying the pair with the target of 1.2437, with a stop-loss order below the level of 1.2180 if a close is made above the peak of the bearish divergence.
I recommend selling a pair with the target of 1.1853 and with a stop-loss order above the level of 127.2% if the closing is closed under the level of 1.2180.
