Movements within the limits of the flat have been taking place on the market for more than three weeks already, and soon, a breakout may successfully occur in the market.
Speculators have been closely monitoring the market, analyzing each jump in the limits. A consolidation above or below the areas can lead to a number of trade orders, which will lead to a breakdown of the flat and impulse changes.
Thus, yesterday, the EUR / USD pair almost reached the upper limit of the flat, where a local slowdown occurred on a regular basis.
If we analyze yesterday's trading by minutes (M30), we can see that a round of long positions arose, due to which the local high was updated from 1.1864 to 1.1880. Afterwards at the European session, an attempt was made to change the quote's direction, but the downward movement was local and did not lead to any major changes in the market.
Nonetheless, volatility to 51 points, which is 40% below the average daily value. If we proceed from the patterns inherent in volatility, a sharp slowdown may be a harbinger of a new round of speculation. It was also recorded on the dynamics of the GBP / USD, where for the first time in three months, the daily volatility indicator dropped to the level of 47 points.
Meanwhile, as discussed in the previous review , traders worked on a further increase in the market, using the breakdown of the established flat as the main strategy.
Hence in the daily chart, a fluctuation can be seen around the conditional peak of the movement recorded from the beginning of July.
As for news, China gave a warning on the Fed's actions in terms of stimulus measures, as such may well provoke a new global financial crisis.
"In an international monetary system dominated by the US dollar, the policy of unprecedented, unlimited quantitative easing, which the US is pursuing, reduces confidence in the dollar and undermines the foundations of global financial stability," Chairman of the China Banking Regulatory Commission, Guo Shuqing, said in a statement.
Today, data on construction in the United States will be published, where it is forecasted that issued building permits will increase, as well as new construction projects.
Growth in the construction sector will indicate a recovery, but recently, the market has been ignoring positive data in the US, so fundamental analysis may not work in raising the US dollar.
Further development
Analyzing the current trading chart, we can see that the quote neared the upper limit of the side channel - 1.1910, where a slowdown occurred from versatile Doji candles, which indicates the indecision of market participants. The quote may try to rebound from this area, and such could lead to a downward move towards the values 1.1830, 1.1800 and 1.1700.
Nonetheless, the main strategy, as before, is to break out from the established limits, as such will direct the movement in the market in the future, as well as provide an opportunity to get profit from the local jumps in activity.
Indicator analysis
Analyzing the different sectors of time frames (TF), we can see that the indicators on the minute period have a neutral signal due to a price slowdown within the upper flat limit, while the hourly periods give a buy signal following the upward wave from the lower limit of the flat to its upper limit. The daily period, as before, signals buy, due to the general trend in the market.
Weekly volatility / Volatility measurement: Month; Quarter; Year
The measurement of volatility reflects the average daily fluctuations, calculated per Month / Quarter / Year.
(August 18's was built, taking into account the time this article is published)
Volatility is currently 40 points, which is 52% below the daily average. Since the dynamics is at a low level, everything will depend on whether the upper limit of the flat will be broken, which can provoke speculation.
Key levels
Resistance zones: 1.1910 **; 1.2000 ***; 1.2100 *; 1.2450 **.
Support Zones: 1.1800; 1.1650 *; 1,1500; 1.1350; 1.1250 *; 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
Also check the trading recommendations for the GBP / USD pair here , or the brief trading recommendations for the EUR / USD and GBP / USD pairs here .
