4-hour timeframe
Technical data:
The upper channel of linear regression: direction - up.
The lower channel of linear regression: direction - up.
The moving average (20; smoothed) - sideways.
CCI: -96.5475
The first trading day of the new week, the EUR/USD currency pair starts below the moving average line. Thus, at the end of last week, the trend for the currency pair changed to a downward one due to strong macroeconomic reports from overseas on Friday. From our point of view, something happened that should have happened a long time ago. We still believe that there were no good reasons for the strengthening of the European currency. Thus, the formation of a downward trend is now the most likely and expected scenario.
Macroeconomic statistics on Monday, December 9, will be very few. To be precise, it will not be at all. Thus, today we are almost 100% likely to expect boring and low-volatility trades. As for other news, there is something to pay attention to.
Over the weekend, new and crucial information emerged about Donald Trump's possible actions. One of the German publications published a large article, which clearly outlines the scenario of the collapse of the WTO by Donald Trump this week. The WTO Appeals Committee will meet on December 11. According to the rules of the organization, this committee must have at least 3 members, two of whom expire on December 10. The committee cannot function with only one member. Readers will ask what is the problem. The problem is that Washington has been desperately blocking appointments of new members for the past 2 years, the total number of which could be 7. Thus, Donald Trump will be the culprit of the collapse of the Appeals Committee and the WTO itself. Of course, the American leader does it for a reason. Without the work of the WTO, trump expects to get more favorable trade agreements with many countries of the world. Without the WTO, "the right of the strongest" will return to world trade, the author of the article notes. Some countries and blocs will be able to resist the States, some will have a bad time. The European Union, according to the author of the resonant article, has already begun to arm itself. However, it is not known what these weapons are. Moreover, now Trump's further actions are very interesting since logically, new pressure on the EU countries through duties and economic restrictions will have to begin. What can I say, the US leader decided that all countries of the world need to renegotiate trade agreements on more favorable terms. And the odious president goes ahead of his goal. However, we think it is naive to assume that all the countries against which the States impose duties, trying to achieve more favorable terms of trade, will just sit back and follow the lead of America. There will be a backlash. In the end, as in any trade war, it will be bad for everyone. The euro currency, as the most vulnerable of the major currencies, may begin to feel pressure also because of Trump's actions on the European fields of currency and trade battle. As we have already said, the Fed, in case of a deterioration of the economic situation in America, there is room for maneuver; the ECB has much less space.
From a technical point of view, the downward movement on Monday and generally this week may continue. We believe that the bulls have exhausted their potential and now the bears can return to the forex market. The most interesting thing is that this week will be the last meeting of the ECB and the Fed this year. No changes in the monetary policies of the States and the European Union are expected, however, a lot of interesting information can be heard at press conferences.
The average volatility of the euro/dollar currency pair is now 49 points per day, but over the past 30 days, the indicator is only 42 points. Thus, the boundaries of the channel in which the pair can move today are limited by the levels of 1.1007 and 1.1113. Given the "semi-output" status of today, it is likely that none of these levels will be worked out.
Nearest support levels:
S1 - 1.1078
S2 - 1.1047
S3 - 1.1017
Nearest resistance levels:
R1 - 1.1108
R2 - 1.1139
R3 - 1.1169
Trading recommendations:
The euro/dollar pair started a downward movement. Thus, it is now recommended that traders consider selling the euro currency with targets of 1.1017 and 1.1007. Near the moving average line is a good place to sell the pair, as there is a chance to go into a downward trend at its very beginning. A reversal of the Heiken Ashi indicator upward, however, will indicate a possible resumption of the upward movement. It is recommended to return to buying the EUR/USD pair not before the bulls overcome the moving average, but from a fundamental point of view, the growth of the euro is now unlikely.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression - the blue line of the unidirectional movement.
The lower channel of linear regression - 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 - the red horizontal lines.
Heiken Ashi - an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
