4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: 125.2834
The EUR/USD currency pair continues to trade in a side channel with a width of approximately 200 points and does not even try to leave the specified range. In recent days, the pair's quotes have been held slightly above the moving average line, however, they have not yet managed to even approach the upper line of the side channel. Thus, trading is now ultra-quiet. None of the currencies has advantages, just as neither bulls nor bears have it. Unfortunately for traders who clearly would like to conduct active trading, and not sit in the flat, the entire macroeconomic background of the previous week, in fact, was ignored. Recently, there were quite a lot of important macroeconomic indicators both in the European Union and in America, but none of them managed to force the pair to leave the range of $ 1.17 - $ 1.19. Also, the situation is now called "some can't, others don't want to". We have already written about this. Buyers now do not want to make new purchases, since there are no new fundamental reasons for this. And sellers still do not want to invest in the dollar, because there is no reason to do so for several months. So it turns out that the euro/dollar pair is just marking time in one place.
Unfortunately, again for the US dollar, even macroeconomic statistics cannot support this currency now. Despite the fact that quite a large number of different reports have been published in America recently, the first place was the GDP report, which showed a drop of 33%, which has never been seen in the history of the United States. After these numbers, all reports like inflation (which has increased) or industrial production, did not matter much to traders. Even the report on NonFarm Payrolls, which exceeded forecasts, did not cause traders much optimism. The situation in the European Union is much better now. First, GDP in Europe fell by only 12%. Secondly, this country has managed to contain the coronavirus pandemic in at least some countries, at least for a few months. Although now there is again a fairly high number of cases in Spain and France (5-10 thousand daily), it is still not 50-60 thousand cases in America every day. In many EU countries, the coronavirus is under control, which has a positive impact on the pace of economic recovery. Plus, the European Union still adopted the budget for 2021-2027, as well as the economic recovery fund for 750 billion euros, and in the States, the Democrats and Republicans have been arguing for about a month on a new package of economic assistance and have not come to anything, because any actions by either side now pass through the prism of elections, which are less than 3 months away. Thus, the US government leadership continues to think more about how to win elections, rather than how to agree among themselves and mitigate the impact of the crisis on Americans and small and medium-sized businesses.
By the way, about the election. Quite unexpectedly, this weekend we received information that the political ratings of Donald Trump began to grow, but the ratings of Joe Biden – to decline. This was stated on Sunday by CNN. According to him, if the vote was held now, Trump would have won 46% of the vote, and Biden – 50%. That is, the gap is only 4%, not 10%, as it was a few weeks ago. It is difficult to say how true this opinion poll is, since previously almost all studies and simulations showed that Biden would win with a probability of almost 90%. Now it turns out that the probability is already somewhere 40 to 60, and such a rapid change in the mood of the electorate can not even be associated with any event in the United States. After all, the vaccine against "coronavirus" has not yet been invented by American companies, mass protests and rallies continue in some US cities, the epidemic itself will continue to spread among Americans, and Americans themselves continue to die from the "Chinese virus". Moreover, he did not de-escalate the conflict between China and the United States, did not ease the tension between Democrats and Republicans, Trump did not stop making unfounded statements, accusations, and the economic situation in the country did not improve. So, on what basis did Trump's ratings begin to rise? We believe that the results of this study are erroneous. It is reported that only about 1,100 people took part in the telephone survey, so the margin of error for such a small sample may be 5-10%. Thus, most likely, the gap between Trump and Biden has decreased, if at all, then by 1-2 % at most.
Based on all the above, we believe that the flat can continue for as long as you want, because it is difficult to imagine what fundamental or macroeconomic event can bring the pair out of the side channel. We have realized that even the all-important GDP data and US and EU are not able to bring a pair of flat, as fundamental events are now a very small number and the vast majority of them is only a background influence. In other words, market participants do not immediately respond to these events by buying or selling. They form the fundamental background, according to which trade is conducted in general. And for the US dollar, nothing changes for the better here. Thus, the fact that this currency has at least stopped depreciating against the euro is already good. However, we still tend to believe that a downward correction will begin (we mean at least a relatively strong downward correction). At the same time, we continue to put technical factors first. Therefore, before overcoming the level of 1.1909 (the upper line of the channel), we do not recommend considering the option of resuming the upward trend. It is the same as considering the option with a downward trend to overcome the level of 1.1710. Therefore, in the current conditions, market participants can either be "on the fence", or trade between the upper and lower lines of the side channel, or trade relative to the moving average line. However, it is always difficult to trade in the flat, so we recommend that you be extremely careful when opening any positions.
The volatility of the euro/dollar currency pair as of August 18 is 79 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1790 and 1.1948. The reversal of the Heiken Ashi indicator downwards signals a turn of the downward movement within the side channel of 1.1719-1.1911.
Nearest support levels:
S1 – 1.1841
S2 – 1.1719
S3 – 1.1597
Nearest resistance levels:
R1 – 1.1963
Trading recommendations:
The EUR/USD pair continues to trade near the sideways moving average, which indicates a flat. Thus, at this time, it is recommended to either trade between the borders of the side channel based on the signals of the Heiken Ashi indicator or wait for the end of the flat and the resumption of the trend movement.
The material has been provided by InstaForex Company - www.instaforex.com