29.10.202012:35 Forex Analyse & Reviews: Analysis of EUR/USD on October 29. US economy recovers despite the coronavirus, while European economy may start falling again

Exchange Rates 29.10.2020 analysis

On the global scale, the wave marking of the EUR/USD instrument has recently began to get confused. The option of building an upward wave 5 has not been completely canceled so far, but more and more doubts arise about the readiness of the markets to continue buying the euro. If the instrument goes under the minimum of the expected wave 2 in 5, then the wave marking will require adjustments and additions. If not, then the wave 3 in 5 can take a fairly extended form.

Exchange Rates 29.10.2020 analysis

On a smaller scale, the wave marking also shows the importance of the wave 2 minimum and the 23.6% Fibonacci level. An unsuccessful attempt to break this level will indicate a willingness of markets for new purchases of the instrument and will retain the chances of the formation of wave 3. If not, then the whole part of the trend, originating on September 23, will take a three wave structure. And the construction of the three downward waves is expected, since part of a trend from September 1 also turned out to be three-wave.

The second wave of the pandemic continues to gain momentum in the European Union, and the situation is exactly the same in America. The American authorities, however, are ignoring the epidemic, limiting themselves only to local quarantine strictures. On the contrary, the European authorities are sounding the alarm, introducing curfews, and preparing for "lockdowns." And the tougher the measures taken by the European authorities, the more their economy will potentially suffer. During the spring lockdown, it showed amazing resilience and decreased by only 12%. But what will happen in the third quarter is absolutely unpredictable. The US economy lost 31% in the second quarter, but according to forecasts, it can grow by 31% in the third quarter. That is, to recoup most of the losses. Will the European economy be able to do the same? And how much will it lose in the third and fourth quarters?

The European Union will hold a meeting of the ECB today, which is unlikely to make any important decisions. The attention of the markets is now focused on the statements of the heads of France, Germany, Spain, and the European Union as a whole regarding the pandemic and possible quarantines. It is unlikely for the European Central Bank to lower rates, perhaps something interesting will sound at a press conference. ECB representatives will most likely talk about the pandemic and threats to the economy. The question is, how will the markets react to these words? And if the US GDP report also turns out to be as strong as predicted, then it is assumed that a further decline in the instrument's quotes is very likely, despite the opposite perspective drawn by the wave markup. So today, there will be a confrontation between the wave pattern and the news background, and the most key for the instrument is the 23.6% Fibonacci level on the successful or unsuccessful attempt to break through which the movement of the instrument in the coming days will depend.

General conclusions and recommendations:

Since the euro-dollar pair is presumably continuing to build a 3-in-5 wave, it is advisable to buy with targets located near the estimated 1.2012 mark which corresponds to 0.0% Fibonacci for each MACD signal up, in the expectation of building an upward wave. If the instrument makes a successful attempt to break the level of 1,1706, then the option with a possible complication of the internal wave structure can be confirmed.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Uitgevoerd door Chin Zhao,
Analytische expert
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