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The quote touched the psychological level, temporarily hovering within it. Whether we should expect the transition to the third stage or we will see the next testing of the control level – we will analyze these questions in our article.
From technical analysis, we see a control touch with the psychological level of 1.1000, where the quote hovered at a low amplitude, forming a narrow consolidation. We have fully implemented the second stage of recovery of the oblong correction. We cannot say that the stage is developed, as there is no clear breakdown and transition to the third stage, but the test touch of such an important level (1.1000) suggests that the desire of sellers to keep the existing process is still on the market. In terms of volatility and general dynamics, it is impossible to distinguish something definite, since the activity in the last three trading days was extremely small (39 – 29 – 36 points) and had a full downward interest. In turn, the emotional component of the market, as if by inertia, adheres to short positions that were set at the beginning of last week. We cannot say that market participant does not like the current situation, since there is no longer a conventional side corridor, and a kind of ambiguity has subsided, where the current recovery reflects the general interest of the market itself.
Analyzing the past day hourly, we see the "impulse" beat in the structure of the downward movement, where, after a slight correction (November 11), the stage of the further movement has begun just in the direction of the given downward movement. I advise you to open the H1 (EURUSD) chart for a while and look at the clock component.
As discussed in the previous review, traders have a difference of opinion. Some closed short positions as soon as the quote reached the range of 1.1015/1.1025. Other traders, on the contrary, decided to work further, waiting for a clear touch of the level of 1.1000. Still, others decided to sit on the fence (outside the market) and see what happens next, tracking clear price fixations relative to the level of 1.1000. In principle, all market participants have rational trading steps, and we cannot say that they are bad, since there is a profit. By the way, yesterday, we set the theory that the repetition of the oscillation plot, as it was at the moment of passage of stage #1 (1.1080), takes place at step 2. The theory is still in operation, as the passage of the mark of 1.1015 after the rollback/stagnation still did not give strength to short positions, and the level of 1.1000 did not fall on the first attempt.
Looking at the trading chart in general terms (daily period), we see the process of recovery relative to the oblong correction, which is in the structure of a one and a half year downward trend. Let me remind you that the global trend is in the report of July 2008.
The news background of the past day had no statistics on Europe and the United States, the economic calendar was empty.
The information background was a speech by US President Donald Trump during a visit to the New York Economic Club event. So, once again, the topic of US-Chinese relations was raised, where Trump colorfully stated that Beijing "badly wants" to conclude a deal with us, adding to this that it is we (the United States) who decide whether we want to conclude it or not.
"But we will only agree to a deal if it is beneficial to the United States, our workers, and our excellent companies," Donald Trump said.
As you know, the first stage of the trade agreement has not yet been reached, but Mr. President is sure that Washington and Beijing are already close to it.
At the same time, the head of the White House lacquered the idea that if Beijing could not agree with them, then everything would become even worse.
"Perhaps we will conclude a deal very soon, but if only it will be a useful transaction for our farmers and workers ... I told my economic adviser Larry Kudlow and I tell you this, if we do not conclude a deal, we intend to significantly increase fees." – Donald Trump said.
By tradition, we conclude the information and news background with Brexit. So, while the British are boiling in their early parliamentary elections, trying to attract the attention of voters as actively as possible, German Chancellor Angela Merkel believes that the success of the transaction is great and the available version of the agreement meets the requirements of the UK government.
"I believe that this agreement has a high chance of getting approval in the UK. That would be good for us all," Merkel said at the Conference of German Employers in Berlin.
Today, in terms of the economic calendar, we are waiting for the publication of an important indicator – inflation in the United States. So, according to forecasts, they expect the inflation rate to remain at 1.7%, but there is talk that the indicator may be worse and expressed in a decline, which will directly affect the US dollar. At the same time, a two-day meeting in the US Congress kicks off today, where Fed Chairman Jerome Powell will address the Joint Economic Committee. We have a kind of Fed report to Congress, where it will not be superfluous to monitor the information emerging from it.
Further development
Analyzing the current trading chart, we see an extremely sluggish fluctuation of the quote with an amplitude of about 20 points. The most interesting point is that the quote is still located around the psychological level of 1.1000, which signals that there are still plenty of short positions and not all traders have fled from this level. In terms of volatility, I have already noticed that there is a characteristic weakness, about 5 points equals the average hourly candle. The market sentiment is in the waiting phase of "breakdown/rebound", thereby feeling an easy drive before a possible jump.
By detailing the available time interval, we distinguish the boundaries of 1.1000/1.1020, between which the oscillation occurs.
In turn, they are waiting for the continuation of the banquet, someone still has not closed short positions and is thinking about topping up as soon as the quote goes below the level of 1.1000. Others consider two scenarios at once – breakdown and rebound.
It is likely to assume that the existing stagnation within the psychological level will not last long, and perhaps today we will see a characteristic shift. In my opinion, the most optimal tactic looks in terms of strategic prospects. That is, the main deals remain on the decline, and the monitoring of the level of 1.1000 remains, at the same time, we consider alternative positions, perhaps on local spikes from the existing level, which will make money on short-term long operations.
Based on the above information, we derive trading recommendations:
Indicator analysis
Analyzing different sector timeframes (TF), we see that the indicators mainly occupy the downward side, which confirms the overall market interest. At the same time, short-term intervals variably move within the framework of stagnation, without a clear signal.
Volatility per week / Measurement of volatility: Month; Quarter; Year.
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(November 13 was built taking into account the time of publication of the article)
The volatility of the current time is 21 points, which is a low indicator for this period. It is likely to assume that as soon as the available accumulation in the form of stagnation near the level of 1.1000 falls, a significant acceleration can occur.
Key levels
Resistance zones: 1.1080**; 1.1180* ; 1.1300**; 1.1450; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100.
Support zones: 1.1000***; 1.0900/1.0950**; 1.0850**; 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
*** Psychological level
***** The article is based on the principle of conducting transactions, with daily adjustments.
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