An attempt to breakout of the side channel 1.1700 // 1.1810 // 1.1910 failed, so the quote quickly returned to the limits of the average deviation. The main strategy remains to be working out fluctuations within the established limits, that is why the level of 1.1810 played as a support to locally deploy the quote in the market.
Nonetheless, it is rather difficult to predict how long the quote will move within the range, but based on the recent breakout attempt, it can be concluded that market participants are preparing for a movement to a new level, and such may lead to new bursts of activity.
However, hasty conclusions should not be taken in such a situation as an initial breakout from the upper limit of the flat may instead result in a sharp downward move. The best strategy is to trade local positions, since those will turn out to be profitable in the long run.
Thus, before making any transactions, follow and work along the sideways channel first, not forgetting to analyze the behavior of speculators regarding local highs and lows in the market.
In meantime, reviewing the movement of quotes in the M30 chart, we can see that the price reached the average level of 1.1810, but then a round of long positions appeared, which returned the quote to the area of the day's high.
It led to a 23% slowdown in volatility, with which if we make a comparative analysis of the dynamics both in the EUR / USD and GBP / USD pair, we will see that there are cardinal differences relative to the previous day. The spiral of upward positions was different, and the movement in the sideways channel is larger in the EUR / USD pair than the GBP / USD pair.
This is because as discussed in the previous review , traders worked on a rebound from the area of 1.1800 / 1.1810, thereby decreasing the volume of short positions and increasing long positions.
In the daily chart though, the flat is still relevant in the market, so in order to trigger significant changes, the quote must consolidate above 1.2050 or below 1.1690.
With regards to other aspects, news published yesterday included data on the US labor market, which reported an increase in unemployment claims instead of the expected decrease.
Initial applications increase from 971,000 to 1,106,000, (+135 thousand), while repeated applications decreased from 15,480,000 to 14,844,000.
Today, data on business activity in the eurozone will be published, the forecast for which is a slight drop from 54.7 to 54.5 in the service sector, while an increase from 51.8 to 52.9 in the manufacturing sector.
A similar figure will also be released in the United States, where the services sector may accelerate from 50.0 to 51.0, and the manufacturing sector will change from 50.9 to 51.9.
The US is also to publish figures on sales in the secondary housing market for July, which is expected to grow by 14.7%.
The upcoming trading week is not packed with statistical data, and the only thing that may interest market participants is the next estimate of the US GDP.
Tuesday, August 25
US 15:00 - New home sales (July)
Wednesday, August 26
US 13:30 - Volume of orders for durable goods (July)
Thursday, August 27
US 13:30 - Preliminary GDP (Q2)
US 13:30 - Claims for unemployment benefits
Further development
Analyzing the current trading chart, we can see that the short pullback was replaced by another burst of short positions, with which the average level of the side channel 1.1700 / 1.1810 / 1.1910 is still in the way of market participants.
Thus, movement along a downward trajectory will become most relevant only if the quote consolidates below 1.1800, as such will provide an opportunity to bring the price lower than the 1.1700.
Otherwise, fluctuation will occur within the values 1.1810 / 1.1900.
Indicator analysis
Analyzing the different sectors of time frames (TF), we can see that the indicators of the minute and hourly periods signal sell due to movements in the direction of the middle line of the channel. Meanwhile, the daily period, as before, signals buy relative to the general trend of the market.
Weekly volatility / Volatility measurement: Month; Quarter; Year
The measurement of volatility reflects the average daily fluctuations, calculated per Month / Quarter / Year.
(August 21's was built, taking into account the time this article is published)
Volatility is currently 49 points, which is already a lot for the start of the European session. If speculative mood remains in the market, further growth of dynamics is certain to happen. In addition, a jump in activity will occur at the moment of a breakout from the middle line of the channel.
Key levels
Resistance zones: 1.1910 **; 1.2000 ***; 1.2100 *; 1.2450 **; 1.2550; 1.2825.
Support Zones: 1.1800; 1.1650 *; 1,1500; 1.1350; 1.1250 *; 1.1180 **; 1.1080; 1.1000 ***; 1.0850 **; 1.0775 *; 1.0650 (1.0636); 1.0500 ***; 1.0350 **; 1.0000 ***.
* Periodic level
** Range level
*** Psychological level
Also check the brief trading recommendations for the EUR / USD and GBP / USD pairs here
