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From a comprehensive analysis, we see something more than just a correction. And now about the details. The current week's correction had an upward mood, which arose after the quote approached the support area of 1.0775 during inertia. After that, the first upward turn appeared, which led the quote to the variable level of 1.0920 and everyone was already inspired by the possible recovery and return of the price back to the support point of 1.0775. However, the movement slowed down, during which a variable range of 1.0850/1.0885 was formed. The wobbly design from the range focused a considerable number of speculators, where there was just enough noise for market interest to form a local jump, overcoming the limits of the variable range. The noise was like the flow of the external background, during which speculators literally got what they were waiting for in half an hour, that is, a local surge in the activity.
I don't think that the downward mood has fallen into being and everyone is already working on a purchase, since analyzing the fluctuations from the beginning of March, it is clearly visible in which direction the main positions are focused. The only thing that can be considered for sure is the slowdown, I do not mean variable ranges during a particular stroke, but in general in the market. Successive intentions have already signaled that activity decreases with each successive turn, and now a distinct zigzag-shaped model is visible. That is, theoretically, in the case of a decline in the downward mood, a wide flat may occur, approximately in the range of 1.0775/1.1000 (+/-50 p), but this conversation will come a little later in the case of the first signals of confirmation of the theory.
Analyzing the last trading day, we see that the main round of long positions appeared at the start of the American session, but it lasted a modest 1.5 hours, where the quote eventually moved to a new variable range of 1.0920/1.0950.
In terms of volatility, we see a characteristic acceleration relative to April 8, but on the general scale of the last two months, activity is within the norm.
Details of volatility: Monday-155 points; Tuesday-183 points; Wednesday-115 points; Thursday-278 points; Friday-166 points; Monday-151 points; Tuesday-234 points; Wednesday-243 points; Thursday-326 points; Friday-194 points; Monday-191 points; Tuesday-160 points; Wednesday-133 points; Thursday-188 points; Friday-194 points; Monday-134 points; Tuesday-127 points; Wednesday-136 points; Thursday-147 points; Friday-91 points; Monday-67 points; Tuesday-142 points; Wednesday-72 points; Thursday-110 points. The average daily indicator, relative to the dynamics of volatility is 107 points (see the table of volatility at the end of the article).
As discussed in the previous review, traders worked on the breakdown of one or another boundary of the variable range of 1.0850/1.0885, which resulted in a profit to the trading deposit.
Looking at the trading chart in general terms (the daily period), we see just the same sequential inertial fluctuations that are in the structure of the zigzag-shaped model, as we wrote at the beginning of the article.
The news background of the last day did not include data on the labor market in the United States, where once again everyone saw the real picture of the consequences of the COVID-19 virus. So, every week we record huge figures for the number of applications for unemployment benefits in the United States that have already recalled the crisis of 2008-2009, and the great depression. This time, repeated applications for benefits set an absolute record in the history of 7,455,000, but the primary surprisingly fell by 261,000, but in the past week their figure was 6,606,000.
The market reaction to the statistics this time was positive in terms of logic, the dollar locally began to lose its positions, forming impulses and breaking through just the same variable range.
At this point, the noise and pressure on the dollar did not stop, as the news that the Federal Reserve (FRS) announced $ 2.3 trillion in measures to support the economy in the midst of a raging coronavirus.
"The role of the Fed is to provide as much assistance and stability as possible during a period of limited economic activity. Our actions today will help ensure that the recovery that will ultimately happen is as energetic as possible," Fed Chairman Jerome Powell said in a release.
In turn, the head of the European Central Bank, Christine Lagarde, calls on EU countries to support each other during this difficult period of time in order to develop the best policy to counter the shock of the coronavirus emergency.
Lagarde also reminded that there is no discussion of the widespread cancellation of debts incurred in connection with the coronavirus crisis. Now is not the time to ask about the cancellation, now we are focused on maintaining the economy, later we will consider how to pay off debts and how to manage public finances most effectively, the head of the ECB said.
Today, in terms of the economic calendar, we have data on inflation in the United States, where they record a slowdown from 2.3% to 1.5%, which may directly affect the Fed's future decisions on actions on the refinancing rate, and more specifically, on its further reduction. At the same time, do not forget that today is a day off in many countries, including in Europe, the United States, and Britain, where good Friday is celebrated. Thus, trading volumes may be reduced.
The upcoming trading week in terms of the economic calendar begins with a weekend in Europe, where trading volumes may be reduced. The main data stream starts on Wednesday, and the most relevant indicator will be released only on Friday – EU inflation.
The most interesting events are displayed below:
On Monday, April 13
Great Britain/EU - Bright Monday
On Wednesday, April 15
US 13:30 London time - retail sales volume
US 14:15 London time - industrial production
On Thursday, April 16
EU 10:00 London time - industrial production
US 13:30 London time - applications for unemployment benefits
US 13:30 London time - number of construction permits issued
US 13:30 London time - volume of construction of new homes
On Friday, April 17
EU 10:00 London time - Inflation
Further development
Analyzing the current trading chart, we see that the variable range (1.0920/1.0950) has been held on the market for more than 15 hours, which means that it was again noticed by speculators, during which a new local surge may occur. In fact, this is another position with a limited life span, but under the current circumstances, a small profit is also a profit.
It is too early to talk about the main directions now since there is no complete picture, but I think that next week we will get enough data to set the direction.
In terms of emotional mood, a high coefficient of speculative positions is recorded, which can play into the hands of volatility.
In turn, traders closely monitor the variable range, in particular, its borders.
We can assume that the fluctuation within the values of 1.0920/1.0950 will not last very long, and our main task is to make money on the local surge, and here the direction does not matter. The trading strategy is selected using the method of breaking through a certain accumulation limit.
Based on the above information, we will output trading recommendations:
- Buy positions are considered higher than 1.0960, with the prospect of a move to 1.0980-1.1000
- Positions for sale are considered lower than 1.0910, with the prospect of a move to 1.0890-1.0850.
Indicator analysis
Analyzing different sectors of timeframes (TF), we see that by maintaining the upward movement and updating the maximum correction, the indicators of technical instruments relative to all periods signal a purchase. It is worth noting that the minute and hour periods are affected by deceleration, and the signal may be variable.
Weekly volatility / Measurement of volatility: Month; Quarter; Year.
Volatility measurement reflects the average daily fluctuation from the calculation for the Month / Quarter / Year.
(April 10 was based on the time of publication of the article)
The current time volatility is 32 points, which is 70% lower than the daily average. We can assume that as soon as the variable range closes, the activity will grow 2-2.5 times.
Key levels
Resistance zones: 1.1000***; 1.1080**; 1.1180; 1.1300; 1.1440; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100.
Support zones: 1.0850**; 1.0775*; 1.0650 (1.0636); 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
*** Psychological level
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