For the fourth day in a row, the euro/dollar pair is following the trajectory of a narrow range of 1.1790/1.1865, which may signal the accumulation process in anticipation of an acceleration in the market.
Looking at the price trends, you can see the rising lines that have been plotted on the trading chart based on the dynamics of the last five weeks. The slope of the trend lines is 20 degrees, which is characteristic of the slowdown process after inertial changes in the market. A conditional ceiling in the process of ascent is considered to be the psychological level of 1.2000, where the quote recently came and felt strong pressure, which led to a sharp correctional move in the structure of the rising channel.
Based on the general analysis, it can be seen that the European currency has a high degree of overbought, which will affect its value sooner or later.
Analyzing the last trading day by the fifteen-minute, we can see that the downward mood was set from the very opening of trading, but the scale of the price change is insignificant.
In terms of daily dynamics, the lowest volatility indicator for 45 trading days is recorded - 37 points, which is 55% below the average. The decline in activity is directly related to the absence of the main player in the market yesterday, which is the United States, due to the celebration of Labor Day.
It is confirmed once again that American traders are the undisputed leader in terms of market volume and speculation.
As discussed in the previous review, traders were not hoping for drastic changes in the market during the past day. As before, the main strategy was the breakout of the established range boundaries.
Looking at the trading chart in general terms (daily period), we can see a high degree of concentration of trading forces within the lower boundary of the ascending channel, which is likely to lead to a surge in activity in the market.
We have an empty news background yesterday, as statistical data was not published.
In terms of the information background, we have another round of trade negotiations between England and Brussels, where there are still no clear agreements. At the end of Monday, the EU's chief negotiator, Michel Barnier, expressed his concern over London's position in the negotiations in an interview with France Inter radio station.
"If the negotiations end without an agreement on future relations, then the United Kingdom will return to traditional and customary WTO rules, where there will be customs tariffs," Barnier said.
In turn, the Head of the European Commission, Ursula von der Leyen, expressed confidence that Britain will fulfill its part of the obligations under the agreement to leave the European Union, but this is just all hope.
"I believe the British government will honor the Withdrawal Agreement – its obligation under international law and a prerequisite for any future partnership. The Ireland and Northern Ireland Protocol is essential to safeguarding peace and stability on the island, as well as the integrity of the single market," she tweeted on Monday.
In terms of the economic calendar, we have the third estimate of Europe's GDP for the second quarter, where it is expected that the rate of economic recession will accelerate from -3.1% to -15.0%, that is, the indicators coincide with the second estimate. On a quarterly basis, GDP may fall by 12.1%.
The euro will come under pressure, if forecasts are not revised for the better.
Further development
Analyzing the current trading chart, we see the price movement within the previously established range 1.1780/1.1865, where the quote fluctuates within its lower border. It can be assumed that the accumulation of short positions may lead to a breakout of the lower border and, as a result, a sharp surge in activity in the market. In order not to fall under false fluctuations, it is suggested to wait for the price consolidation below 1.1780 on an hourly or four-hour period. The prospect of development in case of a breakdown of the lower border is in the values of 1.1755 - 1.1700.
An alternative scenario will be considered if the price hold within the established range of the amplitude.
Indicator analysis
Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments on the minute and hourly intervals signal a sell, but it should be considered that due to keeping the price in the established range, the indicators may be unstable. And although the daily period also signals a sell, a clearer signal will be received only after the price consolidates below 1.1780.
Weekly volatility / Volatility measurement: Month; Quarter; Year
The volatility measurement reflects the average daily fluctuations, calculated per Month / Quarter / Year.
(It was built considering the publication time of the article)
The volatility of the current time is 32 pips, which is 61% below the average. The dynamics will accelerate at times after the breakdown of one or another border of the existing range.
Key levels
Resistance zones: 1.1910 **; 1.2000 ***; 1.2100 *; 1.2450 **; 1.2550; 1.2825.
Support zones: 1.1800; 1.1650 *; 1,1500; 1.1350; 1.1250 *; 1.1180 **; 1.1080; 1.1000 ***.
* Periodic level
** Range level
*** Psychological level