4-hour timeframe
Amplitude of the last 5 days (high-low): 64p - 75p - 56p - 41p - 39p.
Average volatility over the past 5 days: 55p (average).
The third trading day of the week for the EUR/USD pair is held in the same leisurely bidding as the first two. The volatility of the pair remains average (if you take into account the last five days), however, if you pay attention to the volatility of Monday and Tuesday, it becomes clear that it decreases and is low these days - about 40 points. Most likely, the same value of volatility awaits us at the end of today.
The fundamental background remains empty for the euro/dollar pair. Not a single important macroeconomic report, not a single speech by a high-ranking official, not a single economic message. There is simply nothing for traders to react to on October 23. They can only wait for the receipt of these very news and reports, that is, wait for tomorrow. In addition to the ECB meeting, which we have already spoken about several times, as well as possible scenarios at this meeting, a fairly large number of business activity indices will be released during the day in various sectors of Germany, the European Union and the United States. We have listed the most significant indices; in addition to them, there will also be figures for France, Italy and other European countries. Traders are most interested in business activity indices in the industrial sector of the eurozone and Germany as the locomotive of the entire EU economy. Recall that the current values of the indices are 41.7 (Germany) and 45.7 (European Union). These are very low values, indicating a decline in the manufacturing industry. The worst thing for the European Union is that the index of business activity in the services sector of both Germany and the European Union threatens to fall into the red zone. So far, these indices are balancing on the verge of 50.0, above which the lowest growth in the industry remains. However, the trend of deterioration is visible to the naked eye. It should also be noted that these are not final values for October, but only preliminary ones. But in case of serious deviations of real values from forecasts, a rather noticeable reaction of traders can follow. You should also dwell in detail on the forecasts. For all six business activity indexes (three in Germany and three in the European Union), an increase is expected compared to the previous month. However, we believe that the situation will radically change. Given the current values of business activity in industry, it is hardly worth expecting that a decline in the industry will unexpectedly give way to growth.
Macroeconomic data from overseas on October 24 are even more interesting. The same indexes of business activity in the sectors of services and production, as well as a composite index will be published in the United States. It should be noted that in the US, business activity indexes are published in two variations, Markit and ISM. ISM indices are considered more important, but only Markit indices will be available tomorrow. According to analyst forecasts, all indices in the United States will be higher than September. All three indices, although the same as the European ones, are in a downward direction, but still remain higher than the mark of 50.0. Thus, based on an assessment of the business activity of the United States and the EU, we can conclude that we have already done more than once: the economic situation in the US remains more stable than in the European Union. Thus, even tomorrow it is possible to make an assumption that business activity indices will precisely support the US currency.
But the US dollar may suffer tomorrow from a series of macroeconomic statistics relating to orders for durable goods in the United States. The main indicator for September is forecasted with a decrease of 0.8%. Excluding transport - a decrease of 0.2% is expected. Excluding defense orders, an increase of 1.9% is possible. And without taking into account the defense and aviation, a decrease of 0.2% is possible. It is the latter indicator that is considered the most significant, and 3 out of 4 indicators are expected to decline. But support for the US currency by forex market participants will depend on whether the real values of as many as 7 macroeconomic reports on the US exceed forecasts.
About the ECB meeting, everything that could have been said. Monetary policy is unlikely to change, all the attention of traders will be focused on the last speech of Mario Draghi. That it will be important for traders. As you can see, tomorrow is full of macroeconomic statistics, so volatility is possible and even very likely, as well as sharp price reversals during the trading day. Traders will try to work out every news and report, which can cause the opening of a large number of cross-deals. Tomorrow we will see in the literal sense of the word the confrontation of bulls and bears.
From a technical point of view, by the way, it is more preferable to resume an upward trend, despite the fact that the pair has consolidated below the critical Kijun-sen line. It should be noted here that this Kijun-sen line increased to a greater extent than the price fell. Thus, it is possible that the upward movement will resume, but the fundamental component will come first tomorrow. Both additional levels of support and resistance (1.1181 and 1.1072), which are built on the basis of the average volatility over 5 days, are unlikely to be achieved today. As a result of today, the average volatility is likely to fall even more, so tomorrow these levels will be even closer to the opening price. But just tomorrow, an increase in volatility is possible, so more attention should be paid to the classical levels of support and resistance.
24-hour timeframe
As for the higher timeframe (daily), here we see the consolidation above the Ichimoku cloud and a return to the Senkou Span B line (price value - 1.1106). A rebound may occur from this line, which will make it possible to resume the upward trend. Bulls will be waiting for this rebound today, and most importantly - tomorrow. In case of overcoming the upper boundary of the Ichimoku cloud, the downward movement may continue to the critical line for the 24-hour timeframe (1.1029 - price value).
Trading recommendations:
The EUR/USD pair continues to adjust. However, overcoming the critical line on the 4-hour timeframe is unconvincing, and on the 24-hour timeline, a rebound from Senkou Span B line may take place. and 1,1230, which are recommended to be rejected in this case. It is not recommended to return to selling the euro/dollar pair since there is strong support in the form of the Senkou Span B line on the daily timeframe.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicator window.
Support / Resistance Classic Levels:
Red and gray dotted lines with price symbols.
Pivot Level:
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movement options:
Red and green arrows.
