From the point of view of complex analysis, we see that the upward course set on April 24 managed to locally overcome April 15's high, but failed to hold within it, so a downward impulse occured, which returned the quote to the same price level that it began.
The high activity was countered by the psychological level of 1.1000, which has a strong concentration of trading forces.
Now, trading is inclined towards a downward move, and sellers are active in the market, as suggested by the extreme fluctuations observed in the trading chart.
Quotes are again below the level of 1.0850, literally the same as before activity occurred.
Volatility rose by 16%, and the data on daily activity suggests that the volatility measure is gradually normalizing, and what was typical in mid-March is now considered as over-active.
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; Friday - 101 points; Monday - 49 points; Tuesday - 79 points; Wednesday - 68 points; Thursday - 139 points; Friday - 83 points; Monday - 79 points; Tuesday - 100 points. The average daily indicator, relative to the dynamics of volatility, is 86 points [see table of volatility at the end of the article].
Despite the high activity, bearish mood remains in the daily chart.
Weak macroeconomic data published yesterday indicated a decrease on producer prices in the eurozone. According to the report, the drop in the index accelerated from -1.4% to -2.8%. Data on business activity in the US also recorded a decrease from 39.8 to 26.7, with the composite index completely falling from 40.9 to 27.0.
Such data strengthened the position of the US dollar.
Meanwhile, the German court ruled that the quantitative easing program of the ECB partially violates the laws of the European Union, which prohibits direct financing of public debts.
Thus, the ECB has three months to prove the proportionality of the program to the court, else, the central bank of Germany will not participate in it.
"The Bundesbank is prohibited from participating in the ECB program over the transition period of 3 months, which was required by the Eurosystem for approval and consideration, unless the ECB proves that the monetary and political goals associated with the program are proportional to the economic and fiscal consequences associated with them, "the court decision stated.
Such decision pulled the euro down.
The report published today on Europe's business activity in the services sector revealed a decrease in the index from 26.4 to 12.0, with the composite index falling from 29.7 to 13.6. Retail sales data, which dropped -11.2% in March, had the strongest influence on the euro.
Market reaction was not surprising, thus, the demand for the euro continued to decline.
This afternoon, ADP will publish its US employment report for April, where, according to forecasts, expect a decrease in figure from 27,000,000 to 20,050,000. Final data will be published by the US Department of Labor on Friday.
Further development
Slowdown of local consolidation in the region of 1.0832 / 1.0845 led to the accumulation of trading forces and acceleration, which caused the quotes to resume the downward course, in the direction of the point of interaction of the trading forces.
The theory of downward development is now the main strategy for the medium-term move, but local positions are still relevant in the form of short-term trading.
Downward move will resume to the level of 1.0775, which was already broken previously, so strongest support will be in the area of 1.0700 / 1.0730. The key value is March 23's low - 1.0636.
Based on the above information, we derived these trading ideas:
- Traders already hold sales positions in the direction of 1.0775, so consolidation is expected below the pivot point, around 1.0700 / 1.0730
- Buy positions in the event of a rebound from the values of 1.0775; 1.0700 / 1.0730.
Indicator analysis
The intense downward move generated a single sell signal relative to all time frames.
Volatility per week / Measurement of volatility: Month; Quarter year
The volatility measurement reflects the average daily fluctuation calculated per Month / Quarter / Year.
(May 6 was built, taking into account the time of publication of the article)
Current volatility is 54 points, which is not bad, but still 37% lower than the average daily indicator. Average value will be reached at a break of 1.0775 down.
Key levels
Resistance zones: 1.0850 **; 1.0885 *; 1,1000 ***; 1.1080 **; 1,1180; 1.1300; 1.1440; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support Areas: 1.0775 *; 1.0650 (1.0636); 1,0500 ***; 1.0350 **; 1,0000 ***.
* Periodic level
** Range Level
*** Psychological level
