The trading week is coming to an end and it's time for us to summarize the preliminary results. High daily dynamics did not prevent traders from staying within the boundaries of the 1.1700 / 1.1910 side channel, where they spent the most time in its lower part, but, as the results of the week showed, the flat frames are still relevant.
A weak dollar is the main motive for finding the price at current levels, otherwise, the quote would have gone down to the 1.1550 / 1.1650 area at the beginning of the week. In this case, the flat plays the role of an unloading mechanism, where market participants fix long positions, but the volume of the cheap dollar clearly exceeds all expectations.
The situation is extremely difficult, since in terms of the logic of technical and fundamental analysis, we should have taken the path of short positions a long time ago, but that was not the case, the quote is still at very high levels. It is possible to say that the medium-term trend has changed from downward to upward, but the rate of change in the European currency is very high, which indicates speculative interest and an unstable structure.
It is better to build the theory of market development in relation to this case on the principle of local changes, that is, do not focus on price trends and market overheating, we work exclusively on the breakdown of the flat.
Analyzing the last trading day by the minute, we can see that there was an upward price movement at first, which proceeded from the dynamics of August 12, which led to the renewal of local highs and hitting the level of 1.1864. There was a burst of short positions from 14:30 UTC+00, which returned the quote to the level of 1.1800, where the day ended.
In terms of daily dynamics, a high level of volatility of 83 points is recorded, which coincides with the average daily change. It is worth considering that price fluctuations are carried out within the framework of a flat, which a priori is considered a slowdown, but in our case, there is an acceleration.
As discussed in the previous review, traders were ready for an upward move in price after the quote locked in above 1.1800. The forecast for the price movement to 1.1860 coincided by 100%.
Considering the trading chart in general terms (daily period), we can see the amplitude fluctuation at the conditional peak of the previous inertia. The region of 1.1800 values makes much more sense than it seems at first glance, it is possible that the current flat began to form in relation to it. This theory is based on the regular price fluctuations in the period June - September 2018.
The news background of the past day included weekly data on claims for unemployment benefits in the United States, where initial claims fell below 1 million.
Primary applications declined from 1,191,000 to 963,000 with the forecast of 1,150,000.
Repeated applications declined from 16,090,000 to 15,486,000 against the forecast of 15,800,000.
We have a strong signal of recovery in the US labor market, but we still remain at high levels by historical standards.
The market reaction to the positive data for the US was ignored at the time of publication (12:30 Universal time), and the movement in the US dollar arose only from 14:30 Universal time.
In fact, we are convinced once again that even a positive news background in the US cannot fundamentally change the situation with the sale of the US dollar.
Today, in terms of the economic calendar, we have data on GDP in Europe for the second quarter, where the acceleration of the rate of economic decline is expected from -3.1% to -15.0%. In fact, there is a coincidence of the recession expectations with the first estimate of Europe's GDP.
In the afternoon, we expect data on retail sales in the United States, where they forecast an acceleration from 1.1% to 1.9%, which benefits the US economy.
It is extremely difficult to say whether there will be a positive reaction to the dollar, since in terms of fundamental analysis, it is a signal for the strengthening of the US currency, but if we proceed from the fact that the data on inflation and the US labor market were better than forecasts, and the market lived its own life, everything can be expected.
The upcoming trading week in terms of the economic calendar has a package of statistical data, but the main event is rightfully considered inflation in Europe, which can cause increased volatility in the market.
Tuesday , 18 on August
USA 12:30 Universal time - Number of building permits issued, for July
USA 12:30 Universal time - The volume of construction of new houses, for July
Wednesday 19 August
EU 9:00 Universal time - Inflation, for July
USA 18:00 Universal time - Minutes of the meeting of the Federal Open Market Committee
Thursday 20 August
EU 11:30 Universal time - Publication of the minutes of the ECB meeting on monetary policy
USA 12:30 Universal time - Claims for unemployment benefits
Friday, August 21
EU 11:00 GMT - Manufacturing PMI, PRELIMINARY (Aug)
EU 11:00 GMT - Manufacturing PMI, PRELIMINARY (Aug)
USA 13:45 Universal time - Manufacturing PMI, PRELIMINARY (Aug)
USA 13:45 Universal time - Manufacturing PMI, PRELIMINARY (Aug)
Further development
Analyzing the current trading chart, you can see price fluctuations within the deviation of the 1.1800 level, where the quote returned last night. The price movement along the course of the side channel 1.1700 / 1.1910 will continue until this or that border falls. Thus, the main tactic of work is based on the method of breaking through the boundaries of 1.1700 / 1.1910, which will indicate the main path.
Regarding local positions, it is possible to build work within a given range, where buy positions are considered above the high of the previous day 1.1865, towards 1.1900, and sell positions are considered lower than 1.1790 towards 1.1750-1.1720.
Indicator analysis
Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments on the minute and hourly intervals signal a buy, by focusing the price above the level of 1.1800. The daily period, in turn, is still a buy signal, reflecting the general direction.
Weekly volatility / Volatility measurement: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated per Month / Quarter / Year.
(14 August was built taking into account the time of publication of the article)
The volatility of the current time is 25 points, which is 70% below the daily average. Market activity will have time to gain momentum, and perhaps we will have already crossed the 50-point mark before noon, and average value before the American session.
Key levels
Resistance zones: 1,1900 **; 1.2000 ***; 1.2100 *; 1.2450 **.
Support zones: 1,1800; 1.1650 *; 1.1500; 1.1350; 1.1250 *; 1.1180 **; 1.1080; 1.1000 ***; 1.0850 **; 1.0775 *; 1.0650 (1.0636); 1.0500 ***; 1.0350 **; 1.0000 ***.
* Periodic level
** Range level
*** Psychological level
