4-hour timeframe
Technical data:
The upper channel of linear regression: direction – down.
The lower channel of linear regression: direction – down.
The moving average (20; smoothed) – sideways.
CCI: -36.8403
We can describe yesterday's summing up of the Fed meeting – disappointment. The Federal Reserve System lowered its key rate by 0.25% (the most anticipated option) and that's it. The main hopes of market participants were associated with the speech of Jerome Powell, the chairman of the Fed, but traders were disappointed. Powell simply listed all the points he lists every time, speaking after the Fed meeting. It was about insufficiently strong inflation again, threats of a global recession, threats from trade wars, but at the same time, "the American economy is healthy and feels good." No hints about the Fed's future actions, lowering or raising rates. Accordingly, Powell and company have left themselves plenty of room for maneuvers in the future. Most interestingly, Powell did not report, and why the monetary policy was relaxed this time? What was the basis for this?
Yesterday, we already said that macroeconomic statistics in the States are at a quite good level, as Powell himself and US President Donald Trump also note. So, why did the Fed lower the rate at all? This question also remained unanswered.
Meanwhile, Donald Trump "took a ride" on the Fed again. "Jerome Powell and the Fed have failed again. No "guts," no sense, no vision," the US President wrote on Twitter. Powell, during a press conference, commented on the regular criticism from the US President. He stated that "he will not change the established practice, which does not involve a reaction to the comments of elected officials." Powell also added that "independence from political control has been maintained for many years for the welfare of the American people." From our point of view, the head of the Fed is deceiving. We believe that it was Trump who became the reason why the Fed has already cut the rate twice and quite calmly admits the future weakening of monetary policy. As we have said many times, statistics from across the ocean are coming in pretty well, obviously not requiring the immediate intervention of the regulator. Stimulation of the US economy is not required, unlike, for example, the economy of the European Union. Thus, we believe that the rates are lowered solely because of the trade wars unleashed by Donald Trump, as well as currency wars, in which China, the United States, and the European Union imperceptibly got involved.
Well, the reaction of traders to all these events is not worth talking about. The EUR/USD currency pair fell by "as much as" 35 points and this is where all the movements ended. The Asian trading session was like a boring Monday. And today, September 19, no important macroeconomic reports from America or the European Union are expected. The technical picture looks completely "ugly". The price once again overcame the moving, for the fifth time in the last few days, which indicates the absence of a trend. Moreover, it is difficult to say where the market will move from the current positions. Previously, there were hopes for a weakening of the Fed's monetary policy and a clear announcement of a key rate cut in the future. Together with the strong technical growth factors of the euro/dollar pair, an upward movement was very likely. Now, no one will be surprised if the downward trend resumes.
Nearest support levels:
S1 – 1.1017
S2 – 1.0986
S3 – 1.0956
Nearest resistance levels:
R1 – 1.1047
R2 – 1.1078
R3 – 1.1108
Trading recommendations:
The euro/dollar was fixed back below the moving average line, so the pair is formally relevant for the sale with targets of 1.1017 and 1.0986. However, the market has formed a kind of flat and we cannot say that the bears have intensified and we are waiting for another decline. It is recommended not to force events and, possibly, to remain outside the market for some time.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of illustrations:
The upper linear regression channel – the blue line of the unidirectional movement.
The lower linear regression channel – the purple line of the unidirectional movement.
CCI – the blue line in the indicator window.
The moving average (20; smoothed) – the blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi is an indicator that colors bars in blue or purple.
