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10.12.201901:01 Forex Analysis & Reviews: EUR/USD. December 9. Results of the day. China takes a cue from the US and says it is ready to make a deal

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4-hour timeframe

Exchange Rates 10.12.2019 analysis

Amplitude of the last 5 days (high-low): 87p - 27p - 49p - 31p - 70p.

Average volatility over the past 5 days: 53p (average).

The EUR/USD currency pair adjusted on Monday, December 9, to the critical Kijun-sen line from below, rebounded from it and can now resume moving down. The pair has already formed a death cross sell pattern, but it is weak, since the price is located above the Ichimoku cloud. There was extremely weak volatility of the euro/dollar pair today, since not a single macroeconomic report was planned for the day. Moreover, there will be several diverse macroeconomic events of the largest caliber this week that traders quite reasonably wait for such events. If you list them briefly, you get the following: ECB meeting, Federal Reserve meeting, report on US inflation, December 15, Donald Trump must decide on additional duties on Chinese imports, and elections to the UK Parliament will be held on December 12. Thus, almost every day this week, traders will be waiting for some important event that could potentially send the pair up or down by 60-80 points. However, there was nothing fundamentally interesting on Monday, therefore, trading was calm.

While traders calmly traded the pair in anticipation of interesting events this week, Beijing made an official statement saying that it intends to enter into a trade deal with the United States as soon as possible. It is reported that such a message from China has been associated with recent speculation that Trump may impose another $160 billion on Chinese imports on December 15. And although, in general opinion, the further escalation of the trade conflict is not beneficial for the US president himself, who has been facing impeachment for months, is under investigation in cases of abuse of office and unfair play in the election campaign, nevertheless the odious US leader goes all-in. Assistant Minister of Commerce of China Ren Hongbin said: "We want countries to move forward on the basis of equality and mutual respect, taking into account each other's interests and ultimately come to an agreement that satisfies both sides." In fact, this message from the assistant minister of Commerce causes both tears of laughter and sadness at the same time. It is surprisingly similar to statements by US President Trump when asked about progress in negotiations between the countries. Only Trump can say that the "negotiations are successful" despite the fact that no one is watching any progress. Only Trump can impose duties against China while declaring that the president of this country, Xi Jinping, is his friend and "in general a very smart guy." Only Trump can declare that he "wants to conclude an agreement with Beijing" and immediately pass two laws (Hong Kong law and Uyghur law), which are unambiguously regarded by China as interference in the country's domestic policy. It seems that now China is following the example of the United States and declares to the press that it "really wants a deal", but in practice it is not clear to anyone at what stage the negotiations are, whether the countries will make concessions, whether an agreement will be reached in the first phase before December 15. What actions will Trump take on December 15, what will happen next? This list of questions cannot be answered right now. It can only be noted that the import of goods from China to the United States decreased in November by 12.5% compared with the same month of 2018. US imports to China fell 23.3% in November. The total trade turnover between the countries lost 15.2%. Needless to say, the further escalation of the trade conflict will lead to an even greater drop in these numbers, which will pull other figures of the world economy.

As for the prospects for the EUR/USD currency pair, in our opinion, they remain the same, that is, extremely non-optimistic. We still do not see a reason as to why the European currency could be in high demand among traders. Corrections, during which the euro is growing, happen from time to time, but this is not a trend growth, but a correction. Already this week, we will be able to find out what actions the ECB is planning for the coming months, what kind of attitude Christine Lagarde has, who has already stated "the need for structural changes" and pointed to the weakness of the EU economy. By and large, the ECB meeting is the most important and significant event this week. There is nothing to expect from the Fed now. Recent macroeconomic reports from across the ocean should have reassured FOMC members if they were even a little nervous. Recent statements by Jerome Powell clearly indicate that the regulator is taking a break from the monetary easing cycle. Thus, all attention to the ECB meeting and the speech of Christine Lagarde. On the other hand, what positive things can euro buyers hear at the press conference?

Trading recommendations:

The EUR/USD pair has taken a big step towards a new downward trend. It is advised to wait until the Ichimoku cloud has been overcome before opening short positions. In this case, the death cross will intensify, and bears will be able to sell euro/dollar pair while aiming for 1,1007. It is recommended to resume purchases of the euro in case traders reverse consolidate above the critical line.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movement options:

Red and green arrows.

Paolo Greco
Analytical expert of InstaForex
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