April 20, 2019
First, a review of last week’s events:
- EUR/USD. Most experts (65%) expected that the pair would go down. This forecast was supported by signals from a third of the oscillators indicating that the pair was overbought. All this happened: the weekly amplitude of fluctuations was about 100 points, and the low was fixed at 1.1225.
Perhaps the fall of the euro on Thursday, April 18, would not have been so strong if it had not been for the short working week before Catholic Easter, when many banks and exchanges were closed on Good Friday. The main reasons for the fall were disappointing market data on business activity in the Eurozone and dollar-friendly data on retail sales in the United States.
On Friday evening, the European currency, however, managed to win back some of the losses, and the pair completed the week at 1.1240;
- GBP/USD. This pair showed a slightly larger amplitude - 140 points. At the same time, the experts indicated the precise low to which it should sink. Actually, with the forecast at 1.2985, the pair felt the bottom at the horizon 1.2978 - inside the support zone, which it has been unsuccessfully trying to break through for two months already;
- USD/JPY. Some experts expected the growth of this pair, some thought it would fall. However, fluctuations with a maximum range of 40 points can hardly be attributed to bullish or bearish trends. For the whole week, we were able to observe the classic sideways trend, which started at 112.00 and ended at 111.92;
- Cryptocurrencies. As has been said many times, the cryptocurrency movement is largely motivated by the news background, which this week was mildly positive. The "guru" Involved in the crypto business continued to repeat the mantra of the imminent rise of Bitcoin. For example, Tom Lee, a former financial analyst at JPMorgan, and now co-founder of Fundstrat Global Advisors, said that given the success of the first cryptocurrency this spring, Bitcoin's exchange rate to the dollar will show growth throughout the year and reach $10,000 by its end. And according to the head of the BitMEX exchange Arthur Hayes, in just a few years we will see BTC/USD quotes around $50,000. The main positive news of the week, in our opinion, was the message that the World Bank and the International Monetary Fund jointly launched an internal cryptocurrency. So far, only for the educational purposes of their employees. But as they say, the first step is the hardest.
As for our forecast, it came true almost 100%: the standard cryptocurrency stayed in the range of $4,975-5,370, adding about 3.5% over the week. Ethereum (ETH/USD) and Litecoin ((LTC/USD) showed an increase of about 4%, but the growth of Ripple (XRP/USD) was less than 2%.
As for the forecast for the coming week, summarizing the opinions of a number of analysts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:
- EUR/USD. The world economy is moving towards recession, and much in Europe depends on how well EU leaders can withstand the negative trends. It is not only about how the political situation will develop in the EU countries, and not only about how the ECB will behave in an effort to stabilize the economic situation in the euro area, but also about how, for example, the US-China trade negotiations will end and how President Trump will behave after that. Many analysts believe that today, Europe is prepared for the global economic recession and external attacks worse than other economic blocs.
The past week brought the euro back within the 15-week downward channel. And 70% of experts, supported by graphical analysis on H4, believe that the European currency will continue to give up its positions, falling to the zone of the 2019 lows - 1.1175-1.1185. It is only 30% of analysts that hope that the pair will be able to return to 1.1325. At the same time, attention should be paid to the data on the US GDP, which will be published on Friday, April 26. According to forecasts, the GDP growth will be only 1.8%, which is significantly lower than the previous value of 2.2%. If this prediction turns out to be correct, bulls can move the pair to the next target at the height of 1.1420;
- GBP/USD. The pair completed the previous five days in the support zone of 1.2975, which it has been trying to break through for eight weeks already. Most experts (75%) believe that it will succeed and will be able to descend to the zone of 1.2770-1.2830. However, some analysts hope that amid the dovish rhetoric of the ECB and the US Federal Reserve, the Bank of England will nevertheless decide to raise the interest rates. One can add to this the still persistent euphoria caused by the delay of Brexit. taken together, these factors let the bulls hope for the pair to return above the 1.3100 mark. The nearest resistance levels are 1.3130 and 1.3200. It is only 25% of analysts who agree that this will happen next week. But in the transition to the monthly forecast, 60% of the experts and graphical analysis on D1 side with the bulls. As for the readings of oscillators, 15% of them signal that the pair is oversold, which means, if not a complete reversal of the trend, then at least a quick correction of the pair upwards;
- USD/JPY. We expect the Bank of Japan’s interest rate decision and a press conference on the monetary policy of this Bank on Thursday, April 25. However, both of these events are unlikely to present any surprises. The side trend of this pair is also not conducive to forecast accuracy. That is why analysts' opinions on its behavior in the next five days have been divided almost equally: a third are for for its growth, a third are for a fall, and a third are for a continuation of the lateral movement. However, in the longer term, 65% of the experts, supported by graphical analysis on D1, vote for the pair to fall. 25% of oscillators also give signals that it is overbought. At the moment, the pair is still in the reversal zone near the upper boundary of the medium-term channel 109.70-112.15, and, in the case of its downward movement, the targets for it will be the support levels 110.85, 110.35 and the lower boundary of the channel 109.70.
If the dollar continues to grow against the Japanese currency, then its immediate task will be to consolidate in the zone of 112.20-113. 25 The next resistance is at 113.70;
- Cryptocurrencies. Despite a more or less positive news background, 65% of experts remain pessimistic, believing that in the near future the BTC/USD pair will not be able to break through the resistance of $5,500. Moreover, according to their forecasts, bears will have a certain advantage in this market, pressing the pair to support $4,600. However, during the transition to the medium-term forecast, the alignment of forces changes to the opposite, and here already 60% of analysts believe that Bitcoin quotes at $5,750-5,800 are realistic.
Roman Butko, NordFX
Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.