From a comprehensive analysis, we see the execution of the theory of downward development, while having ultra-high volatility. Now about the details. Last week was one of the most active in the calculation of 11 months, where the quote first developed a corrective move, then broke through the range (1.2770//1.2885//1.3000) and moved on to a new stage. In fact, we were waiting for such a development in terms of technical analysis, warning readers about the loss of rigidity of borders (1.2770//1.2885//1.3000), where recovery occurred under pressure from the external background.
Regarding the theory of downward development, we see that the change of the clock component did not go in vain, the quote still managed to keep sellers and move to a new stage of development. So, the recovery relative to the medium-term upward trend has reached the level of 79%, which means that the level of #1 (1.3000); #2 (1.2770); #3/1 (1.2620); #3/2 (1.2500); #3/3 (1.2350) are considered broken, and their strength will be lower in the subsequent fluctuation, which will allow sellers to pass the marks without too much effort. There are two main stages on the way to recovery: #4 (1.2150) and #5 (1.2000), which in some sense reflect a peculiar range of interaction of trading forces.
In terms of volatility, we see something supernatural for two days in a row. Daily activity was above 350 points, or 208% higher than the average. At the same time, the market activity has not decreased for the fourth week, reflecting the acceleration, all the fault of the massive external background.
Volatility details: Friday-193 points; Monday-110 points; Tuesday-102 points; Wednesday-102 points; Thursday-107 points; Friday-103 points; Monday-165 points; Tuesday-245 points; Wednesday-172 points; Thursday-358 points; Friday-359 points. The average daily indicator relative to the volatility dynamics is 116 points (see the volatility table at the end of the article).
Detailing the minute-by-minute Friday day, we see that after a slight regrouping of trading forces, the downward interest resumed again, having a descent down to the level of 1.2264.
Details: the downward turn was extended in the interval 12:30-22:45 (trading terminal time).
As discussed in Thursday's review, traders were waiting for a breakout of the lower limit of the range (1.2770//1.2885//1.3000) with price fixing lower than 1.2725. As a result, we got an excellent point for short positions, which we managed to earn significantly. In turn, medium-term traders, who had positions for sale in early February, calculate the profit, since fixations can occur soon.
Looking at the trading chart in general terms (the daily period), we see an inertial downward movement extending for four trading days. In fact, this is the first significant change since the beginning of the year that has cast doubt on the medium-term upward trend. Let me remind you that the global downward trend set by the market back in 2007 remains unchanged.
Friday's news background had nothing serious in it in terms of statistics for Britain and the United States.
In terms of the general information background, we have a wave-like panic associated with the coronavirus, where China is no longer the epicenter, but the rest of the world updates the maximum number of infected. Against such a terrible backdrop, the Federal Reserve (FRS) is holding another emergency meeting, during which it decides to reduce the refinancing rate by 1% to 0.25%.
"The committee expects to maintain this target range until it is confident that the economy has withstood recent events and is on track for maximum employment and price stability targets," an excerpt from the Fed document reads.
In fact, the Fed continues to feed the financial wounds with cheap borrowed funds, which can eventually lead to new collapses.
Today, in terms of the economic calendar, we do not have any statistics worth paying attention to, and they are not necessary, when we have such strong data from the States in the morning.
Further development
Analyzing the current trading chart, we see a distinct slowdown within 1.2264/1.2423, where the quote is fluctuating within the #3/3 stage (1.2350). In fact, the existing external background in the face of the Fed's decision locally shot the quote by 147 points, but in the end, everything shrank at the level of the third stage. Thus, the development of a downward course towards stages #4 (1.2150) and #5 (1.2000) is possible.
In terms of emotional mood, we see a kind of market "hysteria" where speculators rule the ball.
By detailing the minute-by-minute time period, we see the same jump at the opening of a new week (00:00 hours on the trading terminal). With a subsequent oscillation within the framework of 1.2264/1.2423.
In turn, traders continue to work on the downside, where the main goals are located in the area of interaction of trading forces 1.2000/1.2150.
Having a general picture of actions, we see that the quote is trampling around the base of 1.2264, wherein the case of passing this mark, the downward move can resume in the direction of 1.2150-1.2000.
Based on the above information, we will output trading recommendations:
- Buy positions are considered in the case of working off the mark of 1.2264, where the movement continues within 1.2264/1.2423. Work on the rebound will be considered higher than 1.2310.
- Positions for sale are already underway, further transactions will be laid after fixing the price below 1.2250, with the prospect of a move of 1.2150-1.2000.
Indicator analysis
Analyzing different sectors of timeframes (TF), we see that due to the rapid downward movement, the indicators of technical instruments unanimously occupy a sell signal.
The volatility for the week / Measurement of volatility: Month; Quarter; Year.
The volatility measurement reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(March 16 was based on the time of publication of the article)
The volatility of the current time is 165 points, which is already 42% higher than the daily average. It is likely to assume that the external background will continue to catch up with activity in the market.
Key levels
Resistance zones: 1.2350**; 1.2500; 1.2620; 1.2725*; 1.2770**; 1.2885*; 1.3000; 1.3170**; 1.3300**; 1.3600; 1.3850; 1.4000***; 1.4350**.
Support zones: 1.2350**; 1.2150**; 1.2000***; 1.1700; 1.1475**.
* Periodic level
** Range level
*** Psychological level
****The article is based on the principle of conducting a transaction, with daily adjustments.
