4-hour timeframe
Technical details:
Higher linear regression channel: direction - sideways.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: 46.6017
The last few trading days for the EUR/USD pair have been quite chaotic. The day before yesterday, the pair's quotes quite sharply and unexpectedly fell by 100 points in just two hours. Many people thought that the long-awaited downward movement had begun, at least inside the side channel of $1.17-$1.19, in which the price has been trading for more than three months. However, the next day the pair began a new round of upward movement and eventually remained near the upper line of the side channel – 1.1900. Thus, the situation is now ambiguous. On the one hand, the bulls still do not have enough strength to overcome the level of 1.1900 and start forming a new upward trend, on the other hand, they do not let go of the pair and do not allow the bears to start their round of downward movement. There is no point in talking about the fundamental background now. There is no single really important and high-profile topic that has an impact on the movement of the pair. The euro/dollar has been standing in one place in the long term for more than three months, and now the pair have decided to stand in one place in the short term. Traders now have exactly the background at their disposal, which has a very indirect influence on the course of trading.
It's done! In America, Donald Trump very generously decided to start the process of transferring power to the victorious Joe Biden. Of course, the owner of the Oval Office decided to start the process of transferring power not because he recognized Biden as the winner. Trump still calls the entire election process and vote counting rigged, but at the same time, he decided to start transferring power to a Democrat "in the interests of the country". Trump also said that the head of the department that is responsible for ensuring the transfer of power, Emily Murphy, was molested and threatened by unknown people. Thus, Trump seems to be forced to start this sad process for himself. The current US President also said that he will continue to fight for his victory in the courts. "What does the GSA (General Services Administration) permit for preliminary work with Democrats have to do with the continuation of our various legal proceedings?", asked Trump. It becomes clear that the current President is not going to give up, however, his attempts to review the election results already look like convulsions. 95% of the courts rejected the claims of the Trump team. It is unlikely that anything will change in the near future.
The Americans turned out to be very cheerful people. According to the latest opinion polls, 47% of Americans supported the possibility of nominating Donald Trump for President in 2024. However, the survey involved the opinions of only 2,000 Americans, most of whom are supporters of the Republican party, however, a certain trend can be traced. Do the Americans who removed Trump from the presidency want him to run in 2024? Custom-made opinion poll? False information?
Back to the economy. Recently, the markets cheered up when it became known about the creation of several vaccines at once, the effectiveness of which is 90% or more. However, more prudent people immediately felt that in the near future this will not help against the fight against the epidemic. First, some vaccines have not yet passed all the necessary tests and have not received permission from the relevant services for mass use among the population. Second, some vaccines have very specific requirements for transport and storage. Third, it will take at least a year to vaccinate most of the world's population, and this is a too optimistic scenario. Fourth, if 10-15% of the population is vaccinated, it will not make any sense in the context of an entire country. To defeat the pandemic, 70% of people must get sick, then a collective immunity will be formed, or 70% of the population will be vaccinated. Fifth, it will take a huge amount of time to produce the necessary doses of the vaccine for at least the majority of the world's population. Sixth, not all countries and people can afford to buy a vaccine. The world is full of poor countries, people who live below the poverty line. In developed countries, they may receive state assistance, but not all developed countries. Seventh, in any case, the economy will recover for many years to come.
The heads of the world's leading central banks share a similar opinion. Christine Lagarde, for example, said that news about the creation of a vaccine does not yet affect the monetary policy of the ECB. The regulator plans to increase the quantitative easing program in December and calls on the European Commission to resolve all issues related to the EU budget for 2021-2027 and the pandemic recovery fund as soon as possible. Lagarde also shows serious concerns about the contraction of the European economy due to the second "wave" of COVID-2019 and the second "lockdown". The head of the ECB notes that the first half of 2021 will be very difficult, and the exit to pre-pandemic levels will not take place until 2022. Thus, the next year for humanity and the economy is almost guaranteed to be no less difficult than 2020. A similar opinion is held by the head of the Fed, Jerome Powell. He also calls on Congress to help the economy as quickly as possible and allocate additional funds to support businesses and all unemployed Americans. Recall that the next package of stimulus measures has not been agreed upon by Democrats and Republicans. And when the election started, the issue was sealed and put on hold until better times. Many experts believe that it will not be possible to agree and adopt it before Joe Biden takes up his new position. Thus, it is still too early for markets to relax.
As for the confrontation between the euro and the dollar, the contraction of the EU and US economies in the fourth quarter will be of great importance now. More precisely, the reduction/growth figures in the fourth quarter. Recall that in the EU, "lockdown" is introduced, which means the economy will suffer in any case. But in America, there is no strict quarantine, so its economy can continue to recover. Therefore, the figures for the fourth quarter may differ very much and the US economy may have an advantage. Therefore, the dollar may start to rise in price in the coming months. So far, this is a hypothesis, and the price continues to trade inside various side channels. So in any case, you need to wait for confirmation of this hypothesis by technical signals.
The volatility of the euro/dollar currency pair as of November 25 is 58 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1812 and 1.1928. A reversal of the Heiken Ashi indicator down may signal a new round of downward movement within the side channel of $1.17-$1.19.
Nearest support levels:
S1 – 1.1841
S2 – 1.1780
S3 – 1.1719
Nearest resistance levels:
R1 – 1.1902
R2 – 1.1963
R3 – 1.2024
Trading recommendations:
The EUR/USD pair continues to be located just above the moving average line. Thus, today it is recommended to consider long positions with targets of 1.1902 and 1.1928 before the Heiken Ashi indicator turns down. The goals are very close. It is recommended to consider sell orders if the pair is fixed below the moving average with the first targets of 1.1812 and 1.1780.
