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From the point of view of complex analysis, we can see signs of a trend change in the charts.
The current trading week is drawing to a close. The upward trend is again the priority in the market, as traders worked on returning the quotes to the upper border of the flat 1.2150 // 1.2350 // 1.2620. This is the third week that the bullish mood remains, and the total movement of quotes is almost 600 pips, in favor of the British pound.
In addition, the level 1.2620, the upper border of the flat, was reached four times, which signals a possible trend change.
If we compare the EUR / USD and GBP / USD pairs, we will see that both of them are overbought, but at the same time is on the verge of a change in market tact, as well as medium-term sentiment. Such a situation may seem to indicate that key trends no longer have the proper impact on the market, but it is just a volatile judgment, as when analyzing trends, global movements are more important than local jumps, even if they have an extremely large scale .
Nevertheless, a breakout from the flat 1.2150 // 1.2350 // 1.2620 may occur, as levels, like channels and trends, are not eternal.
In terms of volatility, acceleration was recorded over the past two days, where the indicator for Thursday [132 points] fully corresponds to the average daily dynamics.
As discussed in the previous review, traders worked on short positions and took profit within the range of 1.2500. Further sell positions were set after a consolidation below 1.2470, but it did not happen, so the quotes rose to the level of 1.2550, which gave another profit.
Thus, analyzing the daily chart, since the pair accelerated since the beginning of May, movement may change from fluctuation to directional.
Meanwhile, the news published yesterday contained data on the US labor market, in which the number of repeated applications for unemployment benefits resumed growth to 21,487,000, while initial applications, on the contrary, declined, but is still very high at 2,284.00.
The main event on Thursday though was the meeting of the ECB, from which the base interest rate was left at zero, and the program of quantitative easing was expanded to € 1.35 trillion. In addition, the program was extended for six more months, until June 30, 2021.
With regards to Brexit, the round of negotiations on trade relations are nearing to its end, and if both the parties fail again to make an agreement, the pound may theoretically be achieved to strong pressure.
Today, the US Department of Labor will publish a report on US unemployment, in which it is likely that the figure will set a new record of 19.5%, which will be a shock to investors. In addition, the number of jobs may also show a decrease of another 8,870,000.
The upcoming trading week promises many important events and macroeconomic reports, but the most important one is the FOMC meeting on Wednesday.
Nevertheless, the events for next week are:
(UTC + 1)
Tuesday, June 9
US 15:00 - JOLTS (Apr)
Wednesday, June 10
US 19:00 - FOMC meeting
US 19:30 - Fed press conference
Thursday, June 11
US 13:30 - Producer Price Index
US 13:30 - Applications for unemployment benefits
Friday, June 12
UK 07:00 - Volume of industrial production (Apr)
UK 07:00 - GDP (m / m) (Apr)
Further development
Analyzing the current trading chart, we can see that the quotes jumped outside the upper border of the flat 1.2150 // 1.2350 // 1.2620, in which the shadows of the candles touched the coordinates of 1.2688, but failed to consolidate in the H4 chart.
If the quotes continue to fluctuate within 1.2580 / 1.2670, acceleration will occur, so to change the market tick, work on consolidating the quotes above 1.2670 in the H4 chart. With regards to local positions, work on the level of 1.2770 to breakout from the flat pattern.
Short positions have an easier structure due to the general trend, so it is enough to consolidate the quotes lower than 1.2570 to resume the previous fluctuation.
Thus, based on the above information, we present the following trading recommendations:
- Open buy positions higher than 1.2670, towards 1.2770.
- Open sell positions lower than 1.2570, towards 1.2500.
Indicator analysis
Analyzing the different sectors of time frames (TF), we can see that the indicators of the hourly and daily periods show a bullish mood, so buy positions are recommended.
Volatility per week / Measurement of volatility: Month; Quarter year
The measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(June 5 was built, taking into account the time of publication of the article)
The volatility of the current time is 106 points, which is almost the daily average. If speculative activity persists, volatility may increase.
Key levels
Resistance zones: 1.2725 *; 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Areas: 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1,1000; 1,0800; 1,0500; 1,0000.
* Periodic level
** Range Level
*** Psychological level
**** The article is based on the principle of conducting a transaction, with daily adjustments
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