The euro/dollar currency pair showed extremely low volatility of 29 points over the last trading day, as a result of which we received a distinct accumulation. From technical analysis, we see that after the corrective move, the quote drove itself into a sideways movement of 1.1015/1.1065, which is expressed in the phase of wait-and-see accumulation. The wait-and-see attitude of market participants reflects volatility, which tends to be extremely low. In turn, it was noted on the chart that the upper limit of accumulation of 1.1065 coincides with the slowdown on August 16 – 22, where the accumulation process was also going on.
As discussed in the previous review, traders have not sought to operate within existing borders for several reasons: the cluster is narrow and carries more risk than profit; the upcoming ECB meeting on Thursday. Thus, the wait-and-see tactics and analysis of price fixation points remained the most optimal trading tactic. Looking at the trading chart in general terms (daily period), we see that the corrective move is going down, the last days are proof of this. The main trend was a downward trend, so it remains, we do not have any prerequisites for changing the direction of the trend yet.
The news background of the past day contained only data on open vacancies in the United States labor market (JOLTS), where a decrease was recorded from 7.248M to 7.217M. It should be understood that in this case, the JOLTS job openings did not play the role of some important indicator, and the changes were insignificant, thus somehow the news did not affect the trading chart. The information background smoothly went down, the battles in the United Kingdom led to a crushing defeat of Boris Johnson, where he is now simply obliged to find a solution to the issue of withdrawal from the EU until October 19, otherwise the divorce process will be postponed for at least 3 months. The main forcing background in the market is the upcoming meeting of the ECB, which restrained all actions of traders. So what is planned for the autumn meeting? Everyone is waiting for a reduction in the deposit rate, which Christine Lagarde hinted last month, saying that the ECB is ready for anything, including a rate reduction
Today, in terms of the economic calendar, we have data on producer prices in the United States, where they initially projected growth, but the data has been revised and now they are expected to hold at 1.7%. I doubt that this news will somehow react in the market, but the information background, on the contrary, can play a significant role. Earlier, we said that everyone is waiting for tomorrow's meeting of the Board of the European Central Bank, and when everyone is waiting for something, then news releases appear. So, the well-known media source Bloomberg decided to make extra money on their news, throwing out an article with the loud title "The ECB is preparing to do great damage to banks". In the article, former ECB Vice President Vitor Constancio commented on the impact of negative rates on banks. Bloomberg provided information in such a perspective that the upcoming actions of the ECB to reduce deposit rates will have a huge impact on banks, expressed in losses. In such a thin market as now, such emissions are not ignored, and as a result – down.
Analyzing the current trade chart, we see the same surge, as described above, which sent the quotation to the lower boundary of the accumulation of 1.1015/1.1065. Traders carefully analyze the behavior of prices for the breakdown of boundaries, which, in principle, against the background of information, surges can occur today.
It is likely to assume that the quotation will move closer to the lower border of the corridor of 1.1015, but it is still very early to take action. Let me remind you that under the quote near the accumulation border there is a psychological level of 1.1000, just below it, I would advise considering the downward positions. At the same time, if the noise subsides a little, I do not exclude a decrease in volatility and the preservation of fluctuations within the corridor 1.1015/1.1065 until the end of the day.
Based on the above information, we will derive trading recommendations:
- Buy positions are considered in case of price-fixing higher than 1.1065, with the prospect of a move to 1.1080. Further actions are considered after fixing the price above the level of 1.1080.
- We consider selling positions in case of price-fixing lower than 1.1000, with the prospect of a move to 1.0980 – 1.0940.
As we can see from the recommendations, the tactic remains the same – work on the breakdown of the boundaries with the identification of the main course.
Analyzing different sectors of timeframes (TF), we see that the indicators on all major periods signal the sale. It is worth considering one thing that the price continues to move within the previously formed cluster and the indicators can be changeable.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 11 was built taking into account the time of publication of the article)
The volatility of the current time is 38 points. We have two options: the first reflects the preservation within the given framework, where volatility will remain at a low level; the second option is aimed at breaking the existing boundaries, where the supply of information background will increase volatility.
Resistance zones: 1.1100**; 1.1180* ; 1.1300**; 1.1450; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100
Support zones: 1.1000***; 1.0850**; 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
*** Psychological level
**** The article is based on the principle of conducting transactions, with daily adjustments.