05.12.201911:10 Forex Analysis & Reviews: Trader's Diary: EURUSD on 12/05/2019, Foundation and equipment

Foundations and Techniques are the yin and yang of the market. This is especially true for futures markets, which undoubtedly include the FOREX market. Furthermore, the technique is understood as the Technical Analysis of the market, and based on trade, the Foundation is the fundamental analysis of the market.

The foundation serves a more significant role for the stock market while the technique serves as subordinate to the foundation. But for futures markets, the information is deficient and the most important part of the information can be hidden from the ordinary trader, and as stated by the rule, we do not have the access to the position of the largest players. Traders of large banks know who and which countries and large businesses are buying or selling at the moment. But, again, rules state that this is classified information. Therefore, technology becomes the main weapon.

Furthermore, the technique and foundation work together at all times. When the market has realized the current condition of the foundation, the market is traded using an adequate foundation technique. For example, there are strong factors for rising or falling, and this is where the trend begins. When all the technicians see the trend they trade it and when at some point the market realizes that there is no longer any reason for directional movement, that's when the trend stops and technicians start to trade a range.

But it is not as simple as that, there are some complexities in this logic like the moments of trend breaking and the end of a range. Anyhow, in my opinion, we are in such a condition on EURUSD right now.

What's might be happening?

The foundation has changed and the softening of the ECB policy has reached the maximum point where the ECB will no longer soften the policy not even lower the rate further, nor to increase the QE program. This is simply unsafe.

On the other hand, the Fed is pressured by a slowdown in the US and Trump economies where there is a high probability of lowering the rate. This means that the foundation requires the growth of the euro. But traders are so accustomed to earning in the range according to the simple "buy from above sell from below" scheme that fundamentally justified attempts to increase the euro and stumble upon powerful speculative sales at important technical levels at 1.1100 and at 1.1180.

Thus, the situation is "technology against the foundation" which means old technology against the new foundation. And if I am right, the growth of a new foundation will break through the dam of obsolete equipment and this will result in a strong trend.

EURUSD: We hold purchases from 1.1035, stop 1.0990, sales from 1.0980