Details of the economic calendar for July 30
The preliminary data on inflation in Europe was released on Friday, July 30, where consumer prices rose from 1.9% to 2.2%, which is higher than the forecast of 2.0%.
Inflation risks and possible actions by the European Central Bank scare investors, which led to the weakening of the euro during the publication of statistical data.
We study and analyze
• The consumer price index is prepared by the statistical office of the European Union (Eurostat), which determines the change in prices of a selected basket of goods and services for a given period. This indicator is considered a key indicator for assessing inflation. From the point of view of fundamental analysis, the rise in inflation is a positive signal for the national currency, but when consumer prices rise faster than forecasted, it is not considered the best signal.
Analysis of trading charts from July 30
The Euro/Dollar currency pair during the corrective movement from the pivot point 1.1750 reached the level of 1.1900, where there was a decrease in the volume of long positions and an increase in the volume of short positions. As a result, the level of 1.1900 was won back in the market as a resistance, where the price rebounded.
The resistance level of 1.1900 was built on the basis of time periods from July 6 and 12, where a decrease in the volume of long positions occurred near this coordinate.
The trading plan of July 30 considered the possibility of a price rebound from the resistance level, therefore, a scenario of a downward movement was proposed.
The Pound/Dollar currency pair, following an upward trajectory, met an important psychological level of 1.4000, where, due to the natural basis of the past, at first there was a stagnation, and then a rebound in prices.
In simple terms, this level negatively affected the volume of buy positions, which led to the revision and opening of sell positions.
We study and analyze
• Short positions, or Short, means sell positions.
• Long positions, or Long, means buy positions.
• Psychological levels are round values (1,2000,1,3000, 1,4000,1,5000, etc.) that serve as key coordinates in the market that traders pay special attention to. These levels are often used as support or resistance.
Economic calendar for August 2
Today, in terms of the economic calendar, we have the publication of data on business activity in the manufacturing sector in Europe, Britain, and the United States, which may lead to an additional round of activity in the market.
Details of statistical data:
08:00 UTC - PMI in the European manufacturing sector: Prev. 63.4 points; Forecast 62.6 points.
08:30 UTC - PMI in the UK manufacturing sector: Prev. 60.4 pips; Forecast 60.4 points.
14:00 UTC - PMI in the US manufacturing sector: Prev. 60.6 pips; Forecast 60.5 points.
We study and analyze
• The index of business activity in the manufacturing sector is an indicator of changes in business conditions in the industrial sector in the reporting month. The index is calculated on the basis of monthly surveys of supply managers working in private companies in the manufacturing sector.
Trading plan - EURO/DOLLAR for August 2
Analyzing the current Euro/Dollar trading chart, you can see that the resistance level of 1.1900 still puts pressure on buyers, but in order for another round of selling positions to occur, the quotes need to stay lower than 1.1850. Otherwise, a closed amplitude in the range of 1.1850/1.1900 may occur.
The trading plan considers two possible scenarios:
The first scenario is focused on the subsequent downward movement, where holding the price below 1.1850 will open the way in the direction of 1.1800.
The second scenario will be considered by traders after holding the damage in the market with an amplitude of 1.1850/1.1900, where holding the price higher than 1.1900 will open the way towards the psychological level of 1.2000.
Trading Plan - Pound/Dollar for August 2
Analyzing the current Pound/Dollar trading chart, you can see that during the price rebound from the level of 1.4000, the quotes returned to the area of 1.3900, which historically exerted pressure on market participants. In order for the downward movement to resume, the quotes need to stay below 1.3880, otherwise, the level of 1.3900 will be won back as support, returning us to the area of 1.4000.
The trading plan considers two possible scenarios:
The first scenario is focused on the subsequent downward movement, where holding the price below 1.3880 will open the way in the direction of 1.3850-1.3800.
The second scenario will be considered by traders in the event of a price rebound from the level of 1.3900, but the main intentions of buyers will appear after the price holds above the 1.4000 coordinate.
What is reflected in the trading charts?
A candlestick chart view is graphical rectangles of white and black light with sticks on top and bottom. In a detailed analysis of each candlestick, you will see its characteristics relative to a particular time period: open price, close price, high and low prices.
Horizontal levels are price coordinates, relative to which the price can stop or reverse. In the market, these levels are called support and resistance.
Circles and rectangles are highlighted examples where the price of history has reversed. This highlighting in color indicates horizontal lines that may put pressure on the quotes in the future.
The up/down arrows are indications of the possible direction of the price in the future.
