Over the past trading day, the Euro/Dollar currency pair showed volatility two times lower than the daily average, but this fluctuation was enough to restrain the recovery process. From the point of view of technical analysis, we can see that the quotation aimed at the recovery phase after the recent surge in prices, having 80% of the impulse running. As a result, we have quotes returned back to the previously held flat of 1.1066/1.1100.
As discussed in the previous review, only aggressive traders who have already taken almost two stages are actually working. The first stage was in the framework of restoring and returning the price to 1.1100 and the second stage was considered in terms of returning the price in the framework of the early flat at 1.1100-1.1066. Conservative traders continue to be outside the market, but already received a good signal at the time the price returned to 1.1100-1.1066. Considering the trading chart in general terms, we see that the impulse jump did not change the overall picture even if it was high. The global downtrend remains on the market.
The news background of the past day contained S&P/Case-Shiller data on housing prices in the United States, which showed a decrease from 2.4% to 2.1% with a forecast of 2.1%. This indicator played an insignificant role in the market, so it was practically not noticed in terms of the dollar.
The main support for the sustainable recovery of the dollar was induced by the background information. Hence, investors overestimated the risks of a trade war between the US and China after Donald Trump said that Beijing would like to solve the problems in a calm manner. According to the head of the United States, a telephone conversation with representatives of the PRC leadership, which took place on Monday and brought a bit of optimism, saying that his team is ready to sit at the negotiating table. It is still very early to talk about the conclusion of a deal. Nevertheless, negotiations were stopped due to duties, but fleeting optimism of investors was felt. In turn, there was a new newsletter regarding the beloved Brexit. A telephone conversation took place between British Prime Minister Boris Johnson and European Commission President Jean-Claude Juncker, where once again the newly-made prime minister focused on the "Backstop" item and on the determination to exit without a deal if this item is not corrected. The head of the European Commission expressed his willingness to work with Johnson, but noted that exit without a deal would be a solution exclusively for Great Britain, and not for the EU. Already today the news appeared that Boris Johnson kept his promise and announced that the work of the British parliament will be suspended until October 14, which significantly reduces the chances that the deputies will have time to prevent the country from leaving the EU without an agreement.
Based on this news, the sterling pound naturally flew down. In turn, the euro/dollar reacted more restrained to the information, but still under pressure.
Today, in terms of the economic calendar, there is not a single piece of good news. Thus, all hope for an informational background that already pleases us.
Further development
In analyzing the current trading chart, we can see that the quotation froze within the periodic value of 1.1080, forming versatile candlesticks like a Doji. The fact that we returned to the framework of the previous flat at 1.1066/1.1100 is endless for sellers, and the fact that there is still support for the information background adds positive emotions. Hence, traders continue to regard the current amplitudes as a good chance to make money (of course, we are talking about speculators). Conservative traders are waiting for the price to drop to the psychological level of 1.1000, where the main positions will already be produced.
It is likely that in case of the pressure from the background information and passing short positions, the quote will remain in the recovery phase, where the primary point is the lower border of the flat 1.1066. In any case, the persistence of fluctuations within 1.1066/1.1100 will give us confirmation of the initial market interest.
Based on the above information, we derive trading recommendations:
- In case of fixing the price at 1.1120, we can consider buying positions with the prospect of a move to 1.1150-1.1160.
- In case of fixing of the price lower than 1.1075, we can consider selling positions with the prospect of a move to 1.1066 -1.1050 - 1.1030.
Indicator analysis
Analyzing a different sector of timeframes (TF), we can see that the indicators signal a decline to a greater extent, thereby confirming the fact of recovery. In the short term, indicators temporarily turned upside down but the quotation is still within the framework of stagnation.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(August 28 was built taking into account the time of publication of the article)
The volatility of the current time is 15 points, which is a low indicator for this timeframe. It is likely that volatility may increase in the case of reflection of the information background and the preservation of the recovery process.
Key levels
Resistance zones: 1,1100 **; 1,1180 *; 1.1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100
Support Areas: 1,1000 ***; 1,0850 **
* Periodic level
** Range Level
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment
