The quote has almost reached the next checkpoint in phase #2 of the recovery, where it all leads and where we are – we will discuss these issues in our article.
From technical analysis, we see a fairly intense downward move over the past five days, where the quote moved from one phase of recovery (1.1180 – 1.1080) to the next (1.1080 – 1.1000). In fact, for the first time in three weeks, we have reached the 50-60% recovery relative to the oblong correction, and this is a good signal in terms of restoring the initial interest and the general mood of market participants. Considering separately the volatility of the euro/dollar pair, we see that the average daily dynamics is not high, but it is not extremely low, I would characterize it closer to the average, which gives a balanced mood of market participants.
Analyzing the past day hourly, we see that the main round of short positions fell on the period of 11:00-18:00 hours (time on the trading terminal). After that, the quote moved from the compression stage to the limits of 8 points of amplitude.
As discussed in the previous review, traders take short positions at stage 2, where the entry occurred from the point of 1.1060, which already brings income to market participants.
Looking at the trading chart in general terms (daily period), we see the main downward trend, with an oblong correction and subsequent recovery.
Friday's news background did not have important statistics for Europe and the United States, so the development of the quote was largely due to technical factors.
To some extent, the information background has faded, the US-China relations that have been heard lately for the last days have passed into the next phase of deliberation. According to US President Donald Trump, China wanted a complete abolition of duties on its goods, but the American side did not agree.
In terms of the divorce process, Brexit is seen as stagnant since the British side decided to hold parliamentary elections to win over more votes. In turn, the EU is politely waiting, and the newly elected head of the European Commission, Ursula von der Leyen, refuted the opinion that Brexit is a step towards the collapse of the European Union, but rather served as a process to strengthen the countries of the commonwealth.
"Europe from the crisis with the exit of Great Britain received a new force. Yes, I mean Brexit. Of course, we regret that our British friends want to leave us. However, Brexit's experience has opened the eyes of many doubters in the EU and has shown that they are represented by the European Union," Ursula von der Leyen said at a conference in Berlin.
The head of the European Commission also added that Brexit will not mean the beginning of lawlessness, the beginning of the process of disintegration of the European Union, on the contrary, no matter how different we are, in the process of negotiations on Brexit, the 27 Commonwealth countries take a common position.
Today, in terms of the economic calendar, we have statistical data or other information. In the United States, a day off is celebrated – "Veterans Day", which can affect the trading volumes and activity of market participants.
Further development
Analyzing the current trading chart, we see a small pullback from the pivot point found last Friday. The stagnation we saw earlier was formed near the subsequent checkpoint of 1.1000. Thus, theoretically, the psychological level of 1.1000 could play the role of a range level and has already reflected from itself a fulcrum, just slowing down the quote. In this scenario, the rollback/correction/stagnation looks quite realistic and appropriate.
In terms of volatility, we are at low levels as a percentage, this is 64% less than the daily average. In turn, the emotional component of the market is very sluggish, but perhaps all that we see on the current regrouping of trading forces is also not bad.
Detailing the available time interval per minute, we see a weak pullback from the beginning of the trading day, where the hourly average candle had a volume of 4 points.
In turn, traders continue to work on the downside, where there is already an active discussion about fixing positions due to the risk of finding a foothold in the face of the psychological level of 1.1000. Closing of deals is considered in terms of a temporary risk strategy, followed by re-opening already beyond the level of redistribution.
It is likely to assume that the downward mood in its overall plan may persist, even in the case of a correction. Thus, the work to a greater extent will be conducted on the downside in terms of a full restoration of the original course. At the same time, I do not rule out a local surge in the opposite direction, but in the form of rollbacks/corrections, which will interest speculators more.
Based on the above information, we derive trading recommendations:
Buy positions are considered if sellers are held back at 1.1000, with local long positions in the direction of 1.1055-1.1065, from fixation points higher than 1.1040.
Sell positions are held towards the level of 1.1000, where fixation can occur on the values of 1.1020-1.1010-1.1005. Re-entry into the position is considered after a clear price fixation below the psychological level with the retention of downward interest.
Indicator analysis
Analyzing different sector timeframes (TF), we see that the performance of technical instruments on all major time intervals signal sales. In turn, short-term periods in connection with the existing pullback/stagnation fluctuate, signaling neutral interest.
Volatility per week / Measurement of volatility: Month; Quarter; Year.
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(November 11 was built taking into account the time of publication of the article)
The volatility of the current time is 19 points, which is still a low value for this period. It is likely to assume that in the event of a breakdown of the psychological level of 1.1000, acceleration can occur, which will have a positive impact on the dynamics of volatility.
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.
