4-hour timeframe
The amplitude of the last 5 days (high-low): 78p - 78p - 102p - 44p - 172p.
Average amplitude for the last 5 days: 95p (84p).
The EUR/USD currency pair on Thursday, January 3, as we expected in the morning, restored yesterday's losses. The pair has already managed to recover 100 points, which confirms our assumptions that the collapses of the euro and the pound from the previous day were accidental and will not be long-term. The European currency thus remains within a high-volatility and wide side channel with a minimum upward bias. Thus, it will not be surprising to return to the resistance level of 1.1495 in the near future. There were no fundamental reasons for the simultaneous collapse of the euro and the pound yesterday. Thus, this decline could be caused only by synchronous sales of pairs due to non-fundamental reasons. As we have already noted, such a reason may be the banal beginning of the new year and the opening of new "dollar" positions in support of the main long-term trend. However, new and severe falls require more compelling reasons than the New Year. That is why we believe that in the absence of new macroeconomic information, we should not expect the euro to fall under the previous local lows. The euro is still weak, but not enough to fall for no reason. The index of business activity ISM in the US manufacturing sector failed, reaching 54.1 against the forecast of 57.9. The ADP report on the level of employment in the private sector, on the contrary, came out much stronger than market expectations, however, it could not cover the need for correction and the failed ISM index.
Trading recommendations:
The EUR/USD pair has now been adjusted to the critical line. The price rebound from this line may provoke a resumption of the downward movement. Turning the MACD down indicator will signal the opening of new shorts with a target of 1.1299.
Buy positions are recommended to be considered with the target of 1.1490, if the bulls manage to overcome the critical Kijun-Sen line. In this case, the pair remains and will remain in this case inside the side channel, which should be considered when opening any positions.
In addition to the technical picture, fundamental data and the timing of their release should also be taken into account.
Explanation of illustration:
Ichimoku Indicator:
Tenkan-sen-red line.
Kijun-sen – blue line.
Senkou span a – light brown dotted line.
Senkou span B – light purple dotted line.
Chikou span – green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD:
Red line and histogram with white bars in the indicator window.
The material has been provided by InstaForex Company - www.instaforex.com