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From the point of view of complex analysis, we can see the variable level which for several trading days has kept market participants from a further decline.
The past trading day gave light to another attempt of the bears to overcome the area 1.1210 / 1.1250. It was already the fourth attempt to change the previously set upward cycle but the quotes, instead of resuming the downward movement, fluctuated in the variable range 1.1210 (1.1250) / 1.1400 (1.1440).
There are already disputes over whether the upward tact set at the end of May can change the medium-term trend from 2018. There is certainly potential, but there are also many doubts due to the fact that the market is literally saturated with speculative operations, which are considered unstable. In addition, there is a correction with subsequent amplitude at 1.1210 (1.1250) / 1.1400 (1.1440), which in theory should smooth out the market mood and highlight the main positions that will push the quotes in the right direction.
Strategic transactions for trading are certainly attractive, but the market is relying on mood and sentiments, so my strategy remains based on local operations, where there is a prospect for both growth and a decrease.
Analyzing the past trading day in detail (by minutes), we can see that the round of short positions arose at 08:45 (UTC + 1) and lasted until 15:15 (UTC + 1), during which the lower boundary of the 1.1210 / 1.1250 area was reached
As discussed in the previous review, traders were expecting a rebound from the lower boundary of the channel, but the concentration of trading forces remained.
In terms of volatility, a slight slowdown was observed, but compared to the average daily indicator, the market is on the wave of speculation.
Analyzing the daily chart, we can see that keeping the quotes below 1.1440 / 1.1500 will trigger a bearish move on the market.
The news published yesterday contained data on the level of inflation in Europe, in which a decrease from 0.3% to 0.1% was recorded. Although the preliminary estimates already expected such a figure, the European currency still continued a local decline.
In the US, data on construction was published in the afternoon, which increased by only 4.3%, much lower than the expected growth of 17.8%. Building permits, on the other hand, rose by 14.4%, up from the forecast of 12.4%, which slightly eased the situation.
With regards to Brexit, there is potential for a deal, but there are more questions about it than answers. Recently, British Prime Minister Boris Johnson already said that the UK is ready to compromise, and a deal could take place in July. Now, the head of the European Commission, Ursula von der Leyen, said the same thing, that the EU is ready to make concessions in terms of fishing and trade policy.
All these statements are positive, but it lacks proper specificity, which scares investors who need details and confidence in the future.
The weekly report on the US labor market will be published today, which will contain data on applications for unemployment benefits in the country. Forecasts say that initial applications will amount to about 1,300,000, lower than the 1,542,000 figure last week. Meanwhile, repeated applications are expected to drop to 19,800,000.
At the same time, the Bank of England will present today the results of its last meeting, where, according to forecasts, the refinancing rate is not expected to change, but a further process of expanding the quantitative easing program is possible. Any decision will mainly affect the dynamics of the pound, but due to the high correlation between trading instruments, reactions in the European currency are possible.
[To keep abreast of events and market directions, read the article on the GBP / USD currency pair ]
Further development
Analyzing the current trading chart, we can see that the quote is still focused in the area of 1.1210 / 1.1250, so a kind of accumulation has formed, which can lead to an acceleration in the market. One of the main questions right now is whether the quote will retain the upward tact previously set by the market on May 25, or the market will return to the bearish mood it had a period earlier. The answer to this question will depend on the behavior of the quotes at the area 1.1210 / 1.1250.
If the quotes consolidate below 1.1200, the movement in the market will change, which could lead to a pullback to the values of 1.1180-1.1150 --- 1.1080. However, an alternative scenario will develop, if the quotes fluctuate within 1.1210 / 1.1400. Such could lead to a rebound from the lower border of the channel.
Based on the above information, we present these trading recommendations:
- Open buy positions if the quotes consolidate higher than 1.1270, in the direction of 1.1300-1.1350.
- Open sell positions if the quotes consolidate lower than 1.1200, in the direction of 1.1180-1.1150-1.1080
Indicator analysis
Analyzing the different sectors of time frames (TF), we can see that the indicators of technical tools in the minute and hourly periods give out a sell signal due to the concentration of prices in the area 1.1210 / 1.1250. Daily periods, meanwhile, still indicate a buy signal due to the multi-week bearish movement, but it may change if the quotes consolidate below 1.1200.
Volatility per week / Measurement of volatility: Month; Quarter Year
The measurement of volatility reflects the average daily fluctuation calculated by Month / Quarter / Year.
(June 18 was built, taking into account the time of publication of the article)
Volatility at the current time is 36 points, which is 59% lower than the daily average. It is assumed that the news, coupled with the speculative mood of the market, will accelerate 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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