4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: 144.1236
The EUR/USD currency pair begins the week with an upward movement that began last Friday. After a long downward movement, the hour of correction has come, which is also an upward trend, since the quotes have fixed above the moving average line. Thus, the upward movement is expected to develop this week. However, as for Monday, no important macroeconomic publications are scheduled for this day. Secondary indicators for assessing the current situation, the index of economic expectations, the index of business optimism in Germany and the index of national activity of the Federal Reserve of Chicago in the United States are 95% likely to cause no reaction from market participants. Thus, we believe that the first trading day of the week can pass in very boring trading with a corrective mood.
Meanwhile, US President Donald Trump is once again coming to the forefront. The odious US leader supports the sale of GE aircraft engines to China. According to Trump, the States should not refuse to sell almost any categories of goods to other countries, even if this is a threat to national security. "The United States cannot and will not be a country that is difficult to deal with in terms of purchasing our products by foreign companies, including because of the ever-used justification for national security issues. We want to sell our products to China and other countries. We don't want to make it impossible to do business with us. I want China to buy our aircraft engines, which are the best in the world. I have seen some regulations circulating, some of them are being considered by Congress, and they are outrageous," the US President said. "I want it to be easy to do business with the US, not difficult," Donald Trump summed up. Earlier it was reported that the presidential administration, as well as Congress, has the ability to ban the sale of American jet engines to China. The American leader also said that he takes a tough position against the Chinese company Huawei, but does not believe that the States should behave harshly towards everyone.
Thus, we believe that Donald Trump once again gives reasons to Democrats and all his opponents to raise questions of loyalty to the oath. After all, Trump is following the path of a merchant. He doesn't care what to sell and who to sell. The main thing is to sell so that the economy produces as many goods as possible and grows. At the same time, some categories of goods may be used against the United States in the future. Thus, it would be reasonable not to export to the main competitors on the world stage. Obviously, if we were talking about a small country that does not pose a serious threat to America, then it does not make much difference to sell it or not to sell products such as jet engines. But China (with huge production and technological development and even greater potential) can use these engines to copy technologies and place them on their combat aircraft. Given the constant competition between China and the United States, this is really a too risky step. And Democrats can again use this position of Trump to accuse him of short-sightedness.
From a technical point of view, we expect boring and uninteresting trades on Monday. It is unlikely that the correction will continue at the same pace as on Friday. Thus, volatility is likely to decrease. Both channels of linear regression continue to be directed downward, however, as we have said in previous reviews, it is likely that the euro/dollar pair will now go into consolidation for several weeks. The long-term outlook for the euro remains the same - moving towards price parity, as most macroeconomic and fundamental factors remain in favor of the US currency.
The average volatility of the euro/dollar currency pair is 45 points per day. In general, the indicator remains unchanged and the pair still passes about 40 points from the minimum to the maximum of each day. Thus, on Monday, we expect movement between the borders of the volatility corridor of 1.0801-1.0891. In general, volatility remains fairly low.
Nearest support levels:
S1 - 1.0803
S2 - 1.0742
S3 - 1.0681
Nearest resistance levels:
R1 - 1.0864
R2 - 1.0925
R3 - 1.0986
Trading recommendations:
The euro/dollar pair started a corrective movement. Thus, purchases of the European currency with the targets of 1.0891 and 1.0925 are relevant now. You can return to sell positions after the price is fixed below the moving average line with the targets of 1.0803 and 1.0742.
In addition to the technical picture, you should also take into account the fundamental data and the time of their release.
Explanation of the illustrations:
The highest linear regression channel is the blue unidirectional lines.
The lowest linear regression channel is the purple unidirectional lines.
CCI - blue line in the indicator window.
Moving average (20; smoothed) - blue line on the price chart.
Murray levels - multi-colored horizontal stripes.
Heiken Ashi is an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.