4-hour timeframe
Technical data:
The upper channel of linear regression: direction - up.
The lower channel of linear regression: direction - down.
The moving average (20; smoothed) - down.
CCI: 107.4020
A new trading week has begun on the forex market. Volatility over the past 5 days decreased to the area of 30 points per day, but the euro/dollar pair worked out the Murray level of "0/8" - 1.0986, rebounded from it and began an upward correction. At the moment, the quotes have worked out the moving average line, near which the fate of the pair will be decided for the next few days or the entire trading week. Thus, today traders need to closely monitor the behavior of the pair near the moving average. The fundamental background was present last week, but traders continued to stubbornly ignore it. If in the case of the GBP/USD pair, this behavior of market participants can still be explained somehow, then in the case of the EUR/USD pair, it is possible to explain the lack of desire of traders to trade only by the same "paradoxical situation" that we have already described several times. We still believe that the market has come to this time and price point, which is very inconvenient for bears, who need stronger reasons than weak macroeconomic reports from the European Union to continue to get rid of the euro around its 2-year lows, and for bulls, as there are no macroeconomic statistics in favor of the euro.
On Monday, December 2, several macroeconomic reports will be published. However, even with a cursory glance at the news calendar and forecasts for all indicators, we can assume that today will also not be the day of the euro. Indices of business activity in the manufacturing sector of Germany and the European Union are expected to be unchanged compared to the previous month. Business activity should reach 43.8 and 46.6 respectively, that is, the values will remain extremely low, and we will not be able to state an improvement. The same PMI will be published in the States today, in two versions, Markit and ISM. According to Markit, business activity in production will remain at the same level of 52.2, and according to ISM - the indicator will show an improvement to 49.4. The second indicator is more significant, and it may remain below the critical mark of 50.0, which again will not allow us to declare an improvement. However, in recent years, the US statistics show signs of improvement, so you can count on a stronger value of the ISM index than 49.4. Whatever it was, and even the absolute values of the indices can be seen in which country they are higher. Thus, these publications today can only cause a resumption of the downward trend.
In addition to the indicators of business activity, today will also be a speech by Christine Lagarde, which will be very important. We have repeatedly said that it is an event of a similar degree of significance that can push the pair out of the flat in which it has been all the previous week. It is Christine Lagarde who can once again force the bears to return to the market and trade more actively, and the euro/dollar currency pair can be forced to decline again. We believe that if not this month, then next year the European Central Bank will go for another easing of monetary policy, as we do not see any signs of recovery of the European Union economy. If today the indices of business activity in the manufacturing sector of the EU countries disappoint traders again, then the ECB rate cut can be expected with even more confidence. And the head of the ECB today can hint at the timing when the regulator plans to change the monetary pressure on the economy of the alliance again. Accordingly, if such hints are heard today, then this will be an additional factor for the fall of the European currency.
As for the volatility of the pair, if Christine Lagarde does not make some loud statements that will be able to "bring to life" the market, then it is unlikely to change today. Thus, there is hope for the head of the ECB, otherwise, the pair will remain in a state of "hibernation".
Nearest support levels:
S1 - 1.0986
S2 - 1.0956
S3 - 1.0925
Nearest resistance levels:
R1 - 1.1017
R2 - 1.1047
R3 - 1.1078
Trading recommendations:
The euro/dollar pair is correcting again, as evidenced by the Heiken Ashi indicator, but the downward trend remains. Thus, now it is recommended to wait until the correction is completed and trade the pair lower with the first target of 1.0986. We recommend considering further sales of the pair in case of overcoming the first target. It is recommended to buy the euro currency not earlier than the consolidation of traders above the moving average line with the first target of 1.1047.
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.
