4-hour timeframe
Technical data:
The upper channel of linear regression: direction-down.
The lower channel of linear regression: direction-down.
The moving average (20; smoothed) – down.
CCI: -53.9173
The EUR/USD currency pair began to adjust after all due to weak indices of business activity in the manufacturing sector of the United States. However, there are still three working days until the end of the week, which will be filled with various macroeconomic reports and events, as we wrote here. Thus, the main question is: will the fundamental background support the euro this week, and will it be able to significantly adjust against the dollar, or will it end quickly and uninterestingly? On Wednesday, September 4, it is planned to publish the composite index of business activity for the eurozone and the index of business activity in the service sector. Both indices have positive forecasts, that is, above the level of 50.0, so another recession in the eurozone is not expected today. A little earlier, similar indices for Germany will be released, which also does not imply the formation of a recession in the service sector. And a little later, retail sales for the European Union for July will come out, where traders may be disappointed, as forecasts predict a decrease of this indicator by 0.6% in monthly terms.
At the American trading session, traders will not receive any important news, only in the late afternoon, a "Beige book" will be published, which is unlikely to cause at least some reaction of traders. Thus, all the most interesting things will happen at the European session, as during it there will be a speech by Christine Lagarde, the future head of the ECB, which was originally supposed to take place yesterday. We have already said that after Friday's speech, Lagarde will closely monitor any of her interviews and speeches, as the future head of the ECB did not wait for her official inauguration and began to share her plans for monetary policy during the reign of Mario Draghi.
Well, the technical picture of the euro/dollar pair implies a correction until the Heiken Ashi indicator turns back down. Honestly, it's hard to imagine the euro above the moving average line. Traders are very reluctant to buy EU currencies (if at all). News from the States this week should be a failure for the euro to form an upward trend.
Nearest support levels:
S1 – 1.0956
S2 – 1.0925
Nearest resistance levels:
R1 – 1.0986
R2 – 1.1017
R3 – 1.1047
Trading recommendations:
The euro/dollar pair started an upward correction. Thus, it is now recommended to wait for its completion, that is, the price rebound from the moving or the Heiken Ashi indicator turning down, and then resuming sales of the pair with targets at 1.0956 and 1.0925. Long positions are not yet relevant.
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 linear regression channel – the blue line of the unidirectional movement.
The lower linear regression channel – 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.
Murray levels – multi-colored horizontal stripes.
Heiken Ashi is an indicator that colors bars in blue or purple.
The material has been provided by InstaForex Company - www.instaforex.com