At the end of trading on Tuesday, the technical picture of the market has not changed. The continued strengthening of the US dollar relative to European currencies is still accompanied by the formation of signals indicating the probability of corrective movement.
At the time of writing, the business activity indices in the manufacturing and services sectors in October in Germany and the Eurozone became generally known, which were worse than market expectations. The published statistics led to the update of the minimum prices of the EUR/USD pair for the period from August 17. Quotes fell to the level of 1.1412. A similar trend was noted for the GBP/USD pair. Quotes are in the area of 1.2930-1.2940. However, the negative price dynamics led to the formation of a set of convergences on the charts, which allows to stay on the point of view about the possibility of a corrective return of quotations to the values of the beginning of this week. In the afternoon, players will be paid attention to the publication of data on indices of business activity and sales of new housing in the US. In addition, today will be a meeting of the Bank of Canada and the speech from the head of the regulator Stephen Poloz. It is worthwhile to say that the time frame H1 of the USD/CAD pair formed a divergence of local price highs from October 10 to October 22 and the corresponding values of RSI and MACD indicators, which indicates the probability of a weakening of the US currency in this pair and a decrease in quotations to 1.3040 -1.3050. An interesting situation is observed for gold. Yesterday, after breaking the upper limit of the triangle in which this instrument was traded since October 11, a sharp increase in quotations was recorded, which reached the level of 1239.66. However, the positive dynamics was accompanied by the formation of a price divergence and the MACD indicator on the M15 timeframe, which led to the return movement of prices to the area 1231.00-1232.00, where the quotes are at this moment. At the same time, the graph shows the appearance of a new signal (convergence), which indicates the probability of a repeated price increase in the near future.
Summarizing all the above, we can conclude that a significant correction of quotations is brewing on the market before resuming the medium-term strengthening of the US dollar.
The decrease in the quotations of the EUR/USD pair on Tuesday to the level of 1.1438 changed in the following hours by the lateral dynamics. At the same time, on the pair chart, the signal was preserved for a corrective price movement (convergence, marked on the chart with a yellow marker). Today, after the publication of weak statistics on business activity indices in Germany and the Eurozone, in general, the quotes updated yesterday’s low and dropped to the level of 1.14068. However, the formation of convergence continues on the time frames H1 and H4, which allows us to suggest the probability of corrective movement to grow to the area of 200-periodic MA, currently passing through the area of 1.1550-1.1560. At the same time, it is worth bearing in mind the tomorrow’s meeting of the European Regulator, which resulted usually in the recent time with weakening of the euro.
Areas of support and resistance are areas 1.1440-1.1465 and 1.1540-1.1565, respectively.
Most of the trading on Tuesday, the pair GBP/USD held below 1.3000 in the range of 1.2970-1.2990. Today’s weak PMI statistics for Germany and the Eurozone led to an update on yesterday’s lows. Quotes in the last hours fell to the area of 1.2930-1.2940. However, corrective signals remain in force. In particular, the formation of convergence between local lows and corresponding MACD values on the time frames M15 and H1 continues, which leads to the prediction of the probability of a corrective rebound of quotations.
The support zone is in the 1.2960-1.2975 area (green oval).
Resistance zone is present in the range 1.3030-1.3050 (red oval).
Yesterday, the USD/JPY pair continued to oscillate around its 200-periodic MA. In the first half of the day, prices dropped to the level of 112.00, the minimum value of 18 October. However, in the future, prices returned to the area 112.50, where the above-mentioned moving average is located. Today, the continuation of neutral dynamics is predicted. The further movement of quotations will be determined by the reaction of the markets to the statistics published on Friday on US GDP for the 3rd quarter.
The support zone today is the range 112.00-112.10 (green oval).
The resistance zone is located at 112.75-112.85 (red oval).
Today, the USD/CHF chart is presented on the H4 time frame. The chart clearly shows the divergence of the maximum prices and the corresponding values of the RSI and MACD indicators formed in the period from October 5 to the present, which indicates the probability of a negative dynamics beginning. The goal of the proposed decline is the area of 0.9850-0.9860, through which the 200-period MA passes on the H4 time frame.
Support and resistance zones are located in areas of 0.9850-0.9875 (green oval) and 0.9965-0.9975 (red oval), respectively.