4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - upward.
CCI: -31.6527
During the first trading day of the new week, the EUR/USD pair started correcting again and has been trading in different directions for the last few days. We have already repeatedly talked about the key technical factors (from our point of view). Naturally, the side channel $ 1.17-1.19 (alternative 1.1640-1.1920) continues to be in the first place. The pair's quotes have spent the lion's share of the last three months inside this channel, so if you approach one of its borders, you can immediately expect a reversal in the opposite direction. Secondly, in the area of $1.19-1.20, it is very difficult for buyers to find motivation and grounds for new purchases of the European currency. After all, there is a two-year high of the pair near the 1.2000 level, which was reached recently and after which the price could not form a normal correction. Thus, further growth is highly unlikely. Third, sellers are extremely wary of investing in the dollar, as it is completely unclear who will become the new President of the United States and what changes will follow in the country and its economy. Thus, the pair is not sold, simply fearing for the prospects of the American economy. And altogether, this gives us a "flat" when there is no reason for either serious purchases or serious sales. Therefore, the euro/dollar pair has been trading for three months in a range of plus or minus 250 points.
Nothing changed for the EUR/USD pair on Monday. First of all, there was no important news that day. Second, there were no macroeconomic statistics. Thus, even if traders wanted to react to an event, they would not be able to do so. Third, markets continue to ignore almost all macroeconomic statistics in any case. Thus, the volatility during the day was quite moderate, and market participants were forced to focus on the secondary fundamental background. The US presidential election is just over a week away, and Donald Trump, who, according to everyone, could not defeat Biden in the last round of debates, continues to sing his favorite song that "the coronavirus will soon be defeated". The US President started singing this song in the spring, when the epidemic was just gaining momentum in America and when, according to doctors and epidemiologists, it was still possible to turn the situation around and prevent a huge number of victims from COVID-2019 in the United States. However, in recent months, Trump has changed his rhetoric. Instead of the phrase "the virus will disappear on its own", the phrase "a vaccine will be invented soon" is now used. Trump is not interested in the fact that doctors from all over the world continue to say that creating a vaccine usually takes up to 10 years (meaning a safe, fully tested vaccine, and not a hastily put together one). He continues to promise a vaccine "soon", "before the election", "before the end of October", and so on. However, Americans who have not yet received collective immunity from the "coronavirus" have already acquired it against Trump's false statements and promises. If at the beginning of the presidential term, Donald was believed, now any of his words are carefully analyzed by the media and sorted out simply into components. Even if Trump is telling the truth now, his words are still broken down into atoms and they contain inaccuracies, omissions, tricks, and so on. The same media and periodicals regularly update statistics on the number of misleading statements from Trump. Recent studies have shown that Trump lies at least 15 times a day, and the number one person in the world in terms of the number of statements about COVID-2019 that do not correspond to reality is the American President. Thus, a new batch of promises in the form of "a vaccine will be found soon" does not calm the Americans a bit and does not add rating points to Trump himself before the election. In any case, even if the vaccine is invented tomorrow, it will take months to produce it on an industrial scale, so that the entire population of the United States, which has more than 330 million, can get it.
Meanwhile, the European Union is also full of "coronavirus" problems. The second "wave" of the pandemic began quite abruptly and quickly, and now many countries are covered by the epidemic and impose "strict" restrictions to somehow stop the spread of infection. The worst situation is in Italy (in recent days, there are 20 thousand infections daily), in Spain (20-30 thousand daily), in France (30-40 thousand daily), and in the UK (at least 20 thousand daily). Thus, curfews are being actively introduced in European countries and quarantine measures are being tightened as much as possible, which will inevitably lead to a new slowdown in the economy. So far, the consequences of the second "wave" are not yet visible, since it began no more than a month ago (only the indices of business activity in the services sectors of the EU countries fell below 50.0). However, there is no doubt that they will. And the worst thing is that the current levels of morbidity in the EU countries exceed the spring ones by 3-4 times. That is, theoretically, the health systems of European countries can no longer cope with the influx of patients (not only COVID), and then collapses will follow. Or total "lockdowns". In the spring, countries such as Italy, Spain, and the United Kingdom could no longer cope with the number of infected people, and then they had a maximum of 5-6 thousand diseases per day (up to a maximum of 10 thousand). Now the incidence rates are much higher.
As you can see, there are a huge number of factors that can and will affect the US and EU economies in the near future. If, for example, Biden wins the election, then there is no doubt that he will immediately begin to fight the "coronavirus" in his way. And the results of this struggle are unknown to the American economy. In the European Union, in the winter months, the incidence rates may be twice as high as the current ones, and what will happen then again is extremely difficult to predict now. So, theoretically, in a couple of months, we can see the euro/dollar pair anywhere. So far, the markets are responding very calmly to the epidemiological situation in the EU and are just waiting for the elections, showing that they do not intend to trade actively until the results of the vote are announced. But sooner or later, this period of inertia will be completed. And the pair will have to move in one direction. As long as the pair holds above the moving average line, weak upward prospects remain.
The volatility of the euro/dollar currency pair as of October 27 is 67 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1753 and 1.1887. A reversal of the Heiken Ashi indicator to the top can signal a new round of upward movement if the price remains above the moving average.
Nearest support levels:
S1 – 1.1780
S2 – 1.1719
S3 – 1.1658
Nearest resistance levels:
R1 – 1.1841
R2 – 1.1902
R3 – 1.1963
Trading recommendations:
The EUR/USD pair again corrected to the moving average line. Thus, today it is recommended to open new buy orders with the target level of 1.1887 if the price bounces off the moving average. It is recommended to consider sell orders if the pair is fixed below the moving average line with targets of 1.1753 and 1.1719.
