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From a comprehensive analysis, we see a local upward movement relative to the specified framework. And now about the details. The market dynamics are still high, and the price concentration is maintained within the previously established limits. Special attention was paid to the following levels: 1.0650 - the base, where the minimum value is 1.0636; 1.0775 - the variable level, which plays a kind of mirror image; 1.0850 - the subsequent level, which played the role of a kind of resistance on periods earlier. In fact, we see a kind of correction from the lows, where there are outlines of ranges.
Regarding the theory of downward development, it was revealed that the variable support point of 1.0650 can be broken with subsequent touches, and this is confirmed by the continuing trading volumes on the downside. At the same time, the panic-inducing external background raises the boiling point, which can eventually serve as a kind of catalyst that will lead to an update of historical lows in the event of an escalation of fear of the consequences of the COVID-19 virus.
In terms of volatility, we are recording a similar indicator as last Friday, where the dynamics exceeded the daily average by almost twice. It is worth recalling that the characteristic acceleration has been going on in the market for more than a month, and there are no reasons for slowing down yet.
Volatility details: 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. The average daily indicator relative to the volatility dynamics is 98 points (see the volatility table at the end of the article).
Analyzing the past day by the minute, we saw an attempt to resume the downward course, but the most notable moment was the upward surge at 14:00, which, in a matter of an hour threw the quote by more than 100 points. This behavior was of a local nature, where in the end the quote partially played back the existing surge.
As discussed in the previous review, traders considered two options at once: the first one was counting on a further decline, but only if the quote managed to be fixed below the area of 1.0636/1.0650; the second option was considered in view of alternatives if the price was fixed higher than 1.0775 on H4, which eventually happened.
Looking at the trading chart in general terms (daily period), we see the first signs of a possible correction relative to the downward inertia course.
The news background of the last day did not contain important statistics on Europe and the United States, and all the market's attention was focused on the external background.
In terms of the general information background, we see that the coronavirus continues to shock with statistics, where an increase of 41,758 cases of infection was recorded in the world over the past day. While in the United States, for two days, the increase in infected was 19,035, where against this background, US President Donald Trump insists on the adoption by lawmakers of a package of stimulating social and economic measures aimed at overcoming the consequences of the virus.
"The package must be accepted because the virus has a negative impact on our country. We are going to take a number of incentives to ensure that workers live their lives. This is not their fault," Donald Trump said during a briefing at the White House.
I will specify that the stimulus package is about $2 trillion, which, in trump's view, should support the economy and citizens of the country.
In turn, the head of the Federal Reserve Bank of St. Louis, James Bullard, gave his forecasts, which say that the unemployment rate in the US in the second quarter may reach 30%, and GDP will collapse by 50%.
The figures are extremely scary, but experts from Morgan Stanley agree with them, who predicts that the US economy will fall at an annual rate of 30% in the second quarter.
Today's economic calendar has already published PMI data for Europe, where PMI fell so low that set an absolute record in the history of the EU. So, its indicators amounted to 28.4, which was never the case. The situation was saved by the index of business activity in the manufacturing sector, which also fell from 49.2 to 44.8, but this is still within common sense.
In fact, only the euro production index managed to increase its price locally.
In the second half of the day, similar PMI data will be released, but for the United States, where it is forecast that the index of business activity in the service sector will fall from 49.4 to 40.0, and the manufacturing index of business activity will decrease to 42.0.
Further development
Analyzing the current trading chart, we see just the same local upward movement that was discussed above, where the quote manages to be fixed above 1.0850. In fact, we are recording a kind of correction from the minimums, but the instability of the entire structure is obvious. Thus, although the price is fixed above the level of 1.0850, this does not guarantee that the upward movement will continue in the market. What I mean is that the downward development can resume at any moment, and you should be prepared for it.
In terms of emotional mood, we see that the increasing noise from the external background does not give rest to speculators, who on a daily basis accelerate the market to unimaginable heights in terms of activity. This kind of behavior will continue to persist in the market until the external background reduces the negative pressure.
Detailing the available period every minute, we see that since the beginning of the Pacific trading session, the quote has built an upward move, which led us to the area of 1.0888, but after that, there was a slowdown and the price returned below the level of 1.0850.
In turn, traders worked on a local upward trend, having trading positions still from the value of 1.0775. Now, the deals switched to fixing as soon as the price reached the level of 1.0850. Subsequent actions are considered for sale, but in this case, the price must be kept below the level of 1.0850.
We can assume that if the price is fixed lower than 1.0810, it will open another round of short positions, which will first return the quote to the area of the mirror level of 1.0775, and then go towards the lows of 1.0636/1.1650.
Based on the above information, we will output trading recommendations:
- Buy positions should be considered after fixing the price higher than 1.0890, with the prospect of a move to 1.0950
- We consider selling positions if the price is fixed below the area of 1.0810, with the prospect of a move to 1.0775-1.0650-1.0636.
Indicator analysis
Analyzing different sectors of timeframes (TF), we see that due to the existing upward movement, the indicators of technical instruments on the minute and hour periods were under pressure, having a variable buy signal. Daily periods continue to maintain a sell signal against the general background of decline.
Volatility for the week / Measurement of volatility: Month; Quarter; Year.
Volatility measurement reflects the average daily fluctuation from the calculation for the Month / Quarter / Year.
(March 24 was based on the time of publication of the article)
The volatility of the current time is 132 points, which is already 63% higher than the daily average. It is likely to assume that activity will continue to grow, where the dynamics may again reach 190 points.
Key level
Resistance zones: 1.0850**; 1.1000***; 1.1080**; 1.1180; 1.1300; 1.1440; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100.
Support zones: 1.0775*; 1.0650 (1.0636); 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
*** Psychological level
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