4-hour timeframe
Average volatility over the past five days: 84p (high).
The EUR/USD pair was trading as it should be on Monday. As we expected in previous articles (published over the weekend), a downward correction began immediately after trade opened, which was justified by technical factors, and simply by the banal need to correct after a fairly strong growth of the euro/dollar pair. The technical factor is quite strong - working out the 1.0990 level, which is the previous high, as well as working out the psychological mark of 1.1000. Traders failed to overcome these two barriers, so a rebound and corrective movement followed. In fairness, it should be noted that there were no heavy arguments in favor of continuing the upward movement. We are more and more inclined towards the option of consolidating the pair in a wide side channel (250 points) with an upper border of about 1.1000 and a lower border of about 1.0750. At least, the recent weeks' movements are in this range. Moreover, the participants calmed down after a month of panic in the foreign exchange market, and now they need new reasons for trading in one direction or another. Considering the fact that all macroeconomic statistics and the fundamental background are ignored, then it means that technical factors are left, which just speak in favor of the movement in a wide side channel.
Several reports unimportant in the current realities of the market were published in the European Union and the United States on Monday. Business activity indices in manufacturing sectors have become known in Europe today. The values are as follows: in Spain - 30.8, in Italy - 31.1, in Germany - 34.5, in France - 31.5, in general in the European Union - 33.4. Thus, all countries in terms of business activity in production are approximately at the same level. The values themselves did not impress traders at all, since it was already clear that they would collapse. However, compared to services, things are not very bad. In any case, a correction by the time this data is published has already begun and would continue in any case. So these reports had no effect. A report on production orders for March was published in the United States, which showed a decrease of 10.3% with a forecast of -9.7%. Considering the fact that both the euro and the pound continued to calm down after this publication, there is reason to believe that this report did not have any effect on the mood of traders.
Traders in the current environment are much more interested in the question of what will happen after the epidemic can be overcome. Of course, this is still a long way off. There is no vaccine, but even when it is invented, it will take months to first produce it in the right quantities, and then to vaccinate the entire population of the planet. And we are also talking about poor African countries. Therefore, the end of the crisis and the epidemic in the near future should definitely not be expected. The best that the world can expect in the coming year is life in soft quarantine. However, most of us are still optimistic about the future, and therefore are interested in this issue. And the prospects for a world order after the end of the epidemic are very hopeless. Many developed countries of the world are already making claims to China regarding the spread of coronavirus. Suspicions that the COVID-2019 virus did not accidentally break free, and the Chinese government deliberately did not inform the whole world about the extent of the pandemic on its territory and the high threat of spread. The leaders of France and Germany have already spoken out. Well, about Donald Trump, who, thanks to China and its "gift", the chances of a re-election in November have significantly decreased, and there is nothing to say. The US president was determined to "get what he owed" from China. Now there is evidence that China deliberately hid important information about the virus, and also in every possible way delayed its publication in order to manage to purchase the necessary amount of medicines and medical remedies. According to Trump, these delays have led to the infection of the whole world. Trump also accuses China of not preventing the spread of the virus throughout the planet, as well as the World Health Organization that gave incorrect advice and generally failed the entire fight against the pandemic. "In my opinion, they (China) made a mistake and tried to hide it. They could not put out the fire on time. They stopped people who were traveling to China, but did not stop people who were traveling from China around the world," the US president said. As a result, Trump is seriously thinking about starting a new trade war with China.
However, at the same time, China won't sit back and actually provokes the United States to answer its questions regarding the pandemic. In particular, through its print media, Beijing asks questions to Washington. For example: back in November 2019, U.S. intelligence officers informed the Pentagon and the White House that a new disease was spreading in the Chinese province of Wuhan. Later, the National Medical Information Center compiled a report describing the virus. Trump, according to reliable information, received reports on the virus for two months, but imposed a state of emergency only March 13. Why?
4-hour timeframe
Average volatility over the past five days: 128p (high).
The GBP/USD pair also continued to adjust on May 4, as we predicted during the weekend. A new signal for selling the Dead Cross from Ichimoku has formed today, so the trend for the pair has already changed downward. is approaching the Senkou Span B line, which lies very close to the volatility level of 1.2365 and the first support level of 1.2354. Thus, these three supports in total can become an insurmountable obstacle to a downward track. As for the macroeconomic background, there has not been a single important publication today in the UK. Therefore, even if traders had paid attention to the foundation now, nothing would have prevented the pound sterling from falling. As in the case of the euro, we believe that the GBP/USD pair may now begin to consolidate in a wide side channel (400 points). In addition, traders perfectly worked out the previous local high (about 1.2647) and rebounded off of it. Therefore, we also have the double top pattern at our disposal now.
Recommendations for EUR/USD:
For short positions:
The EUR/USD pair started a corrective movement and could go below the critical Kijun-sen line after the pound on the 4-hour timeframe. Thus, you can consider selling the euro after consolidating the first goals of the support level of 1.0854 and the Senkou Span B line, but in small lots, so the Dead Cross is still weak.
For long positions:
Long positions will be relevant with the target resistance level of 1.1063 if there is a rebound from the Kijun-sen line.
Recommendations for GBP/USD:
For short positions:
The pound dollar continues to move down. Thus, traders are advised to sell the British currency with the goals of the Senkou Span B line and the level of 1.2354, but in small lots, since the Dead Cross is still weak.
For long positions:
Purchases of the GBP/USD pair will again become relevant with the goal of 1.2621 not before consolidating the price back above the critical line.
Explanation of illustrations:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator - 3 yellow lines.
The MACD indicator is a red line and a histogram with white bars in the indicators window.
Classic support / resistance levels - red and gray dashed lines with price symbols.
Pivot level is a yellow solid line.
Volatility levels are red solid lines.
Possible price movements:
Red and green arrows.
