4-hour timeframe
Amplitude of the last 5 days (high-low): 63p - 43p - 86p - 51p - 41p.
The average amplitude for the last 5 days: 57p (63p).
On Tuesday, August 7, the EUR / USD currency pair began an upward correction, as indicated by the MACD indicator. No important macroeconomic reports were made available to traders today, however, the correction was brewing since Friday, so its beginning was expected. A number of secondary news could have little impact, but the most important were the trade balance and industrial production reports for June in Germany. And the trade balance remained with a serious deficit, and the growth rate of industrial production fell to 2.5%. Thus, the foundation was not just on the side of the euro. Proceeding from this, the conclusion suggests that the correction is purely technical. At the moment, the pair has almost completed the critical Kijun-sen line. The price rebound from this line may trigger a resumption of the downtrend with a target of 1.1534, which is calculated taking into account the average volatility of the instrument. In general, the probability of resuming the downtrend is very high, as the US seems to be seriously intent on imposing duties on all exports from China, and China has decided not to buy oil in the US and is preparing its list of goods from America that fall under duties. Thus, this can continue to support the US currency, as it has already been more than once when information is received about the escalation of the trade conflict between the states and the EU or China. Also played by the "ultra-soft" policy of the ECB, which can not in any way announce a tightening of monetary policy. In the best case, if the trade conflict with Washington does not develop, a quantitative incentive program will be completely abandoned by the end of the year. While in the US, two more key rate increases are planned this year. In general, on all fronts the US dollar is leading, and the euro remains to rely only on correction ...
Trading recommendations:
For the pair EUR / USD correction began. The price rebound from the Kijun-sen line will indicate its completion, as well as the MACD indicator downward turn, and will serve as a signal for the opening of new shorts with a target of 1,1534, which has already been worked out.
Orders for purchase can be considered as still small lots, if the bulls manage to overcome the Kijun-sen line. In this case, the targets for long positions will be the levels of 1,1646 and 1,1689.
In addition to the technical picture, one should also take into account the fundamental data and the time of their release.
Explanations to the illustration:
Ichimoku Indicator:
Tenkan-sen is a red line.
Kijun-sen is a blue line.
Senkou Span A is a light brown dotted line.
Senkou Span B - a light purple dotted line.
Chinkou Span is a green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and histogram with white bars in the indicator window.
The material has been provided by InstaForex Company - www.instaforex.com