From the point of view of complex analysis, we see high speculative interest, during which we managed to reach the predicted level, and now let's talk about the details. So the triumphal moment came up, the quote updated the local minimum on April 6, which means that the area of interaction of trade forces, represented by the level of 1.0775, is no longer considered impossible. This took us almost one and a half weeks and two levels of 1.1000 and 1.0850, relative to which the downward positions were strengthened.
In terms of the theory of sequential compression, there is an undeniable confirmation of the instability of the entire model. The confirmation signal was the breakdown of the minimum support of the previous cycle [April 6, 1.0768], which is regarded as the prevailing downward interest and the possible completion of the model of sequential compression of the amplitude.
Based on the above information, it can be assumed that the collapse of the model can give the market a local acceleration, and most importantly – a targeted movement, during which it will be possible to go down to the main support point of 1.0636, which is how this model began to form.
As you already understood, the theory of compression flows into the theory of recovery relative to the main trend. In case of coincidence of the existing assumption, we will have the basis for reflection, but more on that in subsequent reviews.
Looking at the past trading day in detail, a high activity can be noticed, during which the quote managed to update a minimum of 1.0768 -> 1.0756 at the beginning of the European session, and then form a local rebound already at the start of the European session, but the downward interest did not disappear and the quote returned to the base point.
In terms of volatility, we have activity equal to the average daily dynamics, and this is very good in terms of improving the emotional mood of market participants. Regarding the volatility of the past two weeks, stabilization and a gradual equalization of indicators can be noted.
Details of volatility: Monday - 155 points; Tuesday - 183 points; Wednesday - 115 points; Thursday - 278 points; Friday - 166 points; Monday - 151 points; Tuesday - 234 points; Wednesday - 243 points; Thursday - 326 points; Friday - 194 points; Monday - 191 points; Tuesday - 160 points; Wednesday - 133 points; Thursday - 188 points; Friday - 194 points; Monday - 134 points; Tuesday - 127 points; Wednesday - 136 points; Thursday - 147 points; Friday - 91 points; Monday - 67 points; Tuesday - 142 points; Wednesday - 72 points; Thursday - 110 points; Friday - 33 points; Monday - 74 points; Tuesday - 84 points; Wednesday - 134 points; Thursday - 95 points; Friday - 80 pips; Monday - 55 points; Tuesday - 64 points; Wednesday - 82 points; Thursday - 90 points ;. Daily average
As discussed in the previous review, traders took the remainder of the profit from our recommendation on April 22, where it came to the steps: 1.0840 ---> 1.0815 and 1.0810 ---> 1.0775. The subsequent movement, which we considered, was to comply with the conditions of consolidating the price lower than 1.0750. However, it did not happen on April 23.
Considering the trading chart in general terms, we see signs of the restoration of the main downward trend in the daily period, where about 120 points remain to the base point. Let me remind you that the level of 1.0636 reflects the area of the spring of 2017.
The news background of the past day contained preliminary data on the index of business activity in Europe, where the service sector recorded a decrease from 26.4 to 11.7 with a forecast of 23.8, while the industrial indicator fell from 44.5 to 33.6 with a forecast 39.2. Markit's Composite Business Activity Index (PMI) is down from 29.7 to 13.5. It is worth recalling that the available data are already in April, so the recession of the European economy has no borders.
The reaction of the market to statistical indicators from Europe certainly did not favor the single currency.
In the afternoon, they published a similar PMI, but for the United States, where a decline from 39.8 to 27.0 was recorded in the service sector, and a decline from 48.5 to 36.9 in the manufacturing sector. What could be worse? Applications for unemployment benefits. So, the number of initial applications was 4 427 000, and the number of repeated applications was 15 976 000, that is, we continue to set anti-records.
The reaction of the market to statistical indicators from the United States this time won back, during which the US dollar locally lost ground.
In terms of the general informational background, we see that the economy feels all the colors of containment measures while the COVID-19 virus continues to rage in the world. So, the head of the European Central Bank, Christine Lagarde, during a video conference with 27 leaders of the EU countries, said that the recession of the eurozone economy could reach up to 15% in 2020 due to the coronavirus pandemic in the worst-case scenario.
At the same time, the EU summit confirmed the need to create a Fund for economic recovery of the European Union after the pandemic, but postponed decisions on its volume and sources of funding.
"EU leaders agreed on the need to create a recovery fund after the coronavirus pandemic and authorized the European Commission to assess needs, propose a new budget and ways to finance it," the commentary says.
I'll clarify that the European Commission has been given until May 6 to prepare practical proposals, after which a new summit will be held.
Today, in terms of the economic calendar, we have data on the volume of orders for durable goods in the United States for March, where an impressive decline of -11.9% is expected.
The upcoming trading week in terms of the economic calendar has an impressive package of statistics, but at the same time, two meetings of the Fed and the ECB are planned at once, thus it will definitely not be boring.
The most interesting events displayed below --->
Tuesday, April 28
USA 13:00 Universal time - Composite housing price index S & P / CS Composite-20 seasonally adjusted (YoY) (Feb)
Wednesday, April 29
USA 12:30 Universal time - data on GDP (Q1) PRELIMINARY
USA 18:00 Universal time - Fed meeting
USA 18:30 Universal time - Fed press conference
Thursday, April 30
EU 9:00 Universal time - GDP data (Q1) PRELIMINARY
EU 9:00 Universal time - unemployment rate (Mar)
EU 9:00 Universal time - inflation data (April) PRELIMINARY
EU 11:45 Universal time - ECB meeting
USA 12:30 Universal time - Applications for unemployment benefits
Friday 1st May
Germany / France / Italy / Spain / Switzerland - day off "Labor Day"
USA 14:00 Universal time - Manufacturing PMI from ISM
Further development
Analyzing the current trading chart, we see the resumption of the downward trend after a slight slowdown in the region of the level of 1.0775. In fact, there is a gradual confirmation of previously voiced theory, where the level of 1.0775 is no longer considered the main one, and its breakdown is displayed in the form of local acceleration.
So, while maintaining the set mood and as a fact of executing the compression model, we expect the price to descend to the values of 1.0700–1.0636, where the move will have a step-by-step character.
Analyzing the time interval every minute, you can see that a round of short positions arose at the start of the European session, which led to the price declining to 1.0727.
In terms of the emotional component of the market, we see the content is being conducted not only by speculative positions, but also by conservative ones, which is a good signal.
It can be assumed that that if the set mood persists, we will get the implementation of the previously set recommendations for downward development, but it is worth considering that while we are talking about a step-by-step process, that is, we should not wait for a one-time decline.
Based on the above information, we derive trading recommendations:
Positions for sale are already considered by traders from the value of 1.0750, with the first prospect in the form of a step of 1.0700. The next move is considered after the passage of the first stage towards the area 1.0636/1.0665.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the indicators of technical instruments maintain a unanimous signal about the sale due to the general background.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Volatility measurement reflects the average daily fluctuation calculated for the Month / Quarter / Year.
(April 24 was built taking into account the time of publication of the article)
The current time volatility is 57 points, which is 37% lower than the average daily indicator, but the dynamics continues to increase. It can be assumed that with the current mood, we can easily increase our activity even more closely, bringing us closer to the daily average.
Key levels
Resistance Zones: 1.0775 *; 1.0850 **; 1.1000 ***; 1.1080 **; 1.1180; 1.1300; 1.1440; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100
Support Areas: 1.0650 (1.0636); 1.0500 ***; 1.0350 **; 1.0000 ***.
* Periodic level
** Range Level
*** Psychological level
