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By the end of the last trading week, the euro/dollar currency pair showed high volatility of 71 points, as a result of which the quote rushed to the limits of psychological value. From technical analysis, we see that the conditional horizontal movement remains in the market, where the quote was concentrated within the upper limit of 1.1080 (1.1115), but then the price returned to the psychological level of 1.1000 again, thus completing the trading week.
As discussed in the previous review, the recommendation in terms of work on the breakdown of the cluster of 1.1030/1.1080 worked by 100%, and traders managed to enter short positions, taking profits from the market, though not for long. Looking at the trading chart in general terms (daily period), we see that the quote is trying hard to restore the downward interest, but the fulcrum still holds in the area of 1.0927, and the conditional horizontal movement can still be held in the market. Thus, constant monitoring of the mark of 1.0927 is performed in order not to miss the main move and to understand the further movement of the quote.
Last Friday's news background didn't have statistics on Europe and the United States, but a kind of information background, as always, was present and supported the interest of speculators. So, the single currency has been burdened with ambiguity about the conflict in the Middle East, in particular, we are talking about possible full-scale sanctions on Iran, which may affect the EU oil companies operating in this country. The next factor follows from the beloved Brexit divorce proceedings, where, it seems, everyone comforts each other with pseudo-hopes, and the result is zero. So, the recent meeting of the British Minister for Brexit, Stephen Barkley, and the EU's chief negotiator Michel Barnier did not give any result. The only thing that was indicated was that the parties agreed to continue negotiations. In turn, European Commission President Jean-Claude Juncker said that Britain's exit from the EU without an agreement will lead to a hard border between Northern Ireland and Ireland. Juncker also added that he did not like the idea of a hard exit, as the consequences could be catastrophic. The consequences were probably about Britain since, at the end of last week, Jean-Claude Juncker once again indicated that the European Union was ready for any outcome and, for example, the Netherlands would only be happy with a deplorable development.
Today, in terms of the economic calendar, we have already seen a deplorable package of European PMI statistics. So, preliminary data say that the index of business activity in the manufacturing sector is reduced from 47.0 to 45.6 with a growth forecast of 47.3, and the index of business activity in the services sector fell from 53.5 to 52.0. Naturally, this kind of data dramatically affected the single currency, and, as a fact, almost a lightning decline. To find the synchronicity, take the German PMI data and match it to the trading chart, everything will fall into place. In the second half of the day, similar indicators will be released for the United States, where the index of business activity in the manufacturing sector should remain unchanged, but the index of business activity in the service sector will grow from 50.7 to 51.5. Actual statistics may support the US currency.
Further development
Analyzing the current trading chart, we see that after the morning rally, the market came back, and here the question arises whether the bulls will be able to drag us to the previously passed level of 1.1000 or stagnation will come much earlier. Speculators, in turn, have already made money on the recent jump, where the tactic was known last week: the flight below the level of 1.1000, a priori gives a signal to sell.
It is likely to assume that the rollback phase will temporarily lead to a slight accumulation in the form of fluctuations of 20-30 points. After that, it is necessary to closely monitor the behavior of the quotes, as fixing the price relative to the values of 1.0966/1.1000 will make it clear about further intentions in terms of movement.
Based on the above information, we will derive trading recommendations:
Technical analysis
Analyzing different sector timeframes (TF), we see that the indicators on intraday and medium-term periods tend to decline against the backdrop of recovery quotes. The short-term perspective works on the rollback phase, a variable indicator.
Volatility per week / Measurement of volatility: Month; Quarter; Year.
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 23 was built taking into account the time of publication of the article)
The volatility of the current time is 59 points, which is almost equal to the daily average. If the inertial course continues and there is no slowdown, as mentioned above, then theoretically volatility may still grow.
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 zones: 1.0926*; 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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