4-hour timeframe
Technical data:
The upper channel of linear regression: direction – down.
The lower channel of linear regression: direction – upward.
The moving average (20; smoothed) – down.
CCI: -61.0478
On Monday, October 28, the EUR/USD currency pair adjusted to the moving average line against the background of an empty calendar of macroeconomic events. However, it failed to gain a foothold above the moving average, so the downward movement started a few days ago may resume. Unfortunately, today traders will also be deprived of a fundamental background. Of all the macroeconomic reports of the day, only the level of consumer confidence in the United States, which will be released in the evening, can be singled out, but its degree of significance is extremely low, so traders may simply not follow up on it. Consequently, market participants will still wait until Wednesday, October 30, when there will be plenty of macroeconomic publications and the results of the Fed meeting will be summarized. Well, on top of this busy day, there will also be a press conference by Jerome Powell.
Yesterday, Mario Draghi formally handed over his powers to Christine Lagarde, saying goodbye to the European Central Bank. He managed it for 8 years and his name is associated with the salvation of the euro in 2011-2012. Unfortunately, the last months of his work were marred by a split in opinion among members of the monetary committee, criticism of him because of the introduction of a stimulus package in September, which was opposed by many central banks. Nevertheless, it is impossible not to note the huge amount of work done by Draghi, who, according to many experts and economists, sometimes "did the impossible." It was Mario Draghi who opposed raising key rates when the "locomotives" of the EU economy voted for this option. It was Mario Draghi who confronted Germany, which raced ahead of all other EU countries and demanded special consideration for its opinion. The problems of the current stagnation (or recession) of the EU economy lie not only in trade wars. In itself, the union of 27 states is a complex mechanism with strong and weak "cogs". Although the union implies a joint game, each country still understands and realizes that its personal goals are higher than the common ones. A vivid example of this is the UK, which considered that without the Alliance and outside the Alliance it would be easier and better. Thus, the weak players always have to "tolerate" the influence of the stronger, and Mario Draghi balanced the overall economic situation, preventing the "tug of war" on themselves by the strong members of the bloc.
Now it's Christine Lagarde. Both literally and figuratively. Firstly, we are waiting for the speech of the new head of the ECB, who should acquaint everyone with the nuances and aspects of its program, with the problem areas that need to be addressed first and so on. Again, we can say that the fate of the euro currency will depend very much on the new ECB Chairman. After all, if, for example, Lagarde turns out to be an ardent "dove" (which, of course, is unlikely), then the prospects for the euro currency are only downward, no matter how the Fed tries to "help" the euro currency. Secondly, we are waiting for Christine Lagarde's first actions as ECB Chairman. Although it is unlikely that she will begin her presidency with strong changes in monetary policy. But sooner or later, action will follow.
The European currency remains under pressure before the Fed meeting, although according to many experts, the US regulator will ease monetary policy for the third time in a row, which is a favorable factor for the euro. However, either traders do not believe in this information, or are waiting for official confirmation of the rate reduction, or the rate reduction has already been taken into account by the forex market, or it will begin to be taken into account a little later, for example, tomorrow morning. Anyway, the volatility of the euro/dollar pair remains quite weak, which indicates a weak desire of traders to take risks in vain. The downward movement is supported by the senior linear regression channel, which still allows the option of a strong correction of the pair and subsequent resumption of the downward trend.
Nearest support levels:
S1 – 1.1047
S2 – 1,0986
S3 – 1.0925
Nearest resistance levels:
R1 – 1.1108
R2 – 1.1169
R3 – 1.1230
Trading recommendations:
The euro/dollar pair is adjusted at the moment. Thus, today it is recommended to sell the pair with the target of the Murray level of "5/8" - 1.1047, after the reversal of the Heiken Ashi indicator down and rebound from the moving average. It is not recommended to buy the euro currency until the price is fixed above the moving average with the first target Murray level of "7/8" - 1.1169. Volatility during Tuesday, October 29, is likely to remain low.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression – the blue line of the unidirectional movement.
The lower channel of linear regression – the purple line of the unidirectional movement.
CCI – the blue line in the indicator window.
The moving average (20; smoothed) – blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
