Greetings, dear colleagues!
Let's try to forecast the prospects for closing the week and sum up some interim results. However, to begin with, I would like to note that yesterday's business activity indices in the manufacturing and services sectors in both the Eurozone and the US exceeded the expectations of economists and came out in the green zone. Today, there are very few events that can affect the price dynamics of the main currency pair on the Forex market. Except for the ECB's monetary policy report, which will be published at 12:30 London time. In this regard, the EUR/USD pair is likely to be affected by technical factors, as well as news and (or) comments related to the already sore topic of COVID-19.
As can be seen from the daily chart, at the end of the current five-day period, the euro/dollar pair is ready to make a correction to its previous growth. This possibility is indicated by yesterday's candle, which can be characterized as a "shooting star" model.
Euro bulls failed to close three consecutive daily sessions above the 89 exponential moving average (black), which calls into question the validity of the breakdown of this exponent. Also yesterday, the iconic technical and psychological level of 1.1000 was tested for a breakdown, but the players failed to raise the quote above 1.1008. Today will be extremely important. The minimum task for EUR/USD bulls will be to keep the price within the cloud of the Ichimoku indicator and not let it fall out of it down. The ideal option would be to close today and the entire week above 1.1000, but the task is extremely difficult, especially in the absence of a serious driver for growth.
Bears need to build on yesterday's success and start playing back the "shooting star" reversal model of candle analysis. If they succeed, the quote may fall to the area of 1.0895-1.0875, where the broken resistance level, the Tenkan line, 50 simple moving average, and Kijun. In my opinion, the pair can find good support in the selected area and turn back to the north. If this does not happen, the upward momentum can be considered completed and adjusted for further downward dynamics of the main currency pair.
I believe that passing and fixing above 1.1000 will be a kind of moment of truth. Many believe that the US dollar maintains a leading position in the foreign exchange market in the context of the COVID-19 pandemic. Moreover, the "American" is in demand both as the main reserve currency of the world and as a safe-haven currency. I will write more about this in an article that will be published on Monday.
We see that after the price seems to have fixed above the gray resistance line of 1.1146-1.11017, the pair returns under this line. This is a negative signal for players to increase, because if three consecutive candles are fixed under the line, its breakdown will have to be recognized as false and sales will be considered on the rollback to the grayline. However, it is not a fact that this will become clear today, and entering the market shortly before it closes is not the best trading idea.
However, for those who want to trade today, we will consider both options. I can recommend risky and aggressive purchases from the current price of 1.0925. It is less risky to buy a pair after a short-term decline in the price zone of 1.0895-1.0880. However, this position is relevant only if the euro/dollar is not fixed under another very important level of 1.0900.
Regarding sales, I have already noted their possibility on a pullback to the gray resistance line, if the pair is fixed under it. You should think about opening positions at more attractive prices after rising to the price area of 1.0990-1.1015, but only if there is a reversal bearish candle or a model consisting of several candles.
In conclusion, I would like to remind you that today is the end of the week, so I do not recommend setting big goals and moving positions to Monday. This is a risky undertaking.
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