4-hour timeframe
Amplitude of the last 5 days (high-low): 60p - 55p - 33p - 22p - 52p.
Average volatility over the past 5 days: 45p (average).
The EUR/USD currency pair, in a completely on-duty style, updated three-year lows, reaching 1.0785, and did not move from the current lows on Wednesday, February 19. The upward correction does not start and the single currency continues to fall. Despite the fact that today no important macroeconomic publication has been planned in the European Union and the United States that traders could use to take part of the profit on short positions, the correction stubbornly does not want to begin. However, we warned traders that such a weak, but confident, downward movement, which is observed now, can be very long. Thus, nothing changes for the euro/dollar pair. It should also be noted that the quotes of the pair have already worked out the support level of 1.0786 twice and failed to overcome it. Volatility has also decreased today and is currently 23 points. Thus, neither fundamental nor technical grounds for starting the correction are still observed. Even an unsuccessful attempt to overcome the level of 1.0786 cannot be considered a rebound, since the price has not rebounded anywhere, but is simply now trading along the indicated level.
Thus, the only event today that could even theoretically affect the course of trading is the minutes of the Fed meeting. We believe that it will not have any particular effect on the movement of the euro/dollar pair. If only because it is difficult to even remember the last time that the publication of the minutes would provoke serious movements in the market. In this case, it should be clearly understood that traders do not react to the minutes itself with any information in it, but to very specific information. If this information is already known to traders, then no reaction will follow. Thus, in essence, one question remains: will the document contain anything that the market may not know? And again, the answer is no. There have been no changes in the US economy recently, there have been no global geopolitical events (such as a trade war or an outbreak of the virus). Thus, the Fed simply has nothing to tell traders. Based on this, most likely, the document will contain a standard set of theses characterizing the US economy, monetary policy, as well as global risks. We can only say good things about the US economy, as it again began to accelerate, in contrast to the European and British. Certain issues still cause industrial production and GDP, but the Fed still does not see a problem in the slowdowns of these indicators, which in time coincided with the period of the trade war with China. Monetary policy in a document can only be discussed in the context of its conformity to the current economic situation. And about global risks, most likely, it will be said that they continue to soften and fall. The only problem that can cause a certain excitement is the coronavirus, but this problem is not new and it is also well known in the trading community.
Thus, for the rest of today, we do not expect any major price changes. Most likely, the downward trend will continue. We consider the issue of correction and inflation in the European Union to be more pressing issues, which will be published on Friday. Today in the UK, the consumer price index suddenly accelerated immediately by 0.5% in annual terms. Maybe something similar should be expected from European inflation? Although unlikely. German inflation showed minimal acceleration, so European inflation can accelerate to a high of 1.5% y/y. In addition, indices of business activity in the services and production sectors of the European Union, Germany and the United States will be released at the end of the week. The values are only preliminary, nevertheless they are very interesting.
From a technical point of view, there is simply nothing to say now. The euro/dollar stood in one place all day, near the support level of 1.0786. There is not even a hint of working out one of the boundaries of the volatility channel. And since the fundamental background is extremely weak today, it is unlikely that anything will change. Thus, prior to the start of the correction, it is recommended not to try to guess its beginning, but simply continue to trade "in the trend". There are high chances for downward movement to continue below the Kijun-sen line
Trading recommendations:
The EUR/USD pair maintains a downward movement without starting to adjust. Thus, it is now recommended that you stay in euro-currency sales with targets at support levels of 1.0786 and 1.0745. The MACD indicator has again turned up and is discharging. It will be possible to consider purchases of the euro/dollar pair in small lots with the goal of a first resistance level of 1.0916, if traders manage to gain a foothold 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 indicators window.
Support / Resistance Classic Levels:
Red and gray dashed lines with price symbols.
Pivot Level:
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movements:
Red and green arrows.
The material has been provided by InstaForex Company - www.instaforex.com