4-hour timeframe
Technical data:
The upper channel of linear regression: direction - upward.
The lower channel of linear regression: direction - sideways.
The moving average (20; smoothed) - down.
CCI: -74.0794
The EUR/USD currency pair starts in a calm direction today. After Friday's drop in the pair's quotes on the back of a vague consumer price index in the eurozone, as well as several ignored macroeconomic publications earlier, traders decided not to force events at the beginning of a new trading week. Monday, as it often happens, is empty in terms of macroeconomic statistics. However, the general fundamental background remains on the side of the US currency and despite the empty news calendar, we can expect the pair to continue falling. Last week ended with reports on industrial production in the States, which not only showed a reduction of 0.3% m/m but also was worse than forecasts. Thus, now there are certain concerns for the US industrial sector. Recall that the ISM business activity index in the US manufacturing sector has been below the key level of 50.0 for several months in a row. Now we are reaping the benefits of such a low value of the ISM index in the form of a reduction in industrial production. And if this is not an ordinary accident (which is unlikely), then we are forced to state a decline in US production, which can lead to a fall in many other indicators that reflect the state of the American economy. Of course, this does not mean now that the US dollar will start falling. Moreover, these same macroeconomic indicators should first start showing a contraction/decline. The latest reports from overseas are not weak. Inflation rose to 2.3%, NonFarm Payrolls were at a decent level, the ADP report was also quite strong, and GDP was not worse than forecasts. So far, we have only certain "bad calls". The index of consumer confidence in America in January was slightly below the forecast values - 99.1.
Meanwhile, market euphoria about the signing of a trade agreement between China and the United States has subsided. Now traders are once again switching to the process of impeaching the US President, which could enter a key phase as early as this week. Earlier, we said that Democrats have collected new evidence of Donald Trump's guilt over the past month and now the case has been referred to the Senate. Namely, a 111-page document with the justification for the impeachment of US President Donald Trump has been submitted to the Senate, which now should be considered by senators, most of whom are Republicans. "The evidence overwhelmingly proves that President Trump corruptly used his official power to put pressure on Ukraine to interfere in the 2020 election," the document says. "By obstructing the impeachment investigation in the House of Representatives, President Trump tried to put himself above the law and undermined the fundamental constitutional principles on which our nation was founded... The Senate must fulfill its constitutional duty to eliminate the constant threat that the President poses to the nation by condemning and dismissing him from office is the outcome of the House of Representatives' demand. So now we just have to wait for the Senate to consider this case and deliver its verdict, but anyway, this process should be completed in the coming weeks. Either Trump's resignation or his acquittal. So far, everything is in favor of Trump being acquitted.
Well, for the US currency, this topic is certainly interesting, but again only in terms of its impact on the country's macroeconomic indicators. If Trump leaves office, new presidential elections will be held, 9-10 months earlier than the deadline, respectively, foreign economic policy will change and will change before the deadline.
The technical picture implies a continuation of the downward trend since the last attempts of the bulls to continue moving upwards ended in failures.
The average volatility of the euro-dollar currency pair is currently 45 points. Thus, we have volatility levels of 1.1047 and 1.1138 as of January 20. A reversal of the Heiken Ashi indicator upwards will indicate a round of corrective movement. On Monday, given the zero macroeconomic background, a correction is possible.
Nearest support levels:
S1 - 1.1078
S2 - 1.1047
S3 - 1.1017
Nearest resistance levels:
R1 - 1.1139
R2 - 1.1169
R3 - 1.120
Trading recommendations:
The euro-dollar pair resumed its downward movement. Thus, sales of the European currency with the targets of 1.1078 and 1.1047 are relevant now before the Heiken Ashi indicator turns up. It is recommended to return to the pair's purchases with the target of 1.1169 not earlier than the reverse overcoming of the moving average.
In addition to the technical picture, you should also take into account the fundamental data and the time of their release.
Explanation of the illustrations:
The upper channel of linear regression - the blue lines of the unidirectional movement.
The lower channel of linear regression - the purple lines of the unidirectional movement.
CCI - the blue line in the indicator window.
The moving average (20; smoothed) - the blue line on the price chart.
Murray levels - multi-colored horizontal stripes.
Heiken Ashi - an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
