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Although the euro/dollar currency pair showed relatively low volatility (49 points) by the end of last week, the quote still managed to touch the key level that many were waiting for.
From technical analysis, we see a stunning inertial move in the recovery phase, which, although it was not large in terms of movement, it still managed to touch the key level for this period 1.1080. What we have – working off the mirror level of 1.1180, where the phase of stunning overbought began to emerge initially uncertain short positions. After that, there was a gradual acceleration and reaching the first control point of 1.1080. The emotional component of market participants, paired with volatility, experienced a considerable shock at the moment of inertia (October 1-21), but after October 21, a distinct healing process began, where emotions subsided and rational steps appeared in terms of cyclicity.
Analyzing the hourly Friday day, we see that the main turn of the course fell on the period of 12:00-19:00 hours (time on the trading terminal), after which the price touched the level of 1.1080 and there was a local rebound.
As discussed in the previous review, the main part of traders was waiting for a clear fixation of the price below the level of 1.1080, which, in principle, happened, but after the initial breakdown, a rollback occurred immediately, which as a fact did not confirm the breakdown.
Looking at the trading chart in general terms (the daily period), we see one of the stages of the recovery course relative to the oblong correction, where we have already received 33% of mining. This may be only the beginning if the quote still manages to fix below the level of 1.1080, but it is too early to talk about the prospects since there is still a risk of entering the long-playing sideways 1.1080/1.1180.
Friday's news background in terms of the economic calendar seemed to be absent, as there were no statistics worthy of attention in Europe and the United States.
In terms of information background, on the contrary, we had discussions about the postponement of Brexit, where the Commonwealth countries decided to grant a postponement, but did not announce its term.
We will return to the Brexit divorce process today, and now I would like to touch upon such a momentous event as the meeting of the Federal Committee for Open Markets, which is scheduled for this Wednesday (October 29-30). So, many eminent experts (Goldman Sachs; Bloomberg) are inclined to believe that the regulator will still succumb to the onslaught of the public and reduce the refinancing rate to 1.75%. However, there is an opinion that the Fed will change the key language that indicates that this step, the third easing of the policy for the year, will correspond to the adjustment in the middle of the regulator cycle, referred to by the Chairman of the Federal Reserve Jerome Powell in July.
In turn, US President Donald Trump decided to prepare public opinion, accusing the Federal Reserve of high rates and calling for its omission.
"The Federal Reserve will not fulfill its obligations if it does not reduce the rate and, ideally, does not introduce stimulus measures. Look at our competitors all over the world. Germany and others get paid for their borrowing. Fed raises rate too fast and lowers it too slowly," – twitter @realDonaldTrump
Today, in terms of the economic calendar, we did not have statistics on Europe and America, but there was an array of Brexit information background. So, the European Union has agreed to make further concessions to England, giving it an additional delay of three months, this was stated by the head of the European Council Donald Tusk in his Twitter.
"The EU, consisting of 27 countries, agreed that it would accept the UK request for an extension of Brexit until January 31, 2020. It is expected that the decision will be formally formalized following a written procedure," – twitter @eucopresident
Further development
Analyzing the current trading chart, we see a rebound from the level of 1.1080, where the quote rose quite confidently up to the value of 1.1106. The consecutive oscillation (impulse/correction) stretches for the fifth day in a row, which may indicate a healthy emotional composition of the market.
By detailing the available time interval, we see that from the Pacific-Asian trading session there was a gradual upward process at the rebound phase, but a more or less strong momentum fell at 13:15 (time on the trading terminal), which just threw the quote to the limits of 1.1106.
In turn, cunning speculators decided to earn extra money in the phase of the rebound from the level of 1.1080, where local long positions were laid in the area of 1.1085. The focus, in this case, was precisely on the local pullback, analyzing the H1 period at the time of the Pacific-Asian trading session.
It is likely to assume that the return to the limits of the level of 1.1080 is still possible, but the strategic entry into the market will be made after fixing the price below 1.1080 or to be more precise, below 1.1070.
Based on the above information, we derive trading recommendations:
Indicator analysis
Analyzing the different sectors of timeframes (TF), we see that the indicators in the short term are working on the pullback phase, signaling purchases. Intraday indicators, on the contrary, work in the recovery phase of the movement, signaling sales. The medium-term period retains an upward interest against the background of inertia, but there is already some progress, the indicators are gradually changing their mood.
Volatility per week / Measurement of volatility: Month; Quarter; Year.
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 28 was built taking into account the time of publication of the article)
The volatility of the current time is 30 points, which is the average for this period. It is likely to assume that in the event of a slowdown and return to the limits of the fulcrum, we will see low activity in the market. We need not just a characteristic background but also fixing the price below the level of 1.1080 to increase volatility.
Key levels
Resistance zones: 1.1180*; 1.1300**; 1.1450; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100.
Support zones: 1.1080**; 1.1000***; 1.0900/1.0950**; 1.0850**; 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
*** Psychological level
* * * * FOMO – loss of profits Syndrome
***** The article is based on the principle of conducting transactions, with daily adjustments.
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