From the point of view of complex analysis, we see a partial development, where the quote still preserves the fluctuation within the given framework, and now let's talk about the details. Since the beginning of the trading week, the quote is in the stage of partial recovery relative to the rapid downward movement the period before. The area of interaction of trading forces, which represented the level of 1.0850, will be able to temporarily hold back the recovery process, forming a reverse course to the level of 1.0775, as expected in the previous review. At the same time, the local holding of the price below 1.0775 indicates that sellers are not afraid of descending positions, and this is a good signal for further development.
Regarding the theory of downward development, we see a correction process that has already reached the Fibo level of 23.6. This phase was necessary, since a substantial oversold was formed at the current stage, but in terms of a global view, the downward development is still relevant. In terms of lows, we see that only the 2017 area was affected at the moment, but the main minimum in the face of 1.0325 stands in its place, which means that in theory, there is still a chance of further decline, where the external background has this. Thus, it is worth noting that, in comparison with the pound sterling, where all were broken to a minimum without exception, there is a real platform for further decline.
In terms of volatility, we fix a slight slowdown relative to the periods earlier, but when calculating the average daily candlestick, acceleration is obvious. We already wrote earlier that the average daily indicator since the beginning of the year has doubled, where the dynamics of the currency pair has become similar in nature to aggressive trading instruments, but we have ignored the hourly average candles, the dynamics of which have grown by 262% since the beginning of the year. Now, we understand how densely the external background is in the market and how actively speculators are working on it.
Details of volatility: Monday - 155 points; Tuesday - 183 points; Wednesday - 115 points; Thursday - 278 points; Friday - 166 points; Monday - 151 points; Tuesday - 234 points; Wednesday - 243 points; Thursday - 326 points; Friday - 194 points; Monday - 191 points; Tuesday - 160 points. The average daily indicator, relative to the dynamics of volatility is 101 points [see table of volatility at the end of the article].
Analyzing the past minute by minute, we saw two main bars ascending, which arose at the start of the daily candle and lasted until noon, and the second bar, which changed to descending and lasted until 18:00 UTC+00. Moreover, a peculiar V-shaped formation locally completed just at the moment of confirmation of the level of 1.0775.
As discussed in the previous review, traders actively took profits from long positions at 1.0850, where new deals appeared, but for sale. The recommendation regarding the decline to the area of 1.0775 level coincided, which gave us a small profit.
Considering the trading chart in general terms [the daily period], we see the correction phase in the structure of the inertial move. The first signs of a possible correction relative to the downward inertial course.
The news background of the past day contained statistics on the PMI of Europe, where the business activity index fell below all historical lows, setting a kind of anti-record in the EU. So, indicators amounted to 28.40, the business activity index in the manufacturing sector saved this situation, which declined from 49.20 to 44.80, but this is still within the bounds of common sense. In the afternoon, data on PMI in the United States was published, where the index of business activity in the service sector, like Europe, showed an anti-record, falling from 49.40 to 39.0. Nevertheless, the situation was straightened by the index of business activity in the manufacturing sector, which fell, but still within the normal range from 50.70 to 49.20.
In terms of the general informational background, we see fear of the possible consequences of the pandemic, where the European Central Bank conducted a study in which it was said that the raging virus COVID-19 could cause damage to the global economy, comparable to the financial crisis of 2008-2009. In turn, the epidemiological situation and the spread of COVID-19 in the world as of 05.00 (Universal time) on 03/25/2020 scares with new records, where the growth of infected in the world amounted to 42,276 per day, the total recorded case is already 422,733. Separately, it is worth noting the United States, where almost three thousand people grew sick in three days. Donald Trump, in turn, is trying to cheer up the country's economy with a package of stimulus measures, on expectations of which the Dow Jones index managed to grow by 11.37% by the close of trading. In this case, it is like a kind of pill that does not have the properties of healing.
Today, in terms of the economic calendar, we have data on orders for durable goods in the United States, where they expect a reduction of 0.7%, which as a result will be regarded as not the best factor for strengthening the dollar. It is worth considering that the external background is still here and it will continue to put pressure on market participants, where statistics may be in the background.
Analyzing the current trading chart, we see a temporary fluctuation between the levels of 1.0775 / 1.0850, where the price has focused within the upper frame. In fact, the corrective move is still in effect, but keeping the price below the level of 1.0850 leaves a chance of a possible slowdown, during which short positions will appear, returning the quote to the base point. It is worth considering that if the correction move is still preserved in the market, then the next Fibo level is located at 1.0965 [38.2].
In terms of emotional mood, we see that the activity of market participants is out of the question, and this is confirmed by hourly average candles, the dynamics of which are growing on a daily basis.
By detailing the available time interval, we see that after working out the level of 1.0775 during the Pacific trading session, the quote went towards the next level of 1.0850, showing particular activity after the start of the Europeans.
In turn, traders immediately consider two scenarios: the continuation of the correction course in case of price fixing higher than 1.0885, and the resumption of the main trend in case of price fixing lower than 1.0800.
It can be assumed that this situation may temporarily fluctuate along the level of 1.0850, where the deviation will be approximately 30 points. The tactic in this case will be according to the method of analyzing the price behavior, where the main position remains the downward development, but in this case, we need to fix lower than 1.0750.
Based on the above information, we derive trading recommendations:
- Buy positions should be considered already after fixing the price higher than 1.0885, with the prospect of a movement to 1.0950
- Sell positions should be considered if prices are fixed below the 1.0800 area, with the prospect of a movement to 1.0775-1.0650 --- 1.0636.
Analyzing a different sector of timeframes (TF), we see that the indicators of technical tools locally changed their mood relative to minute and hour periods due to the corrective move. On the other hand, daily intervals invariably keep a sell signal.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation calculated from Month / Quarter / Year.
(March 25 was built taking into account the time of publication of the article)
The volatility of the current time is 86 points, which is almost closer to the daily average. It can be assumed that the dynamics will continue to grow due to the impressive external background and eventually exceeding the average daily indicator.
Resistance zones: 1.0850 **; 1,1000 ***; 1.1080 **; 1.1180; 1.1300; 1.1440; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100
Support Areas: 1.0775 *; 1.0650 (1.0636); 1.0500 ***; 1.0350 **; 1.0000 ***.
* Periodic level
** Range Level
*** Psychological level