Over the past trading day, the EUR / USD currency pair showed a high volatility of 62 points. As a result of which, the downward movement resumed. From the point of view of technical analysis, we see that the past pullback served the market in the form of a regrouping of trading forces, where the fulcrum in the form of a range level of 1.0900 / 1.0950 nevertheless fell under the onslaught of short positions, and, as a fact, the main trend continued its formation.
As discussed in the previous review, traders were in no hurry to take hasty actions in the form of entering the market at the moment of fluctuation within the range level [1.0900 / 1.0950]. The main tactic in this case was to work on the breakdown of borders, which, as a matter of fact, turned out to be a lucrative undertaking. In fact, traders received the most suitable entry point at the time of the breakdown of the value of 1.0900, where the transaction is still being conducted.
Considering the trading chart in general terms [the daily period], we see that the theory of preserving the global downward trend has been confirmed, where its basis on the fundamental and technical analysis reflects the reality of what is happening. In fact, the quote is already at the beginning of 2017, and this is not the limit, we still have where to fall.
The news background of the past day had a data package for Europe, where the unemployment rate, surprisingly, fell from 7.5% to 7.4%, but this did not affect the single currency in any way. After that, preliminary data on inflation in Germany came out, and here, the euro was drained. Therefore, inflation is showing a slowdown from 1.4% to 1.2%, with a forecast of 1.3%, and if you recall the more recent data on industry in Germany, it will become much clearer.
There is a slight lull in terms of informational background, where there are no particularly remarkable outbursts of activity from the West and Europe, but, as always, the regular Brexit comes to the rescue, who again makes its contribution to the activity. Thus, British Prime Minister Boris Johnson unofficially asks the European Union not to provide a new Brexit reprieve. In connection to this, it is expected that London will provide Brussels with a legal document containing proposals for alternative regulation of the problem of back-stop this week.
Today, in terms of the economic calendar, we have preliminary data on inflation in Europe, where, according to expectations, its level should remain at 1.0%, but in view of yesterday's statistics for Germany, one should not be so sure about maintaining inflation at 1.0% . At the same time, Europe will publish data on business activity in the manufacturing sector, where they expect a decrease from 47.0 to 45.6. As you know, a data package for Europe does not carry anything good for a single currency. In the afternoon, the final data on the index of business activity in the manufacturing sector of the United States will be published, where they forecast growth from 50.3 to 51.0. Thus, we see that the American dollar looks quite attractive in terms of trading with it once again.
EU 11:00 - Manufacturing PMI (Sep)
EU 12:00 - Inflation (YoY): Prev 1.0% ---> Prog. 1,0%
USA 17:00 - Manufacturing PMI
Further development
Analyzing the current trading chart, we see that downward interest remains in the market, where the quotation is fixed below the level of 1.0900, leaving behind the inertial move. In turn, speculators continue to hold short positions with the prospect of a further move, which, in principle, is quite logical.
It is likely to assume that the temporary fluctuation within the levels of 1.0880 / 1.0900 will not last long, and sellers will nevertheless try to stretch the quotation towards the subsequent periodic level of 1.0850-1.0800, where we can already expect a fulcrum with subsequent rollback. The reverse picture of the plot, in this case, looks like stagnation within the lower boundary of the previously passed range level.
Based on the above information, we derive trading recommendations:
- We consider the buy positions in terms of finding a foothold in the area of 1.0850-1.0800 marks, with subsequent confirmation.
- Most traders already have selling positions, thereby conducting a transaction in the direction of 1.0850-1.0800.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that indicators on all the main time intervals signal a further downward trend, which reflects the general background of the market trend.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 1 was built taking into account the publication time of the article)
Volatility of the current time is 21 points, which is a moderate indicator for this time section. It is likely to assume that if the inertial course is maintained, volatility can still grow, reaching or exceeding the daily average.
Key levels
Resistance zones: 1.0926 ** 1.1000 ***; 1,1100 **; 1,1180 *; 1.1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support areas: 1.0850 **; 1,0500 ***; 1.0350 **; 1,0000 ***.
* Periodic level
** Range Level
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment
