Over the past trading day, the EUR / USD currency pair showed an extremely high volatility of 159 points, resulting in a surge of 95 points down and 159 points up. From the point of view of technical analysis, we have a great trading day. I congratulate everyone on a decent profit and the coincidence of the previously set forecast, and now, we will analyze the technical part in detail. Many waited for a downward movement, and the consolidation in the face of the psychological level of 1.1000 was on everyone's ears, as the accumulation of several days prepared the quote for the great procession. Day "X" has come, the price rushed down, the point 1.1000 is behind, and the breakdown was followed by an inertial move, which went straight to the minimum of the current year 1.0926, where the fulcrum was found with surgical accuracy. Profit taken! Further, no one expected such a development, in counting hours, we return back to the starting point and overcome it, resting in the end at the resistance level of 1.1080. Local overheating of short positions in a compartment with an information and news background played a role in restoring the quote, and if you still weren't afraid and took the initiative, you could make money on two vibrations.
As discussed in a previous review, speculators were waiting for short positions, and their reporting point was slightly below the psychological level of 1.1000. For some reason, I'm sure that many managed to ride both a decline and an increase. A decline to a minimum of 1.0926, at the same rate as yesterday, said for itself that the market was overheating and was very likely to wait for a correction, but it happened even better - a return. Considering the trading chart in general terms (the daily period), we see that the corrective move is still on the market, and the recent fluctuation confirmed the pivot point of 1.0926, which holds the main downward trend.
Now, let's move on to the organizers of this banquet, that is, to the information and news background.
Yesterday, the focus of the spotlight was a meeting of the Board of the European Central Bank, followed by a press conference. As expected, the ECB reduced the deposit rate from -0.4% to -0.5%. In addition to everything, they resumed the quantitative easing program with the purchase of assets in the amount of 20 billion euros per month. That is, the Europeans have lived without the QE program for less than a year, and here you go again - come and get it! In turn, the head of the ECB, Mario Draghi, at a subsequent press conference, delighted everyone with a statement that the ECB would not raise rates until inflation approached the target level — a little less than 2%. Now, the inflation rate is 1% per annum. What was left unattended was the fact that Mario Draghi evaded a direct answer regarding the quantitative easing program, without giving specific dates for the QE program. Experts agree that in accordance with the charter of the regulator and the limits on the purchase of securities of one issuer, QE programs can last approximately 12-14 months - no more. In fact, this calculation and the omission of the real QE dates later helped to return the euro position to the market. The next euro recovery factor came to us from the United States, where they published inflation data. So, they were waiting for confirmation of the inflation rate by 1.8%, and as a result, they got a decrease to 1.7%. This indicator automatically activated a panic wave in everyone, regarding the fact that at the upcoming meeting of the Federal Reserve System the refinancing rate will be reduced. It was hard to stop the panic process and if we compare both news, we get the basis for the return of the quotes.
Today, in terms of the economic calendar, we have data on retail sales in the United States, where a slowdown is expected from 3.4% to 3.2%. In fact, if the data are confirmed, then in tandem with the US inflation indicators, the mood about lowering the refinancing rate may increase. In terms of informational background, we have another surge, which was provided by everyone's favorite source of Bloomberg media. So Bloomberg published an interview with the head of the central bank of Austria, Robert Holtzmann, who said that the last package of QE of the European Central Bank may have been a mistake and could be changed after the new head of the ECB Christina Lagarde takes office. The news did not go unnoticed, and we almost immediately rushed up.
The upcoming trading week in terms of the economic calendar has not just a package of statistical data, but a meeting of the Fed, which many traders have been waiting for. Thus, intrigue, and high volatility, is provided in absentia. Of course, no one forgets about the spontaneous informational background, which will fuel the interest of speculators along the entire path.
The most interesting events displayed below --->
Tuesday 17th September
USA 13:15 Universal time. - Volume of industrial production
Wednesday, September 18
EU 9:00 Universal time. - Consumer Price Index (CPI) (YoY) (Aug): Prev 1.0% ---> Forecast 1.0%
USA 12:30 Universal time. - Number of building permits issued (Aug): Prev 1,317M ---> Forecast 1,300M
USA 12:30 Universal time. - Volume of construction of new houses (Aug): Prev 1.191M ---> Forecast 1.250M
USA 18:00 Universal time - Fed meeting
USA 18:30 Universal time - Press conference of the Federal Open Market Committee of the Fed
Thursday, September 19
USA 14:00 Universak time - Sales in the secondary housing market (Aug): Prev 5.42M ---> 5.40M forecast
Analyzing the current trading chart, we see that the level of 1.1080 did not last long and the departure of the current information background gave acceleration, towards the level of 1.1110 - the cluster limit on August 16-22. In fact, we see that against the background of an already unstable platform, another piece of news flies that continues to unjustifiably push the euro to new heights. Speculators, in turn, are immensely happy. Volatility is high and the information and news background sparkles, we work for our pleasure.
It is likely to assume that the information and news background will play a small role in the movement of quotes, where from the point of view of technical analysis everything indicates a correction, or at least a partial recovery. Thus, the value of 1.1110 plays the role of resistance, but if the panic continues, then the upward movement may resume. Another theory is to slow down 1.1080 / 1.1110.
Based on the above information, we derive trading recommendations:
- Buying positions are considered in case of price fixing higher than 1.1120, with the prospect of a move to 1.1160-1.11180.
- Selling positions are considered in the case of fixing the price lower than 1.1066, with the prospect of a move of 1.1050-1.1000.
Analyzing a different sector of timeframes (TF), we see that indicators on the minute, intraday, and medium-term periods signal purchases. In the analysis, it is worth considering such a moment that, due to the high amplitude, the indicators arbitrarily changed their interest.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 13 was built taking into account the time of publication of the article)
The current time volatility is 54 points, which is almost equal to the average daily indicator. It is likely to suggest that volatility could still increase amid the publication of statistics on the United States.
Resistance zones: 11,1100 ** ;, 1180 *; 1.1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support Areas: 1,1100 **; 1,1000 ***; 1.0850 **; 1,0500 ***; 1.0350 **; 1,0000 ***.
* Periodic level
** Range Level
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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