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Over the past trading day, the EUR / USD currency pair showed volatility close to the average daily point of 59 points. As a result, we received a small pullback. From the point of view of technical analysis, we see an attempt to return quotes above the range level of 1.0900 / 1.0950. If we analyze the previous day in detail, we see that the main upward trend came at 9: 00-17: 00 [UTC+00 time at the trading terminal], after which a stop occurred in the range of 1.0965, expressed in a consolidation fluctuation, although this one was already during the time of the Pacific and Asian trading session.
As discussed in the previous review, traders have been working downward since the beginning of the week and, in principle, were ready, having both stop loss and restrictive orders, as well as balancing profit management.
Considering the trading chart in general terms [the daily period], we see not just a steady downward movement, but a full-fledged global trend, which has already managed to lower the single currency by more than 1600 points. Do you think this is the limit? - I doubt it.
The news background of the previous day contained an ADP report on the level of employment in the United States private sector, where, in principle, they expected a decrease in employment, and they got a more interesting picture. Thus, the previous indicators were revised for the worse 195K -> 157K, and the current ones came out even worse than the forecast 135K. Now, it becomes clear the reason for the weakening US dollar.
In terms of informational background, we have already discussed that the British Prime Minister Boris Johnson prepared proposals for Brexit and spoke with the EU leaders. Due to this, the first response came from the head of the European Commission, Jean-Claude Juncker, who believes that London's proposals on the [backstop] regime and customs regulations have flaws that should be addressed. Juncker also noted that there will be meetings of negotiating groups in the coming days in Brussels, where the EC head will also communicate with Irish Prime Minister Leo Varadkar to hear his opinion.
In turn, German Chancellor Angela Merkel, during a press conference after the completion of the German-Dutch intergovernmental consultation, said that Germany and the Netherlands are ready for a tough Brexit.
"We discussed the UK's exit from the EU, stated that we would still like this to be a coordinated decision, an organized UK exit, but both countries are prepared for this not to happen. In this case, we are also prepared, "said the German Chancellor.
Today, in terms of the economic calendar, we have a package of statistics for Europe. Thus, at 9:00 London time. the index of business activity in the service sector will be released, where it is expected to decline 53.5 to 52.0. At 12:00, data on EU retail sales are published, where they again expect a decrease from 2.2% to 1.9%. From which, a single currency locally may be under pressure. In the afternoon, statistics on the United States will be published. So, according to preliminary forecasts, the index of business activity in the services sector may grow from 50.7 to 50.9, and the data on production orders may decrease by 0.2%. In turn, the number of repeated applications for unemployment benefits can be reduced by 5K, and primary applications can grow by 2K. As we can see, the United States has fairly diverse data, and it is not a fact that the US dollar will grow on them.
Once again, I remind you that the report of the United States Department of Labor will be published tomorrow, which may put pressure on the US dollar.
Further development
Analyzing the current trading chart, we see that the stagnation within 1.0955 / 1.0965 did not last very long, but in the end, traders got a pretty attractive entry point in the form of a local decline. In turn, speculators, working with alternative trading positions, managed to ride on the existing surge using a simple but working technique: Identify consolidation, one or another move, followed by work on the breakdown of periodic boundaries.
It is likely to assume that if the quotation manages to overcome the peak of stagnation (October 1-2), then the downward movement may still be locally maintained towards 1.0925. Whether there will be a further move is still unknown, since there are prerequisites for the formation of a periodic amplitude of 1.0925 / 1.0965.
Based on the above information, we derive trading recommendations:
- We consider buying positions in case of price fixing higher than 1.0965.
- If we do not have selling positions, it is better to wait for a fixation lower than 1.0925.
Indicator analysis
Analyzing a different sector of timeframes (TFs), we see that indicators show versatile interest. Thus, a short-term period signals sales due to a local surge. An intraday perspective signals purchases due to an upward move, while the medium-term outlook invariably reflects the overall market interest.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 3 was built taking into account the time of publication of the article)
The volatility of the current time is 24 points, which is the average for this time section. It is likely to assume that the volatility of the day will be locally limited by the previously indicated frames.
Key levels
Resistance zones: 1,1000 ***; 1,1100 **; 1,1180 *; 1.1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support areas: 1.0900 / 1.0950 **; 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
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