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Over the past trading day, the EUR/USD currency pair showed volatility close to the average daily point of 52 points, as a result of having a technical pullback in the market. From the point of view of technical analysis, we see that the inertial course, which held us for more than 6 trading days, led to the fact that sellers not only managed to overcome the psychological level of 1.1000, we consolidated below it, while maintaining downward interest. The decline of the price to the level of 1.0926 overheated the short positions so much that the slightest noise, background, was enough to form a technical pullback / correction.
As discussed in the previous review, traders worked steadily on the decline, having a considerable profit behind them, but everyone had only one thought in their heads - "the correction has matured". Thus, the pullback that we had, as a result, was expected, and the temporary fixation of trading positions in this contributed to it. Considering the trading chart in general terms (daily period), we see that the "Impulse" tact in the global downward trend is still there and even if the price returns to 1.1000, the tact will remain in the market.
On the other hand, the news background of the past day contained data on producer prices in Europe, where a slowdown from 0.7% to 0.2% was recorded, which directly indicates a significant slowdown in inflation, why should it grow. In the United States, data on business activity in the manufacturing sector were published, where it cannot be said that they failed, and so, ISI PMI indicators show a slight decrease from 51.2 to 49.1. Did this data affect the local weakening of the US dollar? I think so, but only in terms of the fact that the dollar itself was overbought and the traders needed at least a small correction.
Recently, there has been quite a lot of talk on the open spaces of the information background regarding the resumption of the QE program and a new reduction in the interest rate, as you know, we are talking about the ECB. So, this time the head of the Central Bank of France, Francois Villeroy de Galhau, who is one of the senior representatives of the leadership of the European Central Bank, expressed his thoughts on this topic. He believes that the ECB has a quartet of powerful instruments, including an asset purchase program, but, according to Francois, these instruments should not play simultaneously or at the same pace. At the same time, according to the head of the Central Bank of France, the ECB's monetary policy cannot work miracles. That is, Francois Villeroy de Galhau has doubts about the rationality of the resumption of the QE program. Let me remind you that the ECB meeting is scheduled for September 12.
Now back to the long-playing topic - Brexit. So here it's all about Feng Shui, the House of Commons voted on Wednesday night to decide to take control of the agenda, which could lead to the fact that the British Parliament will require a new delay of exit from the government, which, I'll notice, has already been raised, and the European Union is ready to provide it. Now, the Prime Minister of Great Britain is trying by all possible means to oppose parliament and the "shadow government", threatening out-of-town elections and the dissolution of parliament. Let's see what happens next, but the pressure is growing daily.
Today, in terms of the economic calendar, we have data on retail sales in Europe, where they expect a significant slowdown from 2.6% to 2.0%. If the data is confirmed, the single currency can get considerable pressure and, as a result, continue to decline. In turn, the information background will continue to flounder in the divorce proceedings, where the British Parliament has fewer and fewer days to withstand the country's tough secession from the EU.
EU 9:00 Universal time - Retail sales for July
Further development
Analyzing the current trading chart, we see that the rollback returns us to the psychological level of 1.1000, which we expected in the previous review. The fact that the quotation still manages to stay below the level of 1.1000 is a good sign in terms of the formation of a downward trend. In turn, traders will record a considerable part of the profit, are in a comfort zone and are still considering short positions in terms of a possible recovery of the trend after correction.
It is likely to assume that a price rapprochement with the level of 1.1000 is possible, where in the event of stagnation and the flow of news flow, traders will try to identify descending positions in the direction of the previously found support level of 1.0930. Do not forget about the massive informational background, which can make considerable changes to our earlier forecast - we follow the actions of Britain.
Based on the above information, we derive the following trading recommendations:
- Buying positions relative to the current development should be considered already in terms of the formation of an oblong correction, that is, in case of price fixing higher than 1.1000. It is desirable, having a foundation from an information background.
- Selling positions are considered in terms of resuming a downward move, where if the price is fixed lower than 1.0960, we can expect a move to 1.0930. Further actions are made after fixing the price below the local minimum of yesterday.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that indicators in the short-term and intraday periods tend to increase due to the formation of a technical correction. Meanwhile, the medium-term outlook is more stable, reflecting the general market background.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 4 was built taking into account the time of publication of the article)
The current time volatility is 21 points. It is likely to assume that due to the information and news background, the volatility of the day may have a value close to the average daily or exceed it.
Key levels
Resistance zones: 1,1000 ***; 1,1100 **; 1,1180 *; 1.1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support areas: 1.0850 **; 1,0500 ***; 1.0350 **; 1,0000 ***.
* Periodic level
** Range Level
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment
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