From the point of view of a comprehensive analysis, we see how, against the backdrop of speculative excitement, the quote locally rebounded above the level of 1.1300, but in the end, the concentration of trading forces took its toll, and now let's talk about the details.
Last trading day had another round of long positions, on the basis of which the quote locally managed to rise to the level of 1.1348, putting the recovery process that arose from the area of interaction of the trading forces 1.1440/1.1500 at high risk. It is worth noting that the surge in activity was speculative in nature, thereby returning the price to the area of 1.1300 did not take long, and this was the end of the past day.
The total scale of the change since touching the range level of 1.1180 amounted to more than 150 points, and this is the most impressive return stroke in size since the start of the recovery process on June 11. It can be noted that the 1.1350 area played with a variable ceiling in the current course, as it was on June 16, when the attempt to return prices to the area of interaction of trade forces was recorded for the first time.
It is worth recalling that in order for the signal to return the price to the area of 1.1400/1.1440 to be confirmed, the quote must be consolidated above 1.1350 in a four-hour period. In this case, the chance of resuming the upward movement will be much higher than just fluctuation within this value.
Regarding the theory of development, they are still discussing the possibility of repeating the plot of March of this year, where the quote against the backdrop of high speculative excitement touched the area of interaction of the trading forces 1.1440/1500, after which it sharply changed direction, while maintaining a speculative mood. In this, everyone should take into account one thing: the interaction of the external background differs with the analyzed period, and this means that the market reaction may differ.
As before, our strategy is a local approach to trading operations, which considers the future not according to trends, but according to fluctuations, which makes it possible to be on the pulse of the market together with speculative leaps.
As discussed in a previous review, traders viewed the 1.1280/1.1310 accumulation limits as a way to enter local operations, which turned out to be a profitable approach in this time period.
In terms of volatility, the indicator is fixed at 115 points, which is 13% higher than the average daily value. A high volatility indicator is associated with the excitement of speculative operations, which is more pronounced in June than in the previous month.
Statistical indicators of the dynamics of 2020 indicate that March was the most active month in terms of volatility. This month was the starting point for speculative excitement, which is currently on the market.
January - 44 points
February - 54 points
March - 111 points
April - 88 points
May - 77 points
June (1-24) - 99 points
[The figures above reflect the daily average candle]
Considering the trading chart in general terms, you can see the price fluctuation at the conditional peak of the upward spiral, where they will talk about the recovery process again after fixing the price lower than 1.1180.
The news background of the past day contained preliminary data on European business activity indices, where they recorded growth from 30.5 points to 47.3 points in the services sector. The production index, in turn, rose from 39.4 points to 46.9 points. As a result, the composite business activity index grew from 31.9 points to 47.5 points, which turned out to be noticeably better than all forecasts.
The market reaction was possible ahead of schedule at the start of the European session.
A similar indicator for the business activity index was published this afternoon in the United States, where an increase from 37.5 to 46.7 was recorded in the service sector, and the manufacturing index rose from 39.8 to 49.6. As a result, Europe's composite business activity index rose from 37.0 to 46.8.
The market did not react to the not at all bad statistics for the United States, possibly due to general excitement on the part of speculators, who at that time, followed the correlating pound/dollar currency pair.
So, a factor in the local growth of the British currency was a new package of weakening quarantine measures that came into force in March of this year, due to the coronavirus pandemic.
In terms of the general information background, we have pessimistic forecasts for the recovery of the US economy, which was provided by the head of the Federal Reserve Bank of Boston [FRB] Eric Rosengren who believes that the macroeconomic indicators of the second half of 2020 in the United States will be worse than expected.
"We will find ourselves in a situation where the economy is growing slower than we could have hoped for a few months ago," Rosengren believes.
So regarding the details, the head of the Federal Reserve Bank of Boston believes that the United States was not particularly successful in the fight against coronavirus infection and this gives him reason to make gloomy forecasts than his colleagues from the Fed committee. Eric Rosengren believes that unemployment will be calculated in double digits by the year, GDP will decline more than the projected 6.5%, and inflation will be significantly lower than the Fed target of 2%.
Today, in terms of the economic calendar, we do not have the attention of statistical data on Europe and the United States, thereby the market will continue to focus on a speculative background.
Further development
Analyzing the current trading chart, we can see that during the start of the European session, the quote managed to go down locally to the value of 1.1269, but after which the concentration of trading forces reappeared near the level of 1.1300, forming a slowdown within the limits of 1.1280/1.1305.
The quote continues chaotic jumps, which means that the local operations strategy works and should be followed.
It can be assumed that price fluctuations in the region of 1.1280/1.1305 will lead to accumulation again and, as a fact, to speculative excitement, where the best strategy would be to work on the breakdown of established boundaries.
Based on the above information, we derive trading recommendations:
- Consider buy positions above the level of 1.1310, towards 1.1345-1.1380
- Consider sell positions below the level of 1.1280, in the direction of 1.1235-1.1200.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the indicators of technical tools on hourly periods signal a purchase, for the concentration of the price within the level of 1.1300. The daily period has a neutral signal, due to the price rebound from the value of 1.1350 and consolidation below the level of 1.1300.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Volatility measurement reflects the average daily fluctuation calculated for the Month / Quarter / Year.
(June 24 was built taking into account the time of publication of the article)
The current time volatility is 56 points, which is only 34% below the daily average. It can be assumed that speculative excitement in the market will lead to high volatility indicators again.
Key levels
Resistance Zones: 1.1300; 1.1440 / 1.1500; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100
Support Zones: 1.1300; 1.1180; 1.1080 **; 1.1000 ***; 1.0850 **; 1.0775 *; 1.0650 (1.0636); 1.0500 ***; 1.0350 **; 1.0000 ***.
* Periodic level
** Range Level
*** Psychological level
