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From the point of view of complex analysis, we see another rebound from the range level of 1.1180, where there was a local surge in long positions. Now, let's talk about the details.
The past trading day confirmed the support point in the form of a range level of 1.1180 [1.1165 // 1.1180 // 1.1190] for the third time, where a stop occurred on an ongoing basis, and as a fact, a price rebound in the opposite direction.
If we take into development the last three weeks, we see a sluggish recovery process from the area of interaction of trade forces 1.1440/1.1500 to the range of 1.1180. A full touch of the level of 1.1180 occurred only on June 22, after which the quote repeatedly tried to repeat the movement, but on a regular basis, there was a slowdown within the level of 1.1190, where each subsequent pullback was less than the previous one. The existing amplitude is reduced to the fact that there is a compression process that signals the readiness of market participants for a new surge in activity.
If you look at the development of the market, much depends on the emotional mood of market participants, where there is speculative excitement on almost a daily basis, which is supported by a panic stream of external information. TThus, it is clear that technical analysis, although it indicates the possibility of a recovery process from the inertia of May 18, but chaotic speculative jumps prevent you from setting the proper tact in the market.
Based on the available analysis, the most optimal tactic is considered to be local operations that allow us to be on the wave of speculative activity.
Analyzing the past day in detail, you can see that the round of long positions arose at 12:30 and lasted until 15:00 [UTC+00 time on the trading terminal], after which there was a slowdown. The most remarkable point was that the weakening of the US dollar was felt throughout the currency market, which means that the process of fixing positions on the dollar was carried out.
In terms of volatility, a similar indicator is recorded as a day earlier - 70 points, which is slightly less than the average daily value.
Analyzing the dynamics of volatility in June, you can see that the average daily indicator is 92 points, which is 19% higher than in May.
JUNE : Monday - 53 points; Tuesday - 80 points; Wednesday –91 points; Thursday - 167 points; Friday - 105 points; Monday –51 points; Tuesday - 122 points; Wednesday - 99 points; Thursday - 115 points; Friday - 128 points; Monday - 106 points; Tuesday - 125 points; Wednesday - 86 points; Thursday - 76 points; Friday - 86 points; Monday - 101 points; Tuesday - 115 points; Wednesday - 78 points; Thursday - 69 points; Friday - 44 points; Monday - 70 points; Tuesday - 70 points.
As discussed in the previous review, traders carefully analyzed the range level of 1.1180 [1.1165 // 1.1180 // 1.1190], since the behavior of the price near the level determines the further course, in this case, a rebound.
Looking at the trading chart in general terms (the daily period), you can see that the quote is at a stagnation stage at the top of the inertial course of May 18, where there is a range level of 1.1180 as a support variable.
The news background of the past day contained preliminary data on inflation in Europe, where they predicted a slowdown from 0.1% to 0.0%, and as a result, they accelerated to 0.3%. Traders did not particularly respond to positive statistics, apparently due to the fact that they do not believe in the recovery process and the proper reaction of the regulator [ECB].
In terms of information background, we have the opinion of the head of the Federal Reserve, Jerome Powell, who spoke in the US Congress. His speech says that the United States economy still has problems due to the coronavirus. The desire to abolish restrictive measures on commercial activities carries risks, which have recently been manifested in the increase in the number of infections with the COVID-19 virus.
"We have entered a new important phase, and we did it earlier than expected. While growth in economic activity is welcomed, it also creates new problems, it is especially necessary to restrain the spread of the virus," said the head of the Fed for the US Congress.
In turn, the head of the Federal Reserve Bank (FRB) of New York, John Williams, speaking at an event of the Institute of International Finance (IIF) on Tuesday, said that the US economy may have already experienced the worst consequences of the pandemic, although there is significant uncertainty regarding its prospects persist.
From the point of view of Williams, the lower point of the coronavirus crisis has already been passed.
It is worth recalling that a new record was set for the number of cases with the COVID-19 virus per day last week in the United States, which inspires investors with anticipation of a second wave of the peak of the virus among the population.
The chief infectious disease specialist in the United States warned that if the trend for the spread of new coronavirus infection continues, then 100,000 growth per day should not be ruled out.
"I guarantee that even when you have an outbreak of the virus in only one part of the country, other parts in which everything is going well are also vulnerable. We cannot focus only on those areas where there is an increase in new cases of infection. It threatens the whole country," Fauci said at a hearing on a Senate committee.
Today, in terms of the economic calendar, we have an ADP report on the level of employment in the United States, where they forecast growth of 3,000,000, which will be the largest growth indicator in 20 years. If the data are confirmed, then the US dollar will receive impressive support.
Further development
Analyzing the current trading chart, we see price fluctuations within the previous range of 1.1190/1.1240, where activity is not so great, but everything can change quickly at the time of publication of data on the United States. We can only talk about possible drastic changes if the quote manages to fix lower than 1.1165, otherwise, the oscillation amplitude can expand to the borders of 1.1180/1.1300.
It can be assumed that if you hold down a previously set downward beat, the quote will return again to the pivot point of 1.1190, where you should carefully analyze the price behavior, since consolidating below 1.1165 will lead to an avalanche-like movement for the next trading days.
Based on the above information, we derive trading recommendations:
- Consider buy deals higher than 1.1255, with the prospect of a move to 1.1285-1.1300.
- Consider sell deals lower than 1.1215, in the direction of 1.1190. The main positions remain after the price consolidates below 1.1165 in a four-hour period.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that indicators of technical instruments signal a sale by finding the price at the bottom.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Volatility measurement reflects the average daily fluctuation calculated for the Month / Quarter / Year.
(July 1 was built taking into account the time of publication of the article)
The volatility of the current time is 29 points, which is 64% lower than the daily average. It can be assumed that the dynamics of fluctuations will accelerate due to the information and news background and speculative activity in the market.
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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