Recently, trading on the foreign exchange market has been held in a neutral mode. There were no clear trends either. This refers to a pronounced medium-term trend. At least medium-term. Thus, after the previous week's strengthening across the entire spectrum of the foreign exchange market and showing signs of a reversal in the direction of its strengthening, the US dollar suffered losses against all major competitors, except for the Japanese yen. This has already been observed before. It can be suggested that this factor indicates an increased risk appetite, which may manifest itself against the background of a large-scale stimulus package in the United States of America to support the world's leading economy from the consequences of COVID-19.
Let me remind you that the volume of this package is almost two trillion US dollars. In one of the previous articles, such a scenario (namely, an increase in risk appetite after the adoption of the program of assistance to the American economy) was not excluded. However, as previously assumed, the appetite for risky operations solely for this reason is unlikely to last long. The latest data on the US labor market showed that the economic recovery is proceeding at a faster pace than many experts, as well as Fed officials, expected. If this trend continues, it will inevitably lead to the strengthening of the US currency across a wide range of markets. In the meantime, we have what we have.
Weekly
Following the results of the last five-day trading, the main currency pair of the Forex market showed mixed price dynamics, and yet the bulls for the single European currency managed to finish the weekly trading with growth, during which the pair strengthened by 0.43%. This can not be called a confident and solid growth of the pair, however, the last weekly candle, which appeared after the close of trading, is suggestive.
So, after falling into a strong technical zone, which passes near 1.1830, the pair quite predictably found strong support and turned sharply upwards, ending last week at 1.1951. And there are several technical nuances and very contradictory ones. Naturally, the long lower shadow of the last candle showed that the euro bulls do not think to give up on the mercy of their opponents. The fact that the trading week ended significantly above the strong and important level of 1.1900 is also in favor of the players on the rate increase. The disadvantages of the bulls include the fact that they failed, despite all their efforts, to close the weekly trading above the broken support level of 1.1952, as well as the blue line of the Kijun Ichimoku indicator. Let me remind you that both this level and the Kijun previously provided quite strong support to the quote and did not let the price go lower for a fairly long period. On this basis, it is quite logical and technically justified to assume that the level of 1.1952 and the Kijun line will now provide no less strong resistance to the pair's attempts to return higher and resume its upward trend that took place recently.
In principle, at the auction on March 8-12, we already had the opportunity to observe this. It was Kijun and the mark of 1.1952 that did not let the price go higher. They haven't let me in yet. But even the passage of these obstacles will by no means signal the resumption of the EUR/USD upward trend. In my personal opinion, this requires going up the iconic psychological level of 1.2000 and the red line of the Ichimoku Tenkan indicator, which is located near 1.2038. The bears each have their tasks. They need to update the minimum values of the previous weekly trading, which implies a true breakdown of the support of 1.1835. Given that a very important technical level of 1.1800 passes a little lower, the key support zone is 1.1840-1.1800. At the same time, only a consolidation below 1.1800 will indicate that the bears control the course of trading on EUR/USD and the pair is ready to continue moving in the south direction. There are also such strong historical levels as 1.1745 and 1.1700 a little lower, but to get closer to them, you need to push through the key price zone of 1.1840-1.1800 at the moment. In general, some and others have difficult tasks and there is something to work on.
Daily
But on the daily chart, the picture is more bullish. In particular, this is indicated by the last four candlesticks. Although the last of them has a black bearish body, a long lower shadow (or tail) can be perceived as the reluctance of market participants to trade lower. If this assumption is correct, we will soon see the return of the quote above the broken support level of 1.1952, as a result of which the breakdown of this level can be considered false. However, after that, the tasks of the euro bulls will not change. They will need to pass up 1.2000 and the blue Kijun line, which passes at 1.2038. I believe that if the pair reaches this mark, it is here that its future fate will be decided.
Trading recommendations for EUR/USD
The assumption that the situation may become clearer after the close of weekly trading was not justified. The direction in which to open trading positions can not be considered unambiguous. In this regard, I recommend looking for sales after the rise of the euro/dollar in the price zone of 1.2030-1.2050. In both cases, it is better to first enlist the support of bearish candlestick analysis models that will appear in the selected zones. Purchases technically look good after a short-term decline in the price area of 1.1940-1.1900. However, even with this type of positioning, it is better to find confirmation, and only then open positions. As you can see, the situation at the auction is prone to frequent changes, so now is not the case when you should set big goals. Tomorrow, we will consider smaller time intervals, and if necessary, we will change something or add it to these trading recommendations.
