Tariffs between the United States and China raised fears that an escalating trade war could weigh on global markets.
U.S. President Donald Trump announced tariffs on Friday on $50 billion of Chinese imports, with China retaliating immediately by slapping duties on American exports, which pushed the Yen higher as the safe haven flows away.
Oil prices dropped before OPEC meeting on Friday.
Investors are also estimating the impact of tightening monetary policy by central banks after the U.S. Federal Reserve increased the interest rate last week and the European Central Bank said it planned to end its bond-purchase program at the year-end.
This divergence between the two banks pushed the dollar higher in front of the whole basket of currencies.
After breaking the reversal pattern ‘wedge’, the price met the broken ascending trend from the high of 2017, meeting the broken ascending channel, heading the B level of the ABC Elliot waves. Divergence on RSI followed by breaking the upper line as shown.
According to Elliot, we can see a spike from that level to 97.9.
On the daily chart, the pair had broken the ascending channel followed by bouncing from the descending trend from the high of 2017 and the key resistance of 111.1.
The price also broke the support of 110.05 to reach the next support 108.15, to then get back up again from this level to retest the level at 110.05.
As you can see on the chart, the price is moving according to Elliot waves. By forming the A & B waves, we are waiting for the next move down to hit the C level which is located at the support of 106 and also to meet the ascending trend from the low of 2016.
So, a bounce is expected to be on its way.
On the daily chart, the price eventually broke the resistance zone of 1.309-1.299, followed by break the ascending trend line from the high of 2016, with an engulfing candle.
But we can also see that it touches the top of the “horn” & “wedge” patterns.
So, we only need another confirmation bullish candle to assure the long bias to reach 1.334.
As we expected, the pair had formed a wedge which had been broken to reach the support zone 81.2-80.5, to make the price ranges in sideways between 80.5 & 84.4.
The price is about to have a bearish bias according to:
bouncing from the resistance zone 84.4-93.9, forming continuous ‘flag’ patterns, bouncing from the moving average 200, and ABC Elliot waves
So, the price is expected to head for 76.25.
As we expected, the price will have a strong bearish rally to the support of 0.7155 and this has been prepared according to five causes;-
the descending trend line from the high of February, breaking of the flag, the resistance zone, and eventually the B level of the ABC Elliott waves
so, the C wave is on its way after a possible retracement