4-hour timeframe
Average volatility over the past five days: 103p (high).
The EUR/USD pair resumed the upward movement on Thursday, April 9, as we expected. After spending more than a day near the critical Kijun-sen line, the pair still found the strength to continue working out our scenario called "correction against correction". Thus, we believe that the upward movement will continue to the level of 1.0967 (the level of volatility for today), and, most likely, to the psychological mark of $1.10. We can expect the upward movement to be completed in the 1,1000 area, but continue to rely on technical indicators and their readings when making trading decisions. Volatility has increased today compared to yesterday, but remains within reason - 100 points.
For the first time in a long time, we can finally say that market participants reacted to macroeconomic statistics. They reacted the way they used to. Even if there was no ambiguity in today's events. In fact, one of the most significant macroeconomic reports of the day caused a sell-off of the US currency against the euro. We are talking about the report on applications for unemployment benefits in the United States. Recall that over the past two weeks, a total of about ten million people have applied for benefits in the United States. Of the 164 million economically active population, that is, able-bodied. Today it was announced that another 6.6 million Americans have lost their jobs. Thus, a total of approximately 16.8 million people lost their jobs in the United States in just three weeks. This is a huge number. Not only that, this figure is comparable to unemployment rates in the thirties of the last century during the Great Depression. Not only is the unemployment rate moving towards the "optimistic" forecasts of James Bullard, who spoke of 25-30%. It is not enough that all these people do not work, that is, they do not contribute to the economy, which is already suffering from quarantine measures. So, unemployment benefits must now be paid to an additional 17 million people in the United States. This is a serious blow to the US economy, and it's not over yet... no wonder the dollar is falling on such news. However, we would like to warn traders against incorrect and one-sided conclusions. We believe that the situation in Europe is no better. It's just that indicators like US Nonfarm Payrolls or applications for unemployment benefits are not published in Europe. There is only the official unemployment rate, which is published once a month. Since it has not been released yet, we simply do not know how things are in the European Union, how many people there have applied for unemployment. Thus, until this data is in the hands of traders, it does not make sense to rush to sell dollars. We continue to believe that the market is in the stage of calm, or, in other words, consolidation. According to our calculations, the final stage of consolidation will take place between the 1.09 and 1.10 levels. After that, the euro/dollar pair can move with new strength in any direction. We have repeatedly said that if the majority of market participants or, on the contrary, large market participants buy dollars en masse, this currency will become more expensive, regardless of any fundamental and macroeconomic data. It is supply and demand that determines the price and exchange rate. Until recently, the US dollar was growing like crazy simply because traders considered it the safest currency in times of total collapses of world markets. Who says this scenario can't happen again? After all, the epidemic is not only not over, it is in full swing. The number of sick people is increasing around the world every day. There is a certain decline in the growth rate of infection and mortality in some countries, but this does not mean that humanity has triumphed over coronavirus. A second wave of the epidemic is possible, it is possible that the virus will be seasonal in nature, like normal flu. Thus, it is too early to talk about the abolition of quarantine measures, and even more so about the end of the epidemic. Consequently, the economies of all countries of the world will continue to decline. And the more they contract, the longer they will recover. Indeed, recession and growth, unfortunately, are taking place at completely different rates...
From a technical point of view, the euro/dollar pair has now worked out the Senkou Span B line, from which it may well rebound. But we believe that the upward movement will continue today and tomorrow. In any case, there are currently no signals to the beginning of the downward correction.
4-hour timeframe
Average volatility over the past five days: 159p (high).
The GBP/USD currency pair also continues its upward movement on April 9. However, there has been an open flat between the levels of 1.2200 and 1.2450 for the last two weeks. At the moment, the upper boundary of this side channel has been worked out, so a rebound and a downward movement can follow to the lower boundary of the channel, that is, to the 1.2200 level. If one confidently overcomes the 1.2450–1.2470 area, then the upward trend may resume. The pound/dollar volatility is around 130 points for today and yesterday, which is quite a small indicator in the current conditions. Markets calm down in the GBP/USD pair's case. And this is good. There was also something to pay attention to in the UK. Monthly GDP indicators were published in the morning, as well as changes in industrial production. The first indicator showed a decrease of 0.1%, the second - a decline of 2.8% in annual terms. These were the values for February. It will be hard to imagine what will happen in the UK at the end of March, if we see such figures as a result of a calm February. Although something can already be said about March. Today, the March quarterly GDP value from NIESR was also published, which showed a 4.8% reduction in the main indicator of the state of any economy. This is only the beginning. Recall that quarantine in the UK remains, Boris Johnson is still in the hospital, the total number of infected people is already 61.5 thousand, and the number of deaths has exceeded 7 thousand.
Recommendations for EUR/USD:
For short positions:
The EUR/USD pair does not continue to move up too much on the 4-hour timeframe. It is advised to consider selling orders before reverse price taking below the Kijun-sen line with the first target as the level of volatility is 1.0761.
For long positions:
At the moment, it is recommended to stay in purchases of the pair with targets at a volatility level of 1.0967 and a resistance level of 1.1043 and manually reduce longs when rebounding from any target or in case the MACD indicator turns down.
Recommendations for GBP/USD:
For short positions:
The pound/dollar pair continues to trade inside the side channel, limited by the 1.2200 and 1.2450 levels. Thus, it is recommended to trade either on the rebound from the upper or lower boundary of the channel, or wait for the end of the flat. Short positions can be considered after overcoming the level of 1.2200 with the goal of the Senkou span line B. Or when the price rebounds from 1.2450 – 1.2470, with the goal of 1.2200.
For long positions:
You will not be able to buy the GBP/USD pair until the price is consolidated above the 1.2450–1.2470 area with the goals of 1.2568 and 1.2693 levels. At the moment, the pair is just testing the strength of the specified area.
