The euro/dollar currency pair showed reduced volatility of 41 points over the last trading day, as a result of which a pullback was formed. From the point of view of technical analysis, we see that the theory of "Breakdown/Rollback" with respect to the psychological level of 1.1000 fell into existence, but the previously formed accumulation of 1.0980/1.1000 provided an opportunity, even if for a while, to enter the market. So, the breakdown of the upper limit of accumulation (1.0980/1.1000) made it possible to open long positions locally towards the nearest interaction point of 1.1025, where the mirror level passed in relatively smaller time periods (H1). Subsequently, stagnation and recovery followed, but this had already happened in the Pacific and Asian trading sessions.
As discussed in the previous review, speculators were waiting for a downward movement, referring to the theory of "Breakdown/Rollback", but everything went wrong, as the upper limit of accumulation broke through. As a result, short-term buy positions were opened, but speculators' expectations did not quite coincide with reality.
Examining the trading chart in the general terms (day time period), we see that the process of restoring the quotation is hovering around the psychological mark of 1.1000. Recall that the fulcrum of the correction movement is in the area of 1.0927, the peak of correction is 1.1080 (1.1115).
The news background of the previous day had data on housing prices in the United States, where the forecasts of S&P/Case-Shiller did not come true in terms of acceleration from 2.1% to 2.2%, as a result, we got a slowdown to 2.0%. An hour later, the CB consumer confidence index came out, down from 134.2 to 125.1. The US dollar did not feel very bad, but it lost its position a little.
The information background included comments by the head of the Federal Reserve Bank of St. Louis, James Bullard, who said he did not rule out a further reduction in the refinancing rate.
"A sharper-than-expected slowdown in economic growth could make it harder for the Federal Open Market Committee to meet its 2% inflation target. The FOMC may decide to provide additional incentives in the future," the head of the Federal Reserve said.
We conclude the column information and news background, as always, news from Brexit. So, yesterday the UK Supreme Court ruled that the actions of Prime Minister Boris Johnson regarding the suspension of the Parliament were illegal, and today (September 25) the Parliament returns to work. Thus, exit without a deal or refusal of the provided delay will be impossible. The "Brexit" show is delayed for an indefinite period, since an agreement on exit conditions until October 31 is extremely unlikely.
Today, in terms of the economic calendar, data on the sale of new homes in the United States, where they expect a significant increase from 635K to 660K. Statistics may provide a local incentive for the US dollar ahead of the publication of GDP data.
Further development
Analyzing the current trading chart, we see a distinct hovering within the psychological mark of 1.1000, where the quote is again fixed below it, forming a small stagnation as a fact. Speculators, in turn, are again discussing short positions, where some want to enter them now, and others with a slight delay.
It is likely to assume that the turbulence within the level of 1.1000 will not last long, and the probability of further decline is still high. If we refer to the theory of decline, the primary descent should be expected in the direction of the local minimum of Monday at 1.0966, and after that, we will talk about the course to the point of the main support of 1.0927. At the same time, hovering within the level of 1.1000 with the subsequent formation of a range of 30 – 40 points is also likely as an alternative theory.
Based on the above information, we will derive trading recommendations:
We consider the buy positions in case of price-fixing higher than 1.1030, which will signal further horizontal movement and a move to 1.1080. We consider selling positions in two versions: the first is an aggressive method, it is considered relative to the point of 1.0980 with the prospect of a move to 1.0966; the second option is more conservative, we are waiting for price fixing below the local minimum of Monday (1.0966), with the prospect of a move to the base of the correctional move to 1.0927. As you understand, both options can be used together with the conservative method of capital management.Technical analysis
Analyzing different sectors of timeframes (TF), we see that the indicators on all major time intervals signal a further decline. It is worth noting that in the case of hovering within the psychological level of 1.1000, the indicators at smaller time intervals can arbitrarily jump in one place, misleading us.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 25 was built taking into account the time of publication of the article)
The volatility of the current time is 30 points. It is likely to assume that if the downward interest persists, the volatility of the day may still grow, unless, of course, we are sucked into a sideways movement along with the level of 1.1000.
Key levels
Resistance zones: 1.1000***; 1.1100**; 1.1180* ; 1.1300**; 1.1450; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100
Support zones: 1.0926*; 1.0850**; 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
*** Psychological level
**** The article is based on the principle of conducting transactions, with daily adjustments.