From a comprehensive analysis, we see an intensive upward move that managed to break through the area of interaction of trade forces. And now about the details. 700 points – this is how much the quote passed from the set lows in just three working days. The activity of the market is striking, where impulse jumps on a daily basis form movements that were simply unrealistic.
In the previous review, we highlighted the topic that it is worth working in local operations in the current circumstances, which turned out to be the right tactic. The area of interaction of trade forces 1.1957//1.2000//1.2150, which in terms of technical analysis, played an important role in the market, was passed without unnecessary difficulties. This step once again confirms the theory that the external background and pressure on market participants provoke rapid jumps that have no other focus.
It turns out that working with relatively short-term fluctuations at this time is a priority task since while maintaining a toxic external background, fluctuations can reach the values of local trends.
In terms of volatility, we see that the last day once again set a record for the week, where the daily fluctuation was 452 points, which is 162% higher than the daily average. I would like to note the dynamics of the average hourly candles, where the dynamics of 43 points is recorded, this is comparable to the activity of daily candles of the main pairs, before the current circumstances in the world.
Volatility details: Monday-165 points; Tuesday-245 points; Wednesday-172 points; Thursday-358 points; Friday-359 points; Monday-144 points; Tuesday-271 points; Wednesday-676 points; Thursday-354 points; Friday-522 points; Monday-267 points; Tuesday-296 points; Wednesday-333 points; Thursday-452 points. The average daily indicator relative to the volatility dynamics is 172 points (see the volatility table at the end of the article).
Detailing the past day by the minute, we see that after a short walk along with the level of 1.1850 during the Pacific and Asian sessions, the quote still took the upward side, forming a move above the mark of 1.2245.
As discussed in the previous review, traders considered long positions even from the breakdown of accumulation within the level of 1.1850, but as soon as the price passed higher than 1.1972, everything became clear, purchase operations flowed like a river, everyone had a chance to earn.
Looking at the trading chart in general terms (daily period), we see a recovery of more than 49% relative to the inertia course. It is worth noting that the long-term downward trend remains unchanged in the market.
The news background of the past day had data on UK retail sales, which slowed from 0.9% to 0.0%, despite the fact that the forecast was not so gloomy data. The market reaction to the statistical indicators was almost absent, for the reason that everyone was waiting for the main news on the US labor market. So this is a complete shock, this is what the market faced when it saw data on applications for unemployment benefits in the United States, where initial applications increased from 282,000 to 3,283,000, and the number of repeat applications increased from 1,702,000 to 1,803,000. The current situation is comparable to the great depression. Now we understand the reason for such a rapid weakening of the US dollar.
At the same time, the Bank of England held a meeting yesterday during which the base interest rate was kept at the same level of 0.1%. In fact, the regulator remained committed to the same scheme as at the recent emergency meeting.
It is worth noting that the committee voted unanimously to continue the program of repurchasing government bonds and corporate bonds for an additional £200 billion. The total volume of these purchases is £645 billion.
In terms of the information background, we see the COVID-19 virus developing around the world, where 2,172 new cases of infection were recorded over the last day (March 26), which means that 11,812 of them have already been infected in the United Kingdom, with 578 fatalities.
British Prime Minister Boris Johnson became infected with the coronavirus, and the Prime Minister tweeted about this about an hour ago.
"Over the past 24 hours, I have developed mild symptoms, and the test for coronavirus was positive. I am currently in self-isolation, but I will continue to lead the government's response via videoconference, and we will fight the coronavirus," twitter @BorisJohnson.
The upcoming trading week in terms of the economic calendar includes the ADP report on employment levels, as well as the report of the United States Department of labor, where, due to the difficult circumstances associated with the coronavirus, we can again see the terrible consequences in the form of statistics.
The most interesting events are displayed below:
On Monday, March 30
United Kingdom 09:30 London time - data on crediting
US 15:00 London time - pending home sales (y/y) (Feb): Previous 5.7%->Forecast 1.7%
On Tuesday, March 31
United Kingdom 07:00 London time - GDP
US 14:00 London time - applications composite index of the cost of housing S&P/CS Composite-20 seasonally adjusted
On Wednesday, April 1
United Kingdom 09:30 London time - manufacturing sector PMI (March)
US 13:15 London time - ADP report on private-sector employment (March)
US 15:00 London time - ISM employment index in the manufacturing sector (March)
On Thursday, April 2
US 13:30 London time - applications for unemployment benefits
On Friday, April 3
US 13:30 London time - report of the United States Department of Labor
Analyzing the current trading chart, we see a characteristic slowdown, where the quote leads the concentration inside the levels of 1.2150/1.2350. In fact, the upper level of 1.2350 has not yet been reached, and the time frame is the coordinates of 1.2300 (1.2150/1.2300). It is worth understanding that the slowdown is a temporary phenomenon, where the activity will reappear, and we will see characteristic jumps. Thus, the trading tactics remain unchanged, working in local movements.
In terms of the emotional mood of market participants, we see that the external background does not stop surprising traders for a single day. Market activity, in this case, depends directly on it, and since the background toxicity is high, volatility will not decrease in the near future.
Detailing the minute-by-minute period, we see that the level of 1.2150 plays the role of support, where it was confirmed when the daily candle was opened. The subsequent amplitude focused on the range of 1.2150/1.2300.
In turn, traders consider the 1.2150/1.2300 frames as reference points for local positions in the event of a breakdown.
Having a general picture of the actions, we can assume that the fluctuation within the framework of 1.2150/1.2300 is temporary, which means that a new surge will occur soon, on which you can definitely make money. Trading tactics distinguish the method of robots on the breakdown of borders, where the upper frame is a variable value of 1.2300, and the main border is 1.2350.
Based on the above information, we will output trading recommendations:
- Buy positions are considered in two stages, the first is in the case of fixing the price higher than 1.2310, with a move to 1.2350. The second stage is made after fixing the price higher than 1.2360, with a move to 1.2450-1.2500.
- We consider selling positions if the price is fixed below 1.2150 with the prospect of a move to 1.2000. Variable trades can occur within the range of 1.2150/1.2300 (1.2350).
Analyzing different sectors of timeframes (TF), we see that due to the local upward movement, the indicators of technical instruments on hourly periods display a buy signal. At the same time, daily intervals invariably maintain a downward mood due to the general background.
Volatility for the week / Measurement of volatility: Month; Quarter; Year.
Volatility measurement reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(March 27 was based on the time of publication of the article)
The volatility of the current time is 173 points, which is comparable to the value of the average daily indicator. It is likely to assume that the market activity will continue to grow since there is no reason for the external background to go down.
Resistance zones: 1.2350**; 1.2500; 1.2620; 1.2725*; 1.2770**; 1.2885*; 1.3000; 1.3170**; 1.3300**; 1.3600; 1.3850; 1.4000***; 1.4350**.
Support zones: 1.2150**; 1.2000*** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1.1000; 1.0800; 1.0500; 1.0000.
* Periodic level
** Range level
*** Psychological level
****The article is based on the principle of conducting a transaction, with daily adjustments.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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