The last five-day trading session was not the best for the US dollar. The dollar weakened against all major competitors, including the single European currency. The reason for this course of trading was the appetite of investors for risk, as well as not too positive statistics from the United States, in particular, the increase in the number of applications for unemployment benefits. It seems that market participants have overestimated the degree of recovery of the world's leading economy from the effects of COVID-19 and have become warier of this issue. And so, in general, everything in the world goes on as usual. The World Health Organization (WHO), after it visited the Chinese city of Wuhan, did not receive an answer to the question about the source of the coronavirus epidemic, which subsequently swept the whole world. US senators have relented and acquitted the 45th President of the United States, Donald Trump, as part of the impeachment process.
Here it is necessary to note the very paradox of the situation. How can you impeach someone who has already surrendered his powers and is not in power? If Trump is accused of inciting a mob that rioted in the Capitol, and there is all the irrefutable evidence for this, then this is a prosecution, but not impeachment. The weakening of the US dollar was also influenced by the optimism that prevailed on the global financial markets, in particular on the stock market, for almost the entire previous trading week. If we return to the fundamental component, it can be perceived by market participants in different ways, as it has been repeatedly noted. Often, positive macroeconomic statistics from the United States do not support the US currency, but, on the contrary, serve as the basis for selling off the dollar. In this regard, when predicting the future price dynamics of a particular trading instrument, it is better to look for answers on the price charts, which we will do right now.
Weekly
However, sometimes technical analysis can not give an unambiguous answer about the further direction of the quote. In my opinion, this is the situation observed on the weekly timeframe of the EUR/USD currency pair at this stage of time. In the euro/dollar review of a week ago, attention was drawn to the long lower shadow of the circled bearish candle, as well as to the support provided to the quote by the blue line of the Ichimoku Kijun indicator and the important psychological level of 1.2000. At the same time, it was noted that the 1.2000 level itself rarely provides support or resistance to the price, which cannot be said about the marks that are above or below 1.2000. Returning to the long lower shadow of the weekly candle, the week before last, it was assumed that the market does not want to continue moving in a southerly direction, which means that there is a high probability of subsequent growth. That's exactly what happened.
Nevertheless, in my opinion, we have not received an unambiguous answer about the further direction of EUR/USD. Although during the trading on February 8-12, the main currency pair of the Forex market ended with growth, the closing price of last week was below the red line of the Tenkan Ichimoku indicator, as well as the strong technical level of 1.2150, which was also repeatedly mentioned in previous materials, it is difficult to determine the direction of the pair on the current togas. By the way, the Tenkan red line is at 1.2150. The closing of this week above the Tenkan, and even more so the completion of trading above another very important level of 1.2200, will allow us to count on the subsequent growth of the quote. An alternative scenario with the closing of trading under the blue Kijun line and the support level of 1.1952 will indicate a bear market for the euro/dollar.
Daily
At this period, we will pay attention to several technical points. First, the pair is traded within the Ichimoku indicator cloud, which is always a zone of uncertainty, until the price moves out of it in one direction. Secondly, look at how strong resistance to growth attempts is provided by the Kijun line, and just above 50 is a simple moving average. Only in the case of a true breakdown of 50 MA will it be possible to test for a breakdown of the upper boundary of the Ichimoku cloud. At the same time, I dare say that after the breakdown of Kijun and 50 MA, the pair will significantly increase its chances of getting out of the Ichimoku cloud. In the meantime, the last three daily candlesticks further confuse the situation regarding the subsequent direction of EUR/USD.
After a powerful breakdown of the purple resistance line, there was no pullback to it yet. If such a pullback still takes place, then purchases are technically justified from the area of 1.2060-1.2050, where the Tenkan red line is also located. If in the area of 1.2130-1.2145 there will be another incomprehensible candle for the continuation of growth, which will have a longer upper shadow, you can try to sell with targets in the area of 1.2060-1.2050, from where, as already noted, it is worth considering opening purchases. At the moment, these are the assumptions. Let's see how the market will start a new trading week, and in tomorrow's article on EUR/USD, we will look at smaller timeframes.
