The calm before the storm. EUR/USD is pending the ECB meeting.

It is already Tuesday, but the most interesting this week is yet to come. With you, the eternal wanderer and lover of the rough terrain of the international currency market Forex – Andrew Green.

One of the key events of this week is the meeting of the European Central Bank. No specific solutions are expected from them, nevertheless the market is waiting. What will this time use the “Super Mario Draghi” gang (Mario Draghi – the chairman of the European Central Bank)? Which of the tools from the arsenal of verbal influence on the market will he use? Or will it be a type of random hints, or a generally uncertain speech, or maybe a cheerful and strong position with clearly set expectations. Those traders and analysts who already have experience of analyzing such performances know that all this is a very beautiful performance in which the text of the speech itself is by no means the main thing. And one of the greatest actors of the modern financial “theater”, of course, is Mario Draghi. Therefore, I recommend that everyone not only wait for comments on the results of the conference, but try to watch it live.) (Thursday 25/01/2018 13:30 UTC) .

The real intrigue around the meeting is more than enough. In the collection of European wise men of financiers there is a certain variety of opinions on how and when to finalize the LTRO program (Long Term Refinancing Operation – the anti-crisis operation of long-term refinancing of banks by the central bank, which allows banks to receive funds for a long period at low interest on the security of their assets. These measures are used to tighten the banking system in times of crisis. The runoff is quite serious, from a sharp end in September 2018, to a gradual decline in volumes over a period of 6 months to a year.  A very strong pressure on the central apparatus of the ECB is provided by the German financial community, headed by Jens Weidmann (president of the German Federal Bank), which initially did not support the policy of quantitative easing, but now stands for, as quickly as possible, its completion.

In general, the fundamental of the meeting is not unique, but more inclined to the “hawkish” version of the development of events. We are waiting …

Now, let’s proceed to the graphs.

In Figure 1, we analyze the daily time frame.

Here we have a strong breakthrough in the triangle. After, the further consolidation is being formed. The most notable zone for the possible completion of the growth period is seen at 1.2700 with the zone of resistance lines crossing the descending weekly trend channel (dark blue) and the rising daytime (red). This zone, to a greater extent, is a medium-term reference point and …

Mid-term trading recommendation: SELL

Example of the transaction: SELL limit 1.2690, SL 1.2760, TP 1.2540

But what do we do before this? We move on to more familiar horizons – the timeframe and Figure # 2.

Here we have a new triangle (pink color). With a good breakdown potential even before the meeting.

Trade recommendation: trade on the triangle breakthrough and its development.

It’s difficult to crack the breakdown itself, that’s why I’m considering correction options after strong movements. For trend fans, the most convenient option, of course, will be a bullish reversal after the breakdown to zone 1.2100, especially in the perspective of the meeting. But do not overlook the possibility of correction after re-test of the level 1.2300-1.2320.

Examples of transactions:

• Bull U-turn
  BUY limit 1.2120, SL 1.2040, TP 1.2240
• Bearish U-turn
  SELL limit 1.2320, SL 1.2370, TP 1.2250

Now, dear viewers of our wandering theater, we just have to take the best places at the monitors, buy popcorn, or whatever else you like to eat in front of the screen, and enjoy the spectacle.

Have a pleasant and profitable viewing! )

The most enjoyable film is an action-packed series of a lifetime, where each series ends with a happy end.

Andrew Green