4-hour timeframe
Amplitude of the last 5 days (high-low): 234p - 243p - 326p - 193p - 192p.
Average volatility over the past 5 days: 238p (high).
The EUR/USD currency pair continues the correctional movement on March 24, which began a few days ago. As part of this movement, the Kijun-sen line of the Ichimoku indicator was worked out. Thus, there are reasons to assume the completion of the correction and the resumption of the downward movement. Moreover, at first glance, we have a rebound from the critical line, and not just a reversal around it. At the same time, we would not recommend making such high-profile conclusions in the current state of the market. The technical picture may change at any time, despite the fact that the illustration does not scare traders at all. It may seem that volatility has returned to normal and market participants have accordingly calmed down. However, this is completely wrong. During today's quiet trading, the EUR/USD pair passed 170 points. Recall that the normal volatility for the euro/dollar pair is 50-60 points per day. Thus, in general, we can draw the following conclusions. Firstly, high volatility persists, which means that panic in the foreign exchange market also persists. Secondly, the pair has performed the lowest necessary correction and can now try to resume the downward trend.
Today's macroeconomic data had a chance to influence the movement of the currency pair. Recall that in the last few weeks, immediately after the onset of the general panic caused by the spread of coronavirus, the macroeconomic background was completely ignored by traders. We talked about the fact that the market conditions have changed during the epidemic and market participants can begin to respond only to data relating to the new time, that is, the month of March. Today we witnessed the first reports for this month. First, data were published on business activity in Germany, the locomotive of the European economy. Just want to note that absolutely all forecasts of business activity were, as they say, "below the baseboard". Nevertheless, the industrial sector showed lower rates of deceleration than expected. Business activity in this sector decreased to just 45.7, which is slightly lower than the previous value - 48.0. But the service sector, we can say, definitely plunged down. Business activity decreased from 52.5 points to a disastrous 34.5. Composite business activity index was 37.2. Thus, in general, it is even difficult to say whether this package of statistics was positive or negative. From our point of view, it is still negative, but traders most likely expected even worse values. Thus, the strengthening of the European currency during Tuesday may be triggered by these publications.
However, with German data on business activity, everything was just beginning. Furthermore, European indices were immediately published, which practically repeated the trend of German indices. In the manufacturing sector, a reduction to 44.8 points was recorded (again, it could have been much worse), and in the service sector, a drop from 52.6 to 28.4. Composite business activity index was 31.4. In addition to European business activity, similar indicators were published in France. Here the picture is the same. The manufacturing sector remained afloat, showing 42.9, while the services sector went deep under water - 29.0. Thus, we have a situation where all nine indices in the eurozone turned out to be much worse than the values of the previous month. However, this is not surprising. These are the numbers we were expecting from the month of March. The only thing that was really surprising was the value of business activity in the manufacturing sectors.
Meanwhile, the total number of patients with coronavirus worldwide is already almost 400,000. And we once again recall that this is only official data. How many people are infected, but not tested for the disease, is unknown. Thus, most likely, the real numbers are much worse. At the same time, it became known about a new amazing feature of the coronavirus. It turns out that a certain number of people infected with it may not have symptoms at all. In China, for example, 43,000 asymptomatic people were found. They were not included in those 80,000 that are officially reflected in documents on the epidemic. Also, representatives of the medical sector specify that the incubation period usually lasts about five days, but can reach both 14 and 27 days. Many medical scientists believe that it is very surprising that China managed to quickly localize the spread of the virus. Perhaps the point is precisely in these asymptomatic patients or those infected people who simply have not yet diagnosed their disease. However, scientists did not have time to suspect China of inaccurate data, as there were reports of new 78 infected with the COVID-2019 virus, in particular in Wuhan, where the spread of the virus began. Beijing and Hong Kong immediately announced a new quarantine.
According to the latest data from the World Health Organization (WHO), about 85% of all infections in the last day are in the European Union and the United States. Thus, now in the world there are immediately two large foci of the spread of infection. Several countries in the EU as well as the US. Scientists believe that it is the United States that can become the new center of a pandemic, although Italy, Spain and other EU countries do not lag behind in the number of infected.
From a technical point of view, the EUR/USD currency pair continues to adjust. The Ichimoku indicator is evidence of this. The Kijun-sen line will determine the trend for the euro/dollar over the next few days. In any case, we would like to note that volatility remains high, but still begins to decline and now does not exceed 200 points per day. Nonetheless, we believe that market panic and high volatility will continue for some time to come.
Recommendations for short positions:
An upward correction continues for the EUR/USD currency pair, which may be completed in the next few hours. Thus, we recommend selling the euro again with targets at 1.0504 and 1.0476 in case of price rebound from the Kijun-sen critical line.
Recommendations for long positions:
Euro-currency purchases with targets at the 1.0980 volatility level and Senkou Span B line can be considered no earlier than when the pair consolidates above the Kijun-sen line. However, in any case, it is recommended to be very careful with the opening of any positions. Panic in all markets persists.
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 indicators window.
Support / Resistance Classic Levels:
Red and gray dashed 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.
