Hello, dear colleagues!
At the beginning of this review, we will briefly talk about the external background and macroeconomic statistics, which will be published today, January 7.
In general, the external background can be described as relatively calm, although the murder of an Iranian military official, the worst fires in Australia and the first phase of the trade deal between the US and China, which is still in limbo, have reduced investors' appetite for risk. However, in the market, as in life, everything is relative.
The following macroeconomic reports are expected to be published today.
The eurozone will publish data on retail sales, as well as the consumer price index at 11:00 (London time).
From the United States, statistics on production orders and the index of business activity in the service sector from the Institute of Supply Management (ISM) will be published at 16:00 (London time).
Perhaps this introductory part can be considered complete, and you can proceed to the consideration of charts for the main currency pair of the Forex market.
Daily
As expected the day before, after the appearance of the candle for January 3 with a large lower shadow, we had the right to expect a strengthening of the EUR/USD. This is exactly what happened at yesterday's trading. At the same time, the designated goals of 1.1174, 1.1183, 1.1190, and 1.1200 were achieved. Monday's highs were shown at 1.1205, after which the pair fell slightly and finished trading at 1.1196.
Such dynamics and the closing price of the trading on January 6 once again shows the strength of the area 1.1200-1.1250, which is still problematic for players to pass for an increase. At least for now.
Now the most interesting thing is what will happen next. Three options. The euro bulls will continue their attempts to raise the price and will again storm the mark of 1.1200. The pair will spend today in a relatively narrow sideways range. Bears will seize the reins of the market and start pushing the price to lower levels.
In my personal opinion, all three scenarios have the right to be implemented, but which of them will be chosen by market participants, we will know only after the completion of today's trading. At the moment, the euro-dollar is showing a decline and is trading near the mark of 1.1177. On the technical side, the rate will remain important above the level of 1.1174 and 233 exponential moving average or fall below the level and moving. I believe that at the current values, the pair may well get support and start a recovery in the area of 1.1195-1.1205.
If this does not happen, an alternative scenario will be a decline in the price zone of 1.1157-1.1154, where the Tenkan line of the Ichimoku indicator is located. As noted yesterday, the closing of the daily session below Tenkan will strengthen bearish sentiment and send the pair to the area of 1.1100, where its further fate will be decided.
H4
In this timeframe, you can see how the pair moved according to yesterday's plan, which assumed growth in the area of 1.1200 and from there a reversal to a downward trend. Yes, it was proposed to wait and assess the situation, move behind the market, but it seems to me that it will take a long time to wait and evaluate. It is unlikely that we will see a stable directional movement in one direction this week. Also, if you remember, the divergence of the last weekly candle and the daily one for January 3, to a greater extent assumes the initial rise of the rate, and then its reversal to a downward trend.
Given the fact that the weekly signal is stronger than the daily one (we are talking about candles), at the moment I continue to consider sales as the main trading idea.
As you can see, after a whole series of Doji candles of the pair, it turned on the decline. I am not sure that we will see another or more reversal 4-hour candles now. In principle, you can search for them on the hourly chart.
As for the current situation, the next sales can be tried on the attempts of the euro-dollar to break up the price zone of 1.1177-1.188. More attractive prices for opening short positions are in the area of 1.1195-1.1205. However, we must be extremely careful here. If the pair rises to the area of 1.1200, yesterday's highs at 1.1205 will probably be updated and the rate will head to the level of 1.1238, where the maximum trading values were shown on December 31. So far, everything is fine. Be careful!
Good luck!
