Forex Analysis & Reviews: 06.05.2020 - Hot forecast and trading...

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06.05.2020 05:11 AM

Hot forecast and trading signals for the EUR/USD pair on May 6

EUR/USD 1H

The picture is now as follows in the hourly time frame. First, the euro/dollar pair overcame a fairly long-term upward trend line, which indicates a change in the downward trend. Secondly, the pair's quotes are pinned below the support level of 1.0854 and below the support area of 1.0880 – 1.0895 (highlighted with a red rectangle), from which they have repeatedly rebounded. Thus, two strong obstacles remain on the upward track: the Senkou span B line for the 4-hour timeframe and the upward trend line, which began its existence from the March 20 low.

As we have already said in recent fundamental reviews, market participants are ignoring the entire macroeconomic background. We do not claim that traders have not worked out any report for the last two or three months. However, we would like to state that there has not been any development in the usual sense of the word, that is, when an important report is released and the mood of traders changes in accordance with its meaning and trades are conducted in the direction of the report's nature, for a long time. Several indices of business activity in the US and the European Union were published in the first two trading days of the week, but even their fall to record-low values did not surprise traders at all. The coronavirus is still the number one topic for the whole world. At the same time, close calculations of those infected in a particular country have already stopped. Many countries are beginning to relax their quarantine measures. And the number one question for the coming weeks: will there be a new COVID-2019 outbreak in one of the countries that are easing the quarantine? For example, according to opinion polls in the United States, the majority of Americans do not approve of Donald Trump's initiatives to "open" the economy. Despite the previous rallies "for the abolition of quarantine". Americans value their health and are afraid of coronavirus, so they do not want to complete self-isolation in the midst of an epidemic. The number one pressing issue now is the China-US standoff, as Washington may start putting pressure on Beijing in the near future. The demand for the US dollar could increase as the geopolitical situation in the world turns more intense. However, we still believe that technical factors should remain in the first place now.

Based on the foregoing, we have two trading ideas for May 6:

1) In the coming hours, the downward movement may continue with the immediate goal of the Senkou Span B line - 1.0811. Thus, those traders who are already in sales can hold them for this purpose. Further, the US dollar still has the potential to grow. If traders overcome the Senkou Span B line, then the downward movement can continue with the goal of an upward trend line, which lies slightly above the support level of 1.0754. The potential to Take Profit in these cases is 30 and 70 points. A retreat to the resistance area of 1.0880 - 1.0895 is not excluded, with a rebound from which you can short the pair again.

2) the second option - bullish - involves overcoming the resistance area of 1.0880-1.0895. In this case, it will become an upward trend in the short term, and we advise you to buy the euro while aiming for the Kijun-sen line-1.0921 and the April 19 high of 1.0990. Potential Take Profit in this scenario can be 20 and 90 points.

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