We continue to look for the answer to the question from the title of the article. As noted in yesterday’s review, the answer will be received before the end of this week. The negative dynamics of quotations in the first half of Thursday was replaced by a corrective movement, which was a reaction of players to information about progress in the Brexit negotiation process. At the same time, in my opinion, the main importance is not the news about the possibility of concluding the Agreement on November 21, as reported by Dominic Raab, Minister for Exit of Great Britain from the European Union, but a little earlier news about that, how EU countries agreed to divide the current tariff quotas between the EU and the UK after the last on exit from the community.
Quotes of the EUR/USD pair yesterday almost reached the minimum values of the current year (the minimum of August is 1.1306, the minimum price of Thursday is at 1.1301). On the daily timeframe, we continue to track the formation of convergence between the price minima and the MACD indicator values. A similar pattern is taking place for the GBP/USD pair, although yesterday the quotes did not reach the lows of this year about 40-50 points, which can be attributed to a slight error on large time frames. The answer to the question puts in the title of the article will be received by the end of Friday. At the same time, the importance of the current week is that, depending on the response, it will be possible to predict the dynamics of the market until the end of this year.
One of the factors that increased investors’ appetite for risk is the publication this night of the October index of business activity in the manufacturing sector in China. The excess of the forecast value led to a reversal of the dynamics of the exchange rate of the Chinese yuan against the US currency. If the maximum values of the pair were 6.9757, closely approaching the important mark of 7.00, then after the publication of this statistics, the quotes decreased and are at Thursday morning at 6.9509.
Today, the focus of the markets is on the outcome of the Bank of England meeting. The press conference of the head of the regulator Mark Carney may give a new growth impetus to the British pound, or, in the case of focusing on the problems associated with Brexit, lead to the resumption of its weakening.
In addition, we remember that tomorrow will be published a block of data on the labor market in the United States. Depending on the actual values of the indicators, the trend in the foreign exchange markets will be finally determined and the answer to the main question of this week will be received.
On the chart of the EUR/USD pair, the convergence between the local price minima and the corresponding values of the MACD indicator continues to form. Yesterday, the quotes came close to 1.1300, which is the minimum value of the current year. In the second half of the day, prices began to grow, due to the reaction of markets to reports of progress in the negotiation process on Brexit. For a confident prediction of a reversal in the market, it is necessary to wait for the final formation of the correction signal on the daily time frame. On the attached chart, yellow ovals indicate areas of minimum prices and corresponding MACD values. Today, the reaction of the markets to the results of the Bank of England meeting, which can further strengthen the European currency or lead to the resumption of negative dynamics, will be important for the local dynamics of quotations.
Zones of support and resistance today are in areas 1.1320-1.1330 and 1.1380-1.1400, respectively.
Messages of the second half of Wednesday, related to the progress on Brexit, interrupted the negative dynamics of quotations. The minimum price values did not reach the lows of the current year about 40 points. On the attached chart, yellow ovals highlight areas of minimum prices and MACD values. As can be seen from the graph, the possibility of convergence remains, which will lead to a strong growth movement in order to increase in the medium term to the level of 1.3300. In the case of the completion of the formation of a correction signal, with a sufficient degree of confidence, it will be possible to predict the growth dynamics of the pair up to the New Year holidays. Of course, today’s meeting of the British regulator will have a significant impact on the quotes. In case of appearance of hawk notes in the statement of the Bank, the pace of price increase may grow. Otherwise, the re-approach of quotations to the area of minimum prices of the current year is not excluded. Trading on Thursday and Friday are, in my opinion, determining for further dynamics in the next few weeks.
The support zone is located at 1.2760-1.2770 (green oval).
The resistance zone is present in the range 1.2880-1.2900 (red oval).
Today, related to neutral news background, the prevailing side dynamics of the USD/JPY pair is predicted. The range of fluctuations is limited from above by the area of maximum prices October 8-10, 113.25-113.40. Bottom support is the area located near the 200-period MA on the H4 time frame around the 112.50 mark. Thus, the prices of the analyzed pair stabilized in the neck of the technical analysis “double bottom” figure, which was mentioned in one of the previous overviews.
The support zone is the range of 112.45-112.60 (green oval).
The resistance zone is located in the area of 113.25-113.40 (red oval).
The situation in the pair USD/CHF can be described in the words “we are waiting”. Despite the update of the maximum price values of the USD/CHF pair, which on Thursday reached the level of 1.0094, a corrective signal (divergence between price highs and MACD values) remains, which indicates the probability of a market reversal and a decline in quotations.
Support and resistance zones are located at 0.9940-0.9960 (green oval) and 1.0050-1.0080 (red oval), respectively.
On Thursday, the USD/CAD pair quotes locally broke through the multi-year resistance line passing through the 1.3150 mark. The maximum price values reached 1.3169. At the same time, the positive dynamics of quotations is accompanied by the formation of a divergence between the highs of prices and the corresponding values of the RSI and MACD indicators, which leaves the possibility of a reversal of the market and a decrease in quotations.
The support zone is in the range of 1.3090-1.3105 (green oval).
Resistance is still located at 1.3135-1.3150 (red oval).
Yesterday, gold quotes fell to the level of 1211.86. It is worth noting that it is in the vicinity of this price that the reduction target is found according to technical analysis, which states that after the channel is broken (recorded on October 30), quotations may decrease by the width of it (this situation is marked on the chart with a yellow marker). In the second half of the day, against the backdrop of the weakening of the US currency, gold quotes interrupted the negative dynamics and rebound up. Today, a gradual increase in prices is predicted, in order to return to the internal area of the medium-term channel during the subsequent trading sessions.
The support zone is located in the area of 1212.00-1214.00 (green oval).
Resistance is the range 1223.00-1225.00 (red oval).