4-hour timeframe
Technical data:
The upper channel of linear regression: direction – upward.
The lower channel of linear regression: direction – upward.
The moving average (20; smoothed) - down.
CCI: -115.3811
The new trading week begins with a downward movement of the EUR/USD pair. At the end of last week, we expected at least a small pullback up, but this did not happen. The bears are seriously up to business and are systematically moving the European currency back to two-year lows. Both channels of linear regression continue to be directed upwards, but both may soon turn downwards. If this happens, it will be possible to count on a long decline in the euro/dollar currency pair.
The new trading week begins for the US dollar and the euro with an empty calendar of macroeconomic events. Thus, the volatility of the pair is unlikely to change today and will be about 50 points. Correction can be expected today, as this phenomenon often happens on "empty Mondays", however, we would recommend waiting for technical signals to the upward correction before. On Tuesday, no macroeconomic reports will be published in the European Union and America, so the beginning of a new week is fundamentally uninteresting.
Meanwhile, negotiations between China and the States on a trade agreement are continuing. We have repeatedly drawn the attention of traders that by themselves, any news on this topic does not have any impact on the movement of the currency pair. However, they have or may have an impact on economic data from the States, so this topic remains very important. So, according to the latest information, Donald Trump, who, from our point of view, needs a deal much more, refused to cancel all import duties from China as part of a possible agreement in the "first phase". Trump also said: "To be honest, China wants to sign a trade agreement much more than I do," thus trying to show that Beijing should do everything to sign the deal. Although we continue to believe that this whole topic is too exaggerated by the media and the negotiators themselves. Negotiations have been going on for more than a year, nothing has been signed, the parties "flared up" several times and imposed new portions of duties on each other, but the press and many market participants pay attention for some reason to theses like "progress in negotiations", "we will soon conclude a deal" and all this becomes similar to the situation with Brexit, where positive news is also extremely small, but the pound regularly shows strengthening just on rumors and expectations of traders. And so, we consider that it is necessary to rejoice and open the champagne when the parties will sign at least any agreement at least in any phase, and not just regularly declare that "almost everything has been agreed". Since nothing of the kind has happened so far, we believe that the trade war is ongoing, and accordingly, its negative impact will continue to affect the macroeconomic indicators of the United States, which gives some illusive chances for the euro currency.
Unfortunately, it's "ghostly," as we said in previous articles that we don't see any signs of improving the economic situation in the EU, so that the euro receives strong support, the economic statistics in the United States must worsen significantly, and the Fed at least several times lowered the key rate. Since this is also not expected shortly, the downward movement is likely to continue. The technical picture shows a downward trend in the short term. The Haiken Ashi indicator colors the bars blue, thus, at the moment, there is no sign of the beginning of a corrective movement.
Nearest support levels:
S1 – 1.0986
S2 – 1.0925
S3 – 1.0864
Nearest resistance levels:
R1 – 1.1047
R2 – 1.1108
R3 – 1.1169
Trading recommendations:
The euro/dollar pair continues to move down after breaking the moving average line. Since the Heiken Ashi indicator continues to color bars blue, there is no reason to close sell orders. Thus, in short positions, you can stay with the target Murray level of "4/8" - 1.0986. It is recommended to return to purchases of the European currency not earlier than the reverse consolidation of the pair 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 the illustrations:
The upper channel of linear regression – the blue line of the unidirectional movement.
The lower channel of linear regression – 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.
Possible variants of the price movement:
Red and green arrows.
