4-hour timeframe
Amplitude of the last 5 days (high-low): 49p - 64p - 67p - 28p - 44p.
Average volatility over the past 5 days: 51p (average).
The EUR/USD pair ends the first trading day of the week with an upward correction, which began on Friday. The euro/dollar pair has currently worked out the critical Kijun-sen line, which is the first and main goal of any correction when we talk about the Ichimoku indicator. Thus, now traders have the right to wait for either the pair to clear from this line or to overcome it. The first option will allow the pair to resume the downward trend, and we believe that this option is most likely. The second option - will allow the correction to continue with the goal of the Senkou Span B line, which is even stronger than the Kijun-sen line and from which a rebound is also possible. Volatility on the first trading day of the week with an empty calendar of macroeconomic events is absolutely low, only 25 points. Thus, there can be no talk of working out any of the boundaries of the corridor of volatility today.
Meanwhile, markets continue to closely monitor developments related to the signing of a trade agreement between the United States and China, the so-called "first phase" thereof. Today, January 13, the head of the Chinese delegation, Vice Premier of the State Council of the PRC Liu He arrived in Washington. It is expected that the parties will sign the very controversial agreement by today or tomorrow, which, it would seem, should be the first step towards reconciliation of the parties. "Contradictory" because, firstly, most of the details of this agreement are covered by secrecy, and secondly, most of the US duties on Chinese imports will remain in effect. Only a small share of duties on goods with a total amount of about $60 billion will be canceled. Recall that all imports from China to the United States are in excess of $500 billion. But according to the same agreement, China agreed to significantly increase the volume of purchases of agricultural products in the United States, with both sides giving completely different figures. However, in any case, if the parties sign the agreement, it will be a significant event. Donald Trump himself has already said that immediately after the signing of the first phase he will go to China to negotiate a "second phase".
By the way, we would like to note how quickly the fights between Washington and Beijing over the adoption of the Uighur and Hong Kong laws by the US Congress subsided. Beijing vigorously protested these laws, accusing the United States of interfering in China's internal affairs, and simply stopped doing so at some point. That is, it seems that the parties are really important now - to agree on the end of the trade war. However, Washington, meanwhile, continues to "swing rights." According to the latest information, the United States intends to get the Chinese government to impose sanctions on Iran in the form of refusal to buy Iranian oil. We have already spoken about the military conflict between America and Iran several times. It remains only to add that, in principle, all US sanctions have no special significance, since Iran can sell its oil anywhere and to anyone. In practice, 70% of Iranian oil goes to China. According to Stephen Mnuchin, "Iran finances terrorist groups with the money received from China." Thus, the United States wants to get a refusal from the largest consumer of Iranian oil. The US Treasury Secretary also said: "Thanks to the sanctions, Washington was able to reduce Iran's oil exports. Probably more than 95%." It is difficult to say how true this figure is. It's even more difficult to say why Beijing should again follow Washington's occasion. China has no conflict with Iran, respectively, the United States need to offer something in return for abandoning Iranian oil. Will this new stumbling block hinder the signing of a trade agreement?
From a technical point of view, we continue to witness the correction, which may be completed tomorrow. As we can see, today the euro/dollar pair failed to demonstrate any serious movement, but tomorrow inflation in the US for December will be published, which is forecasted with another acceleration, which could return demand for the US dollar in the foreign exchange market. Thus, we do not recommend trading against the trend in any case. So, you need to wait for the fundamental factors that complete the correction or, conversely, give the bulls a large amount of strength to form an upward trend.
Trading recommendations:
The EUR/USD pair continues to adjust. Thus, now it is recommended for traders to wait until the correction is completed and resume trading on a decline with the target support level of 1.1060, however, the price should be below the Kijun-sen line. It will be possible to consider purchases of the euro/dollar pair no earlier than when the traders of the Senkou Span B line overcome with the first goals of 1.1168 and 1.1188.
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 indicators 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