EUR/USD 5M
During the third day of the week, the EUR/USD pair continued to move in the same direction as a day earlier, as it did two days earlier. Despite the fact that the pair does not stand in one place during the day, it manages to form false signals, does not reach the target levels, and abruptly changes the direction of movement, several times a day at that. Thus, at the moment, the pair is clearly not in some kind of difficult state. In principle, it is quite simple to understand what is wrong. First of all, there weren't any important reports in the first three trading days of the week, no significant events either. And so traders have been sitting for the entire week. Secondly, the pair's quotes came close to their February highs, even surpassing the level of 1.2243, but the heat of the bulls was not enough for the euro to rise further. Third, we have already said that the entire upward movement looks quite weak, despite the fact that it has been maintained for two months and during this time there was no strong correction. However, in more than 40 working days, the pair has gone up only 560 points, which is approximately 13 points of growth per day. On Wednesday, May 26, the pair bitterly formed two signals on the 5-minute timeframe. The first one is for selling from the level of 1.2243, which could be safely ignored, because the price was trading along this level for several hours, without forming a clear rebound or a clear breakthrough. The second one is another sell signal in the form of surpassing the Kijun-sen line, which was formed at the very end of the trading day and therefore it should not be worked out either. Thus, despite the volatility of more than 60 points, traders failed to earn money again. Unfortunately.
Overview of the EUR/USD pair. May 27. Say a word about poor inflation...
EUR/USD 1H
The upward trend is still maintained on the hourly timeframe. An upward trend line is still relevant, as quotes continue to rise in the medium term and rarely approach the trend line at all. However, the movement itself is still weak. The Kijun-sen and Senkou Span B lines are currently close to each other, since the whole movement is very similar to a flat, which is especially clearly seen on the older timeframes. In general, there is a rather strange movement now: an upward trend seems to exist, and even very stable, but at the same time, intraday movements are extremely difficult to work out. We still recommend trading from important levels and lines that are indicated on the hourly timeframe. The nearest important levels at this time are 1.2160, 1.2190, 1.2243 and 1.2267, as well as the Senkou Span B (1.2147) and Kijun-sen (1.2213) lines. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. Signals can be rebounds or breakthroughs of these levels and lines. 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. According to the tradition of this week, no macroeconomic report in the European Union on Thursday, and we only have a speech by European Central Bank Vice President Luis de Guindos, who pleases the markets with important information once a year. Relatively important data will finally be published in America. Specifically, the GDP report and the durable goods orders report. In addition, the number of applications for unemployment benefits and the change in the volume of pending home sales transactions will become known. To be honest, there is only hope for the GDP report, if its second estimate differs from the first, and the least for a report on orders for durable goods.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair rose by only 20 points during the last reporting week (May 11-17). The new Commitment of Traders (COT) reports, which was released yesterday in the US, showed that professional traders continue to build up buy positions in the European currency. A total of 10,700 Buy contracts (longs) and 1,600 Sell contracts (shorts) were opened. Thus, the net position increased by another 9,000 contracts. Take note that a few weeks ago the "non-commercial" group of traders, which is considered the most important of all, began to increase purchases of the euro again. We have repeatedly said that we believe the main reason for the euro's growth and the greenback's fall is the flooding of the American economy with dollars. But the COT reports show that the big players are also joining the trend, which is not in their power this time, but in the power of the Federal Reserve and the US government. One way or another, but the demand for the euro is growing, the supply of the dollar is increasing, so wherever you go, there is a wedge everywhere. Recall that around fall 2020, the COT reports showed the end of the upward trend, but either the bears simply lacked the strength and desire for a new downward trend, or the money from the Fed outweighed the scales, but the uptrend resumed. The first indicator eloquently shows that the red and green lines are moving away from each other again, which is a sign of an upward trend. In simpler terms, this means that professional players continue to build up longs, and commercial traders (hedgers) - build up shorts. Therefore, at this time, the COT reports again speak in favor of the fact that the euro will continue to grow.
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.
