4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - upward.
CCI: 122.2136
For the EUR/USD currency pair, the last trading day of the week begins with the continuation of the upward movement. The pair's quotes resumed their growth and the bulls resumed their purchases of the European currency, which are not justified in any fundamental or macroeconomic terms. Yesterday, no significant report was published either in the United States or in the European Union. Traders successfully ignored the news on the recovery of the US stock market, although a few days ago, the main reason for the fall of the dollar was the fall of stock indices in America. This week, traders managed to ignore the Fed's decision to lower the key rate by 50 basis points, although this event would have caused the collapse of the US currency at any other time. Thus, we approach Friday, March 6, with a clear understanding that market participants are not paying any attention to macroeconomic statistics at the moment. Of course, it won't last forever. Sooner or later, the panic provoked by the "coronavirus" will pass (at least, I hope so), and the auction will return to its usual course. Traders will again pay attention to the economic indicators of a country's economy. And then all the statistics that were published these days will be remembered.
On Friday, all the most important and significant reports are scheduled in the States. We would like to remind you once again that this week two major events (EU inflation and the Fed's rate cut) were ignored. Thus, today's reports can remain without it. However, we can't ignore them because, despite all the traders' concerns about the US economy's recession (as if the European economy is in better shape), most of the macroeconomic statistics from overseas remain at a very high level. For example, wages in the United States are growing steadily. On a monthly basis, an increase of 0.3% is expected in February. The annual growth rate is +2.9% - +3.0%. Some traders may notice that the growth rate has started to decline but no indicator in the world can constantly accelerate, so a temporary and slight decrease in the growth rate is absolutely normal, which does not mean that the US economy is falling into recession.
The second and more significant indicator – Nonfarm Payrolls for February is expected with an increase of 165,000-175,000. And again, someone can say that a month earlier, the increase was 225,000 and now it can be only 170. But this indicator cannot constantly grow. Therefore, the ratio of the forecast value for which traders are preparing and the actual value will be important. If the real value will differ in a big way, then the US dollar will receive support. I would if the markets didn't completely ignore what is happening now. We also want to remind you that another important report this week (the ADP report on the number of new employees in the private sector) also showed a fairly high value and exceeded forecasts.
At the same time, days earlier, the Fed's Beige Book report was published, which rarely provokes any reaction from traders. Nor did it elicit any reaction this time. Nevertheless, it contained interesting information. According to this review, "coronavirus" has begun to have a negative impact on tourism in the United States. "Tourism growth was sluggish and insignificant. There are signs that the coronavirus is negatively affecting travel and tourism in the United States," the document stated. The report also noted "some delays in deliveries". However, it also noted "moderate growth in economic activity" and "strengthening of industrial sectors in many districts". The Fed considers future presidential elections and the "coronavirus" as risks for the US economy, however, there are no special reasons to worry. The document also notes that prices for gas and oil have fallen against the background of coronavirus in China. However, the main thing is that the virus does not begin to progress in the States and around the world. Its current distribution is not critical for the global economy. Moreover, the Fed has already played ahead of the curve and eased monetary policy.
Thus, at the moment, we can say that the upward trend continues, and Friday's statistics from overseas can be ignored again. Therefore, we recommend paying attention to the Heiken Ashi indicator, which can indicate the beginning of a new round of corrective movement. The lower linear regression channel has turned up, so the medium-term trend is already upward.
The average volatility of the euro/dollar currency pair remains at record values for the euro – about 120 points per day. And these values only once again confirm that the markets are now in a very excited state and can move unexpectedly and sharply in any direction. Thus, on Friday, we again expect a decrease in volatility and movement within the channel, limited by the levels of 1.1120 and 1.1358.
Nearest support levels:
S1 - 1.1169
S2 - 1.1108
S3 - 1.1047
Nearest resistance levels:
R1 - 1.1230
R2 - 1.1292
R3 - 1.1353
Trading recommendations:
The euro/dollar pair resumed its upward trend. Thus, it is still recommended to trade "on the trend". That is, to buy the European currency with the targets of 1.1292 and 1.1353 before the Heiken Ashi indicator turns downward. It will be possible to return to sell positions no earlier than fixing the price below the moving average line with the first target of 1.1047, which is still not expected in the near future.
In addition to the technical picture, you should also take into account the fundamental data and the time of their release.
Explanation of the illustrations:
The highest linear regression channel is the blue unidirectional lines.
The lowest linear regression channel is the purple unidirectional lines.
CCI - blue line in the indicator window.
Moving average (20; smoothed) - blue line on the price chart.
Murray levels - multi-colored horizontal stripes.
Heiken Ashi is an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
The material has been provided by InstaForex Company - www.instaforex.com