4 hour time-frame
Amplitude of the last 5 days (high-low): 87p - 27p - 49p - 31p - 70p.
Average volatility over the past 5 days: 53p (average).
On Friday, December 6, the EUR/USD currency pair had every chance to continue the not-so-strong upward movement, as the macroeconomic publications planned for this day in America could not reach forecast values well. At the beginning of this week and last week, several macroeconomic reports from the United States have already made market participants nervous and even wonder whether the fed took a pause in the cycle of monetary policy easing too soon? However, as practice has shown, it is not early. The euro fell under serious market pressure and fell to the level of 1.1055, which we designated on Friday morning as the lower limit of the daily trading range for the euro/dollar pair. Thanks to the data received from overseas on Friday.
Let's start with the least significant Friday report, which, however, is quite important. In October, industrial production in Germany declined by 5.3% yoy and 1.7% mom. Here, even any comments are unnecessary. The only positive thing about this report is that it is an October issue. Nevertheless, industrial production in Germany and the EU may grow slightly in November since business activity in the industrial sector of the EU countries has increased slightly according to the latest data. However, at present, we are not observing anything positive in the industry of the locomotive country of the European economy. Furthermore, all data are related exclusively to the United States. The unemployment rate, as the least significant indicator, pleased traders as it fell to a new record level of 3.5%. The average hourly wage rose in November by 3.1% y / y, which is higher than experts' forecasts. At the same time, the University of Michigan Consumer Confidence Index was 99.2 with the expectations of traders of 97.0. Now, the most anticipated indicator of the day NonFarm Payrolls with a very high forecast value of 180,000 managed to exceed it by 86,000 and make up 266,000 new jobs created outside the agricultural sector. Thus, as we can see, all macroeconomic data on Friday absolutely turned out to be in favor of the American currency, and traders did not ignore the statistics this time and worked it out as it should. In turn, the Euro currency was still lucky that the downward movement on Friday was relatively strong. The total volatility was only 70 points, although, given the nature of macroeconomic statistics, the fall of the Euro could have been much stronger.
Now, what is the result? What to expect now from the euro / dollar currency pair? We believe that the pair is getting new excellent chances to resume the downward trend. Firstly, technical factors, such as consolidation under the Kijun-sen critical line, speak in favor of this. Secondly, fundamental factors. As it turned out, the US economy shows weak signs of slowdown from time to time, but after immediate 3 cuts in the key Fed rate, it allowed macroeconomic statistics to show growth again. Moreover, the trade wars fired by Donald Trump with great enthusiasm do not exert too much pressure on the American economy. But even when statistics begin to deteriorate, the Fed can always lower its key rate, which currently stands at 1.75%. That is, the Fed has plenty of room for maneuver. On the other hand, what can not be said about the European Union and the ECB? In December, the first meeting of the Regulator will be held under the leadership of Christine Lagarde, who has already talked about the need for "strategic measures" and hinted in every way that reforms, stimulation of the EU economy, and structural changes are all needed. Recent reports from the European Union have inspired a little optimism in the minds of traders, but some numbers still remain at extremely low values, at which any growth is not important and significant, since the overall picture remains the same, but the values still remain extremely weak (for example, business activity in the manufacturing sector, industrial production, inflation). Moreover, trade wars and global uncertainty will continue to have a negative impact on the EU economy. Europe will have a hard time, if Trump begins to put pressure on the EU with his favorite weapon - trade duties. We can also add here the Brexit, which does not end in any way, which in the future can also add a negative impact on the EU economy, and we see that the prospects for the Alliance's economy, as well as Eurocurrencies, remain very vague.
From a technical point of view, a downward movement has begun, which is identified as a correction so far, although the price has already fixed below the Kijun-sen line. Thus, we believe that the fall of the pair will continue next week given the general fundamental background. Now, euro / dollar quotes need to break through the Ichimoku cloud, after which it will be more likely to expect a new downward trend.
Trading recommendations:
The EUR/USD pair has taken a big step towards a new downward trend. To open short positions, it is recommended to wait for the Ichimoku cloud to break through. In this case, the "dead cross" will strengthen, and the bears will be able to lower the euro / dollar to 1.0989 and 1.0959. Moreover, it is recommended to resume purchases of Eurocurrency in case that traders re-pin above the critical line.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicator window.
Support / Resistance Classic Levels:
Red and gray dotted lines with price symbols.
Pivot Level:
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movement options:
Red and green arrows.
The material has been provided by InstaForex Company - www.instaforex.com