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From the point of view of a comprehensive analysis, you can see the local price consolidation below the unfortunate region of 1.1210/1.1250, and now let's talk about the details.
The trading week is coming to an end and it is time to take preliminary results. So, the recovery process, which began on June 11, is still relevant in the market. The bears continue to regain the position previously lost during inertia, but the quote still manages to consolidate below the unfortunate area of 1.1210/1.1250, which kept us almost the entire trading week.
Many traders will say that this is a success, but this is not entirely true.
In fact, we have confirmed the theory of speculative activity once again, which currently rules the ball. That is, the same inertial upward trend from May 26, which changed the clock frequency of the variable range 1.0775 // 1.0885 // 1.1000, is not a signal of a change in the tact of the medium-term downtrend from 2018. The emotional mood of the market enables speculators to change direction without too much difficulty, and this confirms again that the strategy of local operations is superior to the method of strategic positions.
Should I wait further to change the tact of the medium-term downward trend? You can wait, but our actions will remain in terms of local operations, and the start of these positions will take place only after the price consolidates above the area of interaction of trade forces 1.1440 / 1500.
In turn, the theory of the graphic pattern "Head and Shoulders" on the four-hour period, which we mentioned in the review of June 17, has the first confirmation. The neckline was broken by price during the inertial movement of the past day, which may signal the most impressive process of recovery and return.
Analyzing the past trading day every minute, you can see that the round of short positions arose at 11:00 and lasted until 17:00 UTC+00, which corresponds to a surge in activity in the information and news background. The minimum value was the level of 1.1185, that is, the quote closely came close to the predicted coordinates.
As discussed in the previous review, traders expected a similar price development if they consolidated below the 1.1200/1.1250 area.
The recommendation from Thursday regarding short positions below 1.1200 coincided, having a profit on the trading deposit.
In terms of volatility, we have a slowdown relative to the average daily indicator of 12%, but this is a small fraction, the euro/dollar currency pair is still in the wake of speculative operations.
Considering the trading chart in general terms, the daily period, you can see that the downward movement is the most impressive in a month and a half.
The news background of the past day contained data on the labor market of the United States, where they published indicators on the number of applications for unemployment benefits. So, the number of initial applications was 1,508,000 compared to 1,566,000 last week, but 1,300,000 were forecast. The number of repeated applications was 20,544,000, the forecast was 19,800,000.
The market literally ignored applications for unemployment benefits and continued a sequential decline.
The main driver in terms of news was the meeting of the Bank of England, where the regulator once again expanded the program of quantitative easing and gave a hint that the refinancing rate could be reduced. The pound sterling flew down against such a background, and due to the high correlation between trading instruments, the European currency also reached, and speculative excitement arose.
In terms of general informational background, we have a frank statement by German Chancellor Angela Merkel regarding Europe's vulnerability to disasters. So, Merkel, making a government statement in the Bundestag, expressed the view that the coronavirus pandemic showed how vulnerable Europe is, that at the beginning of the spread of the virus, the first steps that EU members took were mostly national. That is, the chancellor has in mind that there is no unity of nations, which leads to more global risks to the integrity of the European Union.
"We must not allow the pandemic to lead the EU member states apart from each other and weaken the domestic market," "We don't need to be naive," Merkel said.
Today, in terms of the economic calendar, we will not focus on statistical data on Europe and the United States, thereby the attention of traders will be concentrated on the technical picture, as well as the external background.
The upcoming trading week in terms of the economic calendar is full of statistics, where they expect preliminary PMI indicators for June, as well as the final data on US GDP.
At the same time, one should not forget that the external background, in particular the Brexit divorce proceedings, still puts pressure on the market.
The most interesting events displayed below (Universal Time) --->
Monday, June 22
USA 14:00 - Sales in the secondary housing market in May
Tuesday, June 23
EU 8:00 - Index of business activity in the Markit services sector for June, PRELIMINARY
EU 8:00 - Markit Manufacturing PMI for June, PRELIMINARY
USA 13:45 - Index of business activity in the services sector for June, PRELIMINARY
USA 13:45 - Index of business activity in the manufacturing sector for June, PRELIMINARY
USA 14:00 - Sales of new housing in May
Thursday June 25th
USA 12:30 - Basic orders for durable goods (m / m) for May
USA 12:30 - GDP for the 1st quarter
USA 12:30 - Applications for unemployment benefits
Further development
Analyzing the current trading chart, we can see that the movement slowed down around 1.1200 after an impressive downward quote. Following this, there was a justified pullback, which would lead to a regrouping of trading forces. In fact, the risk of further decline remains in the market, where the level of 1.1180 plays a variable support point.
In terms of the emotional behavior of the market, there is still a high rate of speculative operations, which can lead to high volatility.
It can be assumed that after a short regrouping of trading forces, the downward mood may resume, where the most ideal entry point, in terms of risks, is the level of 1.1180, consolidating below it. An alternative scenario considers a slowdown in the moment of regrouping of trade forces, where the area of 1.1210/1.1250 will become relevant again.
Based on the above information, we derive trading recommendations:
- Consider buy deals in case of price consolidation above the level of 1.1225, to the side of 1.1250
- Consider sell deals if the price is consolidated below the level of 1.1180, towards the values of 1.1150-1.1080
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the indicators of technical tools sell on the hourly signals, but the strongest signal was received on the daily period, where due to the breakdown of the area 1.1210/1.1250, the indicators of technical indicators changed for sale.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation calculated for Month / Quarter / Year.
(June 19 was built taking into account the time of publication of the article)
The current time volatility is 23 points, which corresponds to the dynamics of accumulation and minimal regrouping of trading forces. It can be assumed that activity can increase significantly amid a speculative mood.
Key levels
Resistance Zones: 1.1300; 1.1440 / 1.1500; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100
Support Zones: 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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