EUR/USD 5M
The EUR/USD pair was trading mostly sideways on April 2. There were very few signals and generally interesting movements that could be considered during the day. Volatility was around 40 points, so, by and large, there is nothing to talk about here. With such volatility, even entering the market did not make any sense. And traders could understand this not from the Asian trading session, where volatility is always extremely weak, but from the European trading session, which is when the pair was trading within the 17-point horizontal channel. Thus, by the beginning of the US session, traders' hopes were only associated with a package of important macroeconomic reports from the US. The data on wages, unemployment and the number of new jobs created by the agricultural sector were to be published. Data on wages immediately faded into the background, but the unemployment rate, as predicted, decreased from 6.2% to 6.0% in March. And Nonfarm Payrolls significantly exceeded the already rather optimistic forecast and reached 916,000. In general, everything was in order for traders to be active on this day. But Good Friday, according to the Catholic calendar, plus unexplained events, kept market participants from taking action. A small surge of emotions was observed when the US reports were released, but very weak. This place on the graph is marked with the number "1" on the chart. As for trading signals. There was none during the European session. Several were formed at the US session but only after the US reports were released, that is, when we advised you to be extremely careful or not trade at all. The price crossed the 1.1761 level several times, as the "swing" began, which, however, ended very quickly. In general, it was clearly not necessary to open deals in such conditions.
EUR/USD 1H
On the hourly timeframe, we see that the EUR/USD pair eventually reached the downward trend line, and it worked out in a very good way. And the rebound from this line just could be a signal to sell, which could and should have been worked out. Unfortunately, the weakest volatility and a certain probability that the downward trend is over, does not allow us to expect that the dollar will firmly strengthen. Nevertheless, the signal was strong. The first target has already been reached - the Kijun-sen line (1.1748), but you can try to stay in short positions on Monday, as the signal is strong. If the bulls manage to get the pair to settle above the trend line, then the downward trend will officially end, and the upward movement will continue to the Senkou Span B line. In general, we still recommend trading from important levels and lines that are plotted on the hourly timeframe. The nearest important levels are 1.1703 and 1.1805, as well as the critical line (1.1748). Signals can be rebounds and once levels and lines are surpassed. Do not forget about placing a Stop Loss order at breakeven if the price moves 15-20 points in the right direction. This will protect you against possible losses if the signal turns out to be false or a sharp reversal occurs after some fundamental or macroeconomic event. The US index of business activity in the service sector ISM will be published today, which in theory could have an impact on the market.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
Recall that the EUR/USD pair fell by 170 points during the last reporting week (March 23-29). This is already quite a significant drop and we have been recording it for several consecutive weeks. The new Commitment of Traders (COT) report was quite eloquent. A group of non-commercial traders opened 25,000 contracts for shorts and 34 contracts for longs during the reporting week. This means that the net position has decreased by another 25,000, and the bullish mood of the major players continues to weaken. At the moment, the total number of Buy-contracts (longs) that professional players opened is at 195,500, and Sell-contracts (shorts) at 136,000. Although as early as January 5, 2021, that is, three months ago, the numbers were as follows: 226,000 - 82,000. That is, in the three months of the new year, non-commercial traders have increased more than 50,000 contracts for the sale and closed about 30,0000 contracts for the purchase. As the trend changed into a downward trend. According to COT reports, we expected the trend to end last September. The chart clearly shows why. The red and green lines of the first indicator moved away from each other as much as possible in September 2020, which were the harbingers of a trend reversal. However, the dollar's depreciation due to the exorbitant trillions of dollars that was poured into the American economy caused a new rise in the euro, which is again clearly seen in the chart. The net position of non-commercial traders (the second indicator) has been falling since the same September-2020, while the euro's quotes continued to grow at the same time, and these two facts contradict each other. Thus, both the technique in global terms and the COT report are now in favor of continuing the downward movement. The key level is 1.1691.
Explanations for the chart:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
Indicator 1 on the COT charts is the size of the net position of each category of traders.
Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.
