4-hour timeframe
Technical data:
The upper channel of linear regression: direction – down.
The lower channel of linear regression: direction – down.
The moving average (20; smoothed) – down.
CCI: -142.5870
There is a general recommendation for all traders: "Buy at the lows, sell at the highs." The recommendation is good but does not show how to determine these same highs and lows. For example, is the euro at the lows or not yet? We believe that in light of recent events, the European currency may well be threatening to work out price parity with the US dollar. Yesterday, the previous two-year minimum of the pair was broken, and tonight it was overcome, which together with the second similar level formed a "double bottom" pattern. An excellent illustration of the topic "how the foundation turned out to be more important than graphic figures". Indeed, the euro continues to fall solely due to fundamental events, technical factors are now playing a secondary role and only indicate the beginning and completion of corrections.
So let's return to the most important topic for the euro/dollar pair. The day before, we wrote about the "flight from the sinking ship of the ECB." No major macroeconomic releases are expected in the European trading session today, but some really important reports will come in from the US this afternoon. They are important, first of all, for the euro currency, since we have already found out that it is from America that we should expect negative things to make the euro go up. The first report will be released on durable goods orders and several of its derivatives. The forecasts for this indicator are much lower than the previous values, but the deviations of the real values from the forecasts are important for us. If in reality the volume of orders will be reduced more than experts suggest, then we can expect a weakening of the dollar at the end of the week. Further, indicators of changes in income and expenditures among the American population will be published, however, these are secondary data and are unlikely to cause a serious reaction from traders. The latest will be the consumer confidence index, which is also interesting, but also secondary.
What do we have in the end? The chance of the euro today is weak orders for durable goods. The topic of the possible impeachment of Donald Trump, we believe, can be closed or not paid too much attention to it, since the dollar is still more expensive, despite the next investigation of the illegal actions of the US president. It's even more than a year before the 2020 elections, and although Trump is starting to prepare now, this topic will become more interesting later, but not now. Also often on Fridays, a correction begins against the main trend, it is possible today, however, we believe that the euro will continue to fall if it is not saved by macroeconomic reports from across the ocean.
The technical picture indicates the continuation of the downward trend. Murray level of "3/8" - 1.0925 is overcome, thus, fall continues. Heiken Ashi and both linear regression channels continue to signal a downward trend in all-time perspectives.
Nearest support levels:
S1 – 1.0864
S2 – 1.0803
S3 – 1.0742
Nearest resistance levels:
R1 – 1.0925
R2 – 1.0985
R3 – 1.1047
Trading recommendations:
The euro/dollar pair continues to move down, as evidenced by all the indicators. Thus, it is recommended to remain in sales with a target of 1.0864 until the Heiken Ashi reversal upwards. It is recommended to buy a currency pair not earlier than fixing the price above the moving average.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of illustrations:
The upper linear regression channel – the blue line of the unidirectional movement.
The lower linear regression channel – 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.
