4-hour timeframe
Technical data:
The upper channel of linear regression: direction - up.
The lower channel of linear regression: direction - up.
The moving average (20; smoothed) - sideways.
CCI: -63.9514
The first trading day of the week, as befits trading on Monday, was quiet and boring, with minimal volatility. Important macroeconomic publications on Monday were neither in the European Union nor in the States. Today, the fundamental background will not change in these countries. Thus, on December 10, you can also expect low-volatility trading without a certain direction of movement. Traders, meanwhile, continue to prepare for a more interesting part of the week, when the Fed and ECB meetings will take place. Also, do not forget that on December 12 the fateful parliamentary elections will be held in the UK, which can greatly affect Brexit and its completion, which also applies to the European Union. Well, this Sunday, it will also be known whether Donald Trump will impose duties on Chinese imports for another $160 billion.
Meanwhile, the US president continues to put pressure on China through any means and instruments. We have already written about two high-profile laws passed by Congress and the Senate, which were signed by Trump himself, which Beijing regards as outright interference in China's internal affairs. However, Trump is working "on all fronts." For example, as recently as December 6, Trump made a statement in which he urged the World Bank not to lend money to China. "Why is the World Bank lending money to China? China has enough money, and if there is not enough money, they create it. This must stop." According to many experts, Donald Trump is still losing the trade war with China. Perhaps Trump himself understands this, clearly counting on the fact that he will scare China with duties a couple of times and Beijing will immediately sign an agreement that will be beneficial to the States. In practice, it turned out that the trade war has been going on for more than a year. In addition to purely American pressure on China, Trump is trying to connect the world's financial institutions. For example, the US share in the authorized capital of the World Bank (16%) is the largest among all investors. Thus, the US presidential administration believes that it has the right to influence the policy of the World Bank and "advise" them who to lend to and who not to give. Thus, it turns out that the main investor of the World Bank is not profitable that the organization gives loans to one of the main rivals on the world stage, and the World Bank, on the contrary, is very profitable. Thus, the issue with the World Bank is now about the same as with the Fed. Will the World Bank voluntarily refuse to lend to China? Or will Trump eventually have to start using his favorite means of pressure-threats? For example, States can withdraw their share of the authorized capital from the Bank. At the same time, it should be understood that Trump's new attack is more of an image character, since the $1.5 billion that China will receive annually until 2025 is an extremely small amount when we talk about an entire country, let alone one like China. Thus, the US leader clearly understands that to put pressure on China through the World Bank does not make much sense.
To achieve the desired goal (signing a new trade agreement), the states are likely to continue to provide background economic pressure (for example, they will introduce new duties on December 15, which will cover all imports from China in total), as well as political pressure. For example, through the same Hong Kong, through the same Xinjiang Uygur Autonomous Region. But the more this story develops, the more likely it is that it will drag on for many years. Of course, China will respond to any actions of Washington, accordingly, we can only expect an escalation of the conflict between China and the United States.
The euro/dollar currency pair does not react very strongly to the clash between China and America. However, we have repeatedly said that the impact on all economies and all currencies will be through macroeconomic indicators. The question, as usual, is how many tools and opportunities do the Fed and ECB have to offset the negative impact of the global economic downturn caused by the trade wars? The advantage is clearly on the side of the Fed. Thus, we believe that the escalation of the trade conflict, in the first place, will harm the European currency.
The average volatility of the euro/dollar currency pair fell to 43 points per day, and over the past 30 days, the indicator is only 41 points. Thus, the channel in which the pair can move today is limited by the levels of 1.1022 and 1.1104. Given that no macroeconomic publication is planned for today, volatility can be much lower than 43 points, and due to the lack of trend movement of the pair, traders can trade the pair near the moving average.
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 pair started a downward movement. Thus, it is now recommended that traders consider selling the euro currency with the targets of 1.1017 and 1.1007, but only after the reversal of the Heiken Ashi indicator down and when the price is below the moving average. At the same time, it is worth remembering that today a low-volatility flat is very likely. It is recommended to return to buying the EUR/USD pair, not before the bulls overcome the moving average and the Murray level of "3/8", but from a fundamental point of view, the growth of the euro is now unlikely.
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) - the blue line on the price chart.
Support and resistance - the red horizontal lines.
Heiken Ashi - an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
