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Technical data:
The upper channel of linear regression: direction – down.
The lower channel of linear regression: direction – up.
The moving average (20; smoothed) – up.
CCI: 119.8076
On the last trading day of last week, the EUR/USD currency pair carelessly continued its upward movement. There were no important macroeconomic publications on this day, as well as speeches by Mario Draghi or Jerome Powell. Nevertheless, the euro continues to grow in the best traditions of the US dollar, simply because it is bought by market participants. But why do traders buy it when there are no visible reasons and grounds for this? There may be several options, as usual. The first, most obvious – the long-term downward trend is completed and we have moved into the "era of the euro." It is difficult to say how long this era will last, given the fact that the economic situation in the European Union not only leaves much to be desired but also worsens almost every month. Perhaps, with the arrival of Christine Lagarde as head of the ECB will change anything for the better, but there is little hope for this. This sphere (economy) is too huge for the replacement of just one manager (albeit the main one) to bring quick results. Moreover, as we all know, the ECB has a very limited set of tools for easing monetary policy, most of which it has already engaged and uses. What else can the European Central Bank do? Only lower rates even more. The second, less obvious, is the reluctance of traders to buy the dollar since the Fed is preparing to lower rates for the third time, that is, it has taken a full-scale course to ease monetary policy, trying to "catch up" with the ECB.
It is also safe to say that the topic of Brexit last week also provided support to the euro currency, as the chances that Brussels and London will agree were great. The parties agreed, but the UK Parliament blocked the "deal" with the EU for the fourth time, in fact, as we expected. Thus, now Brexit will either be postponed to January 31, 2020, or Boris Johnson will have to use unfair play methods to implement a "tough" scenario until October 31. The most interesting thing is that neither the euro nor the pound on Monday did not open trading with a kilometer gap down. That is, traders calmly perceived the information that the agreement between Johnson and the European Union, reached literally in the "last 5 minutes", in fact, now does not matter. This is just another failure of the UK government, Boris Johnson personally, who in general has not won a single victory as prime minister.
This week, on Monday, the fundamental lull will continue. Macroeconomic reports are not scheduled for today. On Tuesday and Wednesday, too. Thus, traders will have to trade exclusively on technical factors, which now speak unequivocally in favor of the European currency. At the moment, the euro/dollar pair has worked out the Murray level of "7/8" - 1.1169 and can rebound from it, starting a downward correction, which would be logical. But for this, it is still worth waiting for the reversal of Heiken Ashi down.
Nearest support levels:
S1 – 1.1108
S2 – 1.1047
S3 – 1.0986
Nearest resistance levels:
R1 – 1.1169
R2 – 1.1230
R3 – 1.1292
Trading recommendations:
The euro/dollar continues to move up. Thus, it is recommended to stay in the euro purchases with the targets of 1.1169 and 1.1230 until the Heiken Ashi indicator turns down. It is recommended to buy the US currency not before the bears cross the moving average line with the first targets of 1.1047 and 1.0986.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression – the blue line of the unidirectional movement.
The lower channel of linear regression – the purple line of the unidirectional movement.
CCI – the blue line in the indicator window.
The moving average (20; smoothed) – blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
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