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Over the last trading day, the euro/dollar currency pair showed high volatility of 93 points, as a result of having an impulse descent to the previously passed psychological level. From technical analysis, we have an intensive descent, after the quote felt a periodic ceiling in the area of 1.1100/1.1115. The candles in the period 09:00-15:00 London time are more noteworthy; in fact, they determined the movement of the past day, but we will analyze the reason a little later.
As discussed in the previous review, speculators are infinitely happy with such high volatility, which has been held for more than one day. There was a lot of work. Just look at last Thursday, where we managed to earn both on the reduction and the increase. Friday was already a kind of residual background, where trades gradually went down and everyone was preparing for new steps in the form of a quote recovery. Monday of the new week had a clear platform slowdown 1.1067 / 1.1085, where the work was carried out relative to the boundaries, and I will say that the work was not bad, the momentum is again in the trader's pocket, I hope you managed to catch the jump. Considering the trading chart in general terms (day period), we see that if we conditionally close our eyes to the cross on Thursday (September 12), the correction phase displays the behavior of the quote. The recovery process is in some way present and there is 50% development, due to yesterday's descent, but after all, the market participants are still wary.
The news background of the last day did not have significant statistics, thus all the attention of traders was focused on the information background. So what was in this raging flood of information? – As always, the Brexit theme was procrastinated. This time, we had the first official meeting of European Commission President Jean-Claude Juncker and British Prime Minister Boris Johnson. The party held constructive negotiations with the desire to intensify the discussions of the negotiators daily, but was there anything concrete in terms of resolving the Brexit issue? As always, none. British Prime Minister Boris Johnson once again outlined his position in the plan to withdraw the country from the European Union on October 31, indirectly rejecting all possible delays. The head of the EC Jean-Claude Juncker sees no progress in terms of alternatives to the "backstop", the UK wants the paragraph to be corrected but does not offer constructive proposals. The European Commission, in turn, stressed its readiness to work 24/7, if necessary.
The lack of any progress in the divorce process puts pressure on the single currency, which is reflected in the local descent. An important role in the form of pressure was exerted by a wide discussion of the recent attack on oil companies in Saudi Arabia, where Iran is found guilty and, as a fact, possible sanctions on the oil industry, which Europeans are engaged in this country.
Today, in terms of the economic calendar, we have data on industrial production in the United States, where it is expected to slow from 0.5% to 0.2%. Statistics may put pressure on the US dollar, but there is still another pressure from the upcoming meeting of the Federal Committee on Open Market Operations, which is waiting for a decision on the refinancing rate.
Further development
Analyzing the current trading chart, we see that the psychological level of 1.1000 plays the role of support again, slowing down the quote and as a fact trying to rebound from it. Do not forget about such a fact as local overheating, which yesterday we saw in its full glory. Speculators, in turn, are trying to work on a rebound from the level (1.1000), but have not yet considered any drastic changes.
It is likely to assume that the current movement will slow down over time, stopping the quote and driving it into the accumulation phase, reflecting a waiting process in the run-up to the FOMC meeting. There is, of course, another denouement, this so-called emission in the media, regarding the Fed rate, and indeed monetary policy actions. In this case, you should occasionally look through the news flow, for example, Bloomberg, to be ready for anything.
Based on the above information we derive trading recommendations:
Technical analysis
Analyzing different sectors of timeframes (TF), we see that the indicators are generally aimed at a decrease, only minute intervals work for a rebound. When working with indicators, it's worth taking into account such a moment that high volatility has been rampant in the market for the past few days, a strong background pushes the quotation up and down, thereby there is a multi directionality in terms of indicators that you need to be able to filter in some way.
Volatility per week/Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month/Quarter/Year.
(September 17 was built taking into account the time of publication of the article)
The volatility of the current time is 37 points. It is likely to assume that if there is a slowdown, as we wrote above, the volatility will remain at the current level, with an error of +5/10 points, but if the background can put pressure on the quote, the picture may turn completely different.
Key levels
Resistance zones: 1.100**; 1.1180*; 1.1300**; 1.1450; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100
Support zones: 1.1100**;1.1000***; 1.0850**; 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
*** Psychological level
**** The article is based on the principle of conducting transactions, with daily adjustments.
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