Over the last trading day, the EUR/USD currency pair showed extremely low volatility of 29 points, resulting in a characteristic stagnation, as if waiting for a pause in this boundless emotional background.
From the point of view of technical analysis, we see that after the detection of periodic resistance in the area of 1.1062, the recovery process began, but it did not last so long, and already in the area of 1.1030, a sluggish accumulation process began, expressed in the framework of 1.1013/1.1042, followed by a narrowing to the amplitude of 10-12 points. We see a kind of indecision of market participants to sharp actions, unlike the pound/dollar pair, but a pause is sometimes better than an emotional jump that leads to nothing. Analyzing the past hour by hour, we see that the only fluctuation that occurred came from 11:00-13:00 (time on the trading terminal), the reason for the surge is not completely clear, perhaps a speculative leap.
As discussed in the previous review, speculators worked on the recovery phase of the quote, where short positions were opened, but the expected descent to 1.1000 did not happen due to the hovering in a narrow corridor.
Looking at the trading chart in general terms (daily period), we see that the status of the oblong correction has not yet been confirmed, as the peak (1.1080/1.1110) of the previous correction has not been reached. The recovery process is still in the activity phase.
The news background of the day had data on industrial production in Europe, where they expected the decline to deepen from -2.1% to -2.5%, but it was even deeper, -2.8%. The reaction of the single currency was rather ambiguous, at first growth, followed by decline and stagnation, as they wrote above.
The information background, as always, was focused on the adjustable process, which is not to say that it directly affected the dynamics of the euro/dollar, but nevertheless contributed to the future formation. There were rumors that the EU allegedly plans to hold another summit on Brexit at the end of October, and at the current summit of the European Council (October 17-18) will be announced positive signals about progress in negotiations between the UK and the EU. On such a positive background, the pound resumed its upward course, and its counterpart in the euro/dollar market took a measured but deliberate pause.
Today, in terms of the economic calendar, we do not have good data on Europe and the United States, but without statistical indicators, it should not be boring. An informational background has already appeared that the EU Brexit negotiator Michel Barnier said that, although reaching an agreement is becoming more and more difficult, but it is still possible this week. This kind of statement locally spurred the currency market, but after that, everything fell into place. In turn, anonymous sources reported that Michel Barnier was cautiously optimistic about the prospect of a Brexit deal during his meeting in Luxembourg with EU Ministers. Hence the local surge in GBPUSD and EURUSD followed by a recovery.
Experts advise to carefully monitor the news feed, as bursts of information can give local bursts in the market.
Further development
Analyzing the current trading chart, we see that the existing pause in the form of stagnation of 1.1013/1.1042 is breaking through in the downward plan, still trying to go to the stage of quote recovery. Detailing the market flashes, we see that the period of information background coincides with the jumps in the market, which confirms the previously stated information.
In turn, speculators adhere to the theory of partial recovery, which has almost already happened.
It is likely to assume that local jumps in the market will continue to please traders, fluctuations can be both up and down, depending on the content of the information. Thus, we carefully analyze such portals as Bloomberg, Financial Times, Reuters, for additional information. In terms of technical analysis, the recovery process is still real, and a move towards the previously passed psychological level of 1.1000 may soon occur. Further progress is considered relative to the price-fixing points.
Based on the above information, we derive trading recommendations:
- We consider the buy positions in case of deceleration within the level of 1.1000, or case of the next receipt of information. In this case, it is worth identifying positive signals by Brexit, followed by an inertial move, where it is worth entering.
- Sales positions are already available in terms of recovery in the direction of 1.1000. Further operations will be carried out after a clear fixation of the price lower than 1.1000.
Indicator analysis
Analyzing different sectors of timeframes (TF), we see that the indicators in the short-term intraday perspective took the downward side against the background of the recovery process. The medium-term outlook continues to be in a phase of recent movement.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 15 was built taking into account the time of publication of the article)
The volatility of the current time is 39 points, which is a moderate indicator for this period. It is possible to assume that in the case of maintaining a dense informational background, there is a probability of a breakdown of the daily average.
Key levels
Resistance zones: 1.1100**; 1.1180* ; 1.1300**; 1.1450; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100
Support zones: 1.1000***; 1.0900/1.0950**; 1.0850**; 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
*** Psychological level
**** The article is based on the principle of conducting transactions, with daily adjustments.
