From the point of view of a comprehensive analysis, we see that the quote fluctuates within the range of 1.1080 for the third trading day in a row, showing extremely little activity. In fact, a range with variable boundaries of 1.1070 / 1.1100 was formed, where traders conduct a thorough analysis while being outside the market. Everything that happens is very similar to the process of accumulation in anticipation of an important event, but more on that later.
Looking at the market in general terms, we see that the EUR/USD and GBP/USD currency pairs showed a high correlation for some time, where both instruments moved closer to the control values during the inertial movement, but then there was a discrepancy. As a result, pound sterling received a significant upward impulse, bouncing off its control level by more than 180 points, while the euro / dollar tirelessly continued a narrow swing within the range of 1.1080. This analysis suggests that currently there is extremely strong pressure on the single currency, which does not provide an opportunity to implement something like a swing. Thus, there is a conditional correlation, but a signal from a fellow marketer [GBPUSD] warns us in advance about the impending volatility, which will stir up the single currency.
In terms of numerical indicators of volatility, we see a decline of 40% relative to the average daily indicator again. This kind of decrease in activity has persisted in the market since the beginning of the trading week.
Analyzing the past minute by minute, we see that there was an attempt to break through the control level of the impulse candle at 13:30 [UTC+00 time on the trading terminal], but the attempt was unsuccessful, where the quote returned to the same fluctuation range of 1.1070 / 1.1100 again.
As discussed in the previous review, traders are at a low start, since accumulation within the control level has already reached the conditional limit. Moreover, no positions were opened due to the low activity and the absence of price fixing relative to the set values [1.1060 and 1.1125].
Considering the trading chart in general terms [the daily period], we see that the quote continues the dull fluctuation in the structure of the oblong correction 1.0879 -> 1.1239, where we will have four months in terms of progress soon. In fact, the process dragged on for an extremely long time, which led to reflection in terms of slowing down the main trend.
The news background of the past day included statistics on the real estate market in the United States, where sales on the secondary market will increase by 3.6% with a forecast of growth of 1.3%. The indicators are actually very good, but there was no market reaction, perhaps the reason for containing trade interests.
In terms of informational background, we had the second day of the World Economic Forum in Davos, where US President Donald Trump became the main person for the media again. So, Trump expressed extreme dissatisfaction with the World Trade Organization [WTO], which, in his opinion, is unjustly treating the United States. In fact, the US president hinted at the impending reform of the WTO system, which, in his opinion, is now at an impasse.
"We will do something, in my opinion, very outstanding. The organization's leadership will arrive in Washington, perhaps next week or perhaps in a week, and we will begin work on this," Donald Trump shared with reporters in the form of insider information.
At the same time, the US president walked through his Federal Reserve System [Fed] once again, calling the action to raise rates a big mistake. Trump believes that if it weren't for the Fed's actions with a rate increase, the US GDP growth rate would be closer to 4%.
"I can imagine that the Dow would be higher by 5-10 thousand points. But it was murderous when they raised the rate." Donald Trump emphasized in his words, speaking about the actions of the Federal Reserve System.
Today, in terms of the economic calendar, we have data on applications for US unemployment benefits, where repeated applications should decrease by 8 thousand, and primary increase by 8 thousand.
The key event of the day and the whole week is the ECB meeting, followed by a press conference.
Why did tremendous interest arise?
The new head of such a significant regulator, Christine Lagarde, announced the revision of the ECB strategy, which has a weight of more than ten years in history. This kind of step focused on itself extremely high interest. In addition to everything, Christine Lagarde banned the ECB representatives from commenting on the regulator's further actions a few days ago, which further fueled speculative positions. So now, we understand the reason for such a remarkable stagnation on the EUR/USD pair.
ECB press conference and comment - 13:30 Universal time
Further development
Analyzing the current trading chart, we see the same fluctuation inside the conditional frames 1.1070 / 1.1100, showing low activity. Obviously, market participants are preparing for a surge in activity, which is likely to come today. Do not forget that the event is noteworthy and there may be informational outbreaks, thereby carefully monitor sources such as Bloomberg for insider information
In terms of the emotional component, we see very strong tension of market participants caused by strong compression of quotes and background pressure.
Detailing the constantly available trading day, we see a slight surge in activity at night at 11:30, but after which everything has returned to its original course.
In turn, traders are at a low start, as there will soon be a surge. Some market participants have small volumes of long positions, but are considering alternative deals at the same time.
It is likely to assume that the way out of accumulation is already close, and thus, you need to be extremely attentive to the order of the quote and price fixing points. At the same time, a trading strategy will be selected by the method of breaking down the boundaries of accumulation, with entry into the market at a momentum jump. Decision points are at 1.1060 and 1.1125.
Based on the above information, we derive trading recommendations:
- Buy positions will be considered in case of price fixing higher than 1.1125.
- Sell positions will be considered if the price is fixed lower than 1.1060.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators of technical instruments still retain a downward interest, reflecting an earlier move. At the same time, neutral interest began to be actively drawn due to the sideways movement.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(January 23 was built taking into account the time of publication of the article)
The current time volatility is 11 points, which is an extremely low indicator. The dynamics of the volatility of the past days reflected a slowdown, which is directly related to the willingness of market participants to join trading operations in case of clarification of circumstances. Thus, the information background can do its job, and volatility will increase significantly.
Key levels
Resistance zones: 1.1080 **; 1,1180; 1.1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1,2100
Support Areas: 1,1080 **; 1,1000 ***; 1.0900 / 1.0950 **; 1.0850 **; 1,0500 ***; 1.0350 **; 1,0000 ***.
* Periodic level
** Range Level
*** Psychological level
***** The article is built on the principle of conducting a transaction, with daily adjustment