We are faced with an extremely low volatility indicator within an important price level. What this can lead to and how the publication of the Fed protocol will affect the market.
The quote hovered tiresome within the control level of 1.1080, where sellers got a chance to return to the market, however, market activity leaves much to be desired. Thus, in terms of macroeconomic reporting, we had data on production volumes in the construction sector of the European Union for September, where they expected acceleration by 2.7%, but forecasts did not match, since there is a decline of 0.7% again. From the west, we had data on the US construction sector, where the published indicators pleased the market participants with the current dynamics. Thus, the number of issued building permits shows an increase of 5%, and the volume of construction of new houses has an increase of 3.8%.
A secondary factor that could put pressure on bullish positions came to us from the UK, where the recent televised debates between Boris Johnson and Jeremy Corbyn showed that the Laborites still have the risk of winning early elections, and this fact will affect the Brexit deal.
Today, in terms of macroeconomic reporting, we do not have the attention of statistical data, but the text of the minutes of the meeting of the Federal Committee for Operations on the Open Market is published, which clearly causes considerable interest of market participants. This is due to the fact that the Federal Reserve System reduced the refinancing rate three times in a row, and although representatives of the regulator convince everyone that they will not soften monetary policy parameters again in December, investors are pretty worried. Thus, market participants will carefully read the text of the minutes, looking for at least the slightest hint of the very possibility of another reduction in the refinancing rate, and so, increased nervousness will contribute to increased volatility.
USA 19:00 Universal time. - minutes of the meeting of the Federal Committee for Open Market Operations
In terms of technical analysis, the EUR/USD currency pair formed a small flat within the control level of 1.1080, the amplitude of which is only 18 points, which is more similar to accumulation than to the whole movement. In fact, we were faced with a versatile interest, where not a weak range level of 1.1080 hangs over the quote, but the bullish interest that arose at the moment of developing the psychological level of 1.1000 has completely dried up due to the massive fixation of long positions.
In terms of a general review of the trading chart, the hope of continuing the recovery process reappeared, due to the existing stop within the range level. Thus, the recovery process with respect to the elongated correction is not completed, and its stage is active.
It is likely to assume that the accumulation amplitude within the range of 1.1066 / 1.1083 will not last very long and perhaps against the background of the existing FOMC protocol, we will see a breakdown of the given frames with accelerated volatility. The most optimal tactic is to work on the breakdown of specified boundaries with a small error of 1.1060 / 1.1100.
Concretizing all of the above into trading signals:
- We consider long positions in the case of fixing prices higher than 1.1100.
- We consider short positions in the case of working out the level of 1.1080, and fixing the price in the region of 1.1055 / 1.1060.
As we can see, trading recommendations remained in the same scenario, which actually enhances their effect.
From the point of view of a comprehensive indicator analysis, we see that due to the available accumulation, indicators have a kind of multi-directional character. At the same time, intraday and medium-term time segments still reflect an earlier upward move, which brought us back to the range level.
