4-hour timeframe
Technical data:
The upper channel of linear regression: direction - up.
The lower channel of linear regression: direction - down.
The moving average (20; smoothed) - up.
CCI: 246.5074
A new trading week began on the forex market with the fact that the euro currency rushed up. Most market participants have already managed to cheer up and are now probably counting on stronger movements of the euro/dollar currency pair after a week of outright stomping in one place. However, we are in a hurry to upset traders. Monday's move may remain an isolated incident. For bulls, there are still not enough fundamental factors to confidently continue buying the euro currency. Yesterday, Christine Lagarde did not report anything new and interesting to the markets, although it was in her speech that the main attention was directed. Business activity indices, when compared with the forecast values, were in the hands of the European currency, however, almost all indicators (several European countries and the EU) were below the key mark of 50.0, below which the decline is considered. Thus, yes, some improvement in business activity in the manufacturing sector of the European Union is observed, but the decline remains. Thus, as before, no matter how weak the US macroeconomic statistics may be, the European statistics are at least no better, and often much worse. The general fundamental background remains on the side of the US dollar.
Also yesterday, US President Donald Trump stirred up the markets again with his resonant statements regarding the introduction of new trade duties, now on imports of steel and aluminum from Argentina and Brazil. In addition, he "managed" to accuse the governments of these countries of deliberately devaluing the rates of their national monetary units, and, according to Trump, many countries of the world adhere to such monetary policy, which is unfair competition and it is becoming increasingly difficult for American farmers to sell their products abroad. Also, a new portion of attention and criticism was not left by the head of the Fed, Jerome Powell, who was again blamed for not supporting the American economy, not supporting American manufacturers, not willing to help increase the competitiveness of American goods on world markets, but only "puts a spoke in wheels." In general, for market participants, these were important and serious statements by the US leader, which may entail new changes in the world trade process and harm the growth rate of the world economy, and for trump, it was an ordinary boring Monday, nothing supernatural happened.
As for China, relations with it have long been spoiled. We believe that the view regarding the conclusion of a trade deal in the first phase before the end of 2019 is extremely optimistic. Beijing "responded" to the States with the adoption of the Human Rights Protection Act in Hong Kong by sanctions against several non-governmental organizations, as well as a ban on American warships and aircraft from visiting Hong Kong. Foreign Ministry spokesman Hua Chunying said on Monday: "Despite the strong protests of Beijing, the US side has signed the so-called Human Rights and Democracy Act in Hong Kong, which is a serious violation of international law and interference in China's internal affairs." "We urge the United States to correct its mistakes, to stop interfering in the internal affairs of China. We will take all necessary steps to protect the stability and prosperity of Hong Kong, as well as the national sovereignty, security, and interests of our country," Chunying said.
From a technical point of view, in addition to the "paradoxical situation", which may again be in action in the coming days, we would like to draw attention to the fact that the overcoming of the previous local maximum did not happen. It may be a coincidence that the level of 1.1097 will break today, but we believe that the probability that the downward movement will resume today is extremely high. Bulls show again that they don't have much strength, macroeconomic reasons for purchases - and even less. Also, yesterday's growth of the euro may be regarded by bears as an opportunity to sell the currency pair at a more attractive rate.
Nearest support levels:
S1 - 1.1047
S2 - 1.1017
S3 - 1.0986
Nearest resistance levels:
R1 - 1.1078
R2 - 1.1108
R3 - 1.1139
Trading recommendations:
The euro/dollar pair has started an upward movement, which can end very quickly. Thus, purchases of the euro currency are now formally relevant, however, a downward correction may begin from the level of 1.1078, so we recommend buying the euro with the target of 1.1108 if the level of 1.1078 is overcome. It is recommended to return to the pair's sales not earlier than the back fixing of the bears below the moving average line.
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 - the red horizontal lines.
Heiken Ashi - an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
