4-hour time frame
Amplitude of the last 5 days (high-low): 156p - 184p - 110p - 279p - 166p.
Average volatility over the past 5 days: 179p (high).
What about the second trading day of the week? Another collapse, another panic in the currency market, minus 170 points in less than eight hours of trading. And after all, it would seem that no super important statistics were published today. No important statements have been made. And what other important statements can there be after the Fed lowered the rate to almost zero? While the coronavirus continues to spread almost freely around the planet and all quarantine measures so far only hinder the even faster spread of the epidemic? Yesterday, we noted around 175 thousand patients and today, there are already 183.5 thousand of them. Thus, it is not surprising that stock markets continue to move down, and the whole world is getting closer and closer to crisis and recession.
In our world, especially if we consider the entire economy as a whole, all countries, all companies, all actors are closely and tightly tied together. There is probably not a single company in the world that does not use loans. Loans are now an integral part of any business activity, any business entity. However, the problem is that loans are now not always taken when there really is a need for this. Loans are taken for development, for the modernization of production capacities, that is, roughly speaking, it turns out that a company cannot afford any improvements that require financial injections or investments. What is this talking about? This suggests that the company has insufficient income and profits for expansion and modernization. However, due to credit funds, such an opportunity is given. It turns out that credit is a way to get what you can not afford at the moment. If we are talking about a consumer loan for air conditioning, then the problem is small. At almost any time, you can find the necessary amount to pay off the debt. Consumer lending is just convenient. However, when it comes to large loans at the level of international companies, it should be understood that "on demand" it is far from always possible to return the required amount. Thus, a chain reaction simply begins often in all world markets. For example, the most banal chain: coronavirus in China - industrial production is falling - consumer confidence and demand for many goods are falling - oil demand is falling - oil prices are falling - oil producing companies, start to suffer losses - if oil prices remain low for a long time, then companies cannot pay off their loans - the banking system begins to lose liquidity - in turn, banks cannot issue new loans and make profits on them and cannot service deposits. As a result, the whole system starts to fail. This is the simplest chain, and a huge number of such chains can. At present, such a chain and, for example, a chain involving airlines take place in the world. Since air transportation has now been reduced due to quarantines and closed borders, and, in addition, due to the fact that the tourism sector has shrunk almost to zero, can you imagine what losses airlines suffer? They cannot pay on their loans and, accordingly, can become bankrupt if the state does not support them. But the state cannot support everyone who has problems during the crisis, which means that there will be bankruptcies anyway. The longer the epidemic persists, the more the world will plunge into a new financial crisis. Yesterday's macroeconomic statistics from China has already shown how strong reductions in the state of the economy of any country in March can be.
Today, the index of economic sentiment for March from the ZEW Institute was published in the European Union. There is absolutely nothing surprising in the fact that this indicator crashed with the speed of light down from 10.4 to -49.5. In Germany, similar indicators were also published. The index of assessment of current economic conditions, decreased from -15.7 to - 43.1, as well as the index of sentiment in the business environment, decreased from 8.7 to - 49.5. Although these indicators reflect only the mood of investors, it is already possible to judge by them what changes in macroeconomic indicators are expected in March. These are the first indicators published for March. Meanwhile, an interesting retail sales report for February was also published in the United States. Although this is only a matter of February, the reduction still began. The retail sales declined 0.5%, and by 0.4% excluding transport sales. Now, what remains today is to wait for only the report on industrial production in the States, which is likely to also be reduced. As we see, traders continue to stubbornly ignore macroeconomic statistics. From a fundamental point of view, there was no reason again for the decline of the European currency today. However, demand for the US dollar continues to rise in price.
Recommendations for short positions:
A strong downward movement remains on the EUR/USD currency pair. Thus, we recommend selling the Euro currency with targets 1.0991, 1.0942 and 1.0778, until the MACD indicator turns up.
Recommendations for long positions:
Eurocurrency purchases with targets 1.1349 and 1.1383 can be considered if the pair consolidates in the area above the critical line. However, in any case, it is recommended to be as careful as possible with the opening of any positions. Markets remain in a state of panic and shock.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chinkou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicators window.
Support / Resistance Classic Levels:
Red and gray dashed lines with price symbols.
Pivot Level:
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movements:
Red and green arrows.
