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As can be noted the last few days the market has prevailedsustained interest in risk and risky assets. This is taking place against the backdrop of easing tensions in two key topics that have been troubling markets for a fairly long period of time.
The first is the brexit negotiation process,which is approaching its logical conclusion, since October 31 is scheduled for the last date by which the UK should withdraw from the European Union. As the news headlines of the country show, they are working to ensure that a mutually acceptable agreement is reached before this date and that a deal will be concluded later on by which Great Britain will exit the European Union, or, as a second option, the release date may be delayed. In any case, this is a positive factor for the pound, which we note on the chart.
Secondly, we have prospects for trade relations between China and the United States. Here, too, everything looks optimistic, the parties are trying to find consensus, there are no exacerbations.
All this reflects the interest of investors in risk, risky assets are currently experiencing a boom, and safe havens working with risky assets in antiphase are under pressure.
To illustrate how this is displayed on the main trading instruments, we will consider each of them.
EUR / USD
Here we have formed stable support onaround 1.10. Yesterday, the couple tried to break a little lower, but we see that these attempts were unsuccessful. The pair was slightly below the 1.10 mark, but apparently the demand was sufficient, today we are already around 1.109 - so far this is the maximum.
From a technical point of view, everything looks very good for the euro-dollar, now there is a chance that after all the mark of 1.11 can be tested in the coming days.
We also note that, according to the tradition of recent years, the euro-dollar is a very slow pair and remains one in the near future, due to the highest liquidity among all other currency pairs.
Thus, while the time is above 1.10, the risk shifts up. That is, growth towards the 1.1100-1.1150 mark is the business of the next few days.
GBP / USD
Euphoria prevails in this pair. In fact, the current growth target is now at 1.30 - a round figure and a psychological barrier. It’s difficult to say how much these expectations are justified, as I have already said, news headlines are now more than positive and, accordingly, the market is beginning to lean toward a positive conclusion to this whole epic of Britain’s exit from the European Union.
If everything continues in about the same style, sooner or later, the pair will reach 1.30, everything will depend on the conditions under which the UK leaves the European Union.
If, at some stage, the negotiation processto stall? Such a development for the pound can be very painful. As long as we see a steady, progressive movement higher. If the situation returns to a negative perspective, the pound has a rather long way down, towards 1.25 - at the moment it’s disappointing, in case of failure of negotiations and no compromise, there may be a deeper decline towards 1.22. So far, these figures look unlikely and they are very far from current price levels.
XAU / USD
Gold as a safe haven in the current situationIt is under pressure and, apparently, the $ 1,480 mark, which has already been tested several times, formally holds. But if, nevertheless, a failure below $ 1480 happens, we are waiting for a further drawdown in the direction of $ 1460 and then $ 1450.
As we can see, $ 1,500 is now a levelresistance and in general it can be assumed that $ 20 in the range of $ 1480-1500 is the border that will set the tone for further movement, when broken. If gold falls below $ 1480, we will see a further decline, in case the risk situation worsens again and safe havens are in demand, we will see a break above $ 1,500 and the first wave of movement in the direction of $ 1,520.
Here we have formed a stable range of about 3 dollars, it is $ 58 - the lower limit and $ 61 - the upper limit. While we are in this range and it suits everyone.
Globally, oil remains under pressure afteran impressive decline from $ 67-68, which we noted recently. At the moment, 57-58 dollars. - Strong support, below this band of demand, oil has not yet fallen.
It remains only to observe the dynamics,if this breakthrough sure happens, the immediate goal will be the mark of 56.00-55.70 dollars. These are the lows that were noted on the daily chart this year.
At the end of our review, we will consider the cryptocurrency market, in particular Bitcoin, since its capitalization from the entire cryptocurrency market is about 70%.
Bitcoin has now dropped to the mark$ 8000, after a long period of consolidation between $ 8000 and $ 8500. Today there are attempts to lower below $ 8000, but while they are sluggish, they are blocked by demand. Note that the general news background remains negative for cryptocurrencies.
Firstly, the decision of the Commission on valuableUS securities, postpone the decision on the cryptocurrency company Telegram. As we know, the TON cryptocurrency was supposed to be launched before the end of October, but so far Pavel Durov and the team have informed investors that the launch is being postponed in order to resolve disagreements with the Securities Commission. This event is negative for the cryptocurrency market.
Secondly, the situation withcrypto project of another global giant Facebook, libra is also in limbo. Many participants in the launch and creation of the consortium left the project, among them Visa and MasterCard. This, of course, is a significant blow.
Since the appeal of Libra in the future is disturbingmany financial regulators, of course, they are ready to somehow postpone the launch of this crypto project (to perform any new formalities, achieve new agreements, etc.).
In general, all these bureaucratic procedures, of course, do not contribute to the growth of interest in the cryptocurrency market and, accordingly, have an impact on cryptocurrency rates.
If Bitcoin steadily breaks below$ 8000, we will again see a decline in the direction of support of $ 7,700- $ 7,800. But this time, if this support band is already broken, Bitcoin will fall somewhere in the $ 6,000 mark.
We note that some demand is present, butperhaps this is due to the fixation of short positions. Since, we see high speculative activity in this market segment, and speculative activity is always short-term. Thus, if a rebound occurs above the $ 8000 figure, absolutely no one will be surprised, as this will simply confirm our confidence that speculators still dictate the short-term dynamics of the market.
Vasily Barsukov (Chief Dealer WELTRADE)