From a complex analysis point of view, we see the next development of the range level 1.1080, within which the quotes found a resistance point. In fact, the past day managed to win back more than 50% of the inertial course of Friday, returning sellers to the market. Considerable merit in this movement lies on the cries of the pound sterling, which in a similar period of time showed ultra-high activity in terms of reduction, pulling a correlated pair of EUR/USD. Is it possible to consider tact 1.1000 ---> 1.1080 as the structure of the downward movement from the beginning of January, hypothetically it is possible to see a reverse move in the direction of 1.1000. At the same time, it is worth taking into account such a moment that if the pound did not have such a strong reaction to the background, the euro would have remained near the range level. Thus, what will happen when the noise subsides? Will the euro return within the limits of 1.1080 [1.1060 // 1.1080// 1,1100]? We will not remove this theory from consideration. Regarding the recovery process from an oblong correction, it is not so simple here, the psychological level of 1.1000 is firmly in place and we will talk about recovery only in case of a breakdown, not earlier.
From the volatility's vantage point, we see acceleration for the second day in a row, and here we can clearly see the echoes of FOMO syndrome [Syndrome of lost profit], which began to occur at the time of the breakdown of the accumulation of last week.
Analyzing the past minute by minute, we see that the main turn of short positions from the range of 1.1080 fell on the period 06:00 -14:00 UTC [time on the trading terminal]. After that, a rollback was recorded, followed by a slowdown in the form of a flat 1.1055 / 1.1065.
As discussed in the previous review , speculators considered a rebound from the range level, therefore, the area of 1.1060 / 1.1065 was given special attention in terms of price-fixing where the short positions took place.
Considering the trading chart in general terms [the daily period], we see the concentration of prices between the first [1,1080] and second degree [1,1000] of the recovery process relative to the elongated correction. At the same time, I advise you to consider the period 10/15/19 vr., where you will see that for a long time the market moves conditionally horizontally, with a wide amplitude.
The news background of the past day contained data on the Eurozone PMI, where acceleration in the manufacturing sector from 46.3 to 47.9 was recorded. A similar indicator also appeared in the United States, where a slowdown from 52.4 to 51.9 was recorded with a forecast of 51.7.
The market reaction was outside the statistical data, since we already had a background of decline.
In terms of the general information background, we have a wave of noise, raised on the basis of the subsequent relationship after Brexit between Britain and the European Union. So, investors' fear arose during high-profile statements, where the British Prime Minister outlined London's position in the upcoming talks, saying that it was them who should set the standards and rules that would be adopted by the British services. In fact, this direct manipulation of competition, as in which case limited measures are introduced for imports from Europe. The EU typically responds immediately through its main negotiator, Michel Barnier to such statements. Which brings us to remember that the trade agreement is drawn up precisely on EU standards, and not differently, adding that the best relations with the European Union would be if EU membership remains, but Britain chose its path.
Today, in terms of the economic calendar, we had data on producer prices in Europe, where a characteristic improvement of -1.4% was recorded ---> - 0.7%. In the afternoon, data on the volume of US industrial orders will be released, where they expect an increase of 1.2%.
Further development
Analyzing the current trading chart, we see the conditional standing still, which in comparison with the correlated pair, GBP/USD confirms the discrepancy. This means that restraint is what we have, and this greatly affects the activity of market participants who still focus on the range of 1.1080. In this case, it is worthwhile to carefully look at the price-fixing points relative to the existing stagnation, since equilibrium can lead to acceleration.
In terms of the emotional mood of market participants, we have a slight decline in terms of speculative activity, but this is probably temporary and is associated with a regrouping of trading forces.
In turn, traders will focus on the values of 1.1040 and 1.1065, since further fluctuation will depend on the fixation point.
It is likely to assume that the existing stop has two possible developments, the first considers the concentration of prices within the range of 1.1080 [1.1060 // 1.1080 // 1.1100], where the quotes will return. The second option considers the existing measure as the structure of the downward movement, which was set back in early January. In this case, fixing the price lower than 1.1040 will lead to a return to the area of 1.1000.
Based on the above information, we derive trading recommendations as follows:
- Buy positions will be considered in case of price-fixing higher than 1.1065 with a move towards 1.1080-1.1100. Further movement is considered in the case of a clear price-fixing higher than 1.1110.
- We consider selling positions in terms of returning to the psychological level of 1.1000, but in this case we need to fix lower than 1.1040.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that due to the current situation, there is a characteristic multidirectional interest, and only in the medium term does a sell signal remain.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation calculated for Month / Quarter / Year.
(February 4 was built taking into account the time of publication of the article)
The current time volatility is 16 points, which is a low indicator for this time section. It is likely to suggest that a break in existing stagnation may result in local acceleration. In the case of a downward movement, acceleration may be more extensive.
Key levels
Resistance zones: 1.1080 **; 1,1180; 1.1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support Areas: 1,1000 ***; 1.0900 / 1.0950 **; 1.0850 **; 1,0500 ***; 1.0350 **; 1,0000 ***.
* Periodic level
** Range Level
*** Psychological level
***** The article is built on the principle of conducting a transaction, with daily adjustment
