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For the first time in a long time, the euro/dollar currency pair showed reduced volatility of 40 points, as a result of having a touch of the periodic level. From technical analysis, we see that the quote has reached the framework of the periodic coordinate of 1.1180, which has long played the role of a mirror level. As a result, we saw a characteristic slowdown followed by a pullback. Whether the current level will be able to keep persistent buyers, only time will tell, but the market overbought has almost reached the limit due to a stable inertial course. The reason for such a confident upward move lies in several factors, but an integral contribution was made in the form of the emotional mood of market participants.
Looking at the hourly last day, we see that the movement was mostly horizontal and only in the period of 10:00 – 11:00 hours (time on the trading terminal), there was a local upward momentum, just touching the periodic level of 1.1179.
As discussed in the previous review, speculators recorded profits in the area of 1.1160/1.1180 from previously opened long positions. After that, there was a waiting period with the analysis of the framework of 1.1145/1.1180, where they expected not just a puncture, but a price fixation, preferably with the support of an inertial move. This development never happened, no deals were opened.
Looking at the trading chart in general terms (daily period), you are faced with an ambiguous judgment. The main downward trend has existed for as long as 1.5 years, and the current movement exists a little less than a month, so why many people already managed to reverse the trend from downward to upward? In percentage terms, we have a change of only 18%, and this is still within the oblong correction. Thus, the fuss divorced on this issue once again confirms that the existing forms in the form of an inertial move are built more on the emotions of market participants.
The news background of the day did not include statistics on Europe and the United States.
The information background, on the contrary, was full of headlines about the Brexit process. So, another attempt by the Prime Minister of Great Britain, Boris Johnson, to stretch the agreement previously agreed with the European Union through the parliament (UK) failed. UK deputies simply refused to vote on Monday, citing a law prohibiting the government from asking again to vote on the same initiative.
In turn, the Ministers of Scotland and Wales, Nicola Sturgeon and Mark Drakeford, addressed the head of the European Council Donald Tusk with a letter asking him to provide an extension of Brexit.
"We would like to support this request for an extension so that there would be no risk of Britain leaving the EU without an agreement ratified by both the EU and the UK. Our common view is that the result of the Westminster process should be a referendum on EU membership. But in any case, there must be enough time for proper study of the bill on withdrawal from the EU," the text of the open letter of the two leaders says.
The information background does not end there, and so, from Europe, in particular, Germany, a comment has been received regarding a possible rim. The head of the German Federal Republic of Germany, Heiko Maas, said: "Naturally, the position of the German and EU governments has always been that we do not want a disordered Brexit without a deal. We want this to be an orderly process. I hope that the lower house of parliament will decide with necessary responsibility on this issue and that based on this decision we will have the opportunity to implement the scenario of an orderly Brexit."
The Brexit relay race is completed by European Commission President Jean-Claude Juncker, who is no longer so optimistic about what is happening on the new agreement.
"Today I am speaking to you for the 105th time and in many of these debates, I had to discuss Britain's exit from the European Union. I am very disappointed that I had to spend so much time on my Brexit mandate, while I fought to do the best for EU citizens. A waste of time and a waste of energy," said Jean-Claude Juncker, speaking at an EP meeting in Strasbourg.
Today, in terms of the economic calendar, we have only data on sales in the secondary housing market in the United States, where a decrease of -0.7% is expected in September. At the same time, the process of (trying) the approval of Brexit in Britain is actively ongoing, and the parliament has only three days to approve, where there will be repeated voting and reading.
Further development
Analyzing the current trading chart, we see how the quote hovered within the lower boundary of the previously designated framework of 1.1145/1.1180, showing, to put it mildly, low volatility. We see an attempt by sellers to form a consistent correction, but so far there are not many who want to join short positions.
Detailing the hourly available day, we see that during the Pacific and Asian trading sessions, there was a narrow consolidation, but with the arrival of the European trading session, a local downward movement was formed (09:00 – 11:00 time on the trading terminal).
In turn, speculators are hoping for a short-term downward move in terms of recovery, where short positions were considered around the mark of 1.1145. Due to safety net, speculators have an alternative position that liquidates the first one, in case the inertial upward move resumes and the price fixes above the level of 1.1180.
It is likely to assume that the swing within the current coordinates is still possible, wherein the case of holding the local downward interest, a descent towards 1.1120 – 1.1080 can occur. At the same time, while maintaining the hype mood of market participants, the primary oscillation (1.1145/1.1180 (+/-10 points)) may persist until the moment of standing information background.
Based on the above information, we derive trading recommendations:
Indicator analysis
Analyzing different sectors of timeframes (TF), we see that the indicators maintain an upward mood on the general background of market emotions. At the same time, short-term intervals signal variable interest due to the existing accumulation process.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 22 was built taking into account the time of publication of the article)
The volatility of the current time is 23 points, which is more low than average. It is likely to assume that as long as the price moves within the established framework of accumulation, it is not worth waiting for something drastic from volatility.
Key levels
Resistance zones: 1.1180*; 1.1300**; 1.1450; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100.
Support zones: 1.1100**; 1.1000***; 1.0900/1.0950**; 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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