From the point of view of complex analysis, we see a variable fluctuation within an important price level, and now let's talk about the details. The given downward mood from Friday last continues to restore the quote where market participants not only managed to work out a variable surge on April 30, but worked out a tact of 1.0727 - 1.1017 by 81%, which can be considered success for followers of short positions. The subsequent fluctuation of the past day was expressed in stagnation / pullback 1.0790 / 1.0826, where the compression of the amplitude continued even at the new trading day.
Such a rapid development speaks about one thing - the theory of downward development is still relevant, and there are not many left before radical changes. The level of 1.0775, which has so long concentrated on itself market participants, is no longer considered a strong support for this period in connection with its recent breakdown. Thus, the passage of prices lower than 1.0775 is a matter of time, but the subsequent movement can be interesting, since it is easy to reach local lows. It is worth understanding that the downward development does not end at the values of 1.0700 and 1.0636 (1.0650), since the area of the beginning of 2017 gave us a platform for reflection.
In terms of volatility, there is a slowdown of 26% relative to the daily average, but it is worth considering that up to this point there was a significant acceleration with an inertial course, thus the existing activity was expected for market participants.
By daily monitoring of volatility, we see a clear picture of the emotional mood of the market, where the collected data shows a gradual stabilization of activity and adaptation to the external background.
Volatility detail
MARCH : Monday [March 9] - 155 points; Tuesday - 183 points; Wednesday - 115 points; Thursday - 278 points; Friday - 166 points; Monday - 151 points; Tuesday - 234 points; Wednesday - 243 points; Thursday - 326 points; Friday - 194 points; Monday - 191 points; Tuesday - 160 points; Wednesday - 133 points; Thursday - 188 points; Friday - 194 points; Monday - 134 points; Tuesday - 127 points.
APRIL : Wednesday - 136 points; Thursday - 147 points; Friday - 91 points; Monday - 67 points; Tuesday - 142 points; Wednesday - 72 points; Thursday - 110 points; Friday - 33 points; Monday - 74 points; Tuesday - 84 points; Wednesday - 134 points; Thursday - 95 points; Friday - 80 points; Monday - 55 points; Tuesday - 64 points; Wednesday - 82 points; Thursday - 90 points; Friday - 101 points; Monday - 49 points; Tuesday - 79 points; Wednesday - 68 points; Thursday - 139 points.
MAY : Friday - 83 points; Monday - 79 points; Tuesday - 100 points.
The average daily indicator relative to the dynamics of volatility is 86 points [see table of volatility at the end of the article].
As discussed in the previous review , traders took short positions in the direction of the first coordinate of 1.0775, which practically happened on the market.
Considering the trading chart in general terms, you can notice in the daily period, the three extreme candles have an inertial appearance, the last time we met a similar form 03/30/20-03.04.20. The scale in this case is smaller, but the fulcrum is the same, thereby drawing conclusions, and most importantly - do not miss an attractive formation.
The news background of the past day had an index of business activity in Europe. So, the index of business activity in the services sector decreased from 26.4 to 12.0, but the composite index fell from 29.7 to 13.6, which can be considered as a new anti-record in PMI. The EU statistics did not end there, since they published data on retail sales for March after that, which fell -11.2% (m / m), -9.2% year on year.
The reaction of the market was not long in coming, the euro continued to decline.
ADP will report on employment in the United States for April in the afternoon, where market participants literally ignored the figures. Employment for this period declined by 20,236,000 with a forecast of 20,050,000.
Why there was no reaction to the ADP report, because the market was ready for these indicators, and in this case, the most interesting event would be the Friday report by the United States Department of Labor.
In turn, James Bullard, head of the Federal Reserve Bank of St. Louis, spoke about employment: "The sharp decline in the number of jobs in the US private sector in April is not surprising, while employment can recover sharply in the second half of the year if the coronavirus pandemic is taken under control".
In terms of the general information background, we have a strong statement by the European Commission regarding the prospects for the EU economy. So, it follows from the forecasts that the economies of the eurozone countries may fall by a record 7.5 % of GDP in 2020, which will lead to the worst recession in 90 years. The most severe damage from a pandemic can be the economy of Greece, where a recession of 9.75% is predicted, but countries such as Italy, Spain and Croatia will have very impressive damage.
In terms of economic growth, the European Commission expects that we will see a rapid recovery in 2021, but we should not expect full compensation for losses.
Today, in terms of the economic calendar, we are expecting data on applications for unemployment benefits in the United States, where we do not expect something good, but we are already used to bad data and look at them completely differently. So, initial applications may amount to 3 210 000, and repeated applications will continue to set anti-records of 20 450 000.
Further development
Analyzing the current trading chart, we see a characteristic amplitude fluctuation within 1.0790/1.0826, where an attempt to create an upward spiral was based on a correlation with the pound/dollar currency pair, but the frame remained steady. In fact, the existing restraint confirms the intention of the sellers once again to continue the movement, but there is no need to hurry, since the level of 1.0775, although not as strong as before, is still a level.
It can be assumed that the quote will remain at the level of 1.0790/1.0826 for some time, but it is already worth preparing for acceleration, since the existing stop can be characterized by market participants as accumulation. Thus, the main tactics are the downward development and the breakdown of the area of 1.0790/1.0775, which will open the way to the earlier support of 1.0700/1.0730. Alternative positions are considered exclusively as local operations.
Based on the above information, we derive trading recommendations:
- We consider selling positions lower than 1.0790, down to 1.0775. Further progress is made after the price consolidates lower than 1.0770, with the prospect of 1.0730 - 1.0700.
- We consider buying positions in terms of local operations higher than 1.0826, with a movement in the direction of 1.0850.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the existing stagnation did not affect the general interest, hourly and daily periods continue to signal a sale.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Volatility measurement reflects the average daily fluctuation calculated for the Month / Quarter / Year.
(May 7 was built taking into account the time of publication of the article)
The current time volatility is 30 points, which is a low indicator relative to the average daily value. It can be assumed that an acceleration of volatility will immediately arise as soon as the boundaries of conditional stagnation are broken.
Key levels
Resistance zones: 1.0850 **; 1.0885 *; 1.1000 ***; 1.1080 **; 1.1180; 1.1300; 1.1440; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100
Support Areas: 1.0775 *; 1.0650 (1.0636); 1.0500 ***; 1.0350 **; 1.0000 ***.
* Periodic level
** Range Level
*** Psychological level
