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: 154.7653
The European currency continues a steady upward movement, with virtually no corrections and pullbacks. If earlier we wrote for a long time that the most important catalyst for growth for the pound/dollar pair is Brexit, now a similar conclusion applies to the euro/dollar pair. As you know, most of the participants of the Forex market believe that the deal between Brussels and London will be concluded in October and it will be ratified by the UK Parliament. If we didn't believe it, then we would not see the growth of the British currency by 800 points. And for the European Union, the signing of the deal is no less important than for the UK, therefore, over the past week, euro traders also pay attention to the data on Brexit. Yesterday, in addition to the news about the "divorce" process between the EU and Britain, several secondary reports were released in the States, the most important of which, industrial production for September, showed a decline of 0.4% m/m, while forecasts predicted a reduction of only 0.1%. As we can see, industrial production suffers and is depressed not only in the eurozone. However, traders are looking more and more in the long term not towards the US dollar, believing that since the Fed has headed for lowering the key rate, and according to Trump should generally bring the rate to zero, then the US currency is no longer attractive for investment. This, of course, is a very loud statement and we would prefer to wait for the results on Brexit, which will appear tomorrow, after the meeting of the Parliament of Great Britain and the corresponding vote, and only after that, we would make more confident conclusions. The fact is that now it is really difficult to say how much Brexit affects the euro/dollar pair, and how much demand for the US currency has weakened. After all, in the European Union, as we have repeatedly noted, the situation is much worse than in America.
No important macroeconomic reports are scheduled for the last trading day of the week. The calendars of macroeconomic events are empty both in the States and in the European Union. This means that today traders will also be paying increased attention to information from the Brexit fields. As before, any positive information that brings the procedure closer to an orderly divorce is a factor for the pound, and now for the euro too. The EU summit, meanwhile, continues and interesting data may still come from it, although Boris Johnson and Jean-Claude Juncker have already announced an agreement yesterday.
From a technical point of view, the euro/dollar currency pair continues its upward movement, thus, the pair's purchases remain relevant. At the moment, there are no signs of the beginning of a downward correction.
Nearest support levels:
S1 – 1.1047
S2 – 1.1017
S3 – 1.0986
Nearest resistance levels:
R1 – 1.1078
R2 – 1.1108
R3 – 1.1139
Trading recommendations:
The euro/dollar continues to move up. Thus, it is recommended to continue buying the euro currency with the targets of 1.1139 and 1.1169 until the Heiken Ashi indicator turns down. It is recommended to buy the US currency not before the bears cross the moving average line with the first targets of 1.1017 and 1.0986.
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) – blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
