The dollar weakening impulse that gave rise to bullish sentiment on the EURUSD pair of August 23 did not develop into the third wave of purchases. Thus, players with long positions in Chinese duties and Powell are drawn into the market, and they are now trapped, which will be discussed in this article.
Trading idea for the pair EURUSD
The developments
Recently, the most popular pair in the world of trading EURUSD was shocked by a series of very controversial events and news that I put on the daily chart of this pair (see below). The most important of these are Jerome Powell's speech and the US announcement of the imposition of duties on Chinese goods, as well as China's response itself.
All these events dragged a large number of players into the market, relying on fundamental analysis and news. And this is normal. All this gigantic mass of orders - concentrated in the relatively small news range of 100p between quotes 1.105 - 1.1150 - it was in this zone that all the latest news came out.
The technical picture
In my analytics, I am guided by the "Hunting for stops" system, which assumes a price movement with a higher probability in the direction where the stops (money) of small and medium bidders accumulate, as well as signal bars from the D1 "Price Action"
Let me remind you that the EURUSD pair is trading at the lows of the current (and last) year, and all long-term and medium-term buyers can hide their risks only for a round extremum of 1.1.
In other words, everyone who has gone from dollars to euros on "duties" is now being held at 1.1 and they simply have no other place.
The news impulse of 08/23/19 did not lead to the emergence of a third growth wave. Moreover, it is almost completely absorbed. The stops of medium-term buyers are now below this day at 1.1050, and this is the first target for EURUSD sales. The second goal is a minimum of a year, as well as around level of 1.1 - under which are the risks of buyers throughout the month of August. In addition, as practice shows, trading near such extremes lead to breakdowns of such levels.
The material has been provided by InstaForex Company - www.instaforex.com