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From the point of view of complex analysis, we can see a variable accumulation, on the basis of which it was possible to resume the correction.
The past trading day met all the standards for accumulation. The quotes, during an initial rollback, was able to reach the level 1.1270, after which an amplitude of 1.1270 / 1.1320 arose. The process lasted for more than 35 hours, which is quite long.
With regards to the movement on May 26, the euro did not undergo any pullback, slowdown or correction, so the convergence of quotes with the area of interaction of the trading forces 1.1440 / 1.1500 spoke for itself that the market needs correction. Failure for such will overheat long positions, followed by a collapse in prices.
For further movement, a lot will depend on the area of interaction of trade forces 1.1440 / 1.1500, a consolidation above which will automatically push quotes upward, which could change the medium-term trend.
Although premature conclusions should not be made, a similar situation was seen in the market earlier, so such a scenario is possible, even on just a smaller scale.
Nevertheless, as discussed in the previous review, traders worked on a full correction, which failed and only achieved 30% of the total movement.
In terms of volatility, the indicator recorded a lowest value for nine trading days being only 51 points, but since the activity is already in the norm, acceleration is soon to occur.
Thus, analyzing the trading chart, we can say that the first half of 2020 is one of the most dynamic in five years.
Meanwhile, in terms of news, ECB Head Christina Lagarde said on Monday that the GDP of the eurozone is expected to shrink by 14%.
"The decline of the eurozone GDP in the 1st quarter of 2020 is reached to 3.8%. Our forecast for the 2nd quarter is 14%, with real GDP shrinking to 8.7% in 2020, but recovering by 5.2% in 2021," Lagarde said.
The ECB, for the first time, was forced to create its own economic forecasts, as the bank operated only with various scenarios before.
"We are facing an unprecedented crisis, which no one is to blame, and has become an asymmetric shock to the European and global economies," Lagarde commented.
The preliminary data on eurozone GDP in the first quarter of 2020 was published, which revealed an economic decline of 3.1%, better than the previous estimate of 3.2% and better than the current forecast of 3.3%. Nevertheless, the scale of the economic crisis still has no boundaries, so investors will continue to pessimistically consider the current reporting.
In the afternoon, data on JOLTS will be published, which should show a reduction from 6.2 million to 5.3 million.
Further development
Analyzing the current trading chart, we can see a local acceleration during the breakout from the lower limit of 1.1270 / 1.1320, where the quote went down to the level of 1.1240 for a moment. The scale of the correction did not even reach 30% of the movement, which means that theoretically, the bears still have much to go down.
Thus, to resume the current mood, the quotes have to continue the descent in the direction of 1.1200-1.1180.
Based on the above information, we present these trading recommendations:
- Open sell positions below 1.1270, in the direction of 1.1200-1.111.
- Open buy positions above 1.1325, in the direction of 1.1350–1.1380.
Indicator analysis
Analyzing the different sectors of timeframes (TF), we can see that the indicators of the hourly periods signal sales due to the existing correction, whereas the daily period, which is still focused on the bullish mood, gives a buy signal.
Volatility per week / Measurement of volatility: Month; Quarter Year
The measurement of volatility reflects the average daily fluctuation calculated for the Month / Quarter / Year.
(June 9 was built, taking into account the time of publication of the article)
The volatility of the current time is 73 points, which is 43% higher than the previous day's record. Activity is assumed to continue growing, even amid speculative activity and news background.
Key levels
Resistance Zones: 1.1300; 1.1440 / 1.1500; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support Areas: 1.1300; 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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