EUR/USD – 4H.
On December 5, the EUR/USD pair performed growth to the correctional level of 61.8% (1.1104), and this level has become quite a serious obstacle for traders. In the morning trading on Thursday, there is again a slight tendency of traders to buy, but their activity remains quite low. If during the day the pair passes 30-35 points, it is very difficult to earn on them with the help of any transactions. Especially if during the whole day the pair does not show movement in a certain direction, but jumps up and down. Thus, traders can now expect to resume growth in the direction of the correction levels of 61.8% (1.1104) and 76.4% (1.1133), but it is unlikely that activity will increase, as well as the strength of the pair's movement.
Sometimes it seems that the participants in the US-China trade battle are playing some kind of understandable game. How else can traders react to events that contradict each other? The States and their president, Donald Trump, make statements almost every two days that trade negotiations on a deal are ongoing and call them optimistic. In practice, we see the adoption of two laws by the States at once, which China interprets as unacceptable interference in the internal affairs of the country. We are talking about the "Hong Kong law" and the "Uighur law", each of which implies certain sanctions against Chinese officials and a reduction in the number of trade preferences. Beijing, of course, is taking retaliatory measures, and about trade negotiations, in general, remains silent. And this silence, in my opinion, is much more eloquent than any statements of the American government. Beijing remains silent because there is no progress in the talks. There is no information to confirm that Beijing agreed to buy agricultural products in the United States for a fixed amount, as the States wanted. There is no information that America has agreed to cancel all duties imposed earlier, as China wanted. What, then, is progress? If there is progress, then the parties would have declared it openly. What is the point of hiding an agreement on key issues if they become public anyway?
On the horizon, meanwhile, the date of December 15 looms ever clearer when Donald Trump will either have to introduce new duties on goods from China or announce the signing of an agreement. So far, the euro currency is growing, as hopes that the parties will still be able to conclude at least the first phase of the agreement still warm in the hearts of traders. However, demand for the euro is still low, which is confirmed by yesterday's economic reports from the United States, which could cause a serious increase in demand for the EU currency. The ISM business activity index (services sector) in November fell to 53.9, and the report on the change in the number of employed ADP showed an increase of only 67 thousand instead of the expected 140. These data could well lead to a strong growth of the European currency but did not. Thus, I believe that the mood of bullish traders now borders on uncertainty, and at any moment, they can close purchases and exit the market, which will lead to a new fall in the European currency. Today, GDP and retail sales reports have already been released, and if the first report coincided with traders' expectations, the second was much worse. The euro currency has not yet reacted to these data.
Forecast for EUR/USD and trading recommendations:
On December 5, traders will continue to try to bring the pair out of another stupor. The attempt to overcome the correction level of 61.8% (1.11104) can be considered unsuccessful or false, but at the same time, there was no noticeable drop in the quotes. The activity of traders remains low, and it is impossible to guarantee the working out of the level, which is only 30-40 points.
The Fibo grid is based on the extremes of October 21, 2019, and November 29, 2019.
