From a comprehensive analysis, we see a high downward activity, where the local minimum was almost reached. Now about the details. The market is feverish from the virus, and the panic mood of market participants does not give rest to speculators. The euro/dollar quote once again rushed into a downward rally, wherein a few hours we reached the level of 1.0802, which is close to the low of February 20. We are testing the entire same pivot point as before, only this time the panic is several times higher, which means that the update of the lows is not far off. If you switch to the correlation effect, we will see that yesterday the leader of the decline was the pound, which was able to fly more than 600 points. The euro/dollar did not lag behind its counterpart in the market and showed activity of more than 240 points, but in contrast to the pound, the euro managed to recover locally by the end of the day relative to the inertia course.
In terms of the theory of downward development, we see that the inertial upward move was worked out by more than 96%, which means that the point of the existing support of 1.0778 will soon fall. The subsequent movement after the breakdown will lead the quote to the same areas of 2016 and 2017, or rather to the steps of 1.0700; 1.0500; 1.0350. As you understand, the critical point, in this case, is the parity of 1.0000, which everyone is afraid of, but if there is an ultra-high panic in the market, I do not exclude that there will be a chance of approaching it.
Regarding volatility, we see that the acceleration is proportional to the panic, where the market exceeds the daily average every day. There are no reasons to reduce activity at this time, so we are still waiting for market jumps and the influx of new speculators.
Volatility details: Monday-155 points; Tuesday-183 points; Wednesday-115 points; Thursday-278 points; Friday-166 points Monday-151 points; Tuesday-234 points; Wednesday-243 points. The average daily indicator relative to the volatility dynamics is 85 points (see the volatility table at the end of the article).
Analyzing the past day by the minute, we see that the fluctuation within the psychological level of 1.1000 ended with an increase from it in the downward direction, where a round of short positions was set, the time interval of 12:30-18:30 (time on the trading terminal). The subsequent oscillation was in the recovery phase, which lasted until the end of the daily candle, 19:00-00:00. The recovery has played out inertia by more than half.
As discussed in the previous review, traders expected a similar development, where they closely watched the price-fixing points relative to the value of 1.0950. In other words, the entry into short positions with a positive result was achieved.
The recommendation from Wednesday coincided with where the profit was recorded.
(Sell positions will resume when the price is fixed below 1.0950, towards 1.0850.)
Looking at the trading chart in general terms (the daily period), we see that the downward trend is still relevant, and there is not such a long distance to update the lows.
The news background of the past day had data on inflation in Europe, where the forecast of its slowdown coincided with 1.4%-1.2%. This indicator, like inflation, raises the risk of a possible reduction in the ECB's refinancing rate. In the afternoon, macroeconomic data was released on the construction sector of the United States, where the number of construction permits issued decreased by 5.5% in February, and the number of construction starts decreased by 1.5%. There was no market reaction to the statistical flow, as the external background and panic mood prevailed in the market.
In terms of the general information background, we see Europe drowning in panic, where the coronavirus is currently raging most actively. So, as of 06:00 (London time), all EU countries are infected with the virus, and the epicenter is Italy, where 35,713 cases were recorded. Germany, where there are 12,327 cases, cannot control itself, and Chancellor Angela Merkel called the virus the most serious challenge since World War II.
"Our idea of normality, social life, and social interaction is now being tested as never before. Since the unification of Germany, there have not been such serious challenges for our country, where our common solidarity is so important," said Angela Merkel.
In turn, the head of the European Central Bank (ECB) Christine Lagarde informed the EU heads of state that the decline in business activity due to the spread of the COVID-19 virus could lead to a 5% reduction in the EU economy. At the same time, the ECB adopted emergency repurchases of private and public sector securities worth €750 billion. The purpose of the program is to support the economy that is facing the consequences of the spread of the virus.
"This new pandemic emergency repurchase program will total 750 billion euros. The repurchase will continue until the end of 2020 and will include all categories of assets falling under the existing asset repurchase program," the regulator said in a statement.
Today, in terms of the economic calendar, we have data on applications for unemployment benefits in the United States, where they expect growth of 14 thousand (Primary +8 thousand; repeat +6 thousand). It is worth noting that the panic mood and pressure from the external background persist in the market.
Further development
Analyzing the current trading chart, we see that the price has already overcome the minimum of the previous day (1.0802), which means that the pivot point is no longer significant. We see that the restoration earlier is already considered played back, which indicates that the downward interest at this time is considered the main one. The theory of downward development refers to the priority position, where the prospect is much lower than the base on February 20 (1.0778).
In terms of the emotional mood, we see that the markets are going through bad times, where the pressure of the external background daily provokes the activity of speculators, who escalate volatility in the market.
By detailing every minute the available period, we see the same pattern, which has already been repeatedly written about in reviews. The start of the European session leads to a new activity, and against the current background, this activity is directed in the downward direction.
In turn, traders are already entering short positions after breaking the lows of the previous day.
It is likely to assume that the downward mood will continue in the market, where we first need to break through the minimum of February 20 (1.0778), and after this step, the quote will begin to decline to the levels of 1.0700; 1.0500; 1.0350. As you know, all this development should be supported by an external background, or rather a panic mood.
The main positions for sale are considered after fixing the price below 1.0775.
Indicator analysis
Analyzing different sectors of timeframes (TF), we see that the indicators of technical instruments still have a sell signal due to a strong downward background.
Volatility for the week / Measurement of volatility: Month; Quarter; Year.
The volatility measurement reflects the average daily fluctuation from the calculation for the Month / Quarter / Year.
(March 19 was based on the time of publication of the article)
The volatility of the current time is 181 points, which is already 112% higher than the daily average. It is likely to assume that the external background will continue to put pressure on the market, maintaining increased activity that will attract speculators.
Key levels
Resistance zones: 1.0850**; 1.1000***; 1.1080**; 1.1180; 1.1300; 1.1440; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100.
Support zones: 1.0775*; 1.0700; 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
*** Psychological level
