For several days in a row, the US dollar seemed to ignore not so bad statistics for the United States, hanging around the psychological level of 1.1000, but everything changed on Friday. Macroeconomic reporting at the end of the week confirmed forecasts of a slowdown in retail sales growth from 4.1% to 3.1%, while anticipating 3.8%. On top of that, published data on industrial production deepened in terms of decline from -0.3 to -0.8. As a result, the dollar, operating on the available data and completely forgetting the earlier positive statistical data on inflation and producer prices, rushed to the negative side, as if all the previous days it delayed this triumphant moment.
On the same day, statistics pleased us not only in the United States, but also in Europe, where they published inflation data, confirming eventually forecasts of a slowdown from 0.8% to 0.7%. The market reaction in this case was practically absent and there was a clear tension, which was already discharged at the time of the release of US data, as described above.
Today, in terms of macroeconomic reporting, we do not have statistics worth paying attention to, many market participants have taken a wait-and-see position, since the only interesting event of the week is the publication of the minutes of the Federal Open Market Committee meeting [November 20, 18:00 London time]. Of course it's not worth it, it excludes a spontaneous information background, but here we follow and act according to the circumstances.
The EUR/USD pair is not so modestly showing its activity, and the level of support in the face of a significance of 1.1000 still managed to play the role of support in this long-playing turbulence. So, repeated attempts to break down the key coordinate of 1,1000 failed, leaving us with multiple punctures by shadows, and working out the level and temporary restraint pushed the quote right up to the nearest periodic level of 1.1065, where the Fibo level of 38.2 is passing at the same time. Is it worth it to talk about the completion of the recovery process regarding an elongated correction, I don't think so. This kind of rebound was expected, at one stage or another, especially since before that we had almost nine trading days of decline.
In terms of a general review of the trading chart, we see that the current fluctuation, of an ascending nature, is the first in the recovery phase and it is worth taking a closer look at it, since it will become clear on it whether the recovery process can resume or the looped fluctuation will return again within the framework of 1.1080/1.1180.
It is likely to assume that the resistance point in this development is located in the area of 1.1065/1.1080, which many traders are focused on. Thus, we closely monitor the behavior of quotes within the given area, working according to the rebound & breakout methodology.
Concretizing all of the above into trading signals:
- Long positions, we consider in case of consolidation above 1.1080-1.1092.
- Short positions, we consider if the resistance level is in the region of 1.1065/1.1080, where we act either at the stage of slowing down, or with an adjustment lower than 1.1045.
As you understand, the first case returns us to the framework of 1.1080/1.1180, where the recovery phase is subject to a significant blow. The second scenario, on the contrary, speaks of a rational regrouping of trade forces and the resumption of the recovery process.
From the point of view of a comprehensive indicator analysis, we see that, against the background of the current move, the minute and hour periods took an upward position. While the daily periods still retain the signal of the recovery process.