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From the point of view of complex analysis, we can see the consolidation of quotes outside the flat pattern.
For the first time in eight weeks, quotes managed to consolidate above 1.1000, the upper border of the flat, instantly raising the possibilities of a breakout, as well as trend change in the market.
The movement that occurred yesterday was quite surprising, since on April 24, the quotes went below 1.0775, the lower border of the flat. Although such a movement happened according to market trends, the borders of the flat resisted, keeping the quotes inside the channel.
Perhaps, market speculation, as well as misunderstanding in the situation, caused the impressive movement in the market. News, which we will talk about later, can locally give enthusiasm to market participants, but the situation will remain the same relative to the trend and the cycles.
Analyzing the past trading day in detail, we can see that the dynamics of the entire day was kept within one candle for 12 hours. After that, quotes jumped up and down, but were united by the psychological level of 1.1000, which ended the trading day.
In terms of volatility, the stable dynamics are encouraging, with the daily average value once again passing 86 points. This indicates that volatility in the EUR / USD pair continues to accelerate, overtaking the GBP / USD pair, which has long been famous for high volatility.
[The analysis and comparison of the dynamics of the EUR / USD and GBP / USD pairs were conducted for 6 trading days]
As discussed in the previous review, traders focused on working the quotes within the flat pattern, but did not exclude local operations.
Meanwhile, analyzing the daily chart, we can see that the bearish mood persists, with the sideways channel still intact, and quotes within the control zones.
The news published yesterday did not contain any important statistics for Europe and the United States. Thus, traders focused on external backgrounds, which managed to locally stir up the market.
The main catalyst yesterday was the proposal of the European Commission to allocate € 750 billion for economic recovery. Of this amount, 500 billion will be grants, and 250 billion will be loans. Such news gave optimism to the euro, but after a while, everyone remembered the previous plan to save the European Union, which failed due to dissatisfaction with most EU countries. In addition, the current plan is complicated, with many countries not agreeing with the distribution. Thus, the approval of the package may be delayed.
ECB Head Christine Lagarde also made a statement yesterday, to which she forecast that the eurozone economy will shrink by 8-12% this year, twice as much as during the financial crisis last 2008-2009.
For economic news today, the second estimate of the US 1st quarter GDP will be published, the contents of which may reveal an economic downturn of about -4.8%. The weekly report on US unemployment will also come out, with repeated applications forecast to put a new record of about 26,180,000, and initial applications at about 2,120,000.
Further development
Analyzing the current trading chart, we can see fluctuations within the psychological level of 1.1000, the amplitude of which is approximately 40 points. Market participants have been focusing on the upper border of the flat, trying to trigger a breakout to return the quotes to its previous levels.
The emotional mood of market participants, such as high coefficient of speculative operations, can set off acceleration on volatility.
The fluctuation of quotes within 1.0990 / 1.1040 will continue for quite a long time, so consider local positions on the breakout of established boundaries. Although there is not enough evidence or signals for a trend change, bearish mood remains on the trading charts.
Based on the above information, we formulated these trading recommendations:
- Open sell positions below 1.0985, towards 1.0950 --- 1.0900 ---- 1.0885.
- Open buy positions above 1.1045, towards 1.1080.
Indicator analysis
Analyzing the different sector of time frames (TF), we can see that the indicators of hourly and daily periods signal an upward mood, due to the concentration of quotes within 1.100, the upper border of the flat.
Volatility per week / Measurement of volatility: Month; Quarter year
The measurement of volatility reflects the average daily fluctuation calculated by Month / Quarter / Year.
(May 28 was built, taking into account the time of publication of the article)
Volatility is currently 44 points, which is 48% lower than the average daily value. Thus, we can assume that the exit of quotes from the accumulation will lead to another surge in activity, thereby holding the acceleration status.
Key levels
Resistance zones: 1,1000 ***; 1.1080 **; 1,1180; 1.1300; 1.1440; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support areas: 1.0850 **; 1.0775 *; 1.0650 (1.0636); 1,0500 ***; 1.0350 **; 1,0000 ***.
* Periodic level
** Range Level
*** Psychological level
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