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From the point of view of complex analysis, we see a strong slowdown in a narrow framework, where market participants seemed to freeze in anticipation of the upcoming fluctuations, and now let's talk about the details. Last week was corrective, after the quote found a foothold in the area of the support level of 1.0775. After that, we saw 170 points of the upward movement, which is approximately 46% of the development relative to the downward inertia of 03.30.20-03.04.20. Completing the week was an extremely remarkable slowdown of 1.0920 / 1.0950, the duration of which is more than 35 hours. In fact, we ended the week with a peculiar accumulation, where market participants closely monitored the established boundaries, since with the slightest change in the trading forces, impulses can arise that can be used to earn.
Regarding the theory of further development, the strategy of local operations is still relevant, but we continue to analyze the external background and mood of market participants. This cannot continue permanently, and we will return soon to the ordinary medium-term directions, with their gradual implementation.
In terms of volatility, we see a 68% decline in activity relative to the average daily indicator, and such a low value as 33 points have not been recorded for a very long time. It is worth considering that the abnormally low volatility of Friday was affected not only by a general decrease in activity in the form of market adaptation to the external background, but also by the holiday in the United States and Europe, where Good Friday was celebrated.
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; Friday - 33 points. The average daily indicator relative to the dynamics of volatility is 104 points [see table of volatility at the end of the article].
As discussed in the previous review, traders closely followed the slowdown of 1.0920 / 1.0950, working on their breakdown. The quote remained within the set limits, and traders went on a well-deserved weekend, where the trading tactics are prolonged for the new week.
Considering the trading chart in general terms [the daily period], we see just the very consistent inertial fluctuations that are in the structure of the Zigzag-shaped model, which was written around the beginning of the article.
Friday's news background contained inflation data in the United States, where it recorded a slowdown from 2.3% to 1.5%. The fact of inflation reduction was known in advance, but it is worth considering that the consequences of such significant news may affect the market in the future. In this case, I am referring to the concern associated with the subsequent decision of the Federal Reserve System, which, against the background of available statistics, may think about further reducing the refinancing rate.
In terms of general background information, we see a long-awaited event, OPEC + countries have signed an agreement to reduce oil production, during which production from May 1 will be reduced by 19 million barrels per day [in the world]. In turn, the fear of the possible consequences associated with the coronavirus is scared without exception by all countries, which preserves the characteristic panic among investors.
We have been recording the effects of COVID-19 on the labor market of the United States for more than one week, but the European side says that the recession in Europe will be stronger than in the rest of the world. So, the vice-president of the European Central Bank, Luis de Guindos, said that a quick recovery of the economy should not be expected, the consequences of the pandemic will last until 2021, but signs of recovery may appear from the third quarter of this year.
Regarding the epidemiological situation and the spread of COVID-19 in the world, we see that as of 05:00 (Universal time) on 04/13/2020, 1 851 417 cases of infection were recorded from 558 193 cases from only in the United States alone. Against this background, Donald Trump announced for the first time in history all 50 US states have a major disaster regime.
Today, in terms of the economic calendar, we do not have statistics, while at the same time, Europe and Britain are not working with the celebration of Good Monday.
Further development
Analyzing the current trading chart, we see a sharp surge in activity at about 6:00 UTC+00 on the trading terminal, during which the upper boundary of the deceleration of 1.0920 / 1.0950 was locally broken, focusing in the region of 1.0960. In fact, the 40-hour compression of the quotes paid off, a surge occurred, but not yet of the scale that was expected, perhaps due to the fact that the market still does not have enough trading volumes. In any case, the slowdown limit is broken, positions are open, we work, only against this background we need to be ready for everything, so do not forget about the stops, and also about the reversal position, in case of a sharp change in interest and price fixing lower than 1.0920. As you might have guessed, local position strategies are in action.
In terms of emotional mood, a high coefficient of speculative positions is recorded, precisely due to the external background, as well as the recent compression of quotes.
It can be assumed that the surge was local in nature, thus, stop loss must be set within the lower limit of accumulation. The position of the shifter is considered only if the price is fixed lower than 1.0910, and then if the positions are short enough.
Based on the above information, we derive trading recommendations:
- Buy positions are still being held, where the prospect is in the region of 1.1000
- Sell positions are considered lower than 1.0910, with the prospect of a move to 1.0890-1.0850. In this case, the buy position should already be liquidated.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that technical tools unanimously signal a purchase, due to the fact that the quote is still at the peak of the recovery move.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation calculated from Month / Quarter / Year.
(April 13 was built taking into account the time of publication of the article)
The volatility of the current time is 43 points, which already exceeds the dynamics of the last trading day, but in relation to the average daily indicator, the slowdown persists. It can be assumed that the dynamics will continue to be concentrated in the framework of the daily average.
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 areas: 1.0850 **; 1.0775 *; 1.0650 (1.0636); 1.0500 ***; 1.0350 **; 1.0000 ***.
* Periodic level
** Range Level
*** Psychological level
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