EUR/USD. November 5. Results of the day. Bears returned to the market, the euro will face another decline

Trading 06 nov 2019 Donner votre avis

4-hour timeframe

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Amplitude of the last 5 days (high-low): 46p - 74p - 44p - 44p - 51p.

Average volatility over the past 5 days: 53p (average).

The second trading day of the week passed with a clear advantage for the US dollar. The downward movement on November 5 began in the morning, when no important macroeconomic report has yet been published. It was only later on, during the US trading session, that data on business activity in the US services sector was released, which traders could interpret in different ways, including in favor of the dollar. However, how to explain the euro's fall during the day, when there was no news from the EU? Christine Lagarde's speech late last night could in no way have caused such a strong fall in the euro... or any fall in it. Just because the newly made head of the ECB did not inform traders with anything that was interesting. News on the topic of the impeachment of Donald Trump should have caused, in theory, a backlash of the forex market. No breakthroughs in negotiations with China were recorded today. The parties continue negotiations, choose the venue for a new round of these negotiations, in general, there is a working process. The only thing that can be noted: China is trying to cancel as many duties imposed by America in September as possible, as part of the possible signing of the "agreement in the first phase". Both sides note that "negotiations are going well," but how many times have we already witnessed such statements, and the next day Trump imposed new duties? Thus, at first glance, the strengthening of the US currency is almost groundless. But this is only at first glance. First, the euro/dollar pair failed to overcome the level of 1.1181, which continued to be the pair's peak for several months. The second time, when the pair came to this level, the bulls did not have enough strength even to work it out. Secondly, we have repeatedly written that the euro shows growth from time to time only thanks to US statistics or disappointing news coming from overseas. That is, the EU economy will continue to sink into the swamp, Christine Lagarde just took office and has not yet made any changes, of course, did not have time, the EU macroeconomic indicators continue to deteriorate. So why did the euro suddenly rise in price? Certainly not because of favorable news from the eurozone. So it turns out that when traders are once again fully aware of this idea, sales of the euro and dollar purchases will resume, which, despite three Federal Reserve rate cuts, still remains a stronger currency, the issuing country of which has a stronger economy.

As for today's macroeconomic reports, there were no important publications in the eurozone, and figures on business activity in the services sector came from overseas. According to Markit, business activity declined further and amounted to 50.6 in October (the previous value of 51.0). But according to ISM, business activity in the service sector, on the contrary, increased and amounted to as much as 54.7 with a forecast of 53.5 and a value in September of 52.6. It is believed that the ISM is more important, thus, the pair's fall during the US trading session (i.e. a stronger dollar) is fully justified.

Tomorrow, the euro may be under even more pressure from traders, as a number of European countries and the EU as a whole will publish data on business activity in the services sectors. Not the fact that they will be weaker than in September, however, the general trend of deterioration of all macroeconomic indicators suggests this option. Moreover, if the indicators on average grow by several tenths of a point, then this factor will not cause a positive impact on the euro. Almost all business activity indices are just above the 50.0 mark. But the decline of some or all of the indices may cause new panic among traders, because in this case it is quite possible to expect the beginning of a recession in the services sectors of the largest EU countries and the EU itself in the near future.

As you can see, the euro had chances to form an upward trend. Small, but it's still growth. However, without at least a little support from the European fundamental background, the bulls very quickly lost the whole fuse. But the bears do not need to look for a reason to sell the pair. From a technical point of view, the euro/dollar was consolidated below the Ichimoku cloud and the first support level of 1.1100. Thus, the dead cross signal is now strong, which suggests a continued downward movement. Bollinger bands began to expand downward, and the volatility of the pair began to grow. Everything indicates that a new downward trend will be formed.

Trading recommendations:

EUR/USD continues to move down. Thus, it is now recommended to sell the currency pair with targets at 1.1035 and 1.0997. Turning the MACD indicator up may indicate a round of correction, but it seems that traders are set for large and long-term sales of the euro. It is recommended to return to purchases of the EU currency no earlier than overcoming the Kijun-sen critical line.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movements:

Red and green arrows.

The material has been provided by InstaForex Company - www.instaforex.com

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