4-hour timeframe
Average volatility over the past five days: 171p (high).
The EUR/USD pair ends the first trading day of the week with a downward correction. Today, the pair passed 134 points, and such a day can be considered a boring Monday in current conditions. Judge for yourself, no important macroeconomic statistics were published today. There were also no high-profile events or actions of governments and the central bank. So a correction is logical, but when was the last time the markets behaved logically? Today's correction, therefore, is not a sign that the markets are coming back to normal. We still believe that the entire currency market, every currency pair, and much of the world now depends on the rate of spread of the coronavirus and the results of the fight against the epidemic. Unfortunately, people still have nothing to brag about in the fight against the virus. The growth rate of the spread of the pandemic can be slightly moderated, but they are still exponential. And is it possible? After all, as before, in order to talk about more or less accurate numbers affected by the COVID-2019 virus, you need to simultaneously make tests for the entire population of the planet. Moreover, each country must provide truthful data on the number of cases, and this is also often a problem. In general, it's impossible to calculate exactly how many people in the world or in one country or another are infected. Simple logic suggests that if official numbers show that there are 740,000 who are sick, then the real statistics are much worse. It always happens. The United States is slowly approaching the 150,000 mark of patients. Not a single country in the world, except China, has so far announced that the growth rate of the epidemic is beginning to decline. Australia made a similar statement, but it is still too early to draw such conclusions. You need to wait at least a week or two, and if after this time the growth rate of the pandemic does not begin to grow again, then it can really be recognized that the disease is receding. In Europe and the United States, this moment is still very far away. US President Donald Trump believes that the peak of the epidemic will take place in two weeks. That is, for another two weeks, Americans will become infected with a new disease (which, according to the latest data, is not so new) at an exponential rate. It is easy to calculate that if the incidence per day is about 20%, then after eight days the total number of infected Americans will be 600,000. Trump also made a statement that is very difficult to perceive without surprise. He said that the work of the US government can be evaluated positively if 100 to 200 thousand Americans die from the COVID-2019 virus. According to the US president, if the authorities did not take any measures, then the mortality rate would be at least 2.2 million people. It's hard to say how Trump got these numbers. Moreover, the wording itself is strange. What does it mean "if the authorities hadn't done anything"? Why then do we need power? Moreover, at the moment, around 30,000 people have died from the coronavirus worldwide. Trump admits the loss of 100-200,000 Americans. If, considering that the mortality rate from the virus is on average 5%, then, according to Trump, approximately 2 to 4 million US residents will be infected. Also, Trump extended the restrictive measures in connection with the epidemic until April 30. Thus, on the one hand, the next forecasts from the US leader did not materialize (he previously stated that the coronavirus would not survive the warm season and that the United States would get rid of this scourge by Easter), on the other hand, American residents can breathe easy, no one is not going to drive to work yet. It seems that the US leader nevertheless took into account the absurdity of such a move.
4-hour timeframe
Average volatility over the past five days: 333p (high).
You could say that the GBP/USD pair is in one place. If you just look at the illustration, it is obvious that the pair practically did not move during the day. However, in fact, it went from the lowest to the highest of the day at 150 points. This is more than the usual volatility of the pound. Thus, despite a certain calm of the markets on Monday, we believe that it is still a long way to the conclusion that the panic is over. Meanwhile, the EU is increasingly starting to talk about extending the transition period for Brexit. David McAllister, who leads the European Parliament's Brexit group, said: "The EU is open to extend the transition." But the ball is now on the British side. So far, the UK government has rejected this option. However, in the current circumstances, London must reconsider its response on the extension." It is still difficult to say at all how the negotiations between Brussels and London will end, given the global pandemic. It seems that, despite the completion of the parties to continue negotiations in the audio and video conferencing modes, the negotiations are suspended. If so, it is likely that London will really have to extend the transition period by two years. In any case, the coronavirus pandemic must first be overcome.
From a technical point of view, a microscopic correction began against an upward trend. The MACD indicator has turned down, but the correction is more lateral. The nearest targets and levels of volatility are quite far away. If volatility continues to decline, this will be great news for market participants, as it will mean that there will be some reassurance.
Recommendations for EUR/USD:
For long positions:
The euro/dollar began to adjust on the 4-hour timeframe. Thus, it is recommended to buy the euro in case the MACD indicator turns up or bounces off the Kijun-sen line with the target level of 1.1310.
For short positions:
It will be possible to sell the EUR/USD pair no earlier than consolidating the price below the important lines of Senkou Span B and Kijun-sen. The first goal is the support level of 1.0799.
Recommendations for GBP/USD:
For long positions:
The pound/dollar took a pause and did not start a downward correction. Thus, it is recommended to buy the British pound with the goal of a volatility level of 1.2785 after the MACD indicator turns up or to remain in longs until a more eloquent signal for correction.
For short positions:
It will be possible to sell the GBP/USD pair not earlier than when the bears overcome the critical line with the first goal, the support level is 1.1771 and in small lots, since the price will be inside the Ichimoku cloud at this time.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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