4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - upward.
CCI: 214.6119
The EUR/USD currency pair continued to move up on Friday, April 23. In total, the quotes continue to grow for almost a month, and for all this time, there was not a single intelligible pullback or correction. From our perspective, this is a very remarkable moment since such uncorrected movements do not happen very often. Consequently, the European currency is growing under the influence of some strong and stable factors over time. We have repeatedly talked about the factor of pumping trillions of dollars into the American economy. Unfortunately, this factor can work against the dollar for a long period, and all this time, we will have to pay the attention of traders to this factor. We want to write now that the euro grew because of some factors, and on another - because of others. But the objective reality shows that this factor is most likely one. Thus, at this time, a new upward trend is emerging. If you look at the older timeframes, it becomes clear that the euro/dollar pair has adjusted well in the first three months of 2021, so there are technical grounds for resuming the march to the north. Global macro factors, such as the frequency of global trends, are also starting to work here. For example, the last downward trend began in August 2008 and ended (presumably) in January 2017. The previous upward trend started in October 2000 and ended in August 2008. The previous downward trend started in March 1995 and ended in October 2000. Thus, the global trend usually takes from 5-6 to 9-10 years. If we assume that the global downward trend ended in 2017, then the next six years will be the "era of the European currency." Of course, these calculations show that three full years from the next cycle have already ended. However, there are still at least three, or even all 5-6 years left. And this is another factor in favor of the long-term appreciation of the European currency.
Meanwhile, Joe Biden and his government continue to do everything possible to make the US currency decline. Of course, it can hardly be said that all US government actions (starting from Donald Trump) are aimed at weakening the dollar. However, the weakening of the national currency may be one of Washington's global goals. Recall that Donald Trump was a much more eloquent and public president than Joe Biden. He often said and always said what he thought, without worrying about the consequences. Trump said that the States need a "cheaper" dollar, as this will increase the competitiveness of American goods on international markets and simplify the task of servicing the national debt, which in the States is approaching the $ 30 trillion mark. Thus, Washington may be partly purposefully pursuing reducing the dollar, which coincided with the global crisis and the pandemic that caused it. Now let's try to determine the approximate goals of the new global trend.
During the first downward trend (1995-2000), the euro fell by 63 cents. During the second upward trend (2000-2008), the euro rose by 78 cents. During the third downward trend (2008-2017), the euro fell by 56 cents. Thus, at this time, we can conclude that the global trend is a movement of at least 50 cents. If a new upward trend started in 2017, its minimum target is located at 50 cents (5000 points) from the beginning of the trend. Accordingly, the approximate target is $ 1.53. At the moment, the exchange rate is $ 1.21, which gives us a potential movement of 3,200 points in the next few years.
Interestingly, the previous trend ended in 2008, during the mortgage crisis, which also swept the whole world. The trend ended in 2017, but in 2020 the quotes fell almost to the minimum of 2017, so we can partly conclude that the last downward trend also completed during the global crisis. Thus, from our perspective, the probability that a new long-term upward trend has started is high.
Of course, the global fundamentals should never be overlooked. If, for example, tomorrow the European Union gets involved in a devastating military conflict, it will be challenging for the European currency to show growth. From a technical perspective, the trend has already begun, but only global fundamental factors of global importance can break it. So far, there is none on the horizon, so we still expect long-term growth of the European currency. However, the current fundamental background and macroeconomic statistics speak against this.
Of the more local factors that will affect the movement of the euro/dollar pair in the near future, there is not much to highlight now since all of them have long been taken into account by the market. Perhaps, suppose the United States raises taxes for the wealthy and large corporations. In that case, this will lead to an outflow of capital from the country, which will affect both the development of the economy and the state of the stock market. But this will only support the fall of the US currency, which is already falling. But the factors that could turn the trend down in favor of the dollar are not visible now. The recovery of the US economy at a high rate is completely offset by pouring trillions of dollars into this very economy. The epidemic in the United States and the European Union has already faded into the background, as most macroeconomic indicators are recovering. Business activity is growing, although people are still getting infected and dying. But not on the same scale as before. Of course, vaccination plays a role.
The volatility of the euro/dollar currency pair as of April 26 is 74 points and is characterized as "average." Thus, we expect the pair to move today between the levels of 1.2022 and 1.2170. A reversal of the Heiken Ashi indicator downwards will signal a new round of downward correction.
Nearest support levels:
S1 – 1.2085
S2 – 1.2024
S3 – 1.1963
Nearest resistance levels:
R1 – 1.2146
R2 – 1.2207
R3 – 1.2268
Trading recommendations:
The EUR/USD pair maintains an upward trend. Thus, today it is recommended to stay in long positions with targets of 1.2146 and 1.2170 until the Heiken Ashi indicator turns down. It is recommended to consider sell orders if the pair is fixed below the moving average line with targets of 1.1963 and 1.1902.
