EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair performed a reversal in favor of the US dollar after the formation of a bearish divergence at the CCI indicator and rebounded from the level of 1.1164. Thus, a drop of the quotes may continue towards the correctional level of 100.0% (1.1106). The upward trend channel, despite the closing quotes of the euro/dollar pair above it, remains in force, indicating the "bullish" mood of traders. Fixing the pair's rate on October 22 above the level of 1.1164 will increase the probability of continuing growth towards the next extremum level of 1.1232.
Traders continue to expect Thursday, when not only a meeting of the ECB will take place, as a result of which changes can again be made in the monetary policy of the European Union, but also released a lot of economic reports in the US and the European Union. Until this day, traders can only adjust the pair by closing purchases, as, firstly, the European currency has grown quite decently in recent weeks, and secondly, it is difficult to expect anything optimistic from Mario Draghi's decisions and his speech at the press conference.
Meanwhile, nothing interesting is happening in the US either. Trade talks between China and the US have concluded, both sides said "progress has been made" and, in general, "good atmosphere", and that's all. No agreement was signed, no new data on this topic. It seems that Beijing is playing cat and mouse with Washington, verbally declaring one thing, in practice, implementing a completely different strategy. And this strategy can be only one. The delay time. China is well aware that Donald Trump is unlikely to be re-elected for a second term. Moreover, the US President would at least finalize the current term until the end, since the topic of possible impeachment has not subsided, unlike trade negotiations. Thus, why should China make concessions, try to come to terms with Trump, with whom no one has managed to reach an agreement if a more loyal president comes to power in a year, with whom it will be possible to restore trade relations between the countries that were before Trump? It seems to me that Beijing understands this and deliberately pulls time. But Trump can only threaten with the introduction of new duties, the tightening of existing duties, to push China to sign a deal that is primarily beneficial to the United States. Theoretically, a solution to the trade conflict could have a beneficial effect on the dollar, as it would mean the end of the cycle of deterioration of economic indicators in America. But no.
Thus, traders are now waiting for the meetings of the ECB and the Fed, realizing that these events can either support the existing trend or return the euro/dollar pair to a downward trend.
What to expect from the euro/dollar currency pair today?
On October 22, traders will be able to count on the continuation of the pair's growth if the consolidation above the level of 1.1164 is performed. Otherwise, we are waiting for a slow slide to 1.1106, below which we can already look towards new purchases of the US currency.
The Fibo grid is based on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
I recommend selling the pair with a target of 1.1024 if the close is made below the level of 1.1106 (100.0% Fibonacci). A stop-loss order above the level of 1.1106.
I recommend opening new purchases of the pair with the target of 1.1232 and the stop-loss order below the level of 1.1164 if the closure is performed above 1.1164.
