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The EUR / USD pair successfully crossed the lower boundary of the long-playing side channel, as a result of which the quote dropped to the forecasted level of 1.1650.
The change in the structure of the seven-week flat has led in a strong downward move, the same as the development observed in the GBP / USD pair. However, the medium-term trend in the pound has already changed from bullish to bearish, as the total downward move since the beginning of September was already more than 800 pips.
Nonetheless, if we look at the M15 chart, we will see that the EUR / USD pair is already following these steps, which is why even if activity was quite low, the bearish sentiment remains strong, so the quote was still able to consolidate below the level of 1.1700, in the direction of price level 1.1650.
In terms of daily dynamics, a local deceleration, about 17% relative to the average level, was observed, so temporary slowdowns are possible. Such will allow accumulation in the EUR / USD market.
Anyhow, just as discussed in the previous review , traders followed the recommendation to bring the quotes towards the first target. If the entire forecast is fulfilled, a solid increase in the trading deposit will occur.
Thus, at the daily chart, we can see that the medium-term upward trend is under strong pressure. At first, this was expressed in the form of a seven-week flat, but now it is reflected by a change in market sentiment.
With regards to news, preliminary data on business activity in Europe was published yesterday. According to the report, the index accelerated from 51.7 to 53.7, higher than the forecast of 52.0. Meanwhile, business activity in the services sector fell from 50.5 to 47.6, while the composite PMI declined from 51.9 to 50.1.
In the afternoon, a similar data for the United States came out, and it turned out to be much better than what was expected. Business activity in the service sector fell from 55.0 to 54.6, while business activity in the manufacturing sector increased from 53.1 to 53.5.
Unfortunately, such good statistics was canceled out by the increasing risk of another pandemic wave. Some countries, like the UK, have already re-imposed restrictive measures, which are very critical to the global economy. As a result, many investors are panicking, which significantly affects the value of the European currency in the market.
Anyhow, today, data on the US labor market will be published, and experts forecast a decline of 20,000 in initial applications, and a reduction of 500,000 in repeated applications.
Further development
As we can see in the trading chart, EUR / USD traded at price level 1.1650. However, if the quote then consolidates below 1.1650 in the four-hour chart, a bearish mood will resume in the pair, and movement will go in the direction of levels 1.1550-1.1500.
A long consolidation below the sideways channel could lead to a fluctuation at 1.1650 to 1.1620.
Indicator analysis
The indicators on hourly and daily time frames signal SELL due to the price consolidation below the sideways channel.
Weekly volatility / Volatility measurement: Month; Quarter; Year
Volatility is measured relative to the average daily fluctuations, which are calculated every Month / Quarter / Year.
(The dynamics for today is calculated, all while taking into account the time this article is published)
Volatility is at 35 points, which is 56% below the average value.
It is assumed that when the price consolidation ends, a new round of acceleration will arise.
At the same time, reports on another quarantine in Europe may put strong pressure on the euro and bring speculators into action.
Key levels
Resistance zones: 1.1700; 1.1910 **; 1.2000 ***; 1.2100 *; 1.2450 **; 1.2550; 1.2825.
Support Zones: 1.1650 *; 1,1500; 1.1350; 1.1250 *; 1.1180 **; 1.1080; 1.1000 ***.
* Periodic level
** Range level
*** Psychological level
Also check trading recommendations for the GBP/USD pair here, or brief trading recommendations for the EUR/USD and GBP/USD pairs here.
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