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) – up.
CCI: 48.8207
In the past few days, currency markets have been talking again about a trade war between China and the United States, probably ahead of the start of another round of talks between the two countries. The trade war in America is now about the same fascinating series as Brexit in the UK. The United States is also "seasoned" with the impeachment of Donald Trump, who ardently wanted to eliminate his main rival from the presidential race. What can we say before the upcoming talks between the American and Chinese delegations? Only one thing: the parties remain far from concluding a trade agreement. Just like Brussels with London from the conclusion of the "deal" on Brexit. New negotiations are of course a chance for progress, which after a few more rounds may still end with the signing of an agreement, but this point is still very far away.
China felt Trump's weakness, who made a mistake in his political career. Even taking into account the fact that Trump did not say anything contrary to US law in a conversation with the President of Ukraine, he still cast a shadow over himself, as the opposition immediately seized the opportunity like a bulldog in his victim. A little later, it turned out that Trump put pressure not only on the Ukrainian President but also tried to ask for an investigation into the activities of Joe Biden and the Australian Prime Minister. Now, Trump is accused of high treason and abuse of the presidency. Of course, it is unlikely to succeed in dismissing Trump from the post of president of the United States, this has not happened in the history of America, but his victory in the 2020 elections is unlikely to happen. Beijing understands this and is now going to behave much tougher in negotiations with Washington. According to the latest information, several topics, such as the reformation of China's industrial sector, have been removed from the agenda by the Chinese side. Now China wants to conclude a trade "deal", but not on the terms of Trump, but its terms.
I will remind you that Trump's relatively low political ratings are directly related to Americans' dissatisfaction with the rise in the price of goods from China, as well as fears for the recession of the American economy. If Trump doesn't win the trade war, most of the electorate will vote for Joe Biden.
In conclusion, we can say that the US currency reacts to any incident related to the trade war, only through the macroeconomic statistics of the States. Traders, as before, are not interested in another failure in the negotiations or the tightening of China's position, or the possible impeachment of Donald Trump. Investors, on the other hand, are still interested in the strength of the US economy, the actions and plans of the Fed and the ratio of these two factors with similar factors in the eurozone. Thus, the euro can still count only on a small strengthening, clearly corrective, which we are now witnessing.
Nearest support levels:
S1 – 1.0925
S2 – 1.0864
S3 – 1.0803
Nearest resistance levels:
R1 – 1.0986
R2 – 1.1047 –
R3 – 1.1108
Trading recommendations:
The euro/dollar pair continues its weak upward movement. Thus, the bears are still recommended to wait for the completion of the correction and resume selling the euro with the target of Murray's level "3/8" – 1.0925 after the reverse consolidation below the moving average. Purchases of the pair can be considered as small lots now with a target of 1.1047, but the upward movement is very weak.
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 channel of linear regression – the blue lines of the unidirectional movement.
The lower channel of linear regression – the purple lines of unidirectional movement.
CCI – the blue line in the indicator window.
The moving average (20; smoothed) – the blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.