4-hour timeframe
Technical data:
The upper channel of linear regression: direction – down.
The lower channel of linear regression: direction – up.
The moving average (20; smoothed) – up.
CCI: -4.3770
The third trading day of the week for the EUR/USD pair is likely to be held in the same direction as the first two. It's all the fault of an empty calendar of macroeconomic events in the European Union and the United States. The volatility of the pair decreased, and traders switched to the implementation of the correction scenario, which we spoke about on Monday. At the moment, nothing has changed, the euro/dollar pair is still moving towards the moving average line, which is the purpose of the current correction. Tomorrow, the ECB will announce the results of the last meeting for Mario Draghi, and the chairman himself will hold a press conference, which, according to many experts, will be something like summing up the entire life of Draghi. Also, tomorrow morning, business activity indices in the services and manufacturing sectors of the eurozone and some European countries will be published, which is also of interest, especially indices in the industrial sector, which have tended to decline sharply in recent months.
What can the euro expect after all this news? Business activity indices from the eurozone are unlikely to help the euro resume growth. Even if the values of these indicators will be better than the forecast values, the most important index is likely to remain under 50.0. The same applies to Germany, where IDA in the industry is at the level of 41.7. But from across the ocean, it's worth waiting for help, since there will also be published IDA in all areas and in recent months these indices have also fallen. Thus, it is quite possible to expect another fall, possibly even below the key mark of 50.0, which will indicate a decline in business activity in the United States. Also, an important report on orders for durable goods in the United States, which may also be significantly worse than the previous value and forecast.
As for the ECB meeting, its results and Mario Draghi's speech, the euro currency is unlikely to find support. Even if the speech is completely neutral, it will not cause the purchase of the euro, and there are no prerequisites for a "hawkish" speech. Also, traders do not believe that at his last meeting Mario Draghi will change monetary policy, leaving his follower Christine Lagarde even less room for maneuver. Accordingly, we do not expect any changes, the only question is the essence of Draghi's speech.
The technical picture has not changed at all for almost half of the trading week. The pair continues to adjust and at the moment we expect a rebound from the moving average with the resumption of the upward trend. Overcoming this line will be the first signal to change the trend to a downward one.
Nearest support levels:
S1 – 1.1108
S2 – 1.1047
S3 – 1.0986
Nearest resistance levels:
R1 – 1.1169
R2 – 1.1230
R3 – 1.1292
Trading recommendations:
The euro/dollar pair continues its downward correction. Thus, it is recommended to wait for its completion and resume buying the euro currency with targets of 1.1169 and 1.1230 as long as the pair is above the moving average. It is recommended to buy the US currency not before the bears cross the moving average line with the first target of 1.1047.
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 – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
