On Monday the European currency was dominated almost during the whole trading session over the US dollar, but a couple of hours before the closure it gave up the most part of won positions. At the European trades the pair tested the resistance level near 1.4768, but just then it dropped to the area of 1.4738. This decline can be connected with a sharp meltdown at the oil market due to the Purchasing managers industrial index data in China which showed a weak growth, decreasing the oil quotations to the level of Friday\'s deals. Meanwhile, after that the pair could break through the mentioned above area and marked the sessional high at 1.4842, then on the back of the regular Euro purchases against the dollar the meltdown happened. The strengthening of the European currency versus the dollar came to 42 points. The trading volatility amounted to 162 pips.
The fundamental review.
The Eurozone was marked only by one Purchasing managers index data, which entirely coincided with experts forecasts and remained unchanged at the level of 50.70.
The US statistics were more positive. The PMI, reflecting the activity in the industrial sector of the US economy, came to 55,7 in October compared to the level of 52,6 fixed a month earlier. Economists were waiting for this index to appear at 53,0. I remind you that the reading of this indicator above 50 points is indicative of increase in the sector, below – of decrease. Although the Pending home sales index dropped by 6.10%, compared to the previous period, but turned out to be higher than experts had predicted, they were looking for the growth only by 0.40%. The Construction spending indicator also showed the upturn by 0.80% against the decrease by -0.10% in the previous month.
The technical picture.
Yesterday the pair once again tried to start the ascendent movement, but the bounce from the lower boundary of the up going price channel of August 22, 2009 led it only to the 200 day exponential moving average testing, which at that moment was located at 1.4837. As a result of it this level was perceived by the major traders as another profit sales area and led the pair to decrease at the closure of the trading session to 1.4728, where this zone acted as the support level.
Currently, the pair\'s growth is kept by the 100 day exponential moving average which is going near 1.4795, where the pair is trading now. The breaking through of this level may lead to the increase till 1.4859.
Also I want to turn your attention to one technical figure which is forming lately. The triangle with tilt downward, the upper line of which has already determined by three points, the high of which was formed on October 27, 2009 near 1.4922. The support level of August,22 is the lower boundary. If this triangle works downward (this is more possible variant), then we will see the pair\'s collapse at least to the 45th figure. If the bulls still manage to break through the figure up, then the pair will be able to return to the area of 1.4947.
The Bollinger bands gradually start to point at the descendent pair\'s movement, but generally they are located in a parallel way to each other. These bands can be considered as the dynamic support and resistance levels.
MACD indicator is at the zero mark, telling us about the pair\'s entry to the sideways trend.
Recommendations for today:
The support levels are: 1.4768, 1.4728, 1.4680.
The resistance levels are: 1.4808, 1.4859, 1.4922.
Today I recommend to buy the pair at the 1- hour timeframe closing above the level of 1.4809 with the target — T/P 1.4856 and S/L 1.4775.
Sell the pair at 1- hour timeframe closing below the level of 1.4756, with the target — T/P 1.4709 and S/L 1.4790.
Best regards,
Analyst: M. Magdalinin.
