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From the point of view of complex analysis, we can see the reversal of quotes which led to a recovery of more than half relative to the correction.
The past trading day was expressed in a downward course, in which during the time spent at a standstill between the values 1.1300 and 1.1350, a sufficient number of short positions were accumulated, which led to a recovery relative to the earlier correction. More than half of the movement was covered, which means that there is not much left before the quotes reach 1.1180, which encouraged the bears since the chance to reach the values 1.1080 and 1.1000 is near.
As you might guess, the theory of price development implies a downward move that will return the quote to the region of April of this year. True, there is one snag in this, the market still has a high speculative operation rate, which means there is no escape from chaotic leaps. That is why, in our strategy, the key role is played by local operations, which are ready to take on speculative excitement and convert it into profit.
Analyzing the past trading day in detail, we can see that the round of short positions arose during the start of the European session and lasted until the end of the trading day. Interestingly, movement in terms of strengthening in the US dollar was seen everywhere in the market.
With regards to volatility, a value of 78 points was recorded, which is 9% lower than the average daily value. Nevertheless, the slowdown did not affect the overall dynamics of the currency.
As discussed in the previous review, traders focused on the area of 1.1280 / 1.1305, in which at the time of making trading decisions, a sufficient number of speculators took on short positions.
Looking at the daily chart, we can see that many market participants want a repeat of the fluctuation observed in March this year, during which the quotes stopped in the area of interaction of the trading forces 1.1440 / 1.1500. However, a repetition of such an intense movement cannot occur, as the situation and external factors now are not the same as before. Nevertheless, a gradual recovery may occur, which will contain adjacent movements.
As for the news published yesterday, the market focused on speculative background, as noteworthy statistics did not come out from Europe and the United States.
Recent forecasts on the recovery of the US economy are pessimistic, and Chicago Fed President Charles Evans said that the economy will return to normal by the end of this year, but will not recover to pre-crisis levels.
"While I hope for a rapid economic recovery, I expect that a large-scale recovery will take some time. My forecast suggests that growth will be hindered by periodic local outbreaks, and lifting quarantine restrictions may harm us, "Evans said.
Eric Rosengren, President of Boston Fed, also made a similar forecast the other day. Other members of the committee adhere to this position.
Today, data on the US GDP for the first quarter will be published, where, according to forecasts, a decline of 5.0% is expected.
Data on orders for durable goods will also come out, which expects an increase of 8.5%. The upcoming weekly report on the US labor market, meanwhile, expects a sluggish recovery in the index, in which the number of initial applications for unemployment benefits is expected to amount from 1,508,000 to 1,380,000, while the number of repeated applications should decrease from 20,544,000 to 20,100,000.
Further development
Analyzing the current trading chart, we can see that the bearish mood persists in the market, which updated the variable pivot points. The quotes will eventually return to the level where the correction began (1.1180), after which it will become clear how large is the scale of the downward sentiment in the market, since the prospect of a decline is not limited to the level of 1.1180.
Nevertheless, the target is still local operations, so work from the current candles.
The bearish mood will eventually lead the quotes to the level of 1.1180, in which there will be slowdowns and a possible rollback. Subsequent short operations will occur after the quotes consolidate below 1.1165.
Based on the information above, we present these trading recommendations:
- Buy positions if the quotes rebound from the level of 1.1180.
- If you do not have sell positions yet, enter the market below 1.1210, in the direction of 1.1180.
Indicator analysis
Analyzing the different sectors of time frames (TF), we can see that almost all the indicators of technical tools signal sell due to the recovery of quotes by more than half at the correction.
Volatility per week / Measurement of volatility: Month; Quarter Year
The measurement of volatility reflects the average daily fluctuation calculated by Month / Quarter / Year.
(June 25 was built, taking into account the time of publication of the article)
The volatility of the current time is 41 points, which is 52% lower than the average daily value. It is assumed that the upcoming news as well as speculative sentiment will set a new round of growth in volatility.
Key levels
Resistance Zones: 1.1300; 1.1440 / 1.1500; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support Areas: 1,1180; 1.1080 **; 1,1000 ***; 1.0850 **; 1.0775 *; 1.0650 (1.0636); 1,0500 ***; 1.0350 **; 1,0000 ***.
* Periodic level
** Range Level
*** Psychological level
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