4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
The EUR/USD currency pair was adjusted against the correction on Monday. What has happened in recent days? The European currency has found the strength to win back a small part of the previously lost positions and gain a foothold above the moving average line. On the one hand, this is already an achievement for the pair, since in recent weeks it has mostly fallen. On the other hand, it is not worth opening champagne ahead of time about the formation of a new upward trend. So far, the euro currency has grown by 110-120 points, most of which is lost on Monday. Therefore, now it is not even possible to conclude that the markets have tuned in to buy the pair. It is also impossible to draw any conclusions on the fundamental background. December starts this week, and we will find out whether the Fed is set to further tighten monetary policy. Also this Friday, the significance of the next Nonfarm Payrolls report will be known, which is very important for the Fed and can influence monetary policy. These events will be the most important in December since there is no point in expecting any serious steps from the ECB now. However, we wrote just last week that the state of the American economy and the absence of a "lockdown" in the United States should not be misleading. We said that a new strain would appear and the US economy could "close" after the European one. Unfortunately, we were right and a new strain did appear. So far, it is difficult to say what consequences it will cause for the whole world and the global economy. At the moment, it is known that it is more contagious than the "delta strain", which is now mainly affected all over the world and is also more resistant to the immunity of those who have already been ill or vaccinated. Since so far a small number of diseases with this strain have been registered in the world, it is too early to draw any conclusions. However, the public does not want to wait for the moment when Omicron will take over the whole world.
Israel closes borders, traders remain calm for now.
At this time, by and large, we can only make guesses and assumptions, since there is too little official data yet. Some doctors believe that those people who have recently been ill with delta and have not fully recovered can get sick with omicron. Some believe that only people with weak immunity. A new variant of the virus has been detected so far in only a dozen countries around the world, but, most likely, many others will announce it in the coming days. Israel has already completely closed its borders to foreigners. Quarantine has been introduced for two weeks. The President of the European Commission, Ursula von der Leyen, proposes to close air traffic with those countries where a new strain has already been identified. It is also known about the strain itself at this time that for some reason it infects more often young people and can proceed almost asymptomatically.
Thus, it seems that the world is on the verge of a new epidemiological catastrophe. Of course, I want to believe that the omicron strain will not become as destructive as it may seem now, but the prerequisites are very bad. American stock indices fell on Friday. Presumably because of the news regarding the new strain. However, the foreign exchange market is still calm and this cannot but please traders. Changes in the rate of a particular pair by 50-100 points can hardly be considered a panic. Moreover, it is hardly possible to link Friday's fall of the dollar against the euro, as a consequence of the market reaction to the news about omicron. The fact is that the euro has been falling against the dollar for several weeks, or even months, so on Friday, there could be banal profit-taking on short positions and a banal upward correction. Moreover, it could not continue on Monday. Thus, from our point of view, the two main currency pairs have not yet shown any interest in the fundamental background of the new strain. In theory, if there is a real danger of infecting the whole world with a new strain, the US dollar will have to grow as it did in February-March 2020 since it is the world's reserve currency. Therefore, any movement not in favor of the dollar cannot be considered a market reaction to omicron.
The volatility of the euro/dollar currency pair as of November 30 is 68 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1193 and 1.1329. A reversal of the Heiken Ashi indicator upwards will signal a round of upward movement.
Nearest support levels:
S1 – 1.1230
S2 – 1.1169
S3 – 1.1108
Nearest resistance levels:
R1 – 1.1292
R2 – 1.1353
R3 – 1.1414
Trading recommendations:
The EUR/USD pair has gained a foothold above the moving average, but it cannot continue moving up yet. Thus, today you should stay in buy orders with targets of 1.1329 and 1.1353 if the pair holds above the moving average line. Sales of the pair should be considered if the price is fixed below the moving average, with targets of 1.1230 and 1.1193.
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 to trade 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.
