4-hour timeframe
Technical data:
The upper channel of linear regression: direction – down.
The lower channel of linear regression: direction – up.
The moving average (20; smoothed) – up.
CCI: 70.8542
The second trading day of the week is unlikely to be fundamentally different from the first. The EUR/USD currency pair began to adjust, failing to overcome the Murray level of "7/8" – 1.1169, thus, we can expect a decline to the moving average line and the Murray level of "6/8". There were no macroeconomic events and data on Monday, October 21, and the exact same picture will be today. Thus, traders can count on Tuesday only on technical factors and on Brexit, which recently has an impact on the behavior of the euro/dollar pair.
The technical factors are clear. Based on the current state of things, as we have already said, the correction and resumption of the upward trend is the most likely scenario. With Brexit, things get more complicated. Last night, we suggested that a vote for Boris Johnson's "deal" would not get the right number of votes, as a majority vote on Saturday was taken to postpone Brexit. It would be strange if the same deputies first postponed the "divorce" with the EU, and then approved the agreement with Brussels. In practice, everything turned out a little differently. Speaker of the House of Commons, John Bercow, simply refused to put to a vote a bill on a "deal" with the European Union, arguing that the House had already expressed its opinion on the issue on Saturday. "I have decided that the matter will not be considered today because it will be a repetition and a violation of the order of the meeting," Bercow said. Thus, the pound has received support again and can again pull up the euro currency.
However, an extremely important Thursday is approaching for the euro, when the technical picture may be disrupted, and the traders' mood to follow the British pound will change. Everything will depend on the results of the ECB meeting and Mario Draghi's press conference. The last press conference of the head of the central bank. It is unlikely that Draghi's rhetoric will suddenly change to "hawkish," but rather the question is different: how "dovish" will it be? If suddenly traders hear the next words about the deterioration of the situation in the eurozone, about the growing risks, then the euro currency can change the trend to a downward one. Not to mention, if Draghi decides to spring a surprise again and to lower the key rate. Thus, before the Fed meeting next week, the euro may well have time to return to the downward trend. Well, the Fed meeting, which will be the last significant event of the month, can, on the contrary, return the pair to an upward trend if Jerome Powell lowers the key rate for the third time in a row.
Nearest support levels:
S1 – 1.1108
S2 – 1.1047
S3 – 1.0986
Nearest resistance levels:
R1 – 1.1169
R2 – 1.1230
R3 – 1.1292
Trading recommendations:
The euro/dollar pair started a downward correction. Thus, it is recommended to wait for its completion and resume buying the euro currency with targets of 1.1169 and 1.1230 as long as the pair is above the moving average. It is recommended to buy the US currency not before the bears cross the moving average line with the first target of 1.1047.
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 line of the unidirectional movement.
The lower channel of linear regression – the purple line of the 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.
