4-hour timeframe
Technical details:
Higher linear regression channel: direction - up.
Lower linear regression channel: upward direction.
Moving average (20; smoothed) - down.
CCI: -63.1389
The currency and stock markets are officially closed in honor of the celebration of Christmas, and we have no choice but to focus on the fundamental background, which is now exclusively political in nature. It is clear that the last full trading week of the year is, firstly, split in half by Christmas, and secondly, there are no planned macroeconomic publications on its balance. On the last trading day, the euro/dollar pair already showed great reluctance to trade in any particular direction, and volatility fell to a record 25 points per day. As we said earlier, with such volatility, trading the pair is extremely difficult and inconvenient.
But back to our political news. The two most relevant and exciting topics now are the "impeachment of Donald Trump" and the "signing of the agreement between China and the United States." On Tuesday, Trump, who, I recall, is extremely unprofitable for the impeachment case to continue for a long period of time, continued to put pressure on the Speaker of the House of Representatives, Nancy Pelosi (who is one of the Democrats). Trump expressed outrage at the fact that there are too many uncertainties around the impeachment process in the Senate, and lawmakers have not yet been able to come to the rules for carrying out such a process. Previously, Pelosi postponed the transfer of the case to the Senate indefinitely. Trump was unable to get past Pelosi, who had "come under attack," and immediately declared: "She hates the Republican Party. She hates everyone who voted for me and the Republican Party. It inflicts tremendous damage to the country. "
One of the main features of the US president is his constant use in speech of indefinite pronouns. Most of all, Trump likes to call the enemies of the government, the country and the American nation the pronoun "they". Every second of his statements the word "they" is mentioned. Sometimes it's absolutely clear who Trump is talking about, sometimes it's completely incomprehensible, and each listener or reader of the message from the US president has to guess for himself who is in question. For example, Trump said: "We have the majority, and now they want McConnell to do something wonderful for them." It's at least understandable who they are, it's about the Democrats, but what Trump has in mind when speaking of "something wonderful" is hard to understand. One thing is certain: the Democrats will drag out the process of transferring the case to the Senate until they find new witnesses who are ready to give new evidence in this case. Trump will insist on the speedy transfer of the case to the Senate, since at the moment there are no new witnesses who are ready to cooperate with justice.
As for the trade agreement between China and the United States, Trump said on Tuesday that he and Chinese President Xi Jinping will hold a ceremony to sign the first phase of the trade agreement that was reached this month. Trump also said that at this time the entire voluminous document of the agreement is in the process of being translated into Chinese, after which "we will all come together and sign the document." We continue to be skeptical of this agreement until its essence is clear and understandable to absolutely all market participants, that is, until it is published and available to everyone. Only then will it be possible to understand what kind of concessions both parties made and the full list of agreements. It seems that the first phase agreement will be signed, but it's nature is also important here, since it will depend on it for further negotiations. Recall that the first phase, according to many experts, is considered the easiest, in the future Beijing and Washington expect much more complicated negotiations.
As a summary, we can say that at the end of the outgoing year there will probably be no strong jerks of the pair. But at the beginning of the new year, when a trade agreement will be signed, the US currency could possibly strengthen, which is already fundamentally justified.
The average volatility of the euro/dollar currency pair fell to 39 points and has a tendency to further decline. Thus, we now have volatility levels of 1.1046 and 1.1124. Given the empty fundamental background and the beginning of the flat, none of these levels can be worked out until the end of the week.
Nearest support levels:
S1 - 1.1078
S2 - 1,1047
S3 - 1,1017
The nearest resistance levels:
R1 - 1,1108
R2 - 1.1139
R3 - 1,1169
Trading recommendations:
The euro/dollar pair retains the prospects for a downward movement, but in the near future the beginning and continuation of the flat is possible. Thus, one can formally consider selling the euro while aiming for 1.1047 after the Heiken Ashi indicator has moved down, however, with the opening of any positions, we recommend that you be extremely careful. The general fundamental background does not remain on the side of the euro, so a fall in the pair is more preferable, but rather in the new year. It is recommended to buy the euro/dollar pair no earlier than when traders return to the area above the moving average line.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanations for illustrations:
The highest linear regression channel is the blue unidirectional lines.
The smallest linear regression channel is the purple unidirectional lines.
CCI - blue line in the indicator window.
Moving average (20; smoothed) - a 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 price movement options:
Red and green arrows.
The material has been provided by InstaForex Company - www.instaforex.com