4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - sideways.
Moving average (20; smoothed) - sideways.
The EUR/USD currency pair on Friday continued to remain inside the side channel between the Murray levels "0/8" - 1.1230 and "2/8" - 1.1353. Thus, nothing has changed technically for the euro/dollar pair on the last trading day of last week. Nothing could have changed, since it was a pre-holiday day. Not a single macroeconomic report has been published in either the US or the European Union, there has not been a single important event. Therefore, the markets had nothing to react to, and they didn't want to. Why react to something when you can celebrate Christmas? Traders are also people who also want to relax, not just work. Therefore, Friday's volatility of 37 points is still a lot for a half-day. However, volatility has risen slightly over the past couple of months and now its average value for 30 days is 71 points, which is very good. Do you remember how for several months this value did not exceed 50 points? As for the weekly average, it is now declining, which again is not surprising, given the empty calendar of events and the lack of desire among traders to trade. Thus, nothing new can be said now. The pair still needs to get out of the side channel. However, this may happen as early as next year, when market activity recovers. If the price manages to gain a foothold above the Murray level "2/8", this may mean the formation of a new upward trend. But just on Friday, the pair turned down around this level, so we believe that there is a high probability of a fall to the level of "0/8" - 1.1230.
Omicron continues to attack Europe.
Although the European currency does not pay attention to the "coronavirus news", the situation with the omicron strain continues to deteriorate. In Italy, Spain, the Netherlands, France, the situation is critical, and the indicators of daily morbidity exceed the peaks of all previous "waves". In Italy, the country's government has already decided to return the mandatory wearing of masks on the street, as well as to ban any mass celebrations of the New Year. All clubs and discos are closed until the end of January. In Spain, the mask regime was also returned, in Catalonia, a curfew was imposed and it was forbidden to gather in groups of more than 10 people. The Netherlands, without further ado, introduced a new "lockdown" and, it seems, did the right thing, since in other countries with milder restrictions it is not possible to contain the increase in the number of cases of the disease. A vivid example of this is the United Kingdom. In France, they decided to limit themselves to calls for wearing masks. Thus, many countries still refuse to take the omicron strain seriously and believe that it can be defeated by vaccination and revaccination, although it is already reliably known that people with any number of vaccinations get sick with it. But the economy is in first place in many states. In particular, the United States and the United Kingdom are not going to quarantine. By the way, flights are being canceled all over the world since many pilots were infected with omicron and had to go into self-isolation. About 6,000 flights have been canceled in the last two days alone. There are simply not enough pilots and flight attendants to carry out flights. This is why omicron is dangerous, even if it causes complications and hospitalizations much less often. But if the majority of them get sick, there will be no one to go to work and perform their duties, so the economy will suffer in any case and may even be much stronger than if a new "lockdown" was introduced. Moreover, as we have already found out, vaccines do not help too much against the new strain.
Thus, we believe that if the situation continues to deteriorate, the economies of individual countries may suffer greatly. And this damage can have an impact on the exchange rate of their national monetary units. Therefore, the immediate future of the euro and the dollar now depends on the consequences of omicron.
The volatility of the euro/dollar currency pair as of December 27 is 56 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1266 and 1.1379. A reversal of the Heiken Ashi indicator upwards will signal a new round of upward movement in the side channel 1.1230 - 1.1353.
Nearest support levels:
S1 – 1.1292
S2 – 1.1230
S3 – 1.1169
Nearest resistance levels:
R1 – 1.1353
R2 – 1.1414
R3 – 1.1475
Trading recommendations:
The EUR/USD pair continues to be located inside the 1.1230-1.1353 side channel. Thus, you can continue to trade for a rebound from the upper or lower border of this channel. However, it should be remembered that we are talking about a flat, and volatility may decrease with the approach of the holidays.
Explanations to the illustrations:
Linear regression channels - help determine the current trend. If both are directed in the same direction, then the trend is strong now.
Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which trading should be conducted now.
Murray levels - target levels for movements and corrections.
Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.
CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.
