Back in early March, we actively argued that the rapid upward trend observed in the EUR/USD and GBP/USD currency pairs drove the quotes so high that it was difficult to believe in the scale of price changes. Without exception, all experts predicted a reversal of the upward cycle, which initially occurred in the market, but the speculative excitement has not disappeared, and after the corrective move, an upward trend reappeared, which changed the order of trading forces in the market in April.

The analysis of the flight is over, and now about the details.

The European currency, which in early January was worth 1.2349 and was considered something incredible, again aimed at the local maximum of the medium-term trend. Traders' opinions changed just at the moment of the upward trend in the period of April, where the euro strengthened by more than 400 points, winning back the corrective move 1.2349 ---> 1.1703, by about 67%.

The scale and speed of the recovery amaze, few people notice the fact that the euro quotes are very expensive, and the fact that a little more than 150 points remain before the local maximum of 1.2349, does not bother anyone at all.

Everyone may have come to terms with the fact that speculators rule the market, but at the same time, do not forget that everything can change quickly.

The biggest risk in terms of technical analysis is not that the market is ruled by speculators, but that the euro quotes are drawn so high that if we repeat the ascending cycle, we will break through the maximum of 2018 and thereby teleport to the levels of 2016, which is already quite scary.

What is the fear?

If growth does not have a fundamental justification, then it is automatically assigned the status of unstable, and this can lead to great consequences in the form of another collapse in prices.

As for the British currency, things are no better. The pound sterling rate stormed the 2018 high at the beginning of February, ignoring the many economic problems within the United Kingdom.

The corrective move 1.4224 ---> 1.3668 cooled the overheated British currency a little, but this is not enough given the scale of the upward movement in the second half of 2020.

Here we again stumble upon speculative interest, which turns a blind eye to technical and fundamental nuances, but, unlike the European currency, the pound sterling crossed the line only in early May, when it crossed the psychological region of 1.3950/1.4000/1.4050 on the way.

Before the local maximum of the medium-term trend is updated, a little more than 50 points remain, all hope is for the order line to be triggered in the area of 1.4200, relative to which another correction may occur.

Whether there will be a repetition of the regular basis associated with this area is difficult to say, since speculators are behind the quotes, but they can quickly change sides, which will again play in their favor, but we will have something to ride.

As for the reference level, it is located in the area of 1.4350, which reflects the local maximum of 2018.