From the point of view of complex analysis, we see fear, emotions, thirst for profit and the whole range of colors in terms of trading, and now let's talk about the details. Extremely overheated single currency cannot depart from the long positions, which continue to increase in volume against the background of the syndrome of lost profit [FOMO]. Yesterday, before the announcement of the super important news, there was some apprehension that FOMO would not retreat so quickly, and this was confirmed by the extremely sluggish market and the lack of reaction to preliminary data on inflation in Europe. Now, we will return to the information and news background. We traditionally consider the technical and emotional part, and so, the quote returned to the resistance level of 1.1080, locally having a jump of 87 points against the backdrop of a five-hour impulse from the trading terminal. In fact, this is a full recovery from the early pullback, as well as a new maximum with shadows in this period of 1.1213. The surprising moment was that the quote flew just 87 points, not 300 with such news, but in this case, the technical analysis demonstrates its efficiency by sending to the area of interaction of trade forces 1.1180-1.1230.
Regarding medium-term prospects, it is advised to take a break before clarifying the circumstances and work against the background of existing noise.
In terms of volatility, we see a steady acceleration over four trading days, where the current jump exceeds the average daily indicator by 114%, and the average dynamics over these days is 124 points.
Details of volatility: Thursday - 127 points; Friday - 102 points; Monday - 152 points; Tuesday - 118 points. The average daily indicator, relative to the dynamics of volatility is 55 points [see table of volatility at the end of the article].
Analyzing the past minute by minute, we see that almost the entire European session was inactive, but with the arrival of the Americans it became interesting. The same surge that we fix on our terminals took place only 19 minutes [14: 00-14:19 UTC+00 time on the trading terminal], but this was enough for the appearance of delight and a charge of 87 points. The subsequent movement was in terms of pullback below the level of 1.1180.
As discussed in the previous review, traders dutifully waited for a correction, which did not happen. But at the same time, FOMO followers continued to consider long positions, as a result of which they made a profit.
The recommendation from Tuesday regarding the possible FOMO meeting and the jump back to the 1.1180 side coincided, having an impressive income.
[Buying positions are considered in terms of localized noise syndrome higher than 1.1160, towards 1.1180-1.1230.]
Considering the trading chart in general terms [the daily period], we see a vertical course, where a small rustle is enough to change the mood of market participants with such amazing stability, as well as emotions.
The news background of the past day contained preliminary data on inflation in the eurozone, where they confirmed a slowdown from 1.4% to 1.2%, and there was no market reaction, although this statistical data would have been enough to reduce the euro, but it wasn't there.
The most important event of the day, week as well as in recent years, was an emergency meeting of the Federal Reserve System [FRS], where they unscheduled reduced the rate by 0.5% for the first time since 2008. In connection to this, Fed Chairman Jerome Powell, referring to the situation with the coronavirus and the possible consequences for the country's economy, as well as the global economy, decided to act.
"The spread of coronavirus has created new problems and risks. The outbreak undermines economic activity. The virus and the measures taken to contain it will for some time affect economic activity in the United States and abroad. We are beginning to see the implications for the travel industry and hear concerns from industries that rely on global supply chains. However, the scale and continuing impact on the economy remain very uncertain, and the situation remains volatile." Jerome Powell said.
On the other hand, the US President Donald Trump, immediately inspired by the success of his influences, responded quickly to the actions of the Fed, urging him to cut the rate even more in order to compete with other countries.
"The Federal Reserve is cutting the rate, but it should continue to weaken and, most importantly, be consistent with other competing countries ..." Donald Trump tweeted.
In fact, such drastic actions on the part of the Federal Reserve will be reflected in the chain of consequences for the rest of the Central Banks, which will be forced to switch to the side of lowering their rates, and the most interesting will be in Europe, where everything is already on the edge, and with this step, the rates can go into the negative zone.
The most interesting moment in this trading show was that it was as if they knew about the decline much earlier than all the facts, so we saw such a persistent upward move, where there was a jump of only 87 points upon the announcement of the verdict, although it could move further so that we wouldn't notice the stops.
Today, in terms of the economic calendar, we have an ADP report on the level of employment in the United States, which expects a decrease in the number of people employed in the non-agricultural sector from 291 thousand to 170 thousand. In any case, the background of the Fed remains on the market.
Further development
Analyzing the current trading chart, we see a characteristic wariness, which is explained by such a strong information background and the uncertainty of the ECB at the upcoming meeting on March 12. The oscillation within the level of 1.1180 is preserved, where, in principle, the correction has matured for a long time, but the pressure does not allow the transition to this phase. Therefore, we see chatter with a rollback, where the expansion of the range to the frames 1.1140 / 1.1230 is not excluded.
In terms of emotional mood, we see not just FOMO (loss profit) syndrome, but also fear of consequences, where the market can do anything.
Detailing the available time interval, we see a pullback, where rising candles reappeared with the arrival of the Europeans.
In turn, traders are in no hurry to act, as jumps are possible. However, a local exit from the conditional boundaries of 1.1140 / 1.1230 is necessary.
It is likely to assume that the first development is a temporary concentration at the borders of 1.1140 / 1.1230, after which work is carried out on the impulse emerging from them. As you understand, the positions are local, there can be no others now, since there is a strong background.
Based on the above information, we derive trading recommendations:
- Buy positions are considered in case of fixing higher than 1.1230 and going above the peak on December 31 [1.1240]. The prospect towards 1.1280-1.1300.
- Sell positions are considered in case of price fixing below 1.1140, with a move in the direction of 1.1100-1.1080.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators of technical instruments invariably retain upward interest against the background of the general dynamics of the market.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation calculated for Month / Quarter / Year.
(March 4 was built taking into account the time of publication of the article)
The current time volatility is 41 points, which is a high indicator for the start of the European session. It is likely to assume that the background will continue to put pressure on speculators, which will lead to further acceleration of volatility.
Key levels
Resistance Zones: 1.1180; 1.1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100
Support Areas: 1.1080 **; 1.1000 ***; 1.0950 **; 1.0850 **; 1.0775 *; 1.0700; 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
