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From the point of view of complex analysis, we can see that the quotes recovered and reached very important price levels.
Last trading week kept the trend downward, where the initial correction from 1.1440 / 1.1500 became a process of recovery relative to the inertial course. It is estimated to approximately 33% of the movement on May 26, which is small in scale, but the change in market sentiment suggests that the repetition of the movement seen on March 10 may occur in the market.
The high speculative activity, which the market has observed recently, formed an upward trend, which jeopardized the medium-term downward trend. Instability has led to a rapid change in market sentiment, not only the European currency, but also to the British pound. Thus, for a short period of time, it might seem that the pound is moving to a new range of fluctuations, but in reality, it is just a trap of locally speculative interest and does not lead to anything cardinal.
The head and shoulder pattern seen in the H4 chart has developed 38%, which is a good signal for a subsequent downward movement.
Analyzing the trading last Friday in detail, we can see a high activity, during which the quotes showed a local surge in speculative activity at 12: 30-16: 00 (UTC + 1). During the surge, the quote managed to reach the level of 1.1180, in the area of which there was a slowdown and subsequent rollback.
As discussed in the previous review, traders expected a decline, in which 1.1180 is the support level that would play an important role in the regrouping trading forces.
With regards to volatility, an activity equal to the daily average was recorded, which is a good signal for subsequent dynamic development.
Analyzing the daily chart, we can see sharp movements over a period of four weeks, which became the second rally in the market in the current year.
The news published on Friday did not have important macroeconomic reports on Europe and the United States, so the attention of traders were focused on the technical picture of the market.
An EU summit was also held, in which the EU leaders discussed the issues related to the total amount of the assistance package after the coronavirus and the next EU budget, as well as questions about whether funds should be allocated exclusively in the form of subsidies, conditions for making cash payments, and the criteria by which they will be decided.
The European Parliament also called out during the EU summit to prepare in case a consensus was not reached between the UK and the EU, since there is very little time to reach an agreement.
"The European Parliament stands for an agreement, in which we support the intensification of the dialogue. However, we also urge you to prepare for a Brexit without an agreement, so that you would know what to do if this happens. There is very little time left to reach a deal, and we must do everything possible to reach an agreement, "said European Parliament President David Sassoli.
Today, the data in home sales in the US secondary market will be published, in which a 2.0% decrease is expected.
Further development
Analyzing the current trading chart, we can see a slow downward movement within the area of 1.1180, which formed a small rebound that is already being considered in terms of regrouping trading forces. A recovery is still one of the current topics of discussion among traders, so the continuation of a downward trend is possible soon.
Nevertheless, market participants are still focused on speculative excitement, which is confirmed by the structure of candles, volumes and speculative activity coefficient.
The regrouping of trading forces may be delayed if the quotes consolidate above 1.1210, which will lead to a local move in the direction of 1.1240 / 1.1250. With regards to the recovery, take main trading positions if the quotes consolidate below 1.1165, which will push the quotes in the direction of 1.1100-1.1080.
Based on the information listed above, consider these trading ideas:
- Open buy positions if the quotes consolidate above 1.1210, in the direction of 1.1240-1.1250
- Open sell positions if the quotes consolidate below 1.1165, in the direction of 1.1100-1.1080
Indicator analysis
Analyzing the different sectors of time frames (TF), we can see that the indicators in the hourly and daily periods signal sell due to the rapid downward movement and consolidation of prices in the area of 1.1180, while short-term periods signal buy due to the regrouping of trading forces.
Volatility per week / Measurement of volatility: Month; Quarter year
The volatility measurement reflects the average daily fluctuation calculated per Month / Quarter / Year.
(June 22 was built, taking into account the time of publication of the article)
The volatility of the current time is 38 points, which is 55% lower than the average daily dynamics. General market sentiment, as well as stable activity, will bring today's volatility up.
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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