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From a comprehensive analysis, we see a corrective movement after the update of the minimum on February 10. Now, about the details. The impulse downward move (which took place on February 19 and 20) managed to lower the quote up to the level of 1.2848, where a correction of more than 100 points was formed on the local overheating and profit-taking. The start of the new week led to a partial recovery, where the quote with surgical accuracy finds support in the area of the average level of 1.2885. The actual sequence shows the movement in the range of 1.2770//1.2885//1.3000 and fixation, which is a good sign for further development.
Regarding the downward trend theory, we see that the breakdown of the February 10 low and the average level of 1.2885 did not produce the desired result. We plan to develop a downward trend rather than local jumps. Thus, a sequence of cycles (Impulse->Correction) is necessary for stable formation. Saving the price in the range of 1.2770//1.2885//1.3000 still gives a chance for further development. However, do not forget that we are talking about the medium and long-term courses.
In terms of volatility, we see a characteristic acceleration at the time of the correction move, which signaled a local overheating of short positions. The subsequent process was in terms of slowing down, which leveled the activity towards a consistent pattern of past periods
Volatility details: Monday-56 points; Tuesday-77 points; Wednesday-115 points; Thursday-79 points; Friday-104 points; Monday-67 points. The average daily indicator relative to the volatility dynamics is 94 points (see the volatility table at the end of the article).
Detailing the past day by the minute, we see that the main surge in activity occurred during the beginning of the European session at 10:00-11:30 (trading terminal time), where there was an impulse downward movement. The subsequent fluctuation was in terms of the reverse movement relative to the day, closing with a slight decrease.
As discussed in the previous review, medium-term traders are working on a downside, where the current correction did not bring them significant damage or adjustments, since it is still in the range of 1.2770//1.2885//1.3000. Intraday traders and speculators worked on the correction. Friday's recommendation for a local upward trend met expectations and generated little revenue.
(Local buy positions were considered if the price was fixed higher than 1.2915 - in the direction of 1.2930-1.2950.)
Looking at the trading chart in general terms (daily period), we see the movement of the quote within the range of 1.2770//1.2885//1.3000, which confirms the change of the clock component. The recovery process relative to the medium-term upward trend has not yet occurred.
The news background of the previous day did not contain statistical data on Britain and the United States, thus the main focus was on the technical part.
In terms of the general information background, we see the European side is close to approving the mandate of the next phase of Brexit negotiations, where an addition has already been made regarding the issue of "equal conditions", which requires the UK to ensure compliance with EU rules in exchange for access to the single market.
"We said that we want to agree on the text by February 25. We followed our schedule. At the same time, it was important for member states to take their time and correctly understand that the position of everyone," the EU representative said.
At the same time, Prime Minister Boris Johnson expressed his intention to start trade talks with the US within the next two weeks. There are suggestions that this step is a kind of pressure on the EU ahead of the negotiations between England and Brussels, as well as a deadline of 11 months.
Today, in terms of the economic calendar, we have S&P / CS data on home prices in the United States, where growth is expected from 2.6% to 2.8%.
Further development
Analyzing the current trading chart, we see a fluctuation in the structure of the corrective course of last Friday, where the quote seems to be trying to get close to the peak (1.2979). However, it remains indecisive, expressed in the desire to return sellers to the market. This desire reflects the probing of levels where sellers select the best entry point. As for the main move, while the quote is within the range of 1.2770//1.2885/1.3000, the downward interest remains unchanged.
From emotional mood, we see that speculative interest exceeds all expectations, the structure of candles and the rise in volatility confirm this.
Detailing the minute-by-minute period, we see that the start of the European trading session was expressed in a local upward jump, which broke through the night stagnation.
In turn, medium-term traders do not feel the pressure of correction, since the price is still within the range. Intraday traders are looking for points of a possible return to short positions. In turn, speculators do not follow any particular direction, and working on impulses is their direct task.
Having a general picture of actions, it is possible to assume a fluctuation relative to the maximum of 1.2979, where the border of 1.3000 is located in the immediate vicinity. This fluctuation will allow sellers who are already considering short positions to return to the market at the best price.
Based on the above information, we will output trading recommendations:
- Local buy positions were considered if the price was fixed higher than 1.2980; in the direction of 1.3000-1.3015.
- Sell positions are already being led by medium-term traders towards the level of 1.2770. Intraday traders are still looking for a starting point. Possible values for the start: 1.2920, if the price can not keep the current round of the upward move; 1.3000/1.3020, if the price still returns to the upper limit of the range.
Indicator analysis
Analyzing different sectors of timeframes (TF), we see that due to the corrective course, the hour and minute periods took an upward position. Day periods have maintained a downward interest.
Volatility for the week / Volatility Measurement: Month; Quarter; Year.
The volatility measurement reflects the average daily fluctuation, based on the calculation for the Month / Quarter / Year.
(February 25 was based on the time of publication of the article)
The volatility of the current time is 47 points, which is the norm for this period. It is likely to assume that the acceleration of volatility is still possible but within the daily average.
Key levels
Resistance zones: 1.3000; 1.3170**; 1.3300**; 1.3600; 1.3850; 1.4000***; 1.4350**.
Support zones: 1.2885*; 1.2770**; 1.2700*; 1.2620; 1.2580*; 1.2500**; 1.2350**; 1.2205(+/-10p.)*; 1.2150**; 1.2000***; 1.1700; 1.1475**.
* Periodic level
** Range level
*** Psychological level
**** The article is based on the principle of conducting a transaction, with daily adjustments.
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