For the last trading day, the euro / dollar currency pair showed high volatility of 64 points, and as a result, the quote traced a rapid downward move.From the point of view of technical analysis, we see the long-awaited breakdown of the support level of 1.1180, which for a long time kept the quote. The accumulation of 1.1200 / 1.1226 the day before the rally perfectly served for the regrouping of trading forces and, as a fact, a pulse train of more than 80 points for the current hour. As discussed in a previous review, traders occupied a waiting position in anticipation of the breakdown of a key value of 1.1180 for this part of the chart. There is a breakdown. The positions are also descending. The goal in the form of the second point 1.1100 is almost reached. Partial fixations are being considered and are already being made. Considering the trading chart in general terms (daily timeframe), we see that everything is going according to plan. The first point in the form of 1.1180 is passed. The second, 1.1100 is already close, thus the restoration of the global downward trend is no longer a theory, but actually an action.
In the center of taking out the information and news background of the past day, of course, was the final election in Britain, where Boris Johnson won without any miracle. The market, in turn, reacted to the event in two ways. The British currency stood in ambiguity, but the euro was under pressure. What is the reason for the rapid decline of the euro? Experts are inclined to believe that with the arrival of Boris Johnson, the agreement on leaving Britain from the EU falls into a deeper pit. The fear of investors associated with a tough exit drives us down in addition to all the noise raised about the possible outcome of the July meeting of the ECB, which will be held this Thursday, where fear is heightened in the form of easing monetary policy and lowering the interest rate. Of course, this is all in theory, but the fear works with wonder.
We return to the news background of the past day, and there we had statistics regarding data on sales in the secondary housing market of the United States, where we forecast growth from 5.34M to 5.35M, but received a review of previous data and a decrease: Previous: 5.36M - -> Fact. 5.27M. News in the larger plan remained in the background due to the array of information background.
Today, in terms of the economic calendar, we see that data for Europe has already been released and it turned out to be worse than expected. The index of business activity in the manufacturing sector fell from 47.6 to 46.4. The index of business activity in the services sector also shows a decline from 53.6 to 53.3. In the afternoon, we are waiting for statistics on new home sales in the United States, where growth is expected from 626K to 660K. There are also preliminary data on PMI in the States, where growth is expected. Of course, do not forget about the information background, which can be a stimulus for further jumps.
Further development
Analyzing the current trading chart, we see that the quotation continued to decline, reaching a value of 1.1127, which is already in close proximity relative to a test point of 1.1100. It is likely to assume that overheating of short positions is certainly on the market, and a control point in the form of a range level of 1,1100 can play as a fulcrum. Traders, in turn, are insured and produce a partial fixation of their transactions with the movement of stops to breakeven.
Based on the available information, it is possible to decompose a number of variations, let's consider:
- Buy positions will be considered in case of working out the range level at 1.1100, you need to stop before laying the positions.
- Positions for sale, as they wrote earlier, already existed, and now, there is a phase of profit taking. Further transactions will be considered after the price has been fixed lower than 1.1100, while maintaining the inertial move.
Indicator Analysis
Analyzing a different sector of timeframes (TF), we see that indicators in the short, intraday and medium term have a downward interest against the background of the inertial course.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.
(July 24 was based on the time of publication of the article)
The current time volatility is 28 points. It is likely to assume that in the case of finding a support in the region of the 1.1100 range, the volatility will be limited.
Key levels
Zones of resistance: 1.1180 *; 1,1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100
Support areas: 1,1100 **; 1.1000 ***; 1,0850 **
* Periodic level
** Range Level
*** Psychological level
**** The article is based on the principle of conducting a transaction, with daily adjustment.
