4-hour timeframe
Amplitude of the last 5 days (high-low): 279p - 166p - 152p - 234p - 243p.
Average volatility over the past 5 days: 215p (high).
The EUR/USD pair spent the fourth trading day of the week in the same downward movement as the previous days. If the pound collapsed by 600 points yesterday, then the euro continues to stay within the "bounds of decency" and loses no more than 200 points a day. However, the euro continues to fall in price in any case. The lows were updated today, which, in fact, started the pair's growth on February 20 after a three-week long fall. At the time, we were wondering how the downward movement could continue for so long without a single pullback (three weeks). A little later, we were surprised at what the euro was growing on. A week later, it was time to wonder why the euro was falling. The answer is still the same and as simple as possible – panic caused by the coronavirus. We have repeatedly said that the coronavirus itself is not too dangerous for humanity. If we remember that more than seven billion people live on earth, it is unlikely that humanity is threatened with extinction. Moreover, the death rate from the COVID-19 virus is no more than 3%. That is, even if the entire population of the planet is infected, it still will not affect the total population of the earth too much. Of course, for every disease, for every death, relatives and family will grieve.
Nevertheless, we would like to remind you that every year a huge number of people die due to natural disasters, cardiovascular diseases, accidents, transport disasters, wars and poverty. How many people die from cancer, AIDS, and other diseases? Yes, the banal seasonal flu death rate is about the same. Thus, the coronavirus itself is not so dangerous for people. But, as practice shows, it is extremely dangerous for the world economy. The main problem is that the virus spreads extremely quickly and easily. People are not immune to this disease, so it affects almost anyone who comes into contact with an infected person. In 97% of cases, conventional medical drugs are enough to make a person recover. As doctors note, deaths occur only in cases when a person has other diseases or a weak immune system. Thus, the main problem is precisely the rapid spread of the epidemic. If a person gets sick, they must go for treatment. Accordingly, it can't work for two or even three weeks. Given that there are a lot of cases, there are not enough hospitals, medical staff, or means of protection against the virus. Countries were simply not prepared for this. How can one prepare for a disease about which four months ago nothing was known? The epidemic cannot be stopped. What is the economy of any country when people are sick and do not work? This means a complete haltof everything. Factories do not work, plants do not produce, services are not provided, GDP is reduced. Therefore, now that quarantine has been declared all over the world, stock markets continue to fall simply on the fears of traders that the infection will continue to spread, since it cannot be easily and simply located. Panic persists in the markets, which is why European currencies continue to fall (simply because traders consider the US dollar more attractive for storage in troubled times). Oil continues to become cheaper due to a drop in industrial production in China and other countries of the world, especially those affected by the virus, as well as due to a complete stoppage of tourism. Demand for all types of fuel and energy has fallen, prices have fallen after them, and followed by the exchange rates of those countries whose economies depend on oil prices. In the future, the world may face a series of bankruptcies, a new debt crisis and other "pleasant" things. Since only China managed to localize the epidemic, the situation will most likely not improve in the United States and the EU in the coming months.
At the same time, to prevent the economy from falling further, the European Central Bank launched an unprecedented stimulus program, called the Pandemic Emergency Purchase program. As part of it, the ECB will buy private and public sector securities worth 750 billion euros from the market. In fact, this program is again aimed at flooding the economy with cash. It is reported that the ECB's securities portfolio already exceeds 2.6 trillion euros. The regulator's Board of Directors said it was "ready to do whatever is necessary to support the economy." "Extraordinary times require extraordinary actions, – said the head of the ECB, Christine Lagarde. – There are no restrictions on our obligations to the euro. We are determined to use the full potential of our tools within our mandate." It is not yet known what effect the economy will have from all the actions of the ECB, but they clearly have no effect on the euro. The single currency continues to fall against the dollar, not paying attention to anything.
According to the latest data, 222,000 people have already become infected with the pandemic worldwide. Moreover, the number of infected in China has stopped. But it continues to increase in Europe and the United States. This is probably why US stock markets and European currencies continue to experience pressure on themselves.
The downward movement continues from a technical point of view. There was no upward correction. No macroeconomic statistics have been planned to date. It is not important now. Traders are not paying any attention to it.
Recommendations for short positions:
A strong downward movement has resumed for the EUR/USD currency pair. Thus, we recommend that you stay in euro-currency sales while aiming for 1.0675 and 1.0501 until the MACD indicator turns up or another sign of the beginning of the correction movement.
Recommendations for long positions:
Euro currency purchases with targets at a volatility level of 1.1105 and Senkou Span B line can be considered no earlier than when the pair has been consolidated above the critical line. However, in any case, it is recommended to be very careful with the opening of any positions. Panic in the markets is still present.
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.
Chikou 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.
