Forex Forecast and Cryptocurrencies Forecast for October 05 - 09, 2020
First,a review of last week’s events:
- EUR/USD. The question that we tried toresolve last week was whether this pair will continue its fall or return againto channel 1.1700-1.2010. Experts couldn't give anyclear answer then. Their votes were divided as follows: 30% favored the fall ofthe pair, 30% favored its rise and 40% took a neutral position. As a result,the pair surely did not continue to fall, but it is also difficult to call itsmovement returning to the channel: having reached the local high at 1.1700 onThursday, October 01, the pair turned around and completed the five-day periodat 1.1715.
Investors werenot particularly impressed by the fact that the Democrats in the US House ofRepresentatives passed legislation on a new package of economic stimulus worth$2.2 trillion, especially since it was previously about $3 trillion-plus. TheUS labour market data didn't have much impact on anything either. ADP'sSeptember Private Sector Employment Report showed an increase to 749K, up from481K a month ago and a 650K forecast. The number of new jobs created outsidethe agricultural sector (NFP), on the contrary, turned out to be less than boththe August and forecast values: 661K in September, 1489K in August against theforecast for September 850K.
Investors weremuch more impressed by the news of the infection of US President Trump and thefirst lady with coronavirus. When this information appeared, the US dollar andthe Japanese yen went up, but then the question arose, how serious this diseaseis and how it could affect the economic situation in the United States and inthe world. And before at least some clarity appeared, the market paused, andthe EUR/USD pair moved to a sideways movement in a narrow range of $1.1685-1.1770, within which, as already mentioned, it came to the end of theweekly trading session;
- GBP/USD.Against the background of Brexit uncertainty, the pair returned to the rangewhere it was already trading on September 15-21 - 1.2805-1.3000, thusconfirming the forecast given last week by 35% of analysts, graphical analysisand 15% of oscillators that signaled the pair was oversold. After a jerk up by230 points, the strength of the bulls dried up, they could not break throughthe resistance of 1.3000, and the pair completed the five-day period in thearea of 1.2935;
- USD/JPY. The last week cannot be calledremarkable for the Japanese currency. Until Friday, the pair moved in a verynarrow channel 105.30-105.75, and it was only on the news of the positive testfor coronavirus by Donald and Melania Trump that the pair jumped down, reaching104.95. This movement showed that, in such a critical situation, investors arelikely to intuitively prefer yen, considering it a safer protective asset thanthe dollar. Although, a 70-point drop in the dollar could hardly be considereda major loss. Moreover, later the situation stabilized, the pair went up, andits final chord sounded at the level of 105.35;
-cryptocurrencies. We started our previous analytical review of thedigital market with the phrase: "Another attempt by bitcoin to gain afoothold above the $11,000 mark ended in another failure." the same can besaid about the outgoing week. Having bumped their heads against the ceiling of$10,940-10,970, the bulls gave up and the BTC/USD pair rolled back to the$10,400-10,500 zone, which fully confirmed the forecast, which was voted for bythe majority of experts (65%). As for the Crypto Fear & Greed Index, it hasdropped slightly over the past seven days, from 46 to 41, and is still in theneutral zone.
According toanalyst portal Messari, this is the first time that daily bitcoin candles closeabove $10,000 for 63 consecutive days. The previous longest series was 62 daysand was registered from December 1, 2017 to January 31, 2018, when bitcoinreached an all-time high near $20,000, having risen in price by 100% in twoweeks. At the same time, the cryptocurrency was held above $11,000 for 50 days,and above $12,000 for 41 days.
According to theexperts of the WhaleMap analytical service, bitcoin is now prevented fromfalling below $10,000 by large investors who begin to replenish their reservesas soon as the value of BTC approaches this level. It is for this reason thatat the week high, the total capitalization of the crypto market, despite thedrop in quotations, grew to $350 billion. However, on October 01-02, anothersale of coins dropped it to $330 billion once again.
The dynamics ofthe cryptocurrency market is increasingly dependent on the mood in thetraditional markets and is subject to changes in the risk appetite ofinvestors. The latter in turn depend on the situation with the coronavirus andthe reaction of regulators to it.
According toexperts of Galaxy Digital Capital Management, bitcoin is beginning to beperceived by institutional players as an inflation hedge, that is, as a kind of“insurance” in case the US dollar loses the status of the world reservecurrency. Comparing the capitalization of gold (more than 12 trillion dollars)and bitcoins (about 200 billion dollars), analysts of this company concludethat “the situation will level out towards the main cryptocurrency, into whichthere will be an outflow of investments from the precious metal, which mayraise its value 60 times in the future.
If you look atthe results of the first 9 months of 2020, it becomes obvious that the COVID-19pandemic has already benefited bitcoin. Even despite the panic of late February- early March, the coin has risen in price by about 40% (gold - by 25%). If wetake March 13 as the starting point, then during this period the maincryptocurrency has grown 2.75 times (gold - 1.3 times).
This situationalso contributed to the growth of cryptocurrency fans. A study by the CambridgeCenter for Alternative Finance says about 100 million people already ownbitcoin and other coins in the world. In 2018, there were about 35 million ofthem, that is, three times less. The lion's share of BTC and other coin holderslive in North America and Europe, followed by Latin America and theAsia-Pacific region. As of the end of the third quarter of 2020, up to 191million addresses were registered on cryptocurrency exchanges.
As for theforecast for the coming week, summarizing the views of a number of experts, aswell as forecasts made on the basis of a variety of methods of technical andgraphical analysis, we can say the following:
- EUR/USD. 65% of analysts supported bygraphical analysis on H4 expect that the dollar will be able to strengthen itsposition somewhat in the coming days, and the pair will once again test supportof 1.1600. This is opposed, respectively, by 35% of experts and graphicalanalysis on D1, according to which the EUR/USD pair, having returned to the1.1700-1.2010 range, will continue to move towards its central part and willconsolidate in the 1.1800-1.1900 range in the second half of the week.
Oscillators andtrend indicators do not give any signals that are more or less suitable forforecasting. Particularly important macro statistics are not expected thesedays either. Interest may be caused by the speeches of the head of the USFederal Reserve Jerome Powell on Tuesday October 6 and his European counterpartChristine Lagarde on Wednesday October 7. The minutes of the US Fed Open MarketCommittee meeting will be published on the same day.
However, themain intrigue of the week will undoubtedly remain the health of the Trumppresidential couple. If the old enough president of the United States quicklyreturns to full-time work, it will become a good trump card in his electionrace. Thus, he will be able to show that he assessed the degree of danger ofcoronavirus correctly and took adequate measures to combat the pandemic in theUnited States. If the symptoms of the disease turn out to be severe, this willnot only force Trump to curtail the election campaign, but, showing theseriousness of the threat, will turn many doubting voters against him;
- GBP/USD. Dueto the growth of the pair last week, the overwhelming majority of indicators(85%) are colored green. But will this trend continue in the future?
It is clearlynot worth looking for the answer to this question in the readings of theindicators. As of Friday evening October 02, when this forecast is beingwritten, Brexit news remains more than contradictory. British Prime MinisterBoris Johnson is due to meet European Commission President Ursula von der Leyenon Saturday 03 October. How this meeting will end is anyone's guess so far. Andthen another factor of uncertainty arrived in time - the infection of Donaldand Melania Trump with the COVID-19 virus. That is why the analysts' opinionsare distributed as follows: 40% support the growth of the pair, 40% are for itsfall and 20% have taken a neutral position. The nearest target of the bears is1.2675, followed by support in the 1.2500 zone. The bulls' task is to breakthrough the resistance at 1.3000 and return the pair to the echelon1.3000-1.3200;
- USD/JPY.Graphic analysis both on H4 and D1 shows the pair's decline to the lowest ofthe past week in the 105.00 zone, and then another 100 points lower, where italready visited on July 31 and September 21. Resistance in this case will bethe level of 105.80.
After completing this trip to the south, according tothe graphical analysis on D1, the pair should return to the zone 105.00-106.00,and go further north by the end of October, to 107.00.
The bearish sentiment is also supported by 85% of theexperts, as well as about 70% of the indicators. Analysts' forecasts arelargely influenced by the situation with the coronavirus pandemic in the UnitedStates, which has now directly affected the Trump couple. And that's just amonth before this country's presidential election. However, this situation canchange very quickly, and then the scenario will be realized, for which only 15%of experts have now voted, according to which the pair will go up and quicklyreach the zone 106.55-107.00;
-cryptocurrencies. The number of bitcoins mined exceeded 18.5 millionunits. Just under 12% of the total issue or less than 2.5 million coins remainavailable for production, most of which could be mined in the next four yearsand the last coin in 2140.
Recall thataccording to the algorithm established by the creator of bitcoin SatoshiNakamoto, the total amount of coins is 21 million, and halving occurs everyfour years - the reward for miners is halved. The main task of halving is tocontrol the issue of cryptocurrency and its inflation.
Bitcoin minersexpect a repeat of the rally of the main coin of three years ago. Many marketrepresentatives are confident that there are all conditions for thecryptocurrency market to move into a stage of active growth now. It is aboutsnatching the main coin to $20,000.
The head of theCrypto Quant trading platform, Ki Yong Joo, noted that signals for a return ofbullish sentiment to the market began to appear in mid summer, but strongexternal factors opposed the rise in the value of the coin then. “There is nodenying that mining pools are having a major impact on the cryptocurrencymarket. It is worth remembering the consequences of the halving this May, whenthe hashrate of the main coin dropped for a while. Growth in such conditionsbecame impossible, so investors and holders of the asset moved to wait-and-seetactics. The situation is completely different now. Miner Position Index (MPI)continues to strengthen. They try to mine as many blocks as possible formaximum rewards. The hashrate of bitcoin is also stable at high rates,"Joo said.
BloombergIntelligence chief commodities strategist Mike McGlone expects growth as well.He believes that the first cryptocurrency should be valued at $15,000. He cameto such conclusions based on the dynamics of growth in the number of activeaddresses since 2017. At the same time, he estimates the likelihood ofalternative scenarios as low.
As for thecurrent forecast, almost everything is the same here: the lower bar of thetrading range for the BTC/USD pair is $9,500, the main support is $10,000, themain resistance is $11,000. At the same time, the probability of the nextattack of bulls to this height, according to experts, is close to 70%, and theprobability of consolidation above this level is twice lower.
NordFXAnalytical Group
Notice: These materials are not investmentrecommendations or guidelines for working in financial markets and are intendedfor informational purposes only. Trading in financial markets is risky and canresult in a complete loss of deposited funds.
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