Market choice

Today at 14:30 (CET) Producer Price monthly Index should be released at US – PPI m/m. The indicator is formed by Labor Department and displays a percentage change of prices for US goods and services. PPI m/m is a basic inflation factor and takes into account three areas of production: manufacturing, commodities production and processing industry. The indicator publication may influence a volatility of most liquid currencies. Inflation is a key factor which defines a monetary policy of Fed and a pace of transition from quantitative easing (QE) to a traditional model of regulation. An acceleration of this process and a perspective of basic rate growth will inevitably lead to the strengthening of USD against other currencies.

Let’s consider EUR/USD instrument at H4 chart. A price is still moving inside a falling D1 and H4 trend channels. At the same time we may observe certain dangerous bullish signals. In particular, a triangle equilibrium has been broken in the direction of a green zone with simultaneous formation of bullish divergence of RSI-Bars oscillator. One of previous bars has broken the weekly (!) resistance level which is an important signal of bear’s attenuation. We suppose that unstable market equilibrium is observed and that an upward breakdown of D1 trendline is probable. At the same time we can not exclude a correction weakening with account of basic tendency influence. We shall give the market an opportunity to make a choice. For now it should be reasonable to consider two symmetrical opposite pending orders, formed with account of two key levels: 1.25817 и 1.23932. Both levels are verified by historical values of ParabolicSAR trend indicator, boundaries of Donchian channel and Bill Williams fractals. One of proposed levels may be used for pending order opening with stop level located below or above another key level. Under condition of first order activation, another one should be removed. 
After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal maximum (short position) or minimum (long position). Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

• Position Buy
• Buy stop above 1.25817
• Stop loss below 1.23932
  
  
• Position Sell
• Sell stop below 1.23932
• Stop loss above 1.25817