From a comprehensive analysis, we see that the variable level of 1.0775 still stood, and a corrective move appeared in the market. Now about the details. 350 points of the downward move – and now we have found variable support in the form of the support level of 1.0775. Initially, it looked like a slight slowdown with a pullback, after which there was a temporary flat of 1.0775/1.0830 and the same corrective movement. In fact, this was to be expected, if the level of 1.0775 does not breakthrough since the flat was narrow, and the downward movement is strong, so there was a technical correction. I do not think that this step should be regarded as a new round of upward movement, since it is too early to draw conclusions, and the chance of returning the quote back to the limits of the variable support of 1.0775 is high.
Regarding the theory of further development, we can assume that we will soon return to the tactics of following the main trends, as the market adapts to the external background, and investors gradually calm down.
The most notable moment was the volatility, which since last Friday, the cutting has moved to a decline, and, for example, the past day has become one of the most sluggish 67 points, which is 38% lower than the average daily activity. A similar phenomenon was recorded in the same week for the pound/dollar pair, where activity fell every day. The fact that the market will adapt to external noise is a fact, but the fact that we will quickly lose activity is a small fraction of the probability, thus speculators will still have an opportunity to earn money.
Details of volatility: Monday-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; Wednesday-136 points; Thursday-147 points; Friday-91 points; Monday-67 points. The average daily indicator, relative to the dynamics of volatility is 109 points (see the table of volatility at the end of the article).
As discussed in the previous review, traders considered having a slowdown within the level of 1.0775 as a starting point, but actions to trade were only received on the following day.
Looking at the trading chart in general terms (the daily period), we see a number of consecutive inertia moves. This theory of inertia was discussed in previous reviews, where the key idea was that each development creates an anti-inertia in the opposite direction.
The news background of the last day did not contain any noteworthy statistics for Europe and the United States, where the market in the face of its participants continued to comprehend the current realities.
In terms of the general information flow, we see that the general panic is trying to make money, and this is the best example of investors who actively buy up "junk" bonds of companies that carry a high risk of default. In other words, these bonds give a high percentage of returns that compensate for the risks. In turn, White House economic adviser Larry Kudlow said that the government is considering issuing coronavirus Treasury bonds, which will become a long-term investment in the future of American health care.
And this is all happening against the background of new anti-records of the COVID-19 virus, where more than 1.34 million cases of infection have already been recorded in the world.
Today, in terms of the economic calendar, we have data on open vacancies for JOLTS in the United States, where they are waiting for a reduction from 7.0 million to 5.6 million.
Further development
Analyzing the current trading chart, we see that during the correction movement, the quote has already managed to pass more than 100 points, which is a significant amount in comparison with the slowdown of the past two days. In fact, we can already talk about a partial recovery towards the level of 1.0850, but then there is a question, because if there are no fixes below the level, a round of long positions may occur, considering the value of 1.0850 as variable support.
Analyzing the minute-by-minute period, you can see that the round of long positions appeared during the Pacific and Asian sessions, and the second acceleration occurred with the arrival of the Europeans in the market.
We can assume a local recovery towards the level of 1.0850, where it is worth monitoring the behavior of the quote and the price-fixing points. In this case, we will be able to make the most correct decision.
Based on the above information, we will output trading recommendations:
- Buy positions are considered in two options: the first in the case of a pullback to the level of 1.0850, where the quote slows down and makes a test; the second option is based on the fact that there is no recovery, and the existing stagnation is sufficient to resume the course. In this case, we expect the price to be fixed higher than 1.0900, with the prospect of a move to 1.0920-1.0960.
- Positions for sale are considered lower than 1.0870 with a move to the level of 1.0850. The main positions will occur after a clear price fixing below the level of 1.0850, without a shadow puncture.
Indicator analysis
Analyzing different sectors of timeframes (TF), we see that due to technical correction, indicators on the minute and hour periods have changed their interest to an upward one. Day sections continue to signal the sale.
Weekly volatility / Measurement of volatility: Month; Quarter; Year.
Volatility measurement reflects the average daily fluctuation from the calculation for the Month / Quarter / Year.
(April 7 was based on the time of publication of the article)
The volatility of the current time is 110 points, which is already the value of the average daily indicator. It is possible that the subsequent dynamics will be within the existing framework.
Key levels
Resistance zones: 1.1000***; 1.1080**; 1.1180; 1.1300; 1.1440; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100.
Support zones: 1.0850**; 1.0775*; 1.0650 (1.0636); 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
*** Psychological level
