By IFCMarkets

Good afternoon, dear traders. Today, the main driver of the European currencies movement is the publication of the British economy indicator – change in output in the manufacturing sector, Manufacturing Production m/m . The indicator is released on a monthly basis. It is considered to be a key indicator for the UK economy. Particularly the manufacturing industry which makes up to 80% of the industrial production in the country is based on high-tech solutions and creates a high value added. That makes it an attractive investment. In addition, this sector is the most vulnerable to consumer sentiment, defined by unemployment and income. Thus, Manufacturing Production m/m can be considered as the overall macroeconomic indicator. Close trade relations of Great Britain and other EU countries allow us to consider the release of this indicator as a fundamental factor for all the European currencies.
Currently a slowdown is predicted from 0.5% to 0.4%. If the forecast is too overestimated, the weakening of the European currencies is expected.

Here we consider the EUR/USD currency pair on the H4 chart. The price confirmed the bearish trend line simultaneously with the formation of the “shooting star” bearish candlestick pattern – marked in yellow rectangle on the chart. After that the price crossed the PivotPoints channel signal line (another bearish confirmation) and consolidated in the narrow channel. Regarding this, we expect a significant new price momentum in the red zone – “calm before the storm” effect. The downward trend is confirmed by the motion direction of the RSI-Bars oscillator. Therefore, we expect the oscillator breakthrough at 36.71875 before the price trend continues.

It would be reasonable to place a pending sell order below the Bill Williams fractal support at 1.35799, especially as it coincides with the historic value of the ParabolicSAR indicator. When crossing the indicator level, it will reverse to be bearish. SL can be chosen at the last fractal high or slightly below the first PivotPoints resistance level at 1.09471. Opening a position, it is recommended to move the SL after the parabolic values every 4 hours after the order execution. Thus, we can optimize the return/risk ratio in our favor in the process of changing market conditions. If you decide to take a break from the market, the automatic Trailing Stop can be placed, taking the distance between the two previous fractal peaks into account.

Market Analysis provided by IFCMarkets