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For the last trading day, the euro / dollar currency pair showed an extremely low volatility of 28 points, and as a result, it formed a distinct stagnation in the market. From the point of view of technical analysis, we see that the pulse downward course has given out more than 80 points over the previous days, as a result, closely bringing us to the 1.1100 range, which is the key one in this period of time. As discussed in the previous review, traders switched to insurance mode, holding previously opened short positions. The upcoming meeting of the ECB are forcing fear on market participants and, as a fact, they are pushing for a partial profit taking and moving the stops to breakeven. Considering the trading chart in general terms (daily timeframe), we see a striking picture, the theory of restoring the global downward trend has reached an important price level of 1.1100, against which the court will go in case of its breakdown, as we will instantly find ourselves on 2017 values.
The news background of the past day had a package of statistics on the European Union, which were not so good. The index of business activity in the manufacturing sector fell from 47.6 to 46.4. The index of business activity in the services sector also shows a decline from 53.6 to 53.3. In the United States, data was also coming out, but already regarding sales of new housing, where growth was expected from 626K to 660K, but as a result, the previous data was revised to the worse and in general terms received data: Previous. 604K ---> Act. 646K. The main stumbling block on the news and news background, of course, is the upcoming ECB meeting, which leads to fear of market participants, for this very reason we have seen rapid decline, and the current stagnation. Let's talk more about this fear. In recent days, the noise associated with the speedy decrease in the deposit rate has also been actively raised on the expanses of the world media, as well as such locomotives as experts from Bloomberg, Goldman Sachs, predict horrible things, whipping up fear on traders. Now, let us recall the June meeting and the statement by Mario Draghi - "the eurozone economy needs monetary stimulation, if necessary, the regulator is ready to take appropriate measures."
Today, the very event that is the focus of attention is the ECB meeting, followed by a press conference. And if no steps in terms of monetary policy occur, the previous drain clearly served to buy euros at a more attractive price. According to statistics, we only have data on the United States regarding durable goods, where they expect a growth of 0.7%, but, most likely, the news will be in the background at the expense of the ECB press conference.
EU 14:45 MSK - interest rate decision
15:30 MSK - ECB Press Conference
Further development
Analyzing the current trading chart, we see that the quotation still weighs within yesterday's stagnation, but nevertheless seeks to come close to the range of 1,1100. Traders, in turn, are divided into two fronts: the first finally closed all previously opened short positions and wait for what will happen next at the time of the ECB meeting; the second part of the traders partially fixed the profit and shifted the restrictive orders with the hope of further descent. It is likely to assume that before the meeting, due to massive fear, we will still be stretched to the side of 1,1100, but then we continue to look at the circumstances and rhetoric of the ECB, as there may be leaps. We do not forget that the quotation is now at important values, and if the level of 1,1100 still falls, then the conversation about the resumption of the global downward trend will sparkle with new colors and we will be on the values of 2017.
Based on the available information, it is possible to decompose a number of variations, let's consider:
- Positions for the purchase will be considered if the ECB does not say anything special and we will see a support, followed by a surge to the top. Estimated rebound in the direction of 1.1180.
- Positions for sale, as written earlier, already existed and went into the stage of fixation. Now, if we do not have deals, it is better to wait for a clear fixation lower than 1,1100, with the support of the information background.
Indicator Analysis
Analyzing a different sector of timeframes (TF), we see that indicators in the short, intraday and medium term have a downward interest against the general background of the inertial course. It should be understood that at the time of the ECB meeting, indicators on smaller timeframes can jump.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.
(July 25 was based on the time of publication of the article)
The current time volatility is 18 points. It is likely to assume that due to the upcoming event, volatility may increase, exceeding the daily average. Referring to the previous day and extremely low volatility, it can be assumed that the stagnation will serve to the engine of the current day.
Key levels
Zones of resistance: 1.1180 *; 1,1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100
Support areas: 1,1100 **; 1.1000 ***; 1,0850 **
* Periodic level
** Range Level
*** Psychological level
**** The article is based on the principle of conducting a transaction, with daily adjustment.
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