From the point of view of complex analysis, we can see that the quotes converged once again with the control levels.
The past trading day was again active, which raised volatility, and encouraged speculators to open long positions in the area 1.0885. The results of which returned the quotes to the upper border of the flat 1.0775 // 1.0885 // 1.1000, but a resistance was found at a systematic level so the quotes rolled back.
The psychological level of 1.1000, which is also the upper limit of the flat, has put pressure on market participants for the fourth time, which causes alarm. Such frequent concentration of prices at the level leads to an increasingly strong influence on the integrity of the flat, in particular the upper limit. If the frequency of reaching the 1.1000 level does not decrease, and the quotes fail to consolidate at the bottom of the 1.0775 / 1.0885 flat, a local breakout of the upper boundary may arise, which for a while can change the overall dynamics and structure of successive downward cycles.
Until such development occurs, the downward course in the medium-term remains as the main goal for trading. To achieve it, the quotes need to go to the bottom of the flat 1.0775 / 1.0850, and then overcome the frame 1.0775 and consolidate on the 1.0700 level.
Analyzing yesterday's trading day in detail, we can see that the upward movement took place almost throughout the day from 22:00 to 19:00 (UTC + 1), during which the psychological level 1.1000 was affected. The following movement was a small pullback.
In terms of volatility, an acceleration of 19% is recorded relative to the average daily indicator. However, if we consider the dynamics relative to May 25, the acceleration is about 134%.
As discussed in the previous review, traders worked on local long positions from the value of 1.0920, with take-profit in the area of 1.0950 / 1.1000.
Thus, in the daily chart, a consolidation occurred in the side channel with a scale of almost two months.
The news published yesterday contained data on the real estate market in the US, the results of which did not coincide with the forecasts. According to the report, the S & P / CS composite housing price index increased from 3.5% to 3.9%, completely different from the forecast of a 3.0% slowdown. Sales of new homes in April also increased by 0.6%, up from the forecasts of a -21.1% decrease.
Discussions on China's national security law, from which Beijing plans to "acquire" Hong Kong, limiting its autonomy, are escalating. The US disagrees with such measures so during a briefing, US President Donald Trump said that they are preparing for a response that is very interesting and very powerful.
"We are preparing something now. I think it will seem very interesting to you. I'll talk about this in a couple of days, "said US President Donald Trump.
It is not clear what kind of action the White House will take but investors are worried.
Meanwhile, ECB representative Philip Lane announced that the EU economy has reached the bottom in April.
"I think it's obvious, by the way, that the absolute bottom was reached in April," Lane said during an interview.
According to him, the main uncertainty is the future prospects of the economy, as well as the duration of the recovery.
Lane said that the EU will need about three years to fully restore the eurozone economy.
With regards to economic news, there are no important statistics today in Europe and the US that could affect the dynamics of the EUR / USD pair.
Further development
Analyzing the current trading chart, we can see a rather rapid recovery from the upper border of the flat, where the quotes consolidated below 1.0950, which is a good signal for sellers. To prevent the concentration of trading forces in the upper part of the flat, the quotes need to return to the average deviation of 1.0885 and consolidate below it.
If the current mood and speculative activity persists, the quotes will continue a bearish mood and move closer to the 1.0885 area.
Based on the above information, we derived these trading recommendations:
- Open sell positions below 1.0950, towards 1.0900 / 1.0885.
- Open buy positions in case of a trend change and consolidation above 1.1020.
Indicator analysis
Analyzing the different sectors of time frames (TF), we can see that the indicators of hourly and daily periods still signal a bullish mood, since the quotes are in the upper part of the flat.
Volatility per week / Measurement of volatility: Month; Quarter Year
The measurement of volatility reflects the average daily fluctuation calculated by Month / Quarter / Year.
(May 27 was built, taking into account the time of publication of the article)
Volatility is currently 51 points, which is already good and pretty close to the average daily value. Thus, we can assume that if recovery persists, volatility will continue to accelerate.
Key levels
Resistance zones: 1,1000 ***; 1.1080 **; 1,1180; 1.1300; 1.1440; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support areas: 1.0850 **; 1.0775 *; 1.0650 (1.0636); 1,0500 ***; 1.0350 **; 1,0000 ***.
* Periodic level
** Range Level
*** Psychological level
