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From a complex analysis, we see a rapid downward move, where the quote once again came to the area of the psychological level of 1.1000. Now, about the details. The move set at the beginning of the week managed to develop a full-fledged step, from the first (1.1080) recovery stage to the second (1.1000). In fact, this is the second attempt since the beginning of the year to overcome the ill-fated area of the psychological level, but the pressure is still high, and the quote stops at the same values as on January 29. The regularity, in this case, plays a significant role if we analyze the dynamics of fluctuations relative to the coordinate of 1.1000 over the past five months. If we refer to the fact that the five-week cycle is descending, and the recovery process fluctuates around 60% relative to the oblong correction, then we get a good chance of breaking the psychological level of 1.1000, but in this case, the pressure within the control value must weaken, otherwise, everything will happen again.
In terms of volatility, we see an acceleration of 17% relative to the daily average, which is a good sign for the structure of the future course. If we analyze the volatility from the beginning of the downward trend (02.01.20-05.02.20), we will see that the average daily candle is 45 points, which corresponds to the indicator of the market dynamics of the EURUSD pair. That is a healthy tact and mood of market participants.
Analyzing the past day by the minute, we see that the downward mood was set at the time of the breakdown of the night accumulation of 1.1033/1.1050, were in the period of 11:30-21:30 (time on the trading terminal) there was an inertial move. Further fluctuation carried a narrow accumulation within the level of 1.1000.
As discussed in the previous review, speculators were working on a local move towards the psychological level of 1.1000, having not so large volumes, but steadily making a profit at the exit, which is to be congratulated. The other part of the traders was not so risky. Their task was to identify a sensitive price-fixing lower than 1.0980 for setting the main deals, which did not happen.
Looking at the trading chart in general terms (the daily period), we see a long recovery process with a relatively oblong correction, were due to the level of 1.1000, it began to feel that the correction cycle has been exhausted and we have a growing sideways move within 1.1000//(1.1080)//1.1180.
The news background of the previous day included PMI data from Europe, where the composite business activity index rose from 50.9 to 51.3, and the business activity index in the services sector came out better than expectations of 52.5. An hour later, the indicator for retail sales in the eurozone was released, where they expected acceleration from 2.2% to 2.5%, but received a slowdown to 1.3%.
The market reaction to the statistical data was extremely interesting, since the PMI, which, in principle, was not bad, was simply ignored, but the reaction to retail sales occurred half an hour before the publication of the statistical data, and this is a question for Eurostat, who leaked the data.
In the afternoon, the ADP report on the level of employment in the private sector of the United States was published, where the data came out much better. So, to begin with, there was a revision of the previous period from 202 thousand to 199 thousand, after which the current indicators came out, which were many times better than the forecast and amounted to 291 thousand.
The market reaction was not long in coming and the dollar went into strengthening on all fronts.
In terms of the general information background, we have a speech by the head of the European Central Bank (ECB), Christine Lagarde, who spoke about the uncertainty in the global economy.
"While the threat of a trade war between the US and China seems to have receded, the coronavirus adds a new layer of uncertainty... The uncertainty is mainly related to global risks: trade, geopolitics, and now the coronavirus outbreak and its potential consequences for global growth," the ECB head said.
At the same time, former head of the Federal Reserve System (FRS) Janet Yellen criticized the actions of Donald Trump in terms of duties on imports of Chinese goods.
"If we talk about US companies, the introduction of import duties, as expected, was supposed to increase the competitiveness of companies in the manufacturing sector, as well as improve employment prospects in it, but we do not see this," the former head of the Federal Reserve said.
In turn, we have a mental discharge associated with a humorous show called "Impeachment of Trump", where, without too much surprise, the US Senate acquitted the President on both counts at the impeachment trial.
Today, in terms of the economic calendar, we have data on applications for unemployment benefits in the United States, where, according to forecasts, there are no strong changes, primary +3 thousand, and repeated -8 thousand.
Further development
Analyzing the current trading chart, we see an attempt to rebound from the lows of the area of the psychological level of 1.1000, but the attempt was not so successful, and the quote continues to focus on the lows. In fact, a technical rebound is possible due to the high division. But what if the moment of breakdown has come, and now there is a process of accumulation for subsequent acceleration? We want to hope for such an outcome, but given the continuing pattern, we should consider two options at once, a rebound and a breakout, and in the case of speculative trading, just an impulse, the direction does not matter.
In terms of the emotional mood of market participants, we see a real chance of acceleration, which will go into the FOMO syndrome (Lost Profit Syndrome), only if you make an amendment, this will happen in the case of a breakdown of the control level of the second stage.
In turn, traders carefully analyze the behavior of the quote relative to the current fluctuation, since we are extremely close to the mark of 1.0980, where if the price is fixed, great prospects will open up.
It is likely to assume that the quote will continue to concentrate at the level of 1.1000, where the range of fluctuations is 1.0980 and 1.1045-50. It is worth considering that we specify the maximum range, where are the interaction points that will be directed to the full course. At the same time, speculative positions may reflect local jumps within the specified framework.
Based on the above information, we will output trading recommendations:
- Buy positions will be considered if the price is fixed higher than 1.1045-50.
- We consider selling positions if the price is fixed below 1.0980, H4.
Indicator analysis
Analyzing different sectors of timeframes (TF), we see that the indicators of technical instruments are mainly focused on the downward trend. It is worth considering that the existing stagnation can lead to variable signals relative to the minute and hour periods.
Volatility for the week / Volatility Measurement: Month; Quarter; Year.
The volatility measurement reflects the average daily fluctuation, based on the calculation for the Month / Quarter / Year.
(February 6 was based on the time of publication of the article)
The volatility of the current time is 21 points, which is still a low value for this period. Volatility will depend on whether the quote can develop a range level, otherwise, we will see a sluggish fluctuation within it.
Key levels
Resistance zones: 1.1000***; 1.1080**; 1.1180; 1.1300**; 1.1450; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100.
Support zones: 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 a transaction, with daily adjustments.
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